Norwegian Cruise Line will no longer pay travel advisors commission on the entire cruise fare for advanced bookings after the first quarter of 2024.
Last January, NCL did away with the noncommissionable portions of fares (NCFs) for travel advisors who book sailings at least 120 days in advance. Participating agents were enrolled in the program after submitting and earning NCL's approval of their marketing plans.
The decision to end the program will affect the approximately 2,500 agencies that signed up.
On Thursday, NCL senior vice president of sales John Chernesky said eliminating NCFs did not result in a strong enough boost in business to justify continuing to pay advisors more money. When NCL announced it would do away with NCFs on bookings made at least 120 days in advance, the industry was starting to emerge from the pandemic doldrums.
"As we have returned to some semblance of normalcy ... it was time to take those funds that have been used for this program and put them in other places, whether it's marketing or the business relationships that we have with each agency," Chernesky told Travel Weekly.
Chernesky broke the news to agency partners at the line's Presidents Club meeting in New York on Thursday. He said the program will end on March 30, enabling participating advisors to continue to collect larger commissions during Wave season on sailings booked as far out as 2026.
NCFs typically include port fees and other fixed, pass-through charges. They have been a sore spot with the trade. Most cruise lines have NCFs, although some smaller lines do not.
The decision comes as parent company Norwegian Cruise Line Holdings has focused on reducing costs, although Chernesky said the decision to do away with the program did not come from the corporate office.
When NCL announced it would scrap NCFs, the cruise line said advisors would earn close to 40% higher commissions. At the time of the announcement, Frank Del Rio, who was NCLH's CEO at the time and has since retired, hinted there was no guarantee the program would stay in place, but underscored that travel agencies needed to deliver.
"This is a quid pro quo," he told travel advisors at Travel Weekly's CruiseWorld conference. "This is not a freebie. We expect something in return, and what we expect in return is more support from you."
He said at the time the program would cost $20 million.
Last May, premium brand Oceania Cruises (also owned by NCLH) said it launched a trial for eliminating NCFs, and was confident the policy change would stick. However, some of Oceania's competitors don't have NCFs while NCL's competitors do.