Four major cruise lines introduce advertised pricing rules
[2/6/2006: LOOKING FOR INFORMATION ABOUT ROYAL CARIBBEAN'S PROJECT GENESIS CRUISE SHIP? CLICK HERE.]
So did you think you can always find the best pricing for cruises online? Not any more!
First Royal Caribbean and Celebrity (which is owned by Royal Caribbean), and now Carnival and Norwegian, have announced new policies that are songs from the same hymn book. All four have announced that any publicly advertised cruise pricing must be the cruise line's officially approved rate, whether on the Internet, newspaper, radio, or anywhere else.
While Carnival and Norwegian will still allow a travel agent, once on the phone with a customer, to rebate some of their commission back to the customer, in effect lowering the cruise's price, Royal Caribbean and Celebrity went a step further to say that rebating itself is forbidden--that all customers must actually pay the company-approved price.
The impact to you, the customer? At least where Norwegian and Carnival are concerned you may be able to get a better price when you call a travel agency, than the price you see advertised online or in your newspaper or from the cruise line itself.
And with Royal Caribbean and Celebrity the situation is mayhem. Travel retailers forbidden from giving back cold, hard, cash are instead offering everything from free merchandise, to free insurance, to free hotel stays, to free champagne, in a quest to gain your business. Plus there are undoubtedly those who rebate behind the back of the cruise lines by mailing consumers a post-cruise check, although these agencies risk being cut off by Royal Caribbean and Celebrity altogether if discovered. One of Royal Caribbean's stated goals was to reduce consumer confusion, whereas more confusion has been the result.
Up until now, big-boy travel agencies earning more lucrative commission rates from these cruise lines advertised better pricing than their smaller competitors, since they could afford to give some of their higher commission back to their customers. Within the travel agency community there has been a lot of animosity toward these "rebaters" under the socialistic logic that the "little guy" and the "big guy" should be on a "level playing field." Although I can see the popular appeal, the last time I checked, this is not the way the real world functions. The irony is that the mega-agencies can afford to build entire departments to manage new value-added programs, like lining up free pre- and post-cruise stays at hotels, that the "little guy" will never be able match.
Frankly the populist angles of the cruise line press releases are a smokescreen. They can't come right out and say so, since travel agents currently sell the vast majority of cruises, but the cruise lines are trying to cut their payments to travel agencies. Which is 100% reasonable, given that these public companies' obligation is to deliver the highest possible return to shareholders. With larger travel agencies earning as much as twice the commission of smaller ones, by moving market share from larger agencies to smaller ones, the cruise lines save a pile of dough. Plus, now the cruise lines' own direct-to-consumer sales departments won't be in the embarrassing position of offering an "official" price on a cruise only to have it undercut by a mega-agency.
Another red herring served up by the cruise lines has been a stated concern that Mrs. Jones and Mrs. Smith, sitting down for dinner on the ship, might compare pricing and discover that the amount they paid was very different for a similar accommodation--due to travel agent rebating.
While Mrs. Jones and Mrs. Smith may well have an experience like this, travel agency kickbacks are unlikely to be the culprit. This is silliness for one big reason. Anybody who's bought an airline ticket is well aware that pricing varies wildly depending on when you bought it. The same holds true for cruise tickets, and in fact cruise line pricing yield management systems--that adjust fares as often as several times daily--had their genesis in that same airline technology. The amount of variance in pricing that a travel agency could introduce is absolutely trivial compared to the fluctuations driven by the cruise lines' own pricing techniques.
It will certainly be fascinating to see how this trend develops!
So did you think you can always find the best pricing for cruises online? Not any more!
First Royal Caribbean and Celebrity (which is owned by Royal Caribbean), and now Carnival and Norwegian, have announced new policies that are songs from the same hymn book. All four have announced that any publicly advertised cruise pricing must be the cruise line's officially approved rate, whether on the Internet, newspaper, radio, or anywhere else.
While Carnival and Norwegian will still allow a travel agent, once on the phone with a customer, to rebate some of their commission back to the customer, in effect lowering the cruise's price, Royal Caribbean and Celebrity went a step further to say that rebating itself is forbidden--that all customers must actually pay the company-approved price.
The impact to you, the customer? At least where Norwegian and Carnival are concerned you may be able to get a better price when you call a travel agency, than the price you see advertised online or in your newspaper or from the cruise line itself.
And with Royal Caribbean and Celebrity the situation is mayhem. Travel retailers forbidden from giving back cold, hard, cash are instead offering everything from free merchandise, to free insurance, to free hotel stays, to free champagne, in a quest to gain your business. Plus there are undoubtedly those who rebate behind the back of the cruise lines by mailing consumers a post-cruise check, although these agencies risk being cut off by Royal Caribbean and Celebrity altogether if discovered. One of Royal Caribbean's stated goals was to reduce consumer confusion, whereas more confusion has been the result.
Up until now, big-boy travel agencies earning more lucrative commission rates from these cruise lines advertised better pricing than their smaller competitors, since they could afford to give some of their higher commission back to their customers. Within the travel agency community there has been a lot of animosity toward these "rebaters" under the socialistic logic that the "little guy" and the "big guy" should be on a "level playing field." Although I can see the popular appeal, the last time I checked, this is not the way the real world functions. The irony is that the mega-agencies can afford to build entire departments to manage new value-added programs, like lining up free pre- and post-cruise stays at hotels, that the "little guy" will never be able match.
Frankly the populist angles of the cruise line press releases are a smokescreen. They can't come right out and say so, since travel agents currently sell the vast majority of cruises, but the cruise lines are trying to cut their payments to travel agencies. Which is 100% reasonable, given that these public companies' obligation is to deliver the highest possible return to shareholders. With larger travel agencies earning as much as twice the commission of smaller ones, by moving market share from larger agencies to smaller ones, the cruise lines save a pile of dough. Plus, now the cruise lines' own direct-to-consumer sales departments won't be in the embarrassing position of offering an "official" price on a cruise only to have it undercut by a mega-agency.
Another red herring served up by the cruise lines has been a stated concern that Mrs. Jones and Mrs. Smith, sitting down for dinner on the ship, might compare pricing and discover that the amount they paid was very different for a similar accommodation--due to travel agent rebating.
While Mrs. Jones and Mrs. Smith may well have an experience like this, travel agency kickbacks are unlikely to be the culprit. This is silliness for one big reason. Anybody who's bought an airline ticket is well aware that pricing varies wildly depending on when you bought it. The same holds true for cruise tickets, and in fact cruise line pricing yield management systems--that adjust fares as often as several times daily--had their genesis in that same airline technology. The amount of variance in pricing that a travel agency could introduce is absolutely trivial compared to the fluctuations driven by the cruise lines' own pricing techniques.
It will certainly be fascinating to see how this trend develops!
Labels: Carnival, Celebrity Cruises, Norwegian Cruise Line, Royal Caribbean
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