Virgin Voyages will introduce a starkly different compensation system for travel agents that it contends will result in more overall agent earnings, even as it holds the base commission rate to 10% for everyone.
The line’s Epic Sea Change will give agents a much larger pool of commissionable revenue to earn from by paying commission on line items such as the so-called NCFs (noncommisionable fares), even while shunning the traditional incremental tiers that move agents from 10% to 16% commission rates for producing more sales.
Virgin will begin Caribbean sailings in early 2020.
“In our case 10 is greater than 16,” said Stacy Shaw, vice president of sales and business development at Virgin Voyages. “Because we pay on everything, because we don’t have NCFs, because we have a premium price point that includes more, [agents] are being paid for more things. What we really focused on is total dollars.”
Shaw said the structure was based on extensive research and dialogue with travel sellers. The research uncovered the desire for simplicity and flexibility and the unpopularity of NCFs.
Virgin will join Viking Ocean Cruises as an outlier in the industry. Cruise lines generally deduct 10% to 15% of the overall agent sale as an NCF, which can represent taxes, port charges and other costs that the cruise line deems to be outside the base fare of the cruise.
But Virgin will go beyond dropping NCFs. It will also pay a 10% commission on air and pre- and post-hotel bookings as well as prebooked spa treatments, shore excursions, beverage packages, travel insurance and even taxes and fees.
“One of our guiding principles is keep it simple,” Shaw said. “We want [agents] to be able to look at the bottom line and know what they’ve earned without having to remove or deduct.”
Agents selling Virgin will even be able to earn commission on presold onboard spending credits called Sailor Loot. For example, $500 in Sailor Loot included in a sale would yield $50 to the agent, bringing onboard spending into the commission mix.
Virgin will also fold gratuities into the fare rather than breaking them out as a separate, noncommissionable item.
And Virgin promises “premium pricing” that will raise agent income. Fares should be available when bookings open Feb. 14.
Virgin will have an override system in which agencies can earn 2%, 4% or 6% in Red Hot Bonus payments at year’s end for breaching the $1 million, $5 million or $10 million revenue levels. Achieving the levels will be based on the total revenue from all products, but the percentage paid will be calculated only on ticket revenue, which typically would be 70% to 90% of total revenue.
Equally important, Shaw said the overrides will be completely transparent and open to everyone. “We don’t have agreements. We don’t have back-end deals,” she said.
Shaw said Virgin will soon post charts on its agent portal with comparisons showing how agents can make more selling Virgin than selling other brands.
“While the debate is often about this percent versus that one, the underlying issue travel professionals have is not being compensated for their hard work on the entire sale. With Virgin Voyages, you will be,” Shaw said. “We’re already paying something equal to what they’re earning at the highest production level. You don’t have to work your way through the tiers, you’re already making it on day one no matter who you are.”
Virgin said it will have a flexible policy for deposits, penalties and change fees. Cabins can be held for 24 hours with no deposits, after which a 20% deposit is due. Guests will have seven days to back out for any reason. After that, the deposit is nonrefundable, but changes can be made to the voyages up to 45 days prior, and name changes can be made up to 48 hours before sailing. Final payment will be due 120 days before sailing.
Shaw said that as a small, startup line, Virgin does not have the luxury of selling the same cruise four or five times, which sometimes happens with cruises sold using refundable deposits, she said.
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