Revenue has been growing fast at the world's largest cruise companies. And in some cases, at a faster rate than the commissions those companies pay out.
That's according to a report from Cleveland Research Co., a firm that found that revenue growth is outpacing commissions at Royal Caribbean Group and Viking. The report also found that commission expenses grew faster than revenue at Norwegian Cruise Line Holdings (NCLH), while at revenue and commissions grew at a similar pace at Carnival Corp.
Cleveland analyzed sailed revenue in 2019 and 2024 (estimated) and compared revenue growth to commission expenses.
The firm used cruise company quarterly earnings, where "commissions, transportation and other" is listed as a line item for expenses.
The report is not a perfect reflection of commission payments, said Vince Ciepiel, a senior research analyst and partner at Cleveland Research who authored the report. Some figures reflect more bundling, air prices and growth in private destination revenue compared to 2019, he said. The Big Three cruise lines have all reported record onboard revenue over the past couple of years.
All of that has contributed to commission growth at Royal Caribbean Group "well underpacing revenue growth," Ciepiel reported. Commission expenses have grown 36% since 2019, while revenue grew 51% in that time.
Ciepiel attributed that gulf in part to Royal doing more direct business while also generating more revenue from cruisers visiting its Bahamian private island, Perfect Day at CocoCay.
Royal Caribbean declined to comment on the Cleveland report's findings.
Royal Caribbean Group has made advancements to its websites since the pandemic, helping its direct business. Direct-to-consumer channels are performing "extremely well," CEO Jason Liberty said during the company's Q4 earnings call in late January.
Liberty also said that travel advisors are delivering meaningfully more bookings than last year at higher rates.
At Viking, which sells river and ocean cruises, Ciepiel said the company's revenue growth, 66%, is outpacing commission expense growth of 58% as the line continues to shift toward direct business.
Tor Hagen, Viking's founder and chairman, said last year when the company went public that he expected direct business to grow, although he also said travel advisors are important to its business.
"We pay one of the highest booking commissions in the cruise industry, and Viking was the first cruise line -- and remains the only major cruise line -- with no NCFs," a Viking spokesperson said. NCFs are portions of the cruise fare for which travel advisors don't earn commission. Virgin Voyages also does not have NCFs.
The Cleveland report found that NCLH's commission growth of 73% was "well in excess of revenue growth" of 47%. Ciepiel attributed that to the line bundling air travel with bookings, which NCLH also acknowledged.
"We have been bundling more air (i.e., transportation), and as a result, this line is a higher percentage of our total revenue than it was in 2019," a spokesperson said.
At Carnival Corp., commission growth of 19% is pacing at a similar rate as revenue at 20%, Ciepiel reported.
Direct cruise sales drive gap
One industry analyst who has noted similar data largely attributed the disparity between revenue and commission growth to the increasing popularity of direct sales among all cruise lines since 2019.
"Normally, you'd think that [revenue and commission growth] would go sort of lockstep, but they don't," said Patrick Scholes, a lodging and leisure equity analyst for Truist Securities.
He also pointed to the industry's shift to shorter cruise vacations visiting private destinations as playing a role in these trends. Three- and four-day cruises are simple itineraries and are less daunting for consumers to book on their own than longer sailings to places the customer may not have been to before, he said.
"On a shorter vacation, you're just less likely to need a travel agent," Scholes said.
Truist data shows that disproportionate growth in revenue above commissions hasn't happened at Carnival, which he suspects has to do with Carnival Corp.'s higher European exposure, which lends itself to a higher need for a travel advisor when compared to Americans booking Caribbean cruises.
Cruise lines have also made their consumer-facing websites easier to book through, he added. "They make it so easy that you can do it yourself, so you're cutting out the travel agent a little bit."
Alex Sharpe, CEO of Signature Travel Network, said the data doesn't surprise him, and it doesn't overly concern him, either. Cruise lines are getting better and more sophisticated at direct selling, which pushes the trade to do better, he said.
"The advisor source of the business is indeed significant," Sharpe said, "and generally we are selling premium space better than the brands directly, which is certainly valuable."