Travel consultants saw a sharp drop in cruise bookings during the pandemic as direct sales soared, but the consultant channel’s dominance is forecast to recover by 2025.
A March bookings report and remarks from cruise managers show that Trip Advisor cruise bookings are rebounding.
Travel agencies’ share of cruise bookings fell to a record low of 52% in 2021, down from 70% in 2019, as direct bookings gained traction, according to the US Cruise Market Report 2022-2026. , published by Phocuswright.
Photo: Phocuswright
But forecasts suggest that concerns over the rise in direct bookings may be relatively short-lived, with the share of travel advisor bookings expected to return to 2019 levels by 2025 and increase to 71% by 2026.
“Cruz was hit so hard and is coming back so strong,” said Michael Colletta, manager of research and innovation at Phocuswright and author of the report. “As these itineraries get longer and more complex, it’s just not really a product that’s very well-suited to booking online.”
The pandemic has led to an increase in direct cruise sales. According to the report, 21% of bookings came from direct sales in 2019, either through call centers (11%) or supplier websites (9%). But by 2022, the share of bookings from call centers had almost doubled, and direct online bookings had risen to a combined share of 35% of gross cruise bookings.
That change came as itineraries during the cruise’s relaunch were shorter and more domestically oriented, making them easier for guests to book directly, Coletta said. Meanwhile, he added, travel agents still operating are dealing with cancellations and applying future cruise credits to rebookings, which is negatively impacting new bookings.
Coletta now sees evidence from the Phocuswright report, which looked at economic indicators, consumer surveys and interviews with industry executives, that the share of bookings will change. (Phocuswright is owned by Northstar Travel Group, which also owns Travel Weekly.)
The cost of direct bookings
The CEO of Carnival Corp. Josh Weinstein said on a first-quarter earnings call last month that several of the company’s brands saw travel agency bookings above 2019 levels. Weinstein and other cruise executives acknowledged the increase in direct sales, but continued to reiterate, that they rely on trade.
Weinstein said on the call that Wave’s booking volumes for the advisor season were “phenomenal” and called the recovery in trade “fantastic.”
“I’m not going to pretend we don’t have direct business. Of course we have. But we will only be successful if all our sales channels are successful. Indeed. And I think trade has done a remarkable job for this industry,” he said in an interview.
This is especially true given how much growth is on the horizon for cruise lines. Coletta said the lines will need help filling berths in the coming years, with 75 ships on order over the next five years.
Wall Street analysts are divided on the value of advisor bookings versus direct bookings.
Truist Securities reported that Carnival Corp. insists that guests are better off talking to one of their cruise line agents to book a $250 cruise than paying an agent a commission to book it, in part because those calls are routed to places with more low prices operating costs like the Philippines.
In contrast, Asiya Georgieva, a longtime cruise analyst and director of Infinity Research, said, “Travel agents are cheaper than call center service.” But she also predicted that the direct booking channel could hold the stronger its position down the line and well beyond 2026, as tech-savvy Generation Z grows into a larger share of cruise customers.
Travel consultants report strong sales
Travel agents say they are confident of their ability to recapture a larger share of gross bookings.
Although Robin Sanchez, president of Montecito Village Travel, instructed her agents to stay in touch with their customers at the start of the pandemic, she said some of those advisors took time off.
“They just got away with it,” Sanchez said. That leaves clients to be hounded by other advisers or work directly with cruise lines, she said.
But she sees a strong recovery in 2023. Her company has recorded $49 million in cruise sales so far this year, compared with $44 million for all of 2019. Her staff is also back at full strength after she hired back all employees and added more than 100 independent contractors since 2020.
Cruise Planners founder and CEO Michelle Fee said business is strong this year and that overall cruise bookings for 2023 are up 25% from all of 2019. She said she’s not worried about the recent increase in direct business to cruise lines.
“There are so many journeys and so many opportunities. Obviously we would like everything to go through the travel agent channel, but for me that has never stopped our business,” she said.