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Carnival Cruise Lines’ recent change in its commission structure dramatically increases the number of cruises agencies must sell to qualify for higher levels in 2013. Behind this decision is a practice of raising the requirements for higher commissions as the amount of saleable product rises.
Carnival has not increased its requirements in the past 10 years, during which the line has had a 50 percent capacity growth and launched nine new ships: Glory, Miracle, Valor, Liberty, Freedom, Splendor, Dream, Magic and Breeze. The company said it was overdue in aligning its commission tiers with the marketplace, and it also has changed the way it determines numbers. Percentages are still based on volume rather than revenue, but Carnival has had a unique seven-day equivalency system of credits, adjusted for various cruise lengths. The new system simplifies the process, counting net cruises sailed, regardless of length.
The very high producers, strong host agencies and those that sell smaller numbers are unlikely to be affected; it is mid-level agencies that are vulnerable to the new system. For instance, an agency currently selling the seven-night equivalent of 20 staterooms has been eligible for 11 percent commission; the new requirement is 50 staterooms.
The highest commission rate, paying 16 percent, required 300 staterooms (the equivalent of 600 passengers); under the new system, it takes 1,000 staterooms to reach 16 percent. The new commission structure goes into effect based on the date of sale (not the cruise date), beginning Jan. 1, and agencies will be notified by Feb. 1 of their 2013 commission levels.
“We rely on and appreciate the support of travel agents and remain fully committed to helping them grow their businesses,” said Lynn Torrent, executive vice president of sales and guest services. “Most North American cruise brands have decreased capacity in the U.S. as they’ve substantially increased international sourcing and deployment, while Carnival remains focused on the U.S. market. As such, Carnival pays more commission to U.S. travel agents than any other cruise brand. And the vast majority of our guests are sourced from the U.S., which continues to create huge earnings opportunities for domestic travel agents.”