Is rising payroll pressure reshaping cruise recruitment strategies?
The government’s decision to increase National Insurance Contributions and the national living wage has cruise business owners fearing for their profit margins, while recruitment plans for many are having to be put on hold. Cruise Trade News speaks to industry heads to see what waits around the corner
When Labour won the General Election by a landslide last July, it was the result many in the cruise industry were hoping for. After years of scandal and leadership changes during 14 years of Conservative Party rule, business leaders across the cruise and wider travel landscape were looking forward to a period of stability.
A statement released by Not Just Travel co‑founder Steve Witt at the time read: “If there’s one thing that boosts customer confidence it is certainty and stability. We are looking forward to a period of long-term clarity which provides consumers with confidence to move ahead and feel comfortable in spending on their favourite purchases – holidays.”
Nearly a year later, the certainty and stability prime minister Keir Starmer set out to deliver has slipped further from his grasp. His promise to resuscitate the financial health of the country has been stunted by the fact that Britain’s coffers appear to be empty, while in January the British Retail Consortium revealed that confidence in the UK economy was at an all-time low.
In an attempt to turn the country’s fortunes around, the government has announced a controversial policy change that’s set to implicate businesses far beyond the travel industry. In chancellor Rachel Reeves’ Autumn Budget, she announced the rate of employers’ National Insurance Contributions (NIC) will increase from 13.8 per cent to 15 per cent from April 2025.
Furthermore, the threshold at which businesses pay NICs will fall from £9,100 to £5,000, while business rates relief will fall from 75 per cent to 40 per cent. For many agents and cruise travel companies, the increase in NIC will have serious consequences on cash flow and profits.
According to the Centre for Policy Studies, employers’ NICs for minimum wage employees will rise from £1,617 to £2,583, making 2025 the most expensive year on record for employers of minimum wage workers.
Meanwhile, the Office for Budget Responsibility (OBR) estimates that the changes will add 2 per cent to employers’ payroll costs. It forecasts that in the 2025/26 tax year, firms will pass 60 per cent of the higher costs onto workers and consumers, via lower real wages and higher prices, and absorb 40 per cent themselves in lower profits.
This is hardly the outcome Witt had hoped for following the General Election last summer, who admits Not Just Travel directors have had to adjust their business plan for the year ahead as a result.
“Travel is a slim margin business at the best of times, so [the increase in NIC] does eat into [profitability],” he says. “We’re in a fortunate position where the bulk of our workforce are self-employed homeworkers, but we have a big corporate team so it does have an impact. As directors we’ve had conversations around it and we’re thankful we don’t have a bigger workforce, otherwise it would have made a much bigger impact.”
Speaking to Cruise Trade News, Witt says many companies will have to work harder just to hit net zero on their balance sheets. “You might end u working even harder to get the same margins, but at least you haven’t lost any business.”
Meanwhile, James Cole, founder and CEO of Panache Cruises, says he’s approaching the rest of the year with cautious optimism, but admits Reeves’ Budget hasn’t helped. “It’s not going to have any impact on our growth ambitions, but it will have an impact on our profitability as a business,” Cole explains.
“We’re just at the start of our journey, but we’re really pleased with where we’re at. There’s going to be some bumps in the road, there’s no question about it. We’ve just got to stay focused on our vision and missions, which is what we do every single day.”
The reality is that the extra cost of NIC amounts to an extra two to three people that we would have employed but now we can’t.
The very real implications the rise in NIC will have on payroll has left many concerned about the cruise industry’s recruitment targets. “The last thing we want to do is to cut back on our recruitment plans,” says Witt.
“The reality is that the extra cost of NIC amounts to an extra two to three people that we would have employed but now we can’t.”
Conversely, Stefan Shillito, founder of luxury retailer Sovereign Cruise Club, says his recruitment plans haven’t been hit and that he is looking to make several hires before the end of the year.
However, this was only possible thanks to years of forward planning. “Of course, it’s a concern when fixed costs go up for the business, but we do take a long-term view on it,” he says.
“Booking patterns have never gone back to the predictability we had pre-Covid, so we have to set aside a decent budget for recruitment. We often hire via recruitment companies who have pretty substantial fees these days, especially if you want to work with good quality ones, so it’s always important to plan ahead, ensuring we have a sufficient recruitment budget over a three-to-five-year period.”
The wage debate Finding the right talent that aligns with your company culture is challenging at the best of times, but ensuring you have the means to offer a financial package attractive enough to get them through the door in the first place is becoming even trickier.
If you are a company investing high sums in training, including paid time out of the office for fam trips, as we are, then your entry salary can look disappointing.
According to C&M Travel Recruitment, the average salary for a new job in the travel industry rose by 8.4 per cent in 2024 to £37,076, with wages in 2021 amounting to 34.9 per cent less than what they are today.
Meanwhile, the number of travel employees commanding jobs in higher wage brackets has jumped significantly since 2022, with candidates securing roles paying at least £40,000 per year rising by 28.1 per cent in 2024, compared to 17.5 per cent in 2023.
“Travel has never offered the best pay so in order for us to be competitive with other industries, salaries had to rise – and this news should be welcomed across the sector,” says Barbara Kolosinska, managing director, C&M Travel Recruitment.
Owner of Mundy Cruising Edwina Lonsdale says she plans to make four new hires this year despite the rise in NIC and unpredictable market conditions, although she admits that being a London-based company brings its own set of unique challenges.
“London salaries are of course high, as are rents, not to mention commuting costs,” Lonsdale explains. “On the other hand, if your business is based in central London, you have a huge catchment of potential staff.”
A lot of travel companies offer on-target earnings (OTE), which can add further complications, says Lonsdale. “Many businesses operate on a salary-plus-commission basis which enables jobs to be offered with OTE salaries. This can skew market understanding of what salary a travel consultant can command. As a result, starting salaries have been pushed upwards.
“However, if you are a company investing high sums in training, including paid time out of the office for fam trips, as we are, then your entry salary can look disappointing.”
It’s better to have a lower number of team members who are really well paid and very well incentivised than a larger team where that’s not the case.
C&M Travel Recruitment’s research into rising wages in the travel sector tracks with Shillito, who is proud of the fact that Sovereign Cruise Club employees sit in the top percentile when it comes to pay. “Pre-pandemic we were already paying considerably more than the travel agents on the high street,” he says.
“My estimate would be we’re paying 45 per cent more than the average salary rate today. It’s better to have a lower number of team members who are really well paid and very well incentivised than a larger team where that’s not the case.”
Of course, employees themselves could be significantly implicated by policy changes around NIC, too. Companies scaling back their recruitment plans, whether they’re agencies or the cruise lines themselves, means fewer opportunities for those looking to take their careers to the next level.
It could also spell bad news for those currently in employment, with shrinking profit margins increasing the threat of redundancy. Witt says that while the threat of job losses can create uncertainty, it can also be an exciting opportunity for those interested in taking a leap toward entrepreneurship.
“Whenever there’s anything like this, people begin to question what they do,” he concludes. “They want security in their lives but suddenly realise that what was once a safe job is no longer a safe bet, so they’d rather take control of their own destiny.
“There are lots of homeworking agencies out there now, which means there are plenty of opportunities to follow your passion and do what makes you happy, rather than look over your shoulder and wonder if you have a job tomorrow.”
