Cruise lines encourage use of TA's

[AdGuyMG]

9 hours ago, DirtyDawg said:

 

So to make a $100K income at 16% commision rate, an individual commissioned agent would need to generate about $3 miilion in cruise fares just by themselves. ($3M X. 7= $2.1M X16% = 336K to agency  X 30% = 100K to agent) 

 

Tough gig!

I can't think of many 100K income jobs that are an easy gig.

 

But an experienced agent will have a few thing going for them that makes 3M sales achievable such as a big book of repeat customers and referrals.

 

PLUS they will not be tied to just $899 - $1899 per person cruises. They will also do a decent amount of 5K -10K per person Europe & Asia escorted land tours, All Inclusive luxury resorts,  Luxury Line cruises and a decent amount of Groups.

[MicCanberra]

15 minutes ago, AdGuyMG said:

I can't think of many 100K income jobs that are an easy gig.

 

But an experienced agent will have a few thing going for them that makes 3M sales achievable such as a big book of repeat customers and referrals.

 

PLUS they will not be tied to just $899 - $1899 per person cruises. They will also do a decent amount of 5K -10K per person Europe & Asia escorted land tours, All Inclusive luxury resorts,  Luxury Line cruises and a decent amount of Groups.

Agreed, they would need some diversity in what they offer.

[iancal]

My guess is that it is the 80/20 rule.  

 

20 percent of the agents make 80 percent of the commission.

[leaveitallbehind]

9 hours ago, iancal said:

My guess is that it is the 80/20 rule.  

 

20 percent of the agents make 80 percent of the commission.

....which as you say would be a guess.  50/50 and 60/40 is not uncommon. Some may be higher.

[MicCanberra]

I have heard of other ratios as well. 70/30 and also 90/10.

[sail7seas]

On 3/23/2019 at 10:07 PM, lenquixote66 said:

 

 

You  are making my point. If people book directly with the cruise line the cruise line does not have to pay the TA a commission.

Wrong

 

Do you think all of the cruise consultants that work for all the cruise lines work for free?   Of course they are paid.  That  job is how  they earn their living.  It is not a hobby for them.

 

 

 

 

 

 

[ldubs]

On 3/25/2019 at 6:34 PM, AdGuyMG said:

I can't think of many 100K income jobs that are an easy gig.

 

But an experienced agent will have a few thing going for them that makes 3M sales achievable such as a big book of repeat customers and referrals.

 

PLUS they will not be tied to just $899 - $1899 per person cruises. They will also do a decent amount of 5K -10K per person Europe & Asia escorted land tours, All Inclusive luxury resorts,  Luxury Line cruises and a decent amount of Groups.

 

Yeah, plus bookings for air, lodging, and everything else that compliments a cruise.  

 

 

[ldubs]

On 3/26/2019 at 5:18 AM, leaveitallbehind said:

....which as you say would be a guess.  50/50 and 60/40 is not uncommon. Some may be higher.

 

Umm, I think you guys are talking about two different things.   

[leaveitallbehind]

6 hours ago, ldubs said:

 

Umm, I think you guys are talking about two different things.   

To be clear, I am indicating - and have said consistently all along - that the total commission paid to an Agency is typically between 10 - 16% of the commissionable portion of the cruise fare, and that is then split further between the Agency and the in house Agent that wrote the booking for their earned portion at a rate that is also typically on a 50/50 or 60/40 basis. That in house split is determined by the Agency and can be higher. (If an Agency is comprised only of a single Agent, then there of course would be no further split of the 10-16% received).

 

And what started this detail of discussion was the OP's incorrect presumption that the total commission paid to the Agency by the cruise lines was 30% - which is, as stated, totally incorrect.

Edited March 28, 2019 by leaveitallbehind

[ldubs]

3 hours ago, leaveitallbehind said:

To be clear, I am indicating - and have said consistently all along - that the total commission paid to an Agency is typically between 10 - 16% of the commissionable portion of the cruise fare, and that is then split further between the Agency and the in house Agent that wrote the booking for their earned portion at a rate that is also typically on a 50/50 or 60/40 basis. That in house split is determined by the Agency and can be higher. (If an Agency is comprised only of a single Agent, then there of course would be no further split of the 10-16% received).

 

And what started this detail of discussion was the OP's incorrect presumption that the total commission paid to the Agency by the cruise lines was 30% - which is, as stated, totally incorrect.

 

Yes, I understood what you were talking about.  In the post you quoted  Iancal was referring to the 80/20 rule.  Two different things.  

 

I don't think the OP just  presumed the 30%.  Right, wrong, or misunderstood  I read that he was given that figure by someone.  

 

[leaveitallbehind]

44 minutes ago, ldubs said:

 

Yes, I understood what you were talking about.  In the post you quoted  Iancal was referring to the 80/20 rule.  Two different things.  

 

I don't think the OP just  presumed the 30%.  Right, wrong, or misunderstood  I read that he was given that figure by someone.  

 

I get it - he was saying that 20% of the agents earn 80% of the income, which would imply that by volume booked, the large agencies, big box retailer, etc., generate in total $ most of the revenue.  This would then have their agents - again by volume - maybe earning the most income.  My response to this was that would be a guess.

 

I then in the same response unclearly went on to discuss the typical revenue split between agencies and their agents to define how that revenue is shared.  Should have been a separate post as that may be what generated your response.

 

As to the OP's position on the 30%, you are correct in that he stated to have been told that by a TA he used to deal with.  So the word "presumption" perhaps was a poor choice.  However, I believe he misunderstood what he was told or misinterpreted the math as I can say with certainty that 30% commission paid on cruise bookings is incorrect.

 

But I appreciate your comments for clarity.

Edited March 28, 2019 by leaveitallbehind

[AdGuyMG]

On 3/23/2019 at 10:28 PM, CruiserBruce said:

I have never heard of a 30% commission...the most I have heard of is in the low teens.

Cruises fare commissions run from about 10% -16%

 

The only travel component I can think of that would pay out a 30% gross TA commission would be Travel Insurance.

[iancal]

The challenge that the public has is discerning between a travel agent and what I would call a data entry clerk who does nothing but enter my travel order on a travel vendor's system.  I would suspect that the commission structure is different for both as would be the sales targets and over achievement adders.

[leaveitallbehind]

1 minute ago, iancal said:

The challenge that the public has is discerning between a travel agent and what I would call a data entry clerk who does nothing but enter my travel order on a travel vendor's system.  I would suspect that the commission structure is different for both as would be the sales targets and over achievement adders.

No it is not. Again, the commission rate payable to travel agencies (or independent solo agents) is 10 - 16%. There is no scale for a "data entry clerk" as you describe.  How that net commission to the agency is split internally with their agents, "data entry clerk", or other staff is determined by them, not the cruise lines.

 

And a travel agent who would be paid this 10-16% is defined as any 3rd party entity outside of the cruise line - on line company, big box retailer, or traditional brick an mortar agency - that is authorized to transact a cruise booking between a customer and the cruise lines.  It is no more complicated than that.

[iancal]

I was referring to the agency comp plan for it's agent employees or sub agents  not the agency fees that are paid by the cruise lines or other travel vendors to the agency.   Do the agencies pay on commission based on valume, or gross margin, or some other formula. Do the agents get more if the agency itself gets higher commission adders from the cruise line based on agency volume?

Edited March 28, 2019 by iancal

[leaveitallbehind]

1 minute ago, iancal said:

I was referring to the agency comp plan for it's agents not the agency fees that are paid by the cruise lines or travel vendors.

Oh ok - got it.  And with that you would be correct.  Sorry I misunderstood.

[ldubs]

In all of this discussion, the thing I would not have guessed is that 75% of cruise bookings are via a travel agent vs directly with the cruise line site -- assuming that is a factual figure.    I suppose if you consider the perks claimed, it kind of makes sense, but I would not have guessed that high. 

 

Considering the amount of revenue involved, I'm surprised Amazon isn't handing bookings.  

 

 

Edited March 28, 2019 by ldubs

[leaveitallbehind]

14 minutes ago, ldubs said:

In all of this discussion, the thing I would not have guessed is that 75% of cruise bookings are via a travel agent vs directly with the cruise line site -- assuming that is a factual figure.    I suppose if you consider the perks claimed, it kind of makes sense, but I would not have guessed that high. 

 

Considering the amount of revenue involved, I'm surprised Amazon isn't handing bookings.  

 

 

That is a correct figure as reported by the cruise industry.  Just my opinion but Amazon's "sell and ship" model is to deliver physical goods and products and is not set up to provide the direct service required after the sale and up to the time of boarding that would be required with booking cruises.  And if they could, I'm not sure they would want to wait until a cruise is completed before being paid their commission to do so.

[ldubs]

4 hours ago, iancal said:

The challenge that the public has is discerning between a travel agent and what I would call a data entry clerk who does nothing but enter my travel order on a travel vendor's system.  I would suspect that the commission structure is different for both as would be the sales targets and over achievement adders.

 

I have zero knowledge of the subject and am too lazy to google it, but I could see a system using piecework pay for a straight forward booking entry vs a commissioned sales agent.  

 

Folks, I'm not saying it happens, so no need to bring out the torches and pitchforks!  

[ldubs]

11 minutes ago, leaveitallbehind said:

That is a correct figure as reported by the cruise industry.  Just my opinion but Amazon's "sell and ship" model is to deliver physical goods and products and is not set up to provide the direct service required after the sale and up to the time of boarding that would be required with booking cruises.  And if they could, I'm not sure they would want to wait until a cruise is completed before being paid their commission to do so.

 

Yeah, I'm not sure either, but I sure won't be surprised if it happens.  

[Hlitner]

34 minutes ago, ldubs said:

In all of this discussion, the thing I would not have guessed is that 75% of cruise bookings are via a travel agent vs directly with the cruise line site -- assuming that is a factual figure.    I suppose if you consider the perks claimed, it kind of makes sense, but I would not have guessed that high. 

 

Considering the amount of revenue involved, I'm surprised Amazon isn't handing bookings.  

 

 

Agree!  Although we have always shopping around among cruise agencies (for the best deal) we assumed a high percentage of folks did book direct.  As I posted earlier in this thread, we learned of the approximate 80% figure (book through agencies) from a future cruise consultant who works on ships of a major cruise line.  That info is about 5 years old, and the percentage obviously various from line to line.  But we recently talked to another future cruise agent (on a different mass market line) who, although she did not know the exact number, said the vast majority of bookings are done by agencies.

 

As to Amazon, they have a unique business model that is more about logistics and an e-marketer that makes markets between customers and third party sellers.  They could easily sub-contract with a major travel/cruise seller and get into the cruise market.  So perhaps in the near future we will see the launching of "Amazon Travel" or perhaps "Amazon Cruises."   We would think a big issue for Amazon to overcome would be the tendency of many who book cruises/tours to want some "handholding." The Amazon Business model is about using high tech and minimal humans.   Most folks who deal with Amazon seldom to ever feel the need to deal with a human.   Subcontracting with some other major travel providers (kind of like the warehouse clubs) might work, but it would be a new direction for their business planning.

 

Hank

[Toofarfromthesea]

1 hour ago, Hlitner said:

Agree!  Although we have always shopping around among cruise agencies (for the best deal) we assumed a high percentage of folks did book direct.  As I posted earlier in this thread, we learned of the approximate 80% figure (book through agencies) from a future cruise consultant who works on ships of a major cruise line.  That info is about 5 years old, and the percentage obviously various from line to line.  But we recently talked to another future cruise agent (on a different mass market line) who, although she did not know the exact number, said the vast majority of bookings are done by agencies.

 

As to Amazon, they have a unique business model that is more about logistics and an e-marketer that makes markets between customers and third party sellers.  They could easily sub-contract with a major travel/cruise seller and get into the cruise market.  So perhaps in the near future we will see the launching of "Amazon Travel" or perhaps "Amazon Cruises."   We would think a big issue for Amazon to overcome would be the tendency of many who book cruises/tours to want some "handholding." The Amazon Business model is about using high tech and minimal humans.   Most folks who deal with Amazon seldom to ever feel the need to deal with a human.   Subcontracting with some other major travel providers (kind of like the warehouse clubs) might work, but it would be a new direction for their business planning.

 

Hank

 

You make good points with regard to those, say 40 and up, but the emerging cruiser cohort after them seem to be more comfortable with digital contact than 'real human being in person' phone contact.

And Amazon has the money to design their own in house system tailored to their strengths, one of which is their large number of prime members.  Another of which these folks are very used to not talking to Amazon.

Edited March 29, 2019 by Toofarfromthesea

[leaveitallbehind]

While I don't disagree with any of the comments made about the potential for Amazon to venture into the cruise market, I still contend that their business model would not be very compatible with the current revenue cadence of not receiving commission payments until after the cruise is completed. And while I realize they have no capital risk in booking cruises, it would have to be developed as a completely different business model for them to be willing to wait upwards of 18 months to get paid for a product sold through them.  Let alone service the booking until the sail date.  And I don't think it likely that the cruise industry would alter their model to accommodate a "pay as booked" scenario.  Just my opinion.

Edited March 29, 2019 by leaveitallbehind

[ldubs]

41 minutes ago, Toofarfromthesea said:

 

You make good points with regard to those, say 40 and up, but the emerging cruiser cohort after them seem to be more comfortable with digital contact than 'real human being in person' phone contact.

And Amazon has the money to design their own in house system tailored to their strengths, one of which is their large number of prime members.  Another of which these folks are very used to not talking to Amazon.

 

Good points.  A company that does not adapt to new opportunities or thinks things won't change is doomed.  It really is only a matter of time before we will have a 100% digital interface.   Current commission systems are not business drivers and will change in a heartbeat if needed.   

[jagsfan]

On 3/23/2019 at 10:47 PM, lenquixote66 said:

My TA in NYC , RA told me that he got 30 percent from HAL. Another TA ,AA told me 30 percent from Carnival. I assume that this would be a standard amount with all cruise lines and all Travel Agents.

Nope!

there are levels of sales that can increase commission slightly. Depending on the arrangement with a cruiseline. 

The standard is still 20% for high producers.