Tuesday, June 5, 2012

Cruise Lines: Rebating - Stop Pointing Fingers and Really Clean Up the Problem You Created

Preface:  Goldring Travel maintains an excellent relationship with all of the cruise lines.  This article is not in response to anything directed at Goldring Travel, but simply has been bothering me since the May announcement by Oceania and Regent Seven Seas Cruise Lines restricting travel agencies...and some of the articles I have since read.


Some of you may recall the downfall of Renaissance Cruise Lines - whose ships now sail for Oceania, Azamara Club and Princess cruise lines.  The problem was, in large part, that Frank Del Rio (now head of Prestige Cruise Holdings which owns Regent Seven Seas and Oceania cruise lines) decided that it was such a good product that it could cut out the travel agents and only sell directly to the cruise customer.  Renaissance went bankrupt.

Now, with cruise line sales soft in many markets and profits for lines such as Regent Seven Seas being dismal at best, Oceania and Regent Seven Seas announced that it was not only forbidding discounting, it was limiting the amount of added value that travel agents can provide to their cruise clients.  To be fair, they are following other cruise lines that prohibit direct discounting such as Crystal and Silversea, but Mr. Del Rio has taken the restrictions to a new level with tough, anti-competitive restrictions on transferring bookings and more.

So why am I writing about this?  Because I am really getting tired of some of the cruise lines talking out of both sides of their mouths. 

First - and foremost - my biggest pet peeve with my industry is the fact that cruise lines advertise discounts that simply are not discounts.  Pick up any catalogue and you will see Early Booking Savings or something similar printed right in it offering you upwards of 30% or more off the price that will never...and I mean never...be used to sell a cruise.  In the retail world that would be illegal because it is just outright deceptive; you must offer an item for sale at full retail price before advertising a discount.

Now, with the cruise lines engaging in what is considered a deceptive practice in most other venues, it exploits...and trains...the cruise customer to seek a further discount.  And if someone is looking for a 30% discount, why wouldn't they see if they could get a 35% discount.  I mean that isn't wrong, is it? 

And, of course, the cruise lines make it worse when they run sales giving yet further discounts and trumpet such things as "Up to 75% Off!"  I mean, WOW!  Really?  No, not really.  If a cruise is given a price of $5,000 and has an early booking savings of 30%, the actual highest selling price is $3,500.00.  If there is an actual 25% discount on this slow-selling cruise (and, by the way, on some cruises it is already planned that there will be a sale...so is it really a sale?), the discount is not 30% + 25% = 55%, but actually $875.00 in price reductions; rather than $875 being the price of the cruise.  Not bad, but not a huge discount.

And then there is the horrific practice of offering different pricing in different countries.  It is possible that a cruise may cost thousands of dollars more if you book in Country A versus Country B and, further, there may be restrictions that are totally different between those countries. So how do some of the cruise lines get away with this?  They prevent travel agents in Country A to sell cruises to people in Country B.  (Sort of a "hide the ball" tactic.)

So why am I going through this?  Because the cruise lines created a "Discount, Find the Best Deal, Shop the Price.  Change the Rules" mentality and want to penalize the cruise consumer and high quality travel agents for the chaos and deceptive practices they have created and nurtured.

Some of the cruise lines are trying to make a false analogy between airline tickets (where commissions...albeit small...have been eliminated) and cruises.  The airlines never promoted discounts or trained its customers to wait for sales like the cruise lines have.  And there is a big difference between the service a client needs for a ticket to Barcelona versus a trip starting in Barcelona and visiting four countries over two weeks...which probably includes an uncommissioned airline ticket as well.  Heck, I tell my clients that if they want to book their own air go right ahead and don't feel guilty about it.  (Of course I am there if they want me to book it, though.)

This is where the travel agent comes in.  If you do not believe your travel agent is of value to you, then you have a bad travel agent or book directly with the cruise line.  Both are BIG MISTAKES!  You wait on hold, get half the information you actually desire, and spend a lot of time dealing with things that would otherwise be swiftly dealt with by a true professional while you go about your daily business...and you have a resource for other questions.  (Go ahead and ask a cruise line reservation agent for real hotel options, great restaurants, what to see in a particular port, private guides for less than a mortgage payment, options between cruises and cruise lines, etc., etc., etc.  As Clint Eastwood said, "Go ahead.  Make my day!")

So what does this have to do with restricting rebating and discounting to the cruise client?  It is simple:  Just as there are car dealers that will do anything to make a sale and are not concerned about whether you ever buy another car from them, there are travel agencies that engage in the same business practices:  Cut rate pricing, feeding off the hard work of the travel agent before them that did all the research (test drives, model comparisons, etc.) and such.  And then the customer says, "I thought the car (cruise) came with a spare tire.  That was an extra cost? I am stuck here with a flat tire.  Now what?!"  The response:  "Hey Lady.  That's your problem."

Have I complained to the cruise lines about sleazy tactics by certain travel agencies?  Yes...And the cruise lines say little more than "We are aware of the problem." and the problem continues.

Have I been angered by working for many hours cleaning up other travel agencies' mistakes only to wind up on a bidding war with a third agency who did nothing to service the client and just wants to steal the business?  Yes!  (And I have fired clients that engage in the aforesaid practice?  You bet I have, but fortunately they have been far and few between.)

But do I want to give my clients the best value to go along with the best service?  Absolutely.  And I do not need a cruise line to tell me to follow rules created out of its own bad and deceptive practices and which have perverted the market. My suggestion is to clean up your own house first, then actually deal with the sleazy agencies (you know who they are) and then, if necessary (and it won't be), block my ability to provide more value to my clients.  [Personally, I would rather pour a portion of my profits back into my clients and earn future business and referrals from them than take out full page color ads that the cruise lines (ironically) will help me pay for...and which generate less business.  But that's me.]

And, by the way, Mr. Del Rio please explain why it is I am not prevented from cleaning up the mess created by either a cruise line's own reservations department or another travel agency?  I thought the idea was to make the customer satisfied and to create long term healthy relationships.  And we both know that I can and will do a lot more than any reservation's agent.  That is my job...and, to be sure, it really isn't theirs.

BTW, this is another in a series of articles I have written, and will continue to write, as some of the cruise lines seek to limit the ability of travel agents like the airlines did...and as did Renaissance Cruises.