Norwegian joins RCCL and Carnival in UK commission cut

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 24 October 2012 24 October 2012

Norwegian Cruise Line has announced that it will amend its base commission to 10% in the UK market effective from 1 January 2013, whereby it joins Royal Caribbean and Carnival groups that have unveiled a similar move earlier.

 

The move reinforces Norwegian’s commitment to the UK trade, through its Partners First philosophy, as it develops new ways to ensure fairness, greater price parity, less confusion for customers and an increase in the number of agents selling cruise. In addition, Norwegian will reward travel agents with incremental earning opportunities through performance-based incentives.

 

Francis Riley, Vice President and General Manager International for Norwegian Cruise Line said, “By amending our commission rates, we believe this will help bring a stop to the discounting culture that is currently widespread in the UK cruise market. We hear daily from customers about the confusion and uncertainty of what, where and when to book. We believe the revised business model, developed with our trade partners in mind and in discussions with them, is an investment in the future success and earning potential of travel agents.”

 

Riley also added, “Moving to 10% and putting in place policies to police the rebating will help to attract new travel agents to the market who in the past have felt they were unable to compete with the big discounters. One of the cornerstones of driving incremental demand for our product is in building travel agent advocacy and having travel partners excited about selling Norwegian Cruise Line. With our recent announcement of another new ship joining the fleet with an option for a second ship, travel agents are and will continue to remain the lifeblood of Norwegian and I sincerely hope this move will make it fairer and more profitable for travel partners overall.”

 

For 2013, the company will continue to make major investments into joint marketing funds as a further commitment to the travel trade and to further reinforce its commitment to price parity in the market, the company will remove its five percent online discount on www.ncl.co.uk from 1^st January 2013.

 

Russian source market needs indigenous cruise brand to grow – G.P. Wild

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 22 October 2012 22 October 2012

Russia only generates about 50,000 cruise passengers each year, but given increasing affluence of its population, this figure could be much higher in the future provided that the potential be exploited successfully, said Peter Wild of G.P. Wild (International), the UK based consultancy.

In a presentation at the recent Transtech trade show in ST Petersburg, Wild outlined views on how to develop the Russian source market and how to develop cruise industry in the country’s ports with visiting foreign ships in mind.

 Wild said that to develop the domestic source market, operators could charter tonnage to cater for the short season when the country’s own ports could come to use as base for cruises. An indigenous Russian mainstream cruise brand could be developed, this could be done in a joint venture with an international operator and also nice products targeting the Russian market could be developed.

As a source market, Russia only produces about 50,000 cruise passengers per year, which translates to a market penetration of only 0.04%. Assuming that the Russian source market reached the 3.56% penetration level of the US, the highest rate of any major market, the country could generate 5.05 million cruise passengers. In case the penetration rate reached the 2.6% of the UK or 2.1% of Germany, the source market would still produce between 2.87 million and 3.70 million passengers each year.

Although the level of affluence is increasing in Russia, the question is whether Russians are attracted to cruise holidays. It should also be noted that the level of affluence is higher than in Russia on all major source markets for cruises apart from Brazil, which has nevertheless grown by an average of 28% per year from 2004/05 to 693,000 passengers in the2010/11 season. “This clearly suggests that Russia offers a major opportunity for development of cruise tourism in future,” Wild concluded.

Due to their seasonality, Russian ports would play a limited role in the growth of the Russian source market, while St Petersburg and Sochi would be best positioned to capitalize from the growth of a Russian source market. However, fly cruises could be operated from various airports to Istanbul, Dubai, Singapore, Shanghai, Hong Kong and Barbados outside the home country cruise season.

Majority of the 142 million people in Russia live west of a line drawn from St Petesrburg and Omsk, while 74% of the country’s population live in urban communities. The length of Russia’s coastline is 37,653km, but inspite of this fact, the country only has a few ports that are ice free in the winter. Most of the coastline is in the Arctic regions of the country and it cannot be visited by cruise liners.

Consequently, only four of the 29 ports used by foreign ships regularly feature on cruise itineraries – these are St Petersburg, Sochi, Murmansk and Vladivostok. In addition, Novorossiysk and Petropavolvsk-Kamchatsky receive occasional cruise calls. The port of Archangel on the White Sea has a fascinating history that goes back to the medieval times and it receives nine calls this years.

Novorossiysk on the Black Sea could be developed thanks to its proximity to the health resort of Anapa. However, as far as ports in the Far East are concerned, developing the facilitiesat Vladivostok should be an obvious choice ahead of other ports in the region as places like Nakhodka and Vosctochny are not well known outside shipping circles.