Thursday, October 29, 2009

Regent Seven Seas - Combating Cancellations Through Aggressive Penalties

I have always felt that Regent Seven Seas' $200 "administrative fee" to cancel a cruise was an affront. Recently Regent softened its position by allowing the $200 to be applied as a future cruise credit. Now, that is the least of your concerns!

Today Regent announced a new, incredibly aggressive, penalty schedule for those who book and then cancel cruises in 2011 and beyond. More specifically:

Deposits, Final Payments and Cancellations

For cruises of 25 nights or less, a deposit of 15% is due within 7 days to secure the reservation, final payment is due 90 days prior to sailing, and the following cancellation penalties apply:

• More than 120 days prior: $200 per booking administrative fee (Future Cruise Credit applies)
• 91-120 days prior: 15% penalty
• 51-90 days prior: 50% penalty
• 31-50 days prior: 75% penalty
• 0-30 days prior: 100% penalty

For cruises of 26 nights or more, a deposit of 20% is due within 7 days to secure the reservation, final payment is due 150 days prior to sailing, and the following cancellation penalties apply:

• More than 150 days prior: $500 per booking administrative fee (Future Cruise Credit applies)
• 121-150 days prior: 25% penalty
• 91-120 days prior: 50% penalty
• 76-90 days prior: 75% penalty
• 0-75 days prior: 100% penalty

Let's review what this means.

It means that unlike, for example, Seabourn Cruise Line, you are being hit with a penalty as far out as 150 days (five months) prior to sailing! And, folks, we are not talking about World Cruises or World Cruise Segments. Most other lines have a 25% penalty at 90 days, or at 120 days for World Cruises and Segments.

But let's leave, for the moment, the longer cruises and focus on what the vast majority of people book: Cruises of 25 days or less. Regent now hits you for 15% 120 days prior and 50% at 90 days prior versus the mainstream such as Seabourn which has a 25% penalty at 90 days.

The reason for this seems obvious to me. (I have yet not been able to verify it though.) It says to me that all the "record breaking" sales have lead to record breaking cancellations. And those cancellations are happening so close to sailing that Regent doesn't have enough time to effectively market the newly available suites to the public. By making the penalties further out and painfully steep, it does two things: Causes those that want to cancel to do it earlier and those that might be willing to take a smaller penalty hit of a late decision to take the cruise because of the larger penalty.

While I cannot fault Regent for implementing the new policy (for, as I explained, it seems to be necessary). What I can do is wonder why Regent has become so attractive to a market segment that appears to be so fickle.

Personally, the steep penalties (and the administrative fees) make it clear to me that rather than a travel agent pushing a Regent cruise as the best option, one might need to first look into the personalities of the clients to be sure that administrative fees and penalties don't become the subject of the conversations ending the agent/client relationship. In other words, the policy might make travel agents and clients to hesitate a bit more before booking a Regent cruise.