"Dear Cruise Club Member,

Royal Caribbean and Celebrity Cruises have just announced that
effective Monday August 16, 2004, they will no longer permit the
discounting of any Royal Caribbean or Celebrity cruise
vacations. Furthermore, any travel agency in North America that
is found to be in violation of this new policy will be severely
penalized!

So far this information has come to us in the form of an
extremely vague press release with very little detailed
explanation. As a result we do not know all the ramifications of
this policy change or how it will affect the way Cruise Club’s
members are rewarded for booking Royal Caribbean or Celebrity
cruises.

More details in this article:
----------------------------------
Cruise lines crack down on discounts, rebates

By EVAN PEREZ
The Associated Press
8/12/04 10:10 AM

The Wall Street Journal

Fearing price wars like those that have battered the major airlines, the cruise industry is cracking down on a widespread practice that has provided thousands of travelers with discounts in the past.

Cruise lines have long paid commissions of up to 18 percent to travel agents who sold their tickets. But in recent years, online travel agencies like Cheapertravel.com and CruiseQuick.com -- eager to capture new business -- have begun passing on a slice of these commissions to consumers in the form of discounts. Now, the cruise industry's two giants, Carnival Cruise Lines, a unit of Carnival Corp., and Royal Caribbean Cruises Ltd., are taking steps to to curb the burgeoning practice.

Starting Monday, Royal Caribbean is threatening to reduce sales commissions of any travel agent that advertises cruises on its Royal Caribbean and Celebrity ships at prices lower than the published rates. Carnival issued a similar warning last week, with its crackdown taking effect Jan. 1.

Carnival and Royal Caribbean, which dominate the $15 billion-a-year cruise industry, say the moves are needed to protect cruise operators from the same kind of helter-skelter price-cutting in airline tickets that has battered the bottom lines of air carriers and undermined passenger loyalty. "The last thing we want to do is commoditize our brands," says Jack Williams, president of Royal Caribbean.

The cruise lines got a taste of what price-cutting can do to their bottom lines during the recent travel-industry downturn, when weak demand meant that travelers could find Caribbean cruises for as little as $40 a day. More recently, online booking emerged as a new threat as Web sites have figured out how to deal with the unique complications of signing up for a cruise online. (Is that cabin on one of the higher decks, or a lower deck -- or down by the engine room?) New specialized online booking services now give travelers more information about cabin locations and pricing options. That's boosting the popularity of booking cruises on sites such as Orbitz.com and Travelocity.com.

Some travel agents and consumer advocates complain that the crackdown amounts to heavy-handed interference by the cruise companies. "What is it Royal Caribbean's business if my travel agent wants to give me a discount?" says Edgar Dworsky, a former Massachusetts assistant attorney general for consumer protection who now runs ConsumerWorld.org, a consumer-resource Web site.

Ray Weiller, an owner of CruiseQuick.com, Fort Lauderdale, Fla., plans to comply with the rules. But he interprets the rules as still allowing the discounts -- as long as he doesn't publicize them on his Web site.

The upshot: Consumers should get in the habit of asking for discounts even if none is listed. For instance, CruiseQuick.com is offering a 10-day cruise to the southern Caribbean, including stops in Colombia, Curacao and Panama, on the Celebrity Cruises Century, for various dates in November and December, at $679 per person, for inside cabin, including port taxes and government fees. Under the new policy the site will advertise the cruise for the $829 list price, though customers still can request the lower price.

Some agencies offer consumers rebates of as much as 15 percent off the published rates. Others can offer even steeper discounts by taking advantage of group discount rates. Luring cruise passengers with lower prices has helped boost volume for some travel agents, although the tradeoff for travelers is the fact that there is often little or no customer service.

While airfares and hotel rooms face nearly constant waves of price-cutting, cruise lines are emboldened by the fact that the industry has largely bounced back from troubles caused by the 2001 terror attacks and the Iraq war. The number of passengers rose 9 percent in the first quarter, compared with a year earlier, according to the Cruise Line International Association, an industry trade organization. Two years ago, and even last year, with cruise-ship cabins going begging, the cruise companies themselves engaged in heavy price discounting.

Cruise companies are acting partly in response to complaints from smaller traditional travel agents, who claim that discounts make it hard for them to compete. Carnival last summer stopped offering large volume discounts to some big agencies after protests from other travel agents. The cruise industry relies on travel agents for more than 90 percent of bookings.

Even some online cruise sellers complain about the rebaters. "Rebating is hurting the distribution channels," says Alex Aliksanyan, chief executive of Icruise.com in New York. "It's a seismic change going on in the industry." Critics of the rebates also say that some discounters add administrative or cancellation fees that can eat up some of the savings.

Craig Pavlus, whose site cheapertravel.com offers discount cruise prices, says he can afford the lower prices by cutting travelers in on at least 10 percent of the cruise-line commission and by booking group rates on ships. He said the new regulation from the cruise lines is "baffling" but he plans to continue selling at lower prices. Shoppers should "pick up the phone and see if there's a lower price," Mr. Pavlus says, noting that he will abide by the new rules.

Mr. Weiller of CruiseQuick, who sold cruises with a traditional travel agency for more than 20 years, openly tells visitors to his no-frills Web site that his agency offers little hand-holding for novices; there's not even a phone number on the site. Customers ask for price quotes by e-mail. In exchange for accepting minimal service, they get between 12 percent and 15 percent of the cruise commission in the form of a discount, he says, depending on the price of the cruise.

Thanks for the details, Joe!

I wonder what the impact of not being able to openly advertise these discounted prices will have on the bottom line of some of these discount cruise agencies?

What they want to do is to help their bottom line by stirring up how things stand. Right now anybody that spends more than ten minutes online knows that you don't accept the cruise line's listed amount as a true price. You know that you can shop several agents and typically get somebody to cut into their commission for a slightly lower price. You know whatever the average price you see, you can do better if you just play enough leads.

It is not that this won't continue. Rather by clouding the water, they will see a better average yield by keep more of the average clients off balance. You make things just a tiny bit harder, and you can count on a percentage of folks giving up trying to find a cheaper price. Do so in a seemingly innocent way, and also move as an industry, and you avoid suffering because of alienated clients.

It won't stop people such as most of those here, from finding good prices, etc. And it leaves open, the chance for fair wars as we have seen with the airlines.

A number of cruise lines already do not allow agent's to advertise Group Pricing in the newspaper or online - but only by direct mail - this is essentially the same thing targeted at the FIT market.

While there will always be discounting to promote early sale of the product - what they want to prevent is further discounting using commission (which were at one time to provide the agent w/ back-end marketing dollars). Why should the cruise lines pay 18% commission to someone when 3 - 5% of that is being back to the consumer - makes NO sense to me at all.

I think this is a very positive thing...I am very glad to hear it!

[ 08-12-2004: Message edited by: Jekyll ]

I would prefer to book directly with the Cruiseline or with an very cheap and good Reseller.

quote:

---

Originally posted by Jekyll:
. . .Why should the cruise lines pay 18% commission to someone when 3 - 5% of that is being back to the consumer - makes NO sense to me at all. . .

[ 08-12-2004: Message edited by: Jekyll ]

---

I like to play the game, especially because I have more extra time than money. If I were working 60 hours a week and making a six-figure income, I wouldn't bother. As it is, I actually enjoy shopping for the best deal because (apart from saving me $$) it allows me to think more about my vacation, and makes me feel good when I finally land that awesome cruise deal.

Namlit: Shoppers like you are the ones that really tick travel agents off - time wasters - everyone deserves a GOOD deal - no one deserves a GREAT deal...i know travel agents value loyal clients who get great service and good deals much more than "one night stands". Surely people could be putting their time to better use than calling every travel agent under the sun - every hour on the hour - to get a GREAT deal. Volunteer at the local youth centre or a charity. If service and follow up when things go wrong w/ your vacation is not important to you - good luck when something finally does.

[ 08-13-2004: Message edited by: Jekyll ]

[ 08-13-2004: Message edited by: Jekyll ]

quote:

---

Originally posted by Jekyll:
Namlit: Shoppers like you are the ones that really tick travel agents off - time wasters - everyone deserves a GOOD deal - no one deserves a GREAT deal...

---

Oh yes....travel agents, car dealers, mortgage officers... I've ticked them all off, and saved myself a pretty penny in the process. As for service... please... I've fixed travel "issues" that have arisen by myself the world over, and don't require the assistance of an agent in Peoria when I'm having an issue in Ankara.

Maybe people will go back to supporting there local economies and local TA's rather than mooching around every site and TA in the world to save $20. Maybe TA's (online or not) will have to resort to providing prompt, professional service rather than giving their commission away to make a sale. I am in the car business and see the same thing. A person will shop ten dealers to save $100 and waste alot of peoples time, receive poor service in the long run, buy from a dealer outside the area where he will service the car and then come back to the local dealer and complain about the car he bought somewhere else.

Maybe people should build relationships with their local TA (or car dealer) so they have someone to go back to that they like, trust and who understands their needs than just go to someone different everytime who turns out to be the cheapest whore in town and may not be there the next time or when you have a problem.

quote:

---

Originally posted by Jekyll:
Colt: If an agent is willing to work for 15 or 13% commission - why should the cruise line pay them 18% - it's like wasting money...maybe being in the industry I look at this from a different angle. Commissions should be used to promote a partner's product and provide the agent w/ an incentive (profit) to sell a preferred supplier. To use it as a discount is disrespectful of that preferred relationship and is one that is abused by many travel agents (apologies to those in advance who don'tabuse it).

Namlit: Shoppers like you are the ones that really tick travel agents off - time wasters - everyone deserves a GOOD deal - no one deserves a GREAT deal...i know travel agents value loyal clients who get great service and good deals much more than "one night stands". Surely people could be putting their time to better use than calling every travel agent under the sun - every hour on the hour - to get a GREAT deal. Volunteer at the local youth centre or a charity. If service and follow up when things go wrong w/ your vacation is not important to you - good luck when something finally does.

[ 08-13-2004: Message edited by: Jekyll ]

[ 08-13-2004: Message edited by: Jekyll ]

---