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Are Cruise Travel Agents Justified in Charging Service Fees?

Written by: Kuki

Traditionally Travel Agent’s earnings have been based on commissions paid by cruise lines as compensation for selling their product; cruises. Of late more agencies are adding an additional fee paid for by the purchaser; asking the purchaser to supplement their commissionable earnings with a “service fee”. The question now arises — Is the “service fee” justifiable?

I have always advocated for, and encouraged readers at CruiseMates to use the services of a Cruise Travel Agent. It’s always been my view that services of an experienced Cruise Travel Agent were in the best interests of those seeking to book a cruise. Indeed I have argued that booking cruises directly with the cruise lines was akin to the foolishness of representing yourself in court. I advised that a travel agent should not only save you money (versus purchasing from the cruise line), but also, in the event of a problem, a travel agent would be your advocate in seeking a resolution of that problem with the cruise line, rather than having to expect a cruise line employee, who booked your cruise, go to bat for you with their employer.

A recent thread on our Message Boards has opened the doors on the discussion of additional service fees now being charged by some travel agents, and several travel agents have joined the conversation, raising some interesting points, and I believe making it worthy of a further look, and further discussion on this topic.

Aside from being an advocate of using a Cruise Travel Agent, I have also steadily advised people to price shop. While making that recommendation I have also stated that you’re not always going to find the lowest price available, and in some cases finding that lowest price possible, you may end up sacrificing some service. So… admittedly there is a tricky balance.

Over the years I’ve had agents tell me they charge more because they provide “better service”. Comments like that have always “stuck in my craw”, because I believed and have encountered travel agents who do both; provide excellent pricing and superb service.

It’s not that I don’t believe a travel agent should be reasonably compensated for their work. However, I also believe travel agents accept and even pursue their careers with full knowledge that they are commissioned positions, and must be willing to compete within their industry.

Unfortunately there are indeed many stories of encounters with difficult customers, and situations where a travel agents services are abused by potential customers, who avail themselves of the knowledge and experience of a travel agent, and then book elsewhere to save a few dollars. And while I sympathize with the travel agents in those situations, I think most of us during the course of our careers, whatever they might be, have experienced similar situations with difficult customers whom we have felt similarly have “used” our expertise, and yet not used our services.

There seems to be two tact’s taken with the strategy of charging additional service fees.

- 1 – To charge a service fee, and then, if the customer completes the purchase of the cruise from that agency, the service fee is credited back to, and subtracted from the total purchase price.

-2 – To charge a service fee over and above the cost of the cost of the cruise, regardless of the situation.

#1 might seem like a reasonable approach, and of the two, it is certainly the least objectionable to me. But in my view there are still questions even with that approach.

- What if someone contacts a travel agent, and takes their time getting answers to questions and taking advantage of their expertise, but then decides against purchasing a cruise at all?

In that scenario the sales person (travel agent) has been unable to “close the deal”. Should they be paid a fee for that?

There’s several ways to look at that. For example, a doctor or dentist is paid a fee for a consultation, yet a real estate agent is not paid anything if they don’t sell the house they’ve been hired to sell. The difference is that one has accepted or pursued a position based on commissions.

In scenario #2 the fee is upfront (if it’s stated directly the moment contact is made) and it is left to the customer to decide immediately whether they see the value of paying the additional charges to consult with the travel agent. The agent or agency is declaring that their expertise is worth the additional costs regardless of if you actually make a purchase. Maybe it is to some. Is it?

In this case I have to wonder at what point the fee comes in. Is a customer asked to pay the fee on first contact, prior to any discussions? If someone shopping for a quote contacts an agency that charges a service fee are they asked for payment even before a quote is offered?

I’ve been told by some people encountered the situation where the first they heard of a service fee was when they received confirmation of their booking, and their credit card has already been charged. Is that right or ethical?

If a person has to cancel a cruise because health, family or even financial reasons unexpectedly rise, are they still held responsible for the fee, even if the cruise line policies allow them to cancel with a full refund of the cruise fare? Or if they have purchased travel insurance, and have to cancel for reasons covered by their insurance policies, does that insurance also cover the agency service fees?

These are all complicated issues, with arguments to made from both customer and business perspectives. But if service fees are becoming more common place I think it would be wise for travel agent organizations like CLIA and IATA to set some acceptable guidelines for their member agencies to operate by… though unfortunately none of these organizations have any power or authority to dictate behavior of their members.

I do understand we all want to be paid for our work, so it’s not an easy or simple topic to discuss, nor agree on what is a fair solution, and equitable to all involved. Perhaps unsympathetically, I take the view that ultimately Cruise Travel Agents and agencies entered into a business where revenues are generated via commissioned earnings. Therefore they have to compete for their business against others, and they have to “close the deal” and make the sale, regardless of how competitive the marketplace is. The bottom line – make the sale, and make the money.

At the same time I am certainly open to discussions to convince me I am wrong. Just don’t tell me that you want me to pay extra because you don’t earn enough from the commissions on the sales you don’t make.

I haven’t even discussed loyalty. I know there are many people who remain loyal to their travel agents even if it means they are paying extra to do so, and that can be considered quite admirable. Though I think loyalty should be a two way street.

Ultimately though I do think that the addition of these new service fees by travel agents will drive many more cruisers to booking directly with the cruise lines. Thus, through their actions they themselves are reducing the size of their own marketplace, and that makes me “kuki” because I always think people are better off if they book through travel agents. And I’ve never considered the business model of charging more, and selling less to be a good one.

I’d be very interested in hearing the opinions from both cruise buyers and sellers on this topic! What do you think?

 

- A View From the Kuki Side of Cruising -

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Comments

Comment from Paul Motter
Time March 3, 2010 at 11:43 am

I am not a travel agent and I am very surprised many have not weighed in here. But I know this….

Being a travel agent has become a hard and thankless job. The ones who have been doing it for years and have a loyal repeat clientele are very lucky that they can make enough money to make their jobs worthwhile, but as a new career I would hardly recommend it.

Here is why – the cruise lines are not only finding new ways to reduce the commission al the time (not paying on air, taking out port fees and other costs of the cruises when figuring out commission) but they are also now in the business of stealing customers from the agents by contacting them directly after the fact and assigning them a “personal cruise planner” they can contact directly at the cruise line. If I were an agent I would find this highly unprofessional. Kuki, you talk about being compensated for “making the sale.” Well, getting a loyal customer is half the job and a benefit of making that first sale. For the cruise line to steal them is not fair.

The cruise lines are the ones making it hard on the cruise agents to their own detriment.

Look at Renaissance – a cruise line that went backrupt in large part because they tried to go around cruise agents and build a huge direct booking business.

Now – look at Oceania – the cruise line born out of the ashes of Renaissance. Oceania is one of the most agent-loyal cruise lines out there, and they are booked a year in advance.

Why? Because agents still sell 90% of cruises. Vicki Freed left Carnival as EVP sales & marketing when the financial heads took over. She is famous as an agent advocate. She is now at Royal Caribbean.

She started with Carnioval and grew to understand the value of agents to the cruise lines. Agents not only sell cruises – they MARKET them. They serve as the distribution channel as well as the sales channel.

In my opinion – no, cruisers should not have to pay fees to agents, but the agents would not be in that position if the cruise lines were treating them with more respect.

Comment from Fern
Time March 3, 2010 at 5:04 pm

I can only tell you how my Travel Agent does things. She doesn’t like the $25.00 fee , but her agency (the “boss” ) requires that she add it to the price of a cruise. After our first completed booking with her, she’s taken the fee off all of our other bookings at final payment. (I suspect she’s taking it out of her commision.)

As long as they are upfront about it, I don’t have a problem with a TA charging a small fee.

Comment from kuki
Time March 3, 2010 at 11:24 pm

Paul,

We also have to remember that it was the travel agents themselves who lobbied the cruise lines for the flat pricing policies, control pricing… to supposedly create a “level playing field”.

It was short sighted of them to not realize they were adding another competitor to their industry… the cruise lines.

A clear case of “being careful what you ask for”.

The cruise lines love their “travel partners”, and they love them even more when they keep pushing their customers with reasons to book directlywith the cruise lines. Then they don’t have to pay their great “travel partners” any commissions at all.

Comment from Richard
Time March 8, 2010 at 1:34 pm

I am a travel agent and I do not charge a fee. I also do not rebate commission. I work to find the best rate and from there it is what it is. Clients today expect TA’s to rebate . These agents will not survive. They are hurting the entire industry including the cruise lines. Lead generating companies like Tripology and Best Fare Finder are also hurting the industry by telling there clients they should let the agents compete for the best price. This is rebating. The cruise lines would help everyone by not supporting these companies.

Comment from kuki
Time March 9, 2010 at 8:53 am

Richard,

Though I do understand your view, I think you’re wrong, in that there are many agents who do rebate who are doing quite well making a bit less on a each sale, but increasing their volume.

PLUS I think you are dead wrong wishing the cruise lines would be helping agents by policing agents, insisting they toe the price lines. That leads to more and more people booking directly with the cruise line, and that is more of a danger to chasing travel agents from the business than discounters can possibly be.

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