After less than a year of paying commission on non-commissionable fares to travel advisors, Norwegian Cruise Line has announced it will be sunsetting the program at the end of next year’s Wave Season. John Chernesky, senior vice president of North America sales, delivered the news to agency members of its President’s Club at a meeting in New York City.
NCL announced last November that it would be paying commission on NCFs to travel advisors who signed up and submitted a marketing plan by the end of 2022. The program applied to all bookings that departed on May 1, 2023 or after, with commissions being paid starting in January 2023. It was the first – and only – contemporary cruise line to make such a move, and travel advisors throughout the industry applauded it.
At the time, NCL did not know how long the program would run for, saying only that it would reevaluate it at the end of 2023.
“At the end of last year when we announced that we were going to be paying commission on NCFs, we did that for many great reasons in terms of doing everything that we could to ensure the travel agency community was as strong as ever in putting more dollars in the pockets of front line advisors,” Chernesky told Travel Market Report during an exclusive interview.
“As we evaluate every investment we make with the trade, whether it is our marketing dollars or the commission we pay… and with programs like this, we’re always evaluating how we can be as good a partner as possible and invest in the areas that are meaningful,” he added.
While Chernesky did not refer to the program as a failure in any way, saying it “served a purpose as we moved into this year,” he said that after analyzing the program, some agencies were fantastic and “some didn’t engage as much as we had thought.”
“When we look at it in total we believe that we are better suited investing those dollars in other areas,” he said.
Reinvesting in agency channel
While NCL is withdrawing its NCF commissions, Chernesky was clear that the cruise line is not pulling back on its investment in the trade. The monies that would have been paid as commission will instead go into other trade-focused programs, systems, and tools.
For instance, going into 2024, NCL is grandfathering in agencies in the 11% to 13% commission range that did not produce enough this year to stay within that commission range. Those agencies will remain at their current commission level.
“We wanted to keep that investment there and be mindful that not every agency is back to full strength,” he said.
But the re-investment doesn’t stop there.
“Our goal at NCL is to be the easiest cruise line that they work with. We have done significant research with frontline advisors, as well as agency owners to measure how we’re doing today and the feedback is we’re good, but we have opportunity to improve and that’s what we’re focused on.”
Areas that NCL is looking to improve (ie reinvest the monies its saving by not paying commission on NCFs after March 31) include its booking engine and air program.
Last chance to maximize earnings
Chernesky emphasized that the program is not coming to an abrupt end. Every booking that is made by one of the 2,500 or so participating advisors, through March 31 will receive the extra commission dollars regardless of whether the client travels in 2024, 2025, or 2026.
“We are very mindful of how we transition away from this program,” he told TMR. “We didn’t want to make it too sudden. We wanted to give time for the approximately 2,500 agencies that are part of this program the full chance to maximize their earnings through the busy Wave period.”
NCL, Chernesky told TMR, is “mindful” of how big a change this is and is hopeful the travel agency community will understand it remains committed to the trade. During the announcement at today’s meeting, that understanding seemed to be there. Chernesky told TMR the initial reaction from advisors – namely its President’s Club members, the majority of whom are agency owners or C-level executives at consortia or host agencies – was one of understanding and gratitude.
“The first comment that was made was, thank you for doing it in the first place, thank you for giving us this opportunity… It was a grateful audience, as business owners they all understood where we are going and how we will focus our investment.”
Additionally, he said, advisors in the room voiced an appreciation for the fact that Norwegian’s base fares – which includes amenities through its Free at Sea bundle – are higher than peer brands, and therefore commissions are higher as well, even without the NCF commission.
“It wasn’t lost on this audience that even taking away the NCF commission our commission per booking is still higher than most of our peers in our industry.”