Tuesday, June 16, 2009

Regent Seven Seas Tries to Curtail Bargain Hunters (er' um, Sharks)

Regent Seven Seas is not the first cruise line to do it, but it is the most recent (Crystal has a similar program).  Essentially it limits the commission a travel agent can earn on bookings that are transferred to it from another agency. 

The rationale is that if an agency is discounting or rebating a portion of its commission it will be less likely to undercut another agency's "best price" if the amount it will earn in commissions is cut to the lowest levels. I fully understand the rationale, but I strongly disagree with the policy. Let me explain:

If Agency A has worked with the client to find the right cruise, the right category and the right suite, possibly even arranging flights and tours, but then the client decides to shop the package to another travel agency and, with all the work done, Agency B says it can do it for less money (and, obviously, with far less time invested!), the client may do better, but Agency A suffers.

At the same time Regent (or any other line with a similar policy) is concerned about its prices being undercut and, therefore, there is further downward pressure on its prices.  Regent already does not allow direct discounting (though its sister cruise line, Oceania, does).  This means that you must pay the rate quoted by Regent for the cruise...and then receive back as a rebate, onboard credit, etc. any discount provided by the travel agent.  This is a second tier of price protection because the ability to discount is reduced  when the commission level is artificially reduced.  This, obviously, assists in Regent's desire to buoy its pricing and to protect Agency A from possible improprieties by another agency.

So far this all sounds good, right?  Well, in my opinion there is a client that should be able to not only get the best pricing available (but not compromising themselves on the service issue as I wrote earlier this week) and to be protected from errors that Agency A may have made without an penalty.

Just last week I had a client referred to me.  The prospective client had expressed some small concerns over its present agent and was looking to make a change for its future cruises.  Really as nothing more than a courtesy, I offered to just check the pricing on its cruises booked with the other agency.  (The rationale was simple:  If the other agency was overcharging it, my future business would be secured...and for a few hundred dollars I ethically would not even consider taking over the existing bookings.)  What I discovered (without knowing the other agency's pricing) was that the client was being overcharged by almost $4,000...and that was for two categories lower, as upgrades were available.

Now, there were no smoke and mirrors in the $4,000+ price difference, but should I be placed in the position of telling the prospective client that the pricing was not available if it transferred the booking to me?  Should I be the one who runs the interference for the cruise line?  Should I be the one protecting the first agency's inexcusable failures?  Me thinks not.

The client should be able to receive the best pricing and cabin assignments and I should be able to operate my agency the way I always do:  Provide my clients with excellent service and excellent pricing.  And, if I can't do that, that is the cost of doing business.

As some of my clients know, I have actually done some pretty remarkable things...at my cost and loss (at least short term)...to be sure my clients receive the best pricing.

So while I understand Regent's philosophy for the change, I believe it is not in the best interest of the cruising public and, in the end, encourages travel agencies to possibly work a little less to earn a client's business.  However, if the concept is simply focused on trying to force a "no-discount policy" on travel agencies and the consumer, I think it is up to the consumer to express his/her opinion in obvious ways.