Two prominent Canadian travel advisor groups are none too happy with Viking today.
In a recent filing to the U.S. Securities and Exchange Commission (SEC) requesting an initial public offering, Viking Holdings said it wants to go public. What alarmed agents is that Viking chairman Torstein Hagen said in his request to the SEC that the company wants to boost the company’s bottom line by getting more direct bookings and paying fewer commissions to agents.
“Direct bookings reduce commissions paid to travel agents, which reduces our distribution costs and improves our margins,” Viking said in its IPO filing.
Hagen went on to say that Viking greatly values travel advisors. But that wasn’t enough for ACTA president Wendy Paradis, who said she’s “disappointed” in the Viking chair’s comment.
“While we acknowledge Viking's recognition of the substantial contribution travel agencies and travel advisors make to their bookings and their commitment to maintaining and strengthening this distribution channel, we cannot ignore their statement regarding direct bookings and commission,” she said in an email to Open Jaw. “We are disappointed by this statement and believe it undermines the value provided by travel agencies and travel advisors. Fair compensation for the services provided by travel agencies and travel advisors is crucial to maintaining a healthy and thriving travel industry.
“Travel agencies and travel advisors play a vital role in the retail travel value chain, providing not only personalized service, expertise, and guidance to travellers but also significant value to suppliers like cruise lines,” Paradis said. “Travel advisors invest countless hours in training, product knowledge, and building relationships with clients, all of which contribute to the success of suppliers by driving bookings, providing valuable feedback, and promoting brand loyalty.
“The relationship between cruise lines and travel agencies and travel advisors is mutually beneficial and essential for the long-term success of both parties” she continued. “Travel advisors offer invaluable support to cruise lines by promoting their products, providing expert advice to clients, and ensuring a seamless booking experience. In turn, cruise lines benefit from the trust and loyalty that travel advisors foster with their clients, leading to increased bookings and revenue.
“We strongly believe that maintaining a strong partnership between cruise lines and travel agencies and travel advisors is crucial for the continued growth and success of the industry,” Paradis said. “We will closely monitor developments related to Viking's IPO and any potential impact on our membership, and we will continue to champion the value and importance of travel agencies and travel advisors.”
ACITA co-founder Brenda Slater said she’s not sure Viking is doing the right thing, and wonders if agents should consider a move to stop selling the product.
“They are hardly the first supplier to chase direct bookings, as this is an ongoing trend,” she told Open Jaw. “But I do question the wisdom in being so outright about it. Direct marketing to clients is a huge (and very annoying) issue in our industry. To me it seems they are getting more and more assertive about in their attempts to bypass advisors, which essentially raises red flags for us in recommending their products.
“My question is why? Have they really studied the cost associated with this practice?”
Slater said asking for more direct bookings could increase the number of calls to Viking, thus requiring the hiring of more staff. And that means more office space, more equipment, more salaries to pay, and more training to conduct.
“Are they really prepared for this? Or is this another supplier we should consider adding to our ‘stop sell’ lists?”
In its IPO filing to U.S. authorities, Viking Holdings said travel agencies “generate a substantial amount of bookings for our cruises,” TTG Media in the UK reports.
“We are committed to maintaining and strengthening this distribution channel,” the company said in its IPO statement. “We have preferred relationships with large travel agent consortia, and we employ sales managers in key markets to maximise awareness of our products within the travel agent community.”
In addition to helping Viking improve its financial picture, Hagen said 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.”
Looking toward the future, we believe there are a number of opportunities for growing Viking,” he said. “We have 24 new ships on order, with options for 12 more. We have also started to enter new markets, such as China and elsewhere in Asia, where we see significant growth potential over the long term.
Viking said in its IPO statement that it’s exploring “other products, such as safaris and land tours, that would allow our guests to explore more of the world in Viking comfort. Experiences that appeal to our guests’ interests can complement our cruise offerings and would continue to cover ‘white spots’ that still exist on the world map.
“We view Viking as the premier provider of travel experiences for thinking people aged 55 and over.”
