Viking Cruises caused a stir among travel agencies when, on April 5, it publicly filed a registration statement on Form F-1 with the U.S. Securities and Exchange Commission (SEC) relating to a proposed initial public offering of its ordinary shares. Of note, Torstein Hagen, founder, chairman and CEO of Viking, spoke in a letter to prospective shareholders that the line relies on direct marketing to drive the majority of its bookings. “With significant investments in marketing across various channels and the ability for customers to book directly with Viking, we have the ability to generate demand rather than wait for third parties to do so for us,” he said.
For 2023, more than 50 percent of Viking’s guests booked directly, according to the F-1 form, which “reduce[s] commissions paid to travel agents, which reduces our distribution costs and improves our margins.” Viking continued: “Direct bookings also provide an additional opportunity for direct contact with our guests, allowing us to build stronger brand awareness and deliver a more personalized experience for our guests. With a marketing database that includes more than 56 million North American households, we believe our direct bookings will continue to grow and add value to our business.”
Zane Kerby, president and CEO of the American Society of Travel Advisors (ASTA), came to the defense of travel advisors in response to Viking’s plan to grow direct sales.
"Viking wouldn’t be the first company to try and have their cake and eat it too when it comes to guidance regarding their stock price,” he said. “Travel advisors book nearly 59 percent of all cruises in the U.S. By 2026 they'll be selling nearly 71 percent of all cruises. And, unlike the U.S. domestic airline industry, there is lots of competition in the river cruise market, with a dozen or more fantastic options. Viking would be wise to embrace the U.S.-based travel advisor as their primary distribution channel, because, quite frankly, they are."
That said, Viking also noted in its filing that “we rely on travel agencies to generate a material portion of our sales. We have preferred relationships with large travel agent consortia and these relationships are important to our business. However, these relationships are at will and no assurances can be made that we will be able to maintain these relationships … We believe we offer competitive commissions and other incentives for selling our cruises.”
The company continued: “Travel agencies generate a substantial amount of bookings for our cruises, and we are committed to maintaining and strengthening this distribution channel. We have preferred relationships with large travel agent consortia, and we employ sales managers in key markets to maximize awareness of our products within the travel agent community. We have created a portal on our website that is dedicated to providing support for the local travel agency community and which offers travel agents access to our sales and marketing tools and resources.”
It was these statements that Michael Consoli, a travel advisor with Cruise Planners and Viking Cruises’ Global Top Producer nine years running, focused on.
“Most of my business is focused on selling luxury and river and Viking is a big part of that,” he said. “But if agents think most of the other lines we book aren’t trying to increase profits by building direct sales, they are deceiving themselves. We see that across the board. I have always found Viking to be committed to the travel advisor channel and the support we receive from their sales team has always been amazing.”
He added that he judges a line’s dedication to advisors “based on the support they provide to me and to my guests, especially when a problem arises,” adding, “When there is an issue, it seems like Viking—as do many of our valued partners—tries to do the right thing for the client. They have always been committed to working with us to make that happen.”
Consoli also noted that Viking pays one of the highest commission levels in the industry and “they pay us on 100 percent of the sale—air, excursions, the whole package. They also have a very liberal takeover policy—60 days, instead of 14 or 30 like other lines. These are all indicators that they think the travel advisor channel is important to them and the growth of their business.”
That said, he added, “Do I blame them for wanting to grow the direct sales portion? Not as long as they continue to show us the support they have always shown in problem resolution, guest satisfaction and loyalty. It’s my job to show the guest the importance of working with an agent and the value I can provide—and that has always worked for me.”
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