Travel advisors assess the demise of NCL's program that waived NCFs

NCL made big news in late 2022, announcing it would eliminate NCFs on sailings booked at least 120 days out.
NCL made big news in late 2022, announcing it would eliminate NCFs on sailings booked at least 120 days out. Photo Credit: Norwegian Cruise Line

Norwegian Cruise Line's 2023 program to eliminate noncommissionable fees in exchange for a major boost in business came at a bad time, leaders at major travel agencies said.

Noting the results from the program fell short of the line's expectations, NCL announced earlier this month it would end the program and revive noncommissionable fees, also known as NCFs, at the end of Q1.

Lamenting the news that the latest effort to eliminate NCFs will not last, leaders of the brand's top-producing agencies said 2023 was such a robust year for business that agents had a difficult time keeping up, let alone selling a disproportionate volume of bookings to prove that the program eliminating NCFs was worth keeping.

"We've been in order-taking mode for a while rather than order-making," said Matthew Eichhorst, president of Expedia Cruises. "Certainly, in this period, our agents have been very, very busy."

Others said that while the no-NCF program will end at NCL, they see the debate about the validity and transparency around NCFs continuing.

John Chernesky, senior vice president of sales for Norwegian, said the program eliminating NCFs helped put more money in advisors' pockets as they recovered from the pandemic. But the program, he said, "was not generating the interest or the focus on NCL that we would have liked, ultimately."

Chernesky said the money used to support the program will be repurposed into other ways to support the trade, such as through marketing or investing in business relationships with agencies.

The line, however, will continue the no-NCF program through Wave season, giving advisors until March 31 to earn commissions on full cruise fares for advance bookings.

NCL made big news in late 2022 when it announced it would eliminate NCFs on sailings booked at least 120 days out. Bookings made further out, the line reasoned, result in higher rebooking rates and higher guest satisfaction scores.

NCL also required advisors to submit a marketing plan for approval to join the program. Ultimately, the line admitted 2,500 agencies.

The no-NCF strategy came with a $20 million price tag, said former Norwegian Cruise Line Holdings CEO Frank Del Rio shortly after the line announced the program. He said he expected travel advisors to bring in enough additional business to offset that cost, calling it a "quid pro quo."

"This is not a freebie," he told travel advisors at Travel Weekly's CruiseWorld conference in late 2022, ahead of the program's 2023 implementation. "We expect something in return, and what we expect in return is more support from you."

NCL's sister brand, Oceania Cruises, quietly launched a similar pilot program to pay commissions on the full cruise fare. However, Oceania's version had no conditions on the types of bookings agents could make to earn full-fare commission. The line eliminated NCFs for the brand's top-performing agencies in April on a six-month trial basis. The line has since continued the program, and leadership does not anticipate making any changes, said Nikki Upshaw, the line's senior vice president of global sales.

"The program continues with the top 50 agencies … and there are revenue growth requirements to stay in the program," she said.

Oceania's incentive to offer the program differed from NCL's. While NCL attempted to set itself apart from other contemporary lines by paying commission on the full cruise fare, Oceania's strategy aligned its compensation with competing upper-premium lines that already pay on the full cruise fare, such as Viking and Explora Journeys.

Debate on cruise fees is not over

Travel advisors said the roaring comeback of the cruise industry last year proved to be a poor time to show Norwegian that the incentive could translate to outsize support for advance bookings.

Ashley Hunter, senior vice president of partnerships at Avoya, said that while she was disappointed NCL ended the program, it makes sense for the line to assess what levers drive bookings in order to get the most from its investment.

She said the brand has also done a lot to raise its pricing over the past year. The line is offering more sailings that stretch beyond seven days, so there is a large commission to be had without the program, she said.
But that doesn't mean the debate about NCFs is over, she said.

"There's going to be a push likely for more transparency as to what is making it into those NCFs and why, but at the end of the day, people are looking for what's actually hitting [their] bank account," she said.

Alex Sharpe, CEO of Signature Travel Network, said the conversation about NCFs won't go away, especially as newer cruise lines, such as Explora Journeys and Virgin Voyages, enter the market without imposing NCFs.
"The notion of NCFs is probably less offensive today when we are all enjoying great pricing strength, but it's our job to continue to be vigilant and call out when lines are increasing them arbitrarily," Sharpe said. "On the hotel side, we call these resort fees."


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