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Old August 12th, 2004, 07:41 PM
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Default No More Celebrity Discounts

RCI and Celebrity have announced that they will not allow any more rebating at all by anyone anymore for RCI or Celebrity products, - beginning on Monday. This is a huge development, and I don't think enough consumers have really thought it through yet to understand what the ramifications are going to be. I personally don't see how this benefits anyone unless you get a thrill from injecting a little chaos into your life once in awhile. All this policy is going to do is make life more complicated for many people in this industry.

At first, many of the small agents applauded this and thought it would level the playing field. Then they realized the mandate goes beyond just advertising, it says everyone will sell at the same price and cannot offer any incentives of any dollar value. That means they are no longer allowed to offer free transfers, onboard credit, or other such gifts that they used to give their special clients.

The big agencies who regularly rebated but made it up on volume are going to find other ways to "discount" Royal Caribbean by bundling the cruise with "free airfare" or a hotel. They can afford to do this because RCI will be paying them the full commission.

RCI is going to have to pay those huge commissions so they are not making any more money than before. If anything, because they have ended rebating, they will be forced to lower prices to keep their cruises competitive in the marketplace. Why would they want to put themselves in that position?

The consumer is going to be hurt the most - always paying full retail for every RCI or Celebrity cruise - discounts are now a thing of the past.

I am sure RCI's first incentive to do this was the hope that it would lead to more direct booking, because now people who call the cruise line directly won't discover they can get the same cruise cheaper from a travel agent. However, since the discounters are going to find other ways to offer incentives, this "level playing field" RCI may have been hoping for is not going to materialize as quickly as they hoped.

And here is another possible reason why...

When Bob Dickinsen created a similar rule for Carnival Cruise Line cruises (except that their rule begins in January and is restricted only to advertising, discounting is still allowed on the telephone), he said he was doing it because "the agents have created a gray market with Carnival's product, and that isn't fair to his company." OK - true enough.

However, I foresee a possible black market of small agencies being rebaters for RCI. For the first time they have the upper hand because they can give a wink and handshake to their customers and they are small enough that RCI will rarely catch ANY of them in the act. So, in the future if your want a rebate on RCI, you go to your neighborhood agency and show him your driver's license says you live right around the corner. He'll understand you are NOT from the RCI gestapo, and he can offer you pricing power over any other agency.

RCI has said they will crack down vociferiously on such violations, but how can they possibly monitor what happens on the local level between neighbors? As long as the payment to RCI is for the full amount they will have no idea how much gets returned to the buyer in cash. This isn't illegal, it is just like a grocery store offering an "in-store" discount. The worst that can happen is the agent can't sell any more RCI or Celebrity cruises - so what has RCI gained by disenfranchising an agent who was giving them full price for the cruise anyway?

Anyway - these are things I see happening. Correct me if I am wrong.

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