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Are Restrictive Pricing Policies The Path To The End of Cruise Travel Agents?

Written by: Kuki

Last week Holland America joined the ranks of some cruise lines implementing a restrictive “flat pricing” policy for travel agents selling their cruises.
 
Travel agents are no longer allowed to advertise or sell cabins on Holland America cruises for less than the cruise line themselves sell them for, without prior consent from the cruise line (like that is ever going to happen). This means that everyone will be selling Holland America cruises for the same price, including Holland America.
I’ve previously written voicing my objections to this practice from a consumer’s perspective. I thought it warranted further discussion now, because this is the first member of the Carnival Corporation brand (the largest cruise line in the world) to make the move to the flat pricing policy. If the remaining Carnival Corporation brands also adopt this sort of pricing policy, the consumer will lose any ability to look for discounts from the prices the cruise lines charge.

When first introduced by Royal Caribbean and Celebrity Cruise Lines they stated that the move was in reaction to requests lobbied for by travel agents. They said the majority of travel agents wanted a “level playing field”, to prevent the large discounting agencies from having a business advantage. In other words, they wanted the cruise lines to regulate the prices of cruises for them, to eliminate any competition between them based on price.

I believe the initiation of these flat-pricing policies has hurt the consumers who want to cruise by establishing set prices. But it was also the beginning of a trend, where the cruise lines vigorously encourage the consumer to bypass the travel agents, and book directly with the cruise lines. Of course, whenever a passenger books directly with the cruise line, the cruise line does not have to pay any travel agent commissions on the booking, and therefore the cruise line makes more profit on the booking.

While cruise lines continue to refer to travel agents as their travel partners, if I was their “partner”, I’d certainly be concerned about my partner trying to cut me out of any deal, and keeping the profit for themselves.

For the time being, certainly the majority of cruises are sold through travel agents. And it seems most travel agents are, for now, happy that the cruise lines are eliminating the competition between themselves, and those that were willing to discount from their commissions in order to make sales. But I believe they have failed to see they’ve created an entirely new competitor in their industry; the cruise lines.

In the case of some lines, they’ve taken the tact that if you visit the cruise lines web site, shortly after, you may actually be called by a sales representative from the cruise line, to follow up on selling you a cruise.

If you’ve booked through a travel agent, and call the cruise line for information regarding your booking, you’re now told that they “can’t” talk to you; that you must discuss it with your travel agent. This certainly strikes me as an attempt by the cruise lines to make the “road to your cruise” bumpier for you if you’ve booked with a travel agent.

The Travel Agent community is large, and as an organization, carries considerable weight within the cruise industry. But it seems to me they’ve been assisting the cruise lines to inevitably put that community out of business. Sure, for now, there will be customers who believe they need to use a travel agent to book their cruise vacations. I do hope I’m wrong, because I’ve always been an advocate for using travel agents, but I can see a path has been layed to drastically reduce the role of travel agents in the selling of cruises.

I hope that path doesn’t become a super highway, rolling right past the structures the travel agents used to occupy.

Your thoughts? Would you prefer that every cruise you can buy be the same price no matter where you book?

Travel agents – Do you see this coming? If not, can you explain why you think these types of pricing policies are a good idea?

- A View From the Kuki Side of Cruising -

 

 

 

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Comments

Comment from Beenie Weenie
Time April 7, 2010 at 7:49 am

It would certainly not deter me from continuing to business with my TA. The direct sales staff of each cruise line works for the cruise line, not for me. My TA represents me and has my best interest in mind if she wants to continue to earn my business. I fail to understand why Cruise lines care if my TA discounts part of their commission back to me or not. The fact is that the better the deals I get, the more frequently I cruise. I am sold on the value of my TA as opposed to dealing with the often misinformed, sometimes unprofessional, often changing people employed by the cruise lines.

The days I call or email my Travel Agent, I get to speak to the same person each time and the experience is consistently excellent. There isn’t one compelling incentive for me to do business with the cruise lines directly.

Comment from Mike M
Time April 7, 2010 at 8:04 am

Kuki,

You know that I always advocate using an agent over the cruise line but I can see where it could make it easier for the consumer to have single source booking. Remember, I did say “easier” not better.

I think this ease of booking is why many people get so excited that their “PVP” or the “Cruise Counselor” at Royal Carribean got them such a great deal. They really don’t know what they’re missing or who will be in your corner when something really goes wrong. Anyone can sell you a cruise, for a fixed price, and give you information. I don’t blame the cruise lines for trying to be “anyone”.

I do think your statement is somewhat slanted:

“If you’ve booked through a travel agent, and call the cruise line for information regarding your booking, you’re now told that they “can’t” talk to you; that you must discuss it with your travel agent. This certainly strikes me as an attempt by the cruise lines to make the “road to your cruise” bumpier for you if you’ve booked with a travel agent.”

This practice has been going on for as long as I’ve been cruising. (ten years) If you booked through an agent or agency only they could talk to the cruise line regarding your reservation. It isn’t a new roadblock the cruise lines have thrown into the frey to better their position.

Otherwise: I think this restrictive pricing will cause a lot of agents to go out of business and the number of agents who charge extra for their service will increase. In the end I think the cruise lines have the product and they will win win no matter who takes the bookings.

Take care,
Mike

Comment from Kuki
Time April 7, 2010 at 8:57 am

Mike… I remember in the ’90s travel agents essentially put Renaissance Cruise Line out of business by refusing to sell them, because they were accepting direct bookings.

For the longest time the cruise lines had little or no prescence on the Net. Their web sites were basic, and they did very little direct booking.

I certainly don’t blame the cruise lines for wanting to increase their share of the profits on sales.

It does make me go mmmmmm? when thinking the travel agents wanted this.

Comment from Pootersdad
Time April 7, 2010 at 10:49 am

If “flat pricing” were to become a reality, we would still continue to book through our TA. She has been loyal to us over the years, and we feel we owe her loyalty in return. Also, she has never failed to give us some “goodies”, whether it be in the form of shipboard credits, dinner in a specialty restaurant, bottles of wine, etc. Try and get that from Royal Caribbean or Celebrity (or Orbitz, or Travelocity, or, or.)

Comment from RayB
Time April 7, 2010 at 3:56 pm

I agree with all of the above adding this: I will continue to us a TA. When RCCL stopped the TA from cutting the prices of their quote the TA was then able to give Cabin credits. She continues todo this and I will continue to give her the business. I can talk to her and state my problem with the cruise lines and she can be my spokes person.

I love my TA because I can depend on her doing what I ask.

Comment from John B
Time April 8, 2010 at 12:32 pm

Pre-internet booking via a cruiseline’s website, the cruiseline’s thought they wanted everyone to book through them directly. RC and others quickly learned that doing so was not really to their benefit because it raised HR costs as much if not more than it raised revenue by not paying out a commission. Then they started pushing TAs more and more. These same cruiselines actually noted customer approval ratings were lower when a person booked through the cruiseline directly because of issues people have already raised in response to this blog post.

Now, we have wonderful easy to use cruiseline websites. The HR costs for a booking via the website is very very low. Some people that book online never actually talk to a human on the phone. The cost of doing that booking is probably less than one beer aboard a ship. When people call into the cruiseline the costs sky rocket.

CLIA and TAs want a level playing field and many people use a TA because they get wonderful advise, better service, and sometimes a reward for choosing them. I think CLIA and TAs see a day where a cruiseline might want to charge less via their website, and TAs are just hoping that this flat pricing policy stays in place. If people find out they can save $50 or $25 a person by booking via the cruiseline’s website they will do it!

Heck, research shows people book a plane ticket that is $5 cheaper on expedia even though it has a 4.5 hour layover. I would pay the extra $5 and take the 1 hour layover. Cruising and flying are different, and lets hope it stays that way :) Sorry about opening that can of worms.

Another factor has already been mentioned, and that is smaller TAs being undercut by a big TA like cruises.com, AAA, etc. This used to be a huge disadvantage to your local TA, and this flat pricing policy keeps that in check also. Many factors at play here, but I hope this sheds some light on some things that have not been mentioned. Thanks to Kuki and CM for a wonderful website.

Comment from Adrienne
Time April 8, 2010 at 1:53 pm

Kuki, I’m a huge fan of yours. Didn’t you just post this recently regarding people booking directly with the cruise lines: “In my opinion that is the very last thing you should do!! It’s as bad as acting as your own lawyer in court, if not worse. When you are booking directly with a cruise line you are ‘hiring’ someone who already works for the cruise line. If you can’t see the conflict of interest in that then you should be running for public office! An employee of the cruise line just isn’t going to represent my interests over those of the one who signs their checks.”

I think you were spot on with the above observation! I like the idea of the level playing field on price. I can tell people with confidence that they may as well let me handle their booking because I can offer them the same price as contacting the cruise line directly plus advocacy and service with a smile.

Comment from Kuki
Time April 8, 2010 at 3:24 pm

Adrienne,

First… thanks for the compliment.

Yes, I do write fairly often recommending people use travel agents. I think people are foolish not to take advantage of a service they don’t have to pay anything extra for. Particularly when it’s good service :)

I can see where agents might feel comfortable with the “flat pricing”, as you explained, it simplifies your game.

But I do think that’s a bit of a short sighted view.

As we’ve seen from posts on the blog, the experienced cruisers are still loyal to booking with travel agents. But I do have a concern that more and more people are booking directly with the cruise lines, “thinking” they may as well as there is no benefit to using a travel agent.

I think there’s more momentum to that movement than to using travel agents. Especially when we see so many posts on the message boards from people who end up dealing with travel agents who don’t know their cruise business, and make things messy. Those people certainly don’t go looking for an agent for their next cruise. They think to themselves, “that didn’t work”, so they book directly with the cruise line.

Comment from Bobz
Time April 10, 2010 at 1:06 pm

It seems to me the cruise lines used to want customers to go through travel agents to avoid all of the upfront questioning about the cruise/times/prices etc. Travel Agents fulfull a vital role on cruise selection as they can more easily tailor cruises to your interests and travel preferences, and select options from different cruise lines. Our AAA cruise specialist was invaluable in helping us select our room get all of the pricing correct and advise on shore excursions. Most of the cruise specialists have pretty good knowledge of the locales and the cruise lines. I think the cruise lines are shooting themselves in the foot with this tactic.

Comment from Manya
Time April 12, 2010 at 10:33 am

As a travel agent, it has been frustrating for me to have some of the online cruise discounters undercut my pricing only to find out that they are getting the same prices but cutting their commission levels due to their volume.

I admit, this may throw a monkey wrench into advertising group pricing but over all, this is a positive for travel agents.

Comment from Kuki
Time April 12, 2010 at 11:46 am

Manya… so you’d rather lose business to the cruise lines when people book direct, than to compete with other agents?

Comment from John Lewis
Time April 13, 2010 at 10:35 am

I booked a cruise last October for this coming November but although I was given a flight price they could not give me an upgrade price. Come December I asked my TA for an upgrade price. It was astronomical. They agreed so ‘e’ mailed a senior person. The answer came back ‘that was the price’.
I was about to cancel the booking but my TA said wait until the last minute to cancel then they have a much poorer chance of reselling and it still only costs you your deposit.
Later that day I rang the flights department and I got a totally different price and furthermore she said ‘we shall go and book all the flights including connections whilst you are on the phone’.
So perhaps Cruise companies do talk to customers direct. At least they did in my case.
The booking was then confirmed direct to my TA.

Comment from Rob H
Time April 13, 2010 at 3:23 pm

Recntly I tried to book a cruise where the cabins were on hold by a UK Cruise Line. I waas told not book via my North America agent.
Well, the price on the parent company website in NA was higher by $1,000 then the month prior so I rang my TA and their senior person contacted the parent company.
I now have my cruise at the original prior web price and not in UK GBP.
I could not have done this direct to the parent cruise line.

Comment from Consumer Advocate
Time June 17, 2010 at 6:59 pm

why doesn’t the industry sue based on the long standing law named “The Robinson-Patman Act” ?
In Business Law, a mfg can not tell a retailer what price they can (or can’t) re-sell their product. If a retailer wants to sell at a loss, they can…

Comment from sandy
Time September 2, 2010 at 4:29 pm

I have noticed in the last few months, as a group coordinator who works closely with or local travel agent, there does seem to be a trend with one of the most popular “Fun” cruise lines that it is getting harder and harder to get ammenity points so that we are able give our folks the little extras we like to offer as a thank you for booking through us. Also, just last week they upped the deposit amount require even for the group bookings already held for 2011. Thus making us look like the bad guy when we now have to go back and ask for more money to bring it up to the amount required. Will we lose business? Yes, as some of those who have booked with us for the first time will wonder why we did not disclose this at the time they booked. Especially those that booked their group the day before the cruise line implemented this “Full Deposit” policy change which will now require a full $250.00 per person by November Less time to complete a group and more money to hald a room. I can’t see that this will be a good thing for any of us who are handeling new prospective clients.

Comment from Bee
Time November 20, 2010 at 2:28 pm

@Sandy, there is no way I would take the fall for Carnival implementing the policy. I would send all of my group clients a copy of the letter from the cruise line with the policy change so that I don’t look like the bad guy in my clients’ eyes.

As for the “level playing field,” there are some very grey areas in these policies and the cruise lines will make exceptions for their big producers so it is not exactly “level.” That being said, agencies with group space on a sailing have an advantage, at least over the PVPs, since group space usually comes with amenities whereas PVPs, to my knowledge, cannot take out group space.

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