Disney Cruises new NCF model has agents fearing income drop

Travel agents last week expressed resentment and disappointment with the decision by Disney Cruise Line to increase its non-commissionable fare (NCF) structure, saying it would cut into their earning power. But they also said there was little they could do about it.

Several agents who commented about the increase said that the problem was wider than Disney and that the long-term solution would be for the agency community to develop some solidarity in the face of a growing erosion of their earning power.

“They’re really telling the travel agent community, ‘We don’t need you,'” Lisa Ringler, a leisure travel consultant at Departure Travel Management in suburban Detroit, said of Disney.

The cruise line on Aug. 18 changed the way it calculates the portion of fares that it considers noncommissionable from a flat $20 per person per day to a sliding scale. Cruises of six days or less now include an NCF of $25 per person per day, while those of seven to 10 days carry a $30-a-day per-person charge. Cruises of 11 days or longer remain at $20.

The change would boost the NCF on a seven-day cruise from $140 to $210 per person.

Disney said the change brings its NCF structure closer to those of other cruise lines.

“While we certainly realize that this may be disappointing to some agencies, this change aligns us closer to the industry standard,” the company said in a statement.

A Carnival Cruise Lines spokesman, while declining to go into detail, said that its NCFs, too, are based on cruise length.

Disney spokesman Mark Sadowski declined to elaborate on why the NCF rate was increased proportionally more for seven- to 10-day cruises, or why it remained unchanged for even longer voyages.

“We do not have any additional information to share,” Sadowski said.

At the same time that it raised the NCF for cruise sales, Walt Disney Co. also reduced the potential for agents to earn commissions associated with its tour product, Adventures by Disney.

Hotel stays at non-Disney resorts before and after an Adventures by Disney vacation are no longer commissionable. Disney said it was still paying commissions on bookings at Disney hotels for trips related to Southern California, China, England and France itineraries.

In addition, while it will continue to book air travel arrangements for Adventures by Disney, the add-on will no longer be commissionable. Disney said those revisions mirror the policy at Disney Cruise Line.

Several agents said they were making the best of the changes.

“Am I happy about it? No,” said Debra Gordon, an independent contractor with MEI and Mouse Fan Travel in Calverton, N.Y., a Disney specialist. “Is it going to stop me from selling Disney? No.”

Gordon said that agents have learned to adapt to changes by cruise lines, which can happen at a moment’s notice.

“You evolve with the suppliers and make it work,” she said.

As a Disney specialist, Gordon said the loss of commission on non-Disney hotels would affect her Adventures by Disney sales because very few of those trips are near Disney resorts.

“I can book them [hotel stays] independently, but then it’s not a seamless Disney experience,” she said.

Gordon said the increase in NCFs at Disney Cruise Line would not affect her bottom line significantly.

“If it’s going to cost me $1,000 at the end of the year, that’s probably overstating it,” she said.

Pam Forrester, co-owner of The Magic For Less Travel, near Pittsburgh, said the mistake travel agents made was to not oppose NCFs more vigorously when they first cropped up.

“At this point, it’s part of doing business,” she said. “As a travel business, we’re forced to adapt, and things change all the time.”

Forrester said that Disney has more latitude than most cruise lines to raise its NCFs because demand typically exceeds supply.

“Disney is a really unique product,” she said. “And it has such broad appeal that when guests want that, or that’s the best fit for them, we wouldn’t not suggest Disney because of this.”

It also helps that Disney’s fares are typically higher than other cruise lines, so the overall commissions can be higher despite bigger NCFs.

On the other hand, agents whose businesses are not Disney-focused were not as sure they would keep selling the line.

“I serve clients as much as I can, but we have to be profitable,” said Ringler of Departure Travel Management. “Disney has a great product, but can they sell it without us? I guess we’ll find out.”

Michelle Fee, CEO of Cruise Planners of Coral Springs, Fla., said that basing the NCF on the length of a cruise is not new to the industry. NCFs are meant to offset pass-through costs such as port charges and government taxes or fees.

Vance Gulliksen, a spokesman for Carnival, said that NCFs “encompass a variety of costs of doing business” and that the longer the voyage is, the higher the costs.

For competitive reasons, cruise lines do not itemize the costs that are bundled into NCF charges, a fact that has triggered suspicions among travel retailers that routine overhead is included in order to lower the cruise lines’ overall commission costs.

As far back as 2003, ASTA asked cruise lines to detail what charges were included in an NCF, but nothing came of that initiative.

Cruise lines periodically reduce or eliminate NCFs in special promotions. Norwegian Cruise Line once paid 10% commissions on NCFs to agents who doubled their business with the line. Silversea Cruises dropped NCFs a few years ago but has since restored them.

The latest such promotion came in June from Celebrity Cruises, which suspended NCFs for the entire month on 2015 bookings. Dondra Ritzenthaler, senior vice president of sales and trade support at Celebrity, said the promotion got the attention of travel partners and was received positively.

Fee said that promotions like Celebrity’s and Norwegian’s recent debut of a commissionable, all-inclusive amenities package show that some lines “are seeing the value of the travel agent and incentivizing travel agents to want to sell a product or brand.”

Follow Tom Stieghorst on Twitter @tstravelweekly.