Regent Seven Seas Pulls Back on Commissionable Taxes and Fees
By Theresa Norton Masek
September 14, 2012 5:53 PM
Regent Seven Seas Cruises is changing its commission policy, no longer paying on government fees and taxes of up to $19.50 per passenger, per day, and including a non-commissionable fare of $20 per passenger, per day, effective Oct. 1.
“We have stayed true to our positioning as the most inclusive luxury cruise experience,” Randall Soy, senior vice president-sales for Regent, wrote in a letter to travel agents. “Since adding free unlimited shore excursions and the free luxury hotel program to our suite of inclusions of free air, free premium liquors, no charge for alternative dining and no gratuities, we have created a clearly differentiated product that resonates well with consumers and with the agency community. It has driven greater demand while generating the highest yields in the industry. This approach, while sound business for the long term, adversely impacted our margins in 2012. Nevertheless, we chose to add to our all-inclusive award-winning product over the constant and reckless discounting that we have seen throughout the industry. We believe that participating in aggressive discounting would have diminished the value of our brand and significantly reduced your earnings.”
Soy notes that the subtracting out government fees and taxes from commissionable earnings puts Regent in line with most other cruise lines. The $20-per-day NCF “allows us to continue to provide the most inclusive offering in the industry without arbitrarily making a core component of our offering non-commissionable,” Soy wrote.
The company also is re-categorizing suites beginning with the launch of winter 2013-14 itineraries, changing the number of suites in certain categories. This decision was “based on the degree of demand for certain suite categories and deck locations. The result for you will be more availability in the categories commanding premium rates,” Soy wrote to agents. Also, the air credit allowance was reduced by about $200 per guest for all bookings effective Aug. 20. “This adjustment means more money for your agency as we will be deducting a lesser air allowance from the commissionable cruise fare,” Soy said in the note.
In a statement, Regent Seven Seas said, “As with any company, we routinely make adjustments to our business. When we do so, we look at changes that will benefit our travel partners as well as strengthen our own business model. As a result, the net effect of the changes will increase travel agent commissions from an already industry-leading average of $2,665 per booking. The primary driver of higher commissions include higher yields, already on the books for 2013, and the reduced air credit allowance of approximately $200 per guest. Please note that a reduced air credit means increased commissions for our travel agent partners. At the same time, we did add a $20 NCF per passenger per day, which is ultimately offset by the benefit of the air credit. The net benefit will be higher yields.”
Ruth Turpin, owner of Cruises Etc. in Fort Worth, Texas, said she was disappointed but also worried how clients, who favor Regent’s all-inclusive pricing, would react to seeing the taxes and fees separated out. “My fear is that clients will see this as an additional cost,” she said. “But even though I’m disappointed, I love and respect Regent and really appreciate all they do for travel agents.”