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Cruise Buyers Get the Shaft

Written by: Kuki

 About 2 years ago there was a revolution in the cruise industry and somehow, amazingly to me, it went by almost unnoticed — and certainly as contentious as I thought it should be — uncontested.

Suddenly most of the cruise lines put policies in place that prevented travel agents from advertising prices different than those a consumer could find by booking directly with the cruise line. And indeed, Royal Caribbean and Celebrity cruise lines prohibited travel agents from selling cruises on their ships for anything less than the cruise line itself is charging. The other cruise lines, while forbidding travel agents from advertising reduced rates did allow them to discount the cabin prices to those who contacted the agencies directly -via telephone call, e-mail, or walking into the agency.

The cruise consumer got the shaft!! Let’s roll back the clock just a bit to before these policies were put in place.

Before these policies arose any of us could simply surf the Internet to check for pricing on cruises we were interested in. Those travel agents who were willing to discount a portion of their commissions to aid them in attracting customers, or to keep their customers loyal, were allowed to do so. Not that anyone would, but if they chose to they could sell the cruises at a loss.

To understand that premise, one must realize that the cruise lines pay the travel agents commissions on their sales. That commission comes out of the fare, not as an add on to the cost to the consumer. Many people seem to believe that it costs them extra to use a travel agent, and that is simply a false premise. If that were the case, buying the cruise from the cruise line should be less expensive because the cruise line is not paying a travel agent. Fact is that doesn’t happen.

So, understanding that,… back to the way it “used to be”.

Prior to the placement of what the cruise lines refer to as Flat pricing policies we could very easily price shop, looking for the very best deals we could find on cruises. With the growth in the Internet this led to many large agencies coming to the fore, that became known as discounters. These agencies were willing to work on very small margins (keeping their commissions to a minimum) to build businesses that thrived and grew based on large volumes; simply put make less on each sale, but sell lots and lots of cruises.

There is no question that this put pressure on the more traditional travel agencies who felt because their costs of operation were higher they had to keep their commissions higher to keep their businesses afloat, and to make a profit.

They felt they were not on a “level playing field” with the discounters. Though in my view they certainly were. They were perfectly able to compete with the discounters if they CHOSE to. However, instead they chose to petition the cruise lines to regulate the prices for them, and dictate that their commissions remain in tact.

It’s my opinion that they asked the cruise lines to eliminate competition in their industry by regulating prices. And that regulation has led to customers getting the shaft, by being forced to pay higher prices.

Yes, pricing competition still exists within the cruise industry, between cruise lines trying to appeal to the consumers. However, that same condition existed, and would continue to exist if the flat pricing policies did not exist. What has happened is that consumers are paying upwards of 10% more for their cruises because the flat pricing policies are in place.

Another result of these pricing policies has been the cruise lines getting very heavily into the business of selling cruises themselves directly to the customer. This could be a good thing if the cruise lines were to discount direct bookings by the amount they would normally pay a travel agent. However, that isn’t the case. It doesn’t happen.

Ironically, the very travel agents who petitioned the cruise lines for these regulatory pricing policies, now find the competition for business has expanded. Besides competing against other travel agencies, they are now also competing for business with the cruise lines… which in some ways makes me chuckle. But that chuckle isn’t nearly as satisfying as lower prices for cruises!

There are still some options left for the consumer in some of the cruise lines flat pricing policies. Some, like all the Carnival Corporation companies for example, though forbidding travel agents from advertising lower prices, do still allow them to discount their prices (by reducing their commissions) if the customer contacts them directly.

This means if you contact travel agents directly you should be able to find those who will still discount. The system does require a bit more work on your part, other than surfing web sites, but the savings can be worth the effort, so don’t give up. Don’t simply accept the situation and be another consumer getting the shaft. Be a smart customer bucking systems that are unfair to you, and save yourselves BIG $$$$.

Do you feel you’re getting the shaft with these pricing policies? Or, are you satisfied knowing the price is the same for everyone?

 - A View from the Kuki Side of Cruising -

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Comments

Comment from Paul Motter
Time September 23, 2008 at 9:59 am

Kuki…

Only the uninformed cruisers are getting the shaft – technically, but as you point out, misinformation rules these days, because the travel agencies are NOT ALLOWED to tell you the truth.

But the simple truth is – if you see an advertised price and call the travel agent, as long as it is done in private, they can legally discount the price.

The agencies cannot ADVERTISE lower prices than the cruise lines, nor can they say “Call Us for a Discount!” Why? Because the cruise lines wanted to level the playing field by flat-pricing advertised prices.

But nothing has changed within the agency – just advertising rules have changed. Unfortunately. most people do not realize this.

It PAYS to call the travel agent. By how much varies by cruise line.

Comment from Kuki
Time September 23, 2008 at 10:19 am

Paul…. that’s part of the problem; people need to know they can get better price quotes by ASKING.

Too many people will still simply click on travel agencies web sites to check their prices. They NEED to know that a phone call or private email will get them the ACTUAL lowest price the agency is willing to offer.

Regards,
Kuki

Comment from RayB
Time September 23, 2008 at 10:44 am

several times I have received brochures from cruise lines quoting a price. I have taken this information to an agent and asked their price. Most times the price they quote was less than the cruiseline.

Comment from Mike M
Time September 23, 2008 at 11:12 am

I remember when Renaissance cruises tried to eliminate travel agents from their sales and relied almost exclusively on direct marketing, in-house sales people and a few travel agents. The result was a great product at a reduced fare. Unfortunately they angered the travel agent giants and an organized smear campaign was launched against Renaissance by agents. I remember reading and hearing so many un-truths and out and out lies about the Renaissance product from travel agents that I couldn’t understand why Renaissance didn’t sue. In the end it hurt Renaissance and they adjusted their policies, commissions and included more travel agents into their sales force but they were still too fragile to survive the 9/11 travel depression. I now see that all cruise lines would love to eliminate the travel agent and are silently doing so, via PVP’s and direct booking but still appease the agents in order not to anger that, still powerful, community.

Take care,
Mike

Comment from Paul Motter
Time September 23, 2008 at 2:28 pm

some 90% of bookings still come from agents and I believe Oceania cruises has a NO direct sales policy – agents only! They went the opposite way of Renaissance.

Comment from balabusta
Time September 23, 2008 at 8:29 pm

I believe in the law of supply and demand; with this economy turning downward due to the mortgage and banking crisis, cruiselines just might rethink their policy of a set price. They all want to fill a ship, even if it means that some passangers will pay less than other passangers. It’s the same thing with the airlines; there can be one hundred passangers on the same flight each paying a different price for the flight. This set price policy definitely hurts travel agent’s initiative to book passangers.

Comment from Michelle1959
Time September 24, 2008 at 10:31 am

I will keep this in mind when I book my next cruise. I want to make sure I get the best deal. Everyone SHOULD pay the same price for their travel, but the travel industry just isn’t set up that way. Too many other little businesses that are in business unless regulations cause them to become obsolete.

Before you know it, travel agents and travel websiutes will become obsolete. We will only be able to book directly through the cruise line or airline, etc. and to handle the huge work load they will all outsource their staffing requirements to countries where they make 10% of what American workers make. We’ll be calling and making our reservation with Hareshnipsun in India (who introduces himself to you as “Tom”) to book a cruise.

Because we won’t be able to really understand him (admit it; that Indian dialect is downright painful to listen to!), our plans will all get messed up.

Comment from Tim Peterson
Time October 1, 2008 at 6:54 am

Kuki,

You mentioned that it takes a little more effort to contact several agencies directly and ask for their unadvertised price. You can save yourself a lot of time by using one of the reverse cruise auction websites(probably cannot mention specific names here). You just enter your sailing information once and lots of agents will email you their best quote price. Even if the agents can’t lower the actual cruise price, they usually can offer free on board spending credits, perks, upgrades, car services, paid parking, etc., which can really add up and reduce your total cruise cost.

Tim

Comment from Kuki
Time October 1, 2008 at 8:43 am

Tim,

I agree that the reverse auction sites is a way to get around some of the cruise lines pricing policies, and can be effective.

The CAVEAT to that system is they do not in any way control the travel agencies who participate. The only conditions on travel agencies to participate is that they pay the “auction site”.

So, while there’s no doubt it’s a system worth trying when price shopping, one has to be VERY careful doing due diligence to make certain the agency offerign the lowest price is a legitmate entity, with a solid reputation and history.

Regards,
Kuki

Comment from ralphj
Time October 30, 2011 at 9:08 am

I don’t see that having the TA kick back one or two percent affects the customer’s well-being much, and driving the smaller agents out of business WILL affect the sailing public.
The ads were EXTREMELY misleading–borderline fraudulent–suggesting that the differences were enormous. As to the lines selling direct, if people think that an agent won’t be useful let them buy that way. If you find an agent that works for you, you should reciprocate and book through them…

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