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Monday 22 July 2013

The Cruise Examiner: New ships - Princess rebating commission?

Ponant and Norwegian Each Order A Ship – Other Cruise News – Princess Cruises Policy To Undermine Other Cruise Lines

July 22nd, 2013 by Kevin Griffin
Last week came the news that, on the heels of accepting its new Le Soleal, Marseilles-based Compagnie du Ponant had ordered a fourth 264-berth vessel of its Boreal class from Fincantieri, followed swiftly by the news that Norwegian Cruise Line had ordered a second 4,200-berth vessel of the “Breakaway Plus” class from Meyer Werft. The fourth Ponant sister will cruise in Alaska by summer and in Australia by winter, while the intended employment for the second Breakaway Plus ship has not yet been announced. Meanwhile, after years of efforts by Carnival and Royal Caribbean to stop rebating by travel agents, Princess Cruises has made a rather unusual announcement that it will allow agents to give away as much as 10% of the cruise fare in on board credits in order to capture more business from other lines.
Ponant and Norwegian Each Order A Ship
Last week, French niche operator Compagnie du Ponant ordered a fifth ship for delivery in 2015. The new ship will sail in Alaska in the summer and in Australia and New Zealand during the Austral summer that coincide with the North American winter months.
L’Austral in Fincantieri’s Ancona Shipyard. The delivery ceremony
The ship will be built by Fincantieri in Italy and will join four others owned by Compagnie du Ponant. The new ship will be a sister ship of Le Boreal (2010), L’Austral (2011) and Le Soleal (2013), with a capacity for 264 passengers each.
Compagnie du Ponant’s niche combines luxury and expedition cruising. Last year it carried 20,000 passengers and had revenue of over €85 million, or about $112 million.
Norwegian Cruise Line has also announced plans for another new ship, giving it three on order. The Miami-based company has exercised an option with Meyer Werft of Germany to build a second 4,200-passenger vessel for delivery in spring 2017.
At 163,000 tons, the new ship will be a sister to the “Breakaway Plus” the line recently ordered for delivery in October 2015 and will be about 10% larger than the Norwegian Breakaway and sister ship Norwegian Getaway, under construction at the same shipyard.
Norwegian Breakaway
Norwegian Breakaway
The new ship will cost approximately €700 million. Norwegian currently operates a fleet of twelve cruise ships.
Princess Cruises Policy To Undermine Other Cruise Lines
Despite Carnival Cruise Lines and Royal Caribbean having made a number of efforts in recent years to get agents to hold the line on pricing and rebating, Princess Cruises has made a number of changes to its pricing and sales policies that are supposedly designed to improve partner relations.
Among the changes, agents will be able under certain circumstances to offer inboard credits of up to 10% of the fare, funded by the agency, in order to facilitate a sale.
Princess Cruises
The change to Princess’ advertised price policy amends one of its “value add” promotion options so that agents will no longer have to seek pre-approval from Princess to offer the credit, so long as it is offered on a promotion applicable to an approved fare.
According to the US edition of Travel Weekly, Brian O’Connor, vice president of North American sales for Princess, said the change isn’t intended to promote commission rebating, although that might be one result. He said Princess doesn’t condone rebating but concedes that a formal policy forbidding it is virtually unenforceable.
Being more flexible with inboard credits supposedly will make Princess more competitive, O’Connor said.
Princess is also giving its field sales managers the discretion to offer amenity points to win group business away from competitors, rather than having the decision made by yield managers at Princess headquarters, who often turned down such requests.
Also, Princess will provide itemized details about on inboard credits passengers are to receive in the shipboard folio at the start of a cruise, a change to give passengers more transparency.
This move certainly goes against the grain after many cruise lines trying to retain price integrity and restrain travel agents from rebating from their commission to buy bookings.
(Kevin Griffin is managing director of specialist cruise agency The Cruise People Ltd in London, England. For further information concerning cruises mentioned in this article readers can visit his blog)

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