Banning NCFs and Costco Sales, Viking Ocean Cruises Upends the Status Quo

When you’re a new player in a crowded field, it’s always a good idea to make some waves. And Viking has done just that with two big moves in support of travel agents: it has done away with non-commissionable fares and canceled its contract with Costco.

While the former has been Viking policy for some time in the river cruise market, it is a game-changer as Viking enters the ocean market, where NCFs — the chunk of the fare on which cruise lines pay no commissions — can cut travel agent earnings on a booking by as much as 30 percent. Added to the Costco announcement, which took effect Sept. 1, it does seem to position Viking as the most travel agent-friendly cruise ship company.

Viking Cruises’ new policy prohibits all retailers from offering “cash marketing incentives…to Viking guests/passengers as promotions or incentives to sell Viking products.”

“Cash incentives” includes gift cards, a policy that seems directly aimed at Costco, which commonly offers gift cards and onboard credits to cruise customers. As a result, Viking’s contract with Costco has been canceled. And travel agents are taking notice.

Shaking up the status quo
One might argue that giving up its Costco distribution channel is not a huge step for a supplier in the high-end market; AMA and Avalon, for example, also do not sell river cruises through Costco. But combined with the no-NCF policy, it marks Viking as offering a new model for travel agents selling ocean cruises.

And, indeed, at the Cruise Planners and CruiseOne/Dream Vacations/Cruises Inc. annual conferences in the past couple of weeks, Viking came away as the star of the show.

At the latter conference, Viking’s Director of Trade Sales Robert Huffman, Jr. said the company “walked away from millions of dollars of business. And we need your support to help make that up.”

The 800 agents in attendance seemed ready to do just that. Brad Tolkin, co-CEO and chairman of World Travel Holdings, parent of the three agency groups, said in his presentation that overall in 2017, “non-commissionable fares in the cruise industry are down 0.7 percent as a percentage of the selling price, falling for the third year in a row.

“So we [travel agents] are making more [money per sale]. I don’t like NCFs; I know certain cruise lines, like Viking, do not have them, but I don’t believe they are going away. But I do believe the cruise lines that have them monitor them closely and are paying attention to Viking, because its ocean line is a great product, and we make a great profit selling Viking ocean cruises.”

Travel professionals applaud Viking
Cruise Planners’ Vicky Garcia told TMR that “agents have shown their appreciation” for Viking’s NCF policy as we’ve seen exponential growth in our sales of Viking. With the most recent Costco announcement that Viking made at our convention in Mexico, our agents went crazy with excitement and further committed to more growth for Viking. It speaks volumes to their loyalty and partnership.”

Indeed, Garcia said, “I don’t think Viking will actually lose much at all. I wholeheartedly applaud them. They have our commitment. Hope others follow suit.”

As to Viking’s marketing, she added, “we all should thank them as they’ve brought river cruising to the forefront of consumers’ minds, it brings them in the door. The awareness has helped us all and their policy to turn bookings over to agents has always been fair and equitable.”

Agents appear to agree. Dream Vacations franchisee Isaac Ingram, Jr. told TMR that while he doesn’t sell much Viking, he “applauds the move as a way of strengthening the industry as a whole. In a channel that is “all about customer service, Costco just cannot follow through with the customer service a travel agent can provide post-sale,” he said. “That’s important for every customer, but especially for high-end cruisers, like those who take a river cruise.”

Marc Bokoff, a Cruise Planners agency owner, said, “the lack of NCFs and commission on everything is only a selfish reason to move toward Viking…the quality product and great client experience are the real reason to move clients since they go and come back looking for another! That’s a true win-win!”

CruisePlanners agent Christi McGown said, “Viking has opened the door to working with agents where most might have ignored them in the past. Like me.” But thanks to the “great news for travel agents, I’m literally taking my Viking Specialist training right now. I have a cruise night planned sponsored by Viking and I am doing TV ads in 2018 that will be river-cruise focused (hopefully, in partnership with Viking).”

Dream Vacations franchise owner Myrna Reyes said she “applauds Viking’s decision to remove themselves from Costco. I am hopeful that their decision will not change in the future, similar to Carnival’s decision to leave Costco only to return years later.”

Will the changes go industrywide?
“This is a policy I’d love to see go industry wide,” said Christine Marilyn Bince. “We are in a season of returning to the travel agent and this type of support will strengthen that. As agents, we can state why they need to use an agent, but when the industry starts to say that, too, it makes our claim more valid. Do they still have a way to go — stopping direct marketing, for example —absolutely. But I applaud moves like this and pray it’s only the start.”

Cruise specialist Naomi Kuhns at Cruises Inc. said she “has some river cruise clients that will stay where they have been happy. However, I will reconsider new clients if they fit for Viking. Rob Huffman is a great BDM and a gentleman.”

And Michael Consoli, owner of Cruise Planners – Planmycruise.com, said he is “a HUGE fan of the changes Viking made by their decision to not sell through Costco. Costco’s rebating policy made it difficult to compete, and for Viking, diminished the experience for their guests. I applaud Viking and wish more would follow.”

Regarding NCFs, he noted that Viking has always paid full commission, not just for the cruise price but “on the excursions we book for our clients. No other river cruise line does that. That is huge and would be wonderful if other lines followed. We spend a lot of time helping our clients choose optional excursions and it’s nice that Viking recognizes that.”

In the end though, Consoli said, “my priority is fitting clients and their needs to the right line. I don’t make those decisions based on commission or policy; I make them based on the client’s needs.” But Viking’s “stance on these two issues and their strong commitment and support of the travel agent channel make me proud to work with them every day and tell my clients about them.”