Carnival Cruise Lines is testing new ancillary fee revenue, moving away from the all-inclusive fare model that’s been traditional in the cruise segment.
The  ”Faster to the Fun” program is being tested on Carnival Imagination and Carnival Liberty on August 20 and August 25.
For $50 a cabin, passengers receive priority embarkation, early cabin availability, and speedier luggage delivery.
The perks used to be reserved as an exclusive perk for elite members of Carnival’s loyalty program, VIFP (Very Important Fun Person).
Cruise lines tickets have traditionally been all-inclusive, with meals, luggage, and activities all included in a total price.
But in recent years, cruise lines have added ancillary income by charging extra for specialty restaurants, shore excursion, and spa treatments.
While more than 90% of cruise tickets are purchased through travel agents, cruise lines are increasingly investing in direct channels. Their goal is disintermediation.
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About Sean O'Neill
It’s contradictory (not to mention simplistic) to say in one sentence that 90% of cruise inventory is distributed via the agent channel (GDS), then in the next sentence to say the “goal is disintermediation.”
The cruise industry, unlike other segments, generates a LOT of revenue via travel agents that will never move online because what the agents sell mostly (across the industry) is high-end, complex itineraries where the agent incentive to upsell is financially compelling, for both the agent and the cruise line.
Granted, the Carnival Imagination is no Queen Mary II, and Carnival generally sells more standard package cruises than the more upscale brands like Cunard. The opportunity for more online sales is greater at Carnival and similar brands because the standard packages can more easily be presented and bought online, plus revenue for these packages is generally lower, giving the cruise lines an incentive to shift them from the expensive GDS channel to direct distribution.
Still, even a packaged sail like a 7-day Carnival cruise from Fort Lauderdale has many more moving parts (e.g., air, ground transport, hotel stay, shore excursions) than an average stay in a resort, making shifting them entirely online to be a challenge.
Selling ancillaries post-booking/pre-sail and fixed-component package tours online is a very smart goal for the cruise lines, but this segment will never see disintermediation to levels the airlines and hotel companies are targeting.
Hi, Jane,
Excellent points about how the cruise segment will never see disintermediation to the levels the airlines and hotel chains are aspiring to.
Thanks for your comment!
Sean
Indeed, a recent survey suggests that 39% of cruises are booked direct with the cruise line and only 34% booked through traditional travel agents. Online travel agencies account for 16% of cruise bookings. It is likely that some cruise lines book over 50% of all cruises direct for the average to be 39%. Most recently it was estimated that travel agents (of all types) still book 51% of all air tickets sold. I would think that not only is it likely that cruise sale disintermediation will approach that of the airline industry but in some cases is already there.
Retailers who persist with a business model of even three years ago are in an evolutionary cul-de-sac. Those retailers that identify why they are relevant to the travel buying process, why they add value, and do the best job of communicating that value are the ones that survive.
Charlie,
Thanks for your comment!
I especially liked “Retailers who persist with a business model of even three years ago are in an evolutionary cul-de-sac.”
What a great way of putting it!
Is that a FCCA study? PhoCusWright? I haven’t seen that one.
Best,
Sean
Any agency that is not preparing their business model for net rate cruises in the very near future will meet it’s end. Carnival corp brands such as Princess, Holland America, and of course Carnival have aggresively persued a policy of direct sales both onboard and through direct mail campaigns with past clients. It’s crazy to think that Carnival itself does not already sell at least 65% direct.
As booking/shopping cruise technology continues to advance in the industry it will spell the end of todays agent…….
If all someone is looking for is the absolute cheapest cruise price, you’re probably correct. That said, a significant part of the cruise booking public:
* prefers to have a knowledgable agent take care of all the planning and complexity of a mulitple element vacation
* has realized that they are doing ALL the work of making the booking and GETTING NOTHING FOR IT when they book direct when they could have an agent do the work for them and probably offer amenities that the cruise line isn’t going to offer
* understands that if there is a mistake (and they occur ALL the time, ask me what the fastest growing segment of our business is – oh alright – it’s people who screwed up their booking and don’t EVER want to have that happen again) that they ARE ON THEIR OWN. THEY HAVE NO ADVOCATE to solve the problem with their best interest at heart.
So, for the “how hard can this be” and “I’m smarter than any travel agent”, client, knock yourself out.
Reiterating – YES you can do all the work yourself BUT WHY DO YOU EVEN WANT TO THINK ABOUT DOING IT if someone does it for you and it costs no more or you have an extra onboard amenity?
Thanks, Charlie. Really important point about travel agencies. Thanks again!
Thanks, Michael. Great point about the trends.
Charlie,
Your comment to Michael is wishful thinking. I think you missed the policy change that Carnival implemented on August 1 which does not allow agents to offer any value above $25 per cabin. This was the biggest change the industry has undertaken since stopping rebating.
The Carnival change was geared at driving more direct sales. I agree with your comment to Michael in a flat playing field when agents are getting paid a commission. Unfortunately, in an environment when the cruise lines ( Namely CCL) reduce and soon eliminate value adds your statement does not fly.
Furthermore, I think your confusing Carnival with Crystal. The Carnival customer is low-budget shopping for deals. So please save the agent bringing value to the customer arguement for the soon to retire agents….
I think you underestimate the resourcefulness of the retail travel agency owner. Rebating is alive and well, including rebates for Carnival bookings. The difference is that the passenger isn’t getting money back until after they have returned from their cruise.
I think you’RE confusing order fillers and payment processors with travel planners. There is and will likely always be a segment of the population that has better things to do with their time than spend hours on the Internet learning to do the things that travel consultants already know how to do. There is also a segment that wants to be sure the $10,000 vacation is planned and executed correctly. You are totally correct that the planner that deals with these two types of clients won’t spend a lot of time on low-budget deal shoppers. They can’t afford to.
Perhaps the biggest challenge facing the type of travel planner described herein is communicating to the traveling public what they do and why the traveler ought use their services.
Thanks, Rachel, for the lively, informed debate!
Thanks for the comments!