Friday, September 10, 2010

Cruise Lines International Pricing Strategies - Protecting Pricing and National Travel Agencies; Not the Consumers!

I wasn't going to write about this subject for a while, but it may just be coincidence...or not...but recently I had some issues with Oceania about booking my non-U.S. clients on the line.  For privacy reasons I will not go into the details or the resolution, but when I read the following announcement today in Travel Trade Gazette, it kind of made my blood boil:

Oceania Cruises is introducing sterling pricing and launching a brochure using pounds for the first time in its history.  Sterling will be in all brochures featuring cruises starting from January 1, including the winter 2011-12 programme, which goes on sale next week. The Miami-based line said the move signified a “new level of commitment from Oceania Cruises to its British guests”.


European sales and marketing director Bernard Carter said: “This is an incredibly big step forward for us and will certainly lead to some of the large travel agencies selling Oceania Cruises for the first time.  “To date, we have sold to our partners in US dollars, and they have had to convert into sterling before selling on.


“This created uncertainty for many agents and customers, and the move to sterling prices will undoubtedly lead to a rise in demand, particularly as we are maintaining our policy of offering fully refundable deposits until the final payment date.”

Oceania said brochures would start arriving in agencies from mid-September.

As many of you know, I have clients who live all over the world (some with more than two countries of residence) and, as such, I have a bit of experience in dealing with different currencies, exchange rates and what I will call questionable pricing and troubling business terms.

In May I wrote a piece titled:  So You Think There is a Better Deal Out There? Think Twice If You Think "Currency".  It discusses some of the pitfalls of looking at currency and exchange rates rather than the overall business terms such as cancellation fees, price guarantees, service, expertise, etc.  I would suggest your read it before continuing here.


Over the past few weeks I have had some "issues" with one cruise line in relation to my dealings with some long time clients living in New Zealand.  While we (the cruise line and I) are working through the problems and issues with some success, the fact remains the first line of misplaced attack (and I use that word purposefully) was that I had no business servicing non-U.S. or Canadian clients.  The issue wasn't that I pressed to find the answer to visa requirements that no travel agent in New Zealand, Australia, England, Scotland or the U.S. could obtain...because the cruise line actually had dropped the ball and, I guess, forgot to address the issue.  No, the issue was that I was an American meddling in an area of the world that I do not live.  (BTW, as a result of the hullabaloo the visa information was found by the cruise line...even for Americans and Canadians.  So I guess it was my doing my job rather than it being my fault for being a "foreigner".  Never did get a thank you from the cruise line; my clients from various countries on the same cruise did, however.)

With the cruise lines spending millions of dollars seeking people from all over the world to sail on their ships to visit yet other parts of the world, the whole concept of protectionist attitude seems counter-intuitive, doesn't it? 

One would think that it would be in the cruise line's interests for the best travel agents to be providing the best service to their passengers so that the passengers receive the best experience before they even board the ship and then board set up for the best cruise experience (rather than, "But my travel agent didn't tell me that...!" or "But I was told by my travel agent that X was included.")

But the fact is that most (not all) cruise lines are terribly protectionist.  They set up rules trying to prevent (or at least limit) international bookings.  They do this for two basic reasons:  They want to manipulate pricing and they want to develop travel agency infrastructure in various countries. The lines may tell you that the reason is actually that selling across currencies is very complicated.  (I guess Oceania has just figured it out!)  It isn't really as the cruise lines do it on the operations side every single day and, alas, international travel agents like myself do it as well.  The reality is that it is about trying to protect pricing and existing powerhouse travel agencies. 

Oceania's announcement, at least to me, is a giant step backwards, not forwards.  It is an antiquated way to isolate markets.  Figuring out your price in US Dollars around the world is simple.  Non-US folks do it all the time (as our economy is relatively enormous compared to almost every other one) as part of their lives.  By changing to using Pounds for UK passengers it sends a signal that Oceania is going to be engaging in pricing games (strategies) including dabbling in the aribitrage of currency markets.  (Remember, Oceania Cruises and Regent Seven Seas - sister companies - use non-US banks, so many passengers wind up with hundreds of dollars of foreign transaction fees that they will reimburse if requested.  Simply put, played correctly, there is a lot of money to be made in working foreign exchange markets!)

I don't want to make this post into one about how some cruise lines try to dump cruises in some markets with the belief that a Brit won't tell a Yank that he got his cruise for a lot less (or visa versa)...or at least he won't do it until it is too late (i.e. onboard).  I have already discussed that.

I am not sure (OK, I really am) why those cruise lines do not allow all travel agencies to offer the special pricing based upon residency if the issue is truly one of only pricing strategies.  I mean many cruise lines have Residency Specials where if you reside in California or New York or wherever you get special pricing and the cruising public is OK with that.  They can see and therefore accept it.  I can sell those cruises with the stated limitations...and all I need do is caution my clients that they need proof of their residency.  Why then should I not be able to do the same thing internationally?  I will get to that...Right Now!

There is a curious situation that unless you have lived and visited there you would probably not be aware of.  Australia and New Zealand are two separate countries, with separate governments, separate visa requirements, etc.  They are not even that close to each other.  And calling an Aussie and Kiwi or visa versa is not a good thing.  The distance from their closest major cities is over 1,300 miles...about the same distance from Florida to Venezuela.  But since geography puts them in the same less populated quadrant of the world I guess they are connected by default.  I can say the same about the U.S./Canada...but not Mexico...coupling, but I don't want to make this political.  But then again, why would I know anything more about the visa requirements of a Canadian (a member of the British Commonwealth) as an Aussie (also a member)?

And I think you are beginning to get my point.  The point is there is no actual, rationale, fact-based logic for the faux groupings and limitations.

Now, that established...it is pretty easy to have clout as a travel agency if you do not have any real competition.  And in the UK and Australia you have only a very limited number of larger travel agencies.  Most of you will have never heard of them...or their business terms...or of their expertise.  Why?  Because it is not to their advantage to let you know about them. They need to have their protections and stay in their corners to keep their business models viable:

- Change fees:  Yes. 
- Cancellation Fees:  Yes.
- Price Guarantees:  None or very limited. 
- Ship Knowledge:  Mostly not so much.

[Note:  Look at the announcement above again.  Do you see where the concept of no cancellation fee by the cruise line - not necessarily the agent - is touted as a progressive policy?  As I have told you, the terms are different...so be careful!]

More importantly: 

- Direct contact with the cruise lines:  Not really

There is a curious set up where there is an intermediary office.  Other than being protectionist, I truly do not understand the utility of, or need for, this sort of arrangement.  It may be regulatory, but that is only a surmise. 

Now what has brought this article on...other than incredible frustration and seemingly needless conflicts when all I want to do, and ultimately do do, is service my international (non-U.S.) clients in the best possible manner?  Believe it or not, it ultimately is not my challenges with the cruise lines or my conflict with at times knowing there may be better fares out there that just are not available to a client. 

It is that there are trade organizations that Goldring Travel should qualify for membership in, but it is not permitted to join.  Why?  Because the purpose of the trade organization is not, as marketed, to provide the consumer with the protections of working with a qualified travel agency, but rather to limit the consumers to local travel agencies which the organization seeks to protect!  Yes, imagine that:  Goldring Travel has sought membership in some trade organizations to provide international clientele with further assurance as to its quality and abilities, but it is barred from membership because it is "Not One of Ours".

Are you, the public better protected?  You now know that you are not...either as to quality of the travel agency's services or business terms or, possibly, pricing.  You are essentially being forced to use a possibly inferior travel agency or have inferior terms just because you live in X.  (To be fair, there are times pricing is better outside the US, but again it is more than price we are concerned about.)

Add that to some of the cruise line pricing schemes of not providing transparent pricing...even though you all wind up on the same ship and talk about pricing (and then some get very upset!). Oceania's change from worldwide consistent pricing in US Dollars is because why?  It makes you wonder.

At least it makes me wonder.

But in the end Goldring Travel gets it, and works in the international markets all the time.  I will make sure you get the best pricing and, as I have done in the past, I will tell you if I know there is a better value out there if you book with a local agency.

What do you think?  Post your thoughts on The Gold Standard Luxury Travel Forum.