How to Profit From Group

Cruise Sales

By Marilyn Green

The old adage that it’s just as easy to marry a rich man as a poor one is paraphrased by many successful agents, who say it’s much easier to build profits by selling groups than individuals. Those who cultivate affinity groups, from gardening buffs and classical music fans to bridge players and family reunions, often find that a group leader already in place can do the bulk of the selling while the agent negotiates value added features and special amenities and builds a higher commission base and a bigger database for the future.

However, policies vary from cruise line to cruise line concerning the numbers that entitle the group to special rates and amenities and the amount of time the agent has to collect deposits and complete the group at the contracted rate. Cruise lines that responded to our survey gave a wealth of information for home based agents who want to profit from group sales.

Recently, Royal Caribbean International and Celebrity Cruises announced dramatic changes in their group policy to keep space open and respond to agent requests to block out group space without initial deposits.

Lisa Bauer, CTC, senior vice president of sales for the Royal Caribbean brand, stated, “We realized the rules under which we have operated for the last 20 years were forcing our partners to block and deposit speculative group space just to remain competitive.” Both brands wanted to end the “Great Land Grab” in which agents lay claim to group space, much of which is never booked for groups. Dondra Ritzenthaler, senior vice president of sales for Celebrity, commented, “In 2004, more than 80% of group space booked on our brands never sailed as a group.”

Bauer added that in 2004 the average period that group space was held was 303 days — days in which these staterooms were not available inventory. Agents now can block out up to twice as much group space as they sold during the previous four quarters. At the end of 90 days they must give full deposits and names. The number of staterooms sold during that time dictates the additional number of staterooms that can be sold for this group during the 60 days that follow. If 15 staterooms are sold in the first 90 days, 15 staterooms will be held for the 60 days afterwards. Finally, if stragglers wish to join the group after the 150-day period, they will receive the amenities and tour conductor benefits, but they must buy the staterooms at the prevailing rate, not the group rate locked in originally.

Bob Dickinson, Carnival Cruise Lines president and CEO, said that about 30% of Carnival’s inventory is sold as group business. He added that for home based agents and normal size brick-and-mortar agencies, there is no cap on space.
“But for very, very large agencies that tend to tie up space on a speculative basis, we allow them to set up groups on 5% of the sailings,” he added. “We have 1,200 sailings this year, for instance, and one of the very big agencies could book groups on no more than 60 sailings.”

Costa Cruises’ goal in the Caribbean is 60%-plus of capacity sold as group space. The line doesn’t allow an agent to book multiple groups on the same sailing, but there is no limit to the staterooms for one group. After 30 days, Costa requires a $50 deposit for each stateroom sold. If none has been sold, the entire space is returned to open inventory. If a portion has been sold, the agent is permitted to continue to sell space, monitored by Costa to ensure that the process is continuing at a reasonable pace.

Holland America Line doesn’t require a deposit up front, it watches its inventory and when space becomes scarce pulls groups as needed, based on firm names, the agent’s past history in booking groups with them, etc.

Tim Rubacky of Oceania Cruises said that, because of limited capacity, the line has never been able to tie up inventory. “We set pricing as in your contract in the various categories involved,” he said. “But if you have requested five staterooms in a given category and by the time you sell them we only have three, that’s what you will get. We require a deposit to take a stateroom out of inventory.”

It is as important to match the right group with the right cruise line as it is with the individual, and there are varied policies and incentives. Here are some group policy highlights from cruise lines that responded to our inquiries.

Groups of 16 guests or more in eight staterooms or more are eligible for group rates, where they apply on a wide range of sailings. One free cruise berth is applied for each 15 full fare guests; the 16th is free.

At the end of 2003, Carnival introduced a new points-based program enabling agents to create customized price and amenities packages for groups. On each cruise, agents receive a specified number of “Fun Points,” which can be redeemed for amenities such as champagne and chocolates, upgrades, cocktail receptions and bonus commissions. “Fun Points” can change over the life of the sailing and vary according to voyage length and season; the program is available in conjunction with all “Fun Ship” cruises, which range from three to 16 days to the Bahamas, Caribbean, Mexican Riviera, Alaska, Hawaii, the Panama Canal, Canada, New England and Bermuda. In order to be eligible for the group amenities program, group discounts and tour conductor credits, travel agents must book a minimum of eight cabins on a particular voyage.

HAL is strongly promoting groups in general. Depending on cruise length, varying numbers of Group Amenities Points (GAP) are required for amenities from a 30-minute spa massage and a Pinnacle Grill Experience, monogrammed premium bathrobe, various wine packages and free tour conductor credits with 10 or 12 full fare guests, rather than 15. Marketing co-op is a GAP item; there is no co-op for groups under 15. Marketing co-op credit for 15-49 guests is 1% of net, 50-99 guests 2% of net, 100-plus guests 3% of net.

GAP points vary by date selected and size of group. The company tries to leave open the selection of “extras” for the agents, be it a cocktail party or an escort. Standard tour conductor C policy is one for 15.

Holland America has a variety of programs for family reunion groups of five staterooms or more (10 passengers or more), with an upgrade on one stateroom from outside to veranda when 10 or more staterooms are booked; unlimited sodas, including 3rd and 4th guest; choice of Pinnacle Grill dining or water equipment at Half Moon Cay for all; and a family photo.

HAL also has a charity group program for groups of five or more staterooms. The organization must qualify as a nonprofit organization and support environmental, health-related, cultural arts or maritime causes and have a signed agreement booking with the travel agency with specific stipulations. Benefits in lieu of GAP points are a donation of $50 per stateroom on 4- to-7-day cruises and $100 per stateroom on cruises 8 days or more. One stateroom is available at 1:10, with additional tour conductor credits available at 1:15. Guests receive a private reception or a bottle of wine in each stateroom.

There is no group “discount” as such. All guests pay the same cruise fare. RSSC said this is consistent with its level playing field sales strategy that allows all retailers, regardless of affiliation or size, to access the best available fares.

However, travel agents can take out a group contract on a given sailing on 90% of the company’s cruises, entitling them to a 5% override commission, which will be credited to the agent’s account, if they sell six or more guests on a given departure.

Upon selling 11 guests, the agent also receives the average net cruise value of one guest (up to a maximum of four), which again is credited to the agent’s account, making it profitable for the agent to upsell clients. Groups of 20 or more are also entitled to a group amenity during their cruise, such as a cocktail party.

Agents also can work with their local director of sales or the sales department on additional co-op opportunities or funding (direct mail, ads, etc.)