The recent IPO registration form filed by Viking with the SEC has shed light on the company’s extensive narrative about its plans in the cruise industry. One particular passage in the 179-page document emphasized the significance of direct bookings in reducing commissions paid to travel agents, thereby enhancing margins. With a marketing database of over 56 million North American households, Viking has expressed its belief that direct bookings will continue to grow and bring value to its business.
The Role of Travel Advisors
While Viking has heavily invested in direct marketing and reported that more than 50% of clients book directly with them, the document also acknowledges the importance of the travel advisor channel. The company recognizes that travel advisors generate a substantial amount of bookings for their cruises and are committed to maintaining and strengthening this distribution channel. However, losing preferred relationships with large travel agency consortia could potentially impact Viking’s business.
Concerns Raised by ASTA President
Zane Kerby, president and CEO of ASTA, expressed concerns about Viking’s focus on growing its direct business at the expense of travel advisors. Kerby cited research from a Phocuswright study indicating that travel advisors currently book about 59% of all cruises in the U.S., with projections suggesting that this percentage will increase to nearly 71% by 2026. He emphasized the importance of embracing U.S.-based travel advisors as the primary distribution channel, given their significant influence in the industry.
In response to Kerby’s concerns, Viking declined to comment but assured him of their commitment to the North American travel advisor market. Kerby, however, remains steadfast in his stance, emphasizing the critical role travel advisors play as the largest and growing distribution channel for cruise companies. He highlighted the potential impact of increased direct bookings on internal costs, such as hiring more staff and paying higher salaries and benefits to handle the influx of direct business.
Windstar Cruises, a growing player in the cruise industry, announced plans to enhance its direct strategy by rebranding its Guest Services department to Vacation Planning. This strategic shift aims to prioritize proactive sales and specialized expertise to craft personalized vacations for Windstar’s diverse customers and travel partners. The move reflects a broader trend in the industry towards embracing direct bookings and enhancing customer experiences.
As the cruise industry evolves, the tension between direct bookings and the role of travel advisors continues to be a point of contention. While direct bookings offer potential cost savings and operational efficiencies for cruise companies, the importance of travel advisors in driving bookings and providing personalized services cannot be overlooked. Finding the right balance between direct bookings and travel advisor partnerships will be crucial for the future success of cruise companies in an increasingly competitive market.