Carnival Corp. & plc took in $193 million in profits on a whopping $3.2 billion in revenue in its fourth quarter, which ended Nov. 30, the mega cruise company reported.
The profits were down from the fourth quarter of 2008, when Carnival’s net income was $371 million, so during a Q & A with financial analysts, the talk turned to belt-tightening measures.
Chairman and CEO Micky Arison was asked whether Carnival was planning on trimming travel agencies’ commission as an efficiency measure.
He said Carnival was “absolutely not” contemplating such a move.
“Times like this, more than ever, we need a strong distribution system and we need folks out there selling the cruise concepts, selling our various brand all over the country, hundreds of thousands of them, the more the merrier and the reality is that we will support that distribution as long as I’m CEO of this company,” Arison said.
As far as other efficiency measures, on the tech front Carnival is contemplating some data center consolidations, officials said.
There you have it. While airlines, hotels and car rental companies are pulling out the stops for direct distribution, Carnival stated early this year that it gets the majority of its bookings from travel agents, tour operators and wholesalers.
The company doesn’t break out specifics about its distribution channels so the question becomes which way is Carnival’s distribution mix trending. Some travel agents opine — and I don’t know if it’s true — that some of Carnival’s brands already get a majority of their bookings direct. It’s hard to know without some numbers being made publicly available.
As Carnival stated about its strategy earlier this year:Â “We have improved our systems within the reservations and customer relationship management functions, emphasizing the continued support of the travel agency community, while simultaneously developing greater contact and interactivity with our guest base.”
Travel agents get very nervous about that “greater contact and interactivity” with guests, but so far Carnival still emphasizes the travel agency channel and its standard commission of 10%, without overrides, has remained on an even keel.
However, Carnival Corp.’s new policy to reign in keyword bidding on its trademarks, and even Carnival Cruise Lines’ still-in-formulation social media policy, were seen by some as efforts to push consumer bookings to direct channels.
Meanwhile, as far as travel agents are concerned, Arison is at least still saying the right things.
Dennis,
One point missing here is NCFs, or non-commissionable fares, elements of the cruise booking which are not commissionable. These have increased over the years, so there has been some indirect reduction in commission expense across the industry.
PhoCusWright has channel segmentation data for the cruise market in aggregate. Traditional travel agencies (excluding OTAs) represent 70% of sales in 2009. More detail here: http://tinyurl.com/yalawua
Douglas: That 70% figures jives with some anecdotal bits and pieces I received after I wrote the above story. I would imagine the percentage will be falling in the years ahead, no? Conjecture, I know.
I think Carnival’s recent move to limit keyword bidding on its trademarks, as referenced in the Travel Weekly link in the above story, is an attempt to hold down Carnival’s paid-search costs as it tries to drive more direct traffic.
And, yes, Carnival says its cruise commission expense fell over the last year and I would imagine that the increase in NCFs played a role.