David Dingle has admitted while Carnival UK’s “brutal” commission cuts may have been necessary at the time, not enough was done to understand their impact on the industry.
Speaking at the Clia UK and Ireland Cruise Forum in Tilbury on Thursday, the Carnival UK chairman insisted the move in 2011, which saw commissions slashed from between 10%-15% down to 5%, was vital.
But he admitted that the company could have done more to minimise the impact on the agents who were most affected by it.
Dingle said: “It was done quite brutally, someone had to do it as everyone was getting completely out of control (with travel agents discounting via their commissions); some agents were going to the wall as a result.
“[When we were] setting the commission at 5% we didn’t know if that would be the right commission or not.
“We knew as soon as we did that we would have to take some remedial action.”
Dingle added that the cruise operator could have spoken to more agents before the cut in order to understand their businesses as well as “finding out what might have been the collateral damage”.
And once the cuts were made, Dingle conceded that not enough time was spent working on rebuilding relationships with agents.
However, following the move two years ago to raise commission levels to 7.5%, he believes the company, and the industry, are both in a much better place.
Dingle said: “We’re at a sensible point now and if you have some more rewards that’s a bonus.”
Looking ahead, Dingle predicted small amounts of consolidation for 2016 and urged those present at the event to focus on growth through price as opposed to volume.
He added: “Segmentation is vital with this. If you want to grow price and you need to grow price and you want to keep your business growing, then you need to think very hard about that.”
Dingle argued that segmentation is becoming increasingly prevalent in the industry as brands better understand their strengths and pursue them further.
He added agents must now put together their own portfolio of preferred cruise companies and get to know them intimately, in order to best meet their customers’ needs.
Dingle said: “If you fit the customer correctly to the brand you will have a customer for life, not just for the cruise company but for the travel agent as well.”
He said there were no further plans to build another ship following the success of P&O’s Britannia launch this year, adding that most ship yards are booked up for the next five years.
Dingle also said there were no current plans for the company to move into river cruising, adding: “There are a number of cruise companies that are better at it than we might necessarily be. There are so many operators across the world we can’t do everything.”