Carnival to cut pay to agents making own pricing scheme

[TBR]

This is from Travel weekly article

 

 

Carnival to cut pay to agents making own pricing scheme (08/05/2004)

MIAMI -- Carnival Cruise Lines will cut compensation to retailers who publicly advertise non-Carnival approved rates and promotions, effective Jan. 1, the line said Thursday.

 

 

Carnival said the plan would ensure consistency in Carnival pricing in public mediums, including the Internet.

 

 

The level of compensation reduction will be determined on a case-by-case basis. Repeat offenders will be placed on a “do not book” status, the line said.

 

 

“Travel agent partners should emphasize the service and expertise they provide to consumers ... rather than just focusing on price,” Carnival CEO Bob Dickinson said.

 

 

[hdawson]

I'm glad to see this. It's a step to protect the traditional travel agents that have done soooo much to make cruising and Carnival so popular and sucessful over the years.

[redneck_dan]

I'm glad to see this. It's a step to protect the traditional travel agents that have done soooo much to make cruising and Carnival so popular and sucessful over the years.

 

It seems like to me that they are trying to get more business on their website and squeeze the online agents. Most people that book directly on the Internet are not that concerned about service but price. If the price is the exact same at both Carnival and online sites, people will more likely use the Carnival site due to the trust factor.

[mosel]

I for one am not happy with this....all things being equal..ie price...ill just book it myself and the TA will lose my buisness. Which is more then likly the reason for the policy in the first place. Just a thought.

[kkorman]

It seems like to me that they are trying to get more business on their website and squeeze the online agents. Most people that book directly on the Internet are not that concerned about service but price. If the price is the exact same at both Carnival and online sites, people will more likely use the Carnival site due to the trust factor.

 

I agree.

 

I kind of like the whole pricing game. Keeps you on your feet.

[GoinCruisin]

I, for one, like this... Too many online sites are stripping their prices down by eliminating customer service... too many times, people see poor customer service by the TA as a reflection on Carnival. I'm sure Carnival is tired of the million phone calls they get each day about pricing and TA's... they can't and won't help you if you are with a TA, once again, a bad reflection on them, but you can't blame them... I for one would rather pay a little higher price for a good TA for any trip I take... seen too many people suffer by bargaining for the rock bottom price...

[hdawson]

Goin. So well said. The absolute lowest price isn't necessarily the best value.

[VentureMan_2000]

Carnival's tired of price descriminators calling them up to say there is a lower price on so-and-so site, only to find out it is the CCL's price with the TA's commision removed, only to be added back in as a surcharge by the TA.

 

Carnival has to spend a lot of time and resouces (expense) fielding these inquiries. And it does nothing for their customer satisfaction and the customer experience when someone gets a better (perceived) deal than the other person.

 

They aren't cutting out the TA, just ensuring a good customer experience.

 

Nothing worse than sitting down at you cruise dinner and finding out the cuople next to you paid a good deal of money less than you for the same booking (not talking about Gty here asthis is risk we know up front).

 

Bully for Carnival. It's a step in the correct direction.

[emerald777]

Gee, for some strange reason I can't get excited over the fact that I will have to pay more for a cruise.....Lack of competition in price is never a good thing for the consumer. They've talked about doing this for a couple years now, I really don't think it will last long. If it does, I can't think of a single reason to go through a TA. Book directly with CCL and cut out the middleman. I think it will be the agents fighting against it once they realize how much business they will be losing when they can't be competitive.

[GoinCruisin]

I don't see it that way at all... When you take customer service out of the equation (which is how MOST agencies offer such low pricing), you affect everyone... there is a cause and effect... Because of the lack of CS, PAX are constantly calling Carnival, who cannot help them because they are booked with a TA... the smaller TA's are being squashed by these internet "superstores", which will eventually drive the pricing up as well... Many TA's out there are stripping out their commissions to offer these "low" prices, then advertising heavily... The smaller guys can't afford to strip their commissions, but generally they also provide a better level of customer service, so most don't mind paying a little extra. I don't think we are talking a lot of money here, just something to even the playing field for everyone... I doubt we will see any serious effects from it (hopefully :D )

[VentureMan_2000]

Canival wants to control pricing themselves. They don't want TAs causing them havic.

 

The pricing will stay competitive as CCL has many competing cruise lines. To stay competitive, they provide their own marketing such as "the fun ship". Carnivals pricing is very competitive. There seem to be plenty of higher priced cruise lines, includiong their sister ship, Princess.

 

The larger market determines prices, not a couple of TAs willing to forego their commision.

[Grayce]

Does this mean that prices will be the same everywhere and there will be no need to "comparison shop":confused: Sounds to me like Carnival is cutting out competition. My understanding was that agents bought large blocks of staterooms at a discount and because of this were able to pass savings on to consumers. I know when I booked my cruise for next month I was able to get an upgrade and a shipboard credit. I called a PVP but they were not able to match what I was offered elsewhere. That surprised me because if I was booking directly with Carnival then they would not be paying a commision to a TA.

[Snowball]

I for one do not like this idea. Not everyone wants or needs a high level of customer service. I know that I do all of my research, decide what cruise I want, itinerary, date, etc - the only thing the t/a does is the actual booking. I have very little if any interaction with the t/a from that point, until I start calling and bugging to see if my docs are in. :p So I don't mind trading customer service for a lower price, since I don't require very much service anyway. As long as my cruise gets paid for, there aren't any mistakes in my booking, and I get my docs before the sail date, then I'm A-OK. :D

[GoinCruisin]

I don't think it means that by any means... the wording was "Carnival Cruise Lines will cut compensation to retailers who publicly advertise non-Carnival approved rates and promotions" ... so I think this means that these major sales TA's have should be in line with the sales that Carnival approves (no stripping out comms to offer deals you can't get anywhere else).... TA's should always follow the guidelines for the company they are an agent of... There will still be comparison shopping, prices will vary, just not to the degree that they have been...

[emerald777]

But how much customer service do you really need? I don't need anyone to suggest what ship I should sail, what cat cabin I would like or what itinerary I should take. Most experienced cruisers have very few issues requiring extensive customer service. Most questions (CS) require a call to the cruiseline for some clarification. Why depend on someone else to make that call when you can do it yourself. I would much prefer to be in control of my reservation and be able to call Carnival directly when necessary. So without the added incentive of a better price, Why use an agent?

[cruiseco]

Gee, for some strange reason I can't get excited over the fact that I will have to pay more for a cruise.....Lack of competition in price is never a good thing for the consumer. They've talked about doing this for a couple years now, I really don't think it will last long. If it does, I can't think of a single reason to go through a TA. Book directly with CCL and cut out the middleman. I think it will be the agents fighting against it once they realize how much business they will be losing when they can't be competitive.

 

Nothing says that the agency can't discount as much as they ever have. They just can't advertise Carnival sailings at a price that doesn't reflect Carnival's true price. Once you contact the agency they're free to discount as much as they want to.

 

As for the "sell the price, deliver zero service" agencies, much of the follow up that a good agency normally handles -- and that they're compensated for -- is ending up on Carnival's phone reps. Say Cheaper-Than-Dirt-Cruises-R-Us makes the booking by rebating most of the commission back to the client then basically washes their hands of any service. Who is the client going to call with questions and problems? Carnival. Carnival ends up paying staff to provide the customer service that they're already paying an agency to provide. Some of these discounters are more trouble than they're worth to Carnival so if they get cut off or have their commission reduced Carnival's sure not going to cry about it.

 

The discounters don't sell cruises, they just book them. No one calls the big discounters unless they're pretty much already committed to booking a cruise. It's the small local agencies that do more than their share of generating new business. Someone comes into the office looking for a vacation to Mexico or Hawaii. The agent asks "Have you thought about a cruise?" That's new business. That's selling a cruise. The big discounters fight over who gets the commission but they rarely generate new business -- flipping land packages into cruises.

 

Carnival NEEDS to make sure that the small agencies have a fighting chance. If Mom and Pop Travel can publish the same rates in the Sunday paper as the big guys maybe they'll get a phone call and a chance to make the sale. If the booking goes somewhere else, well that's business, but at least they had a fair shot.

[Salty Dawg]

Sounds like some type of 'price fixing'! Maybe the Federal Trade Commission should look into this.

 

If the internet TA's want to discount their commission, that should be their right. I think most savy cruisers know that you do not get the same customer service from the internet.

 

We book for price, and price alone. We know what ship, what date, what cabin class, etc. and all we want is the cheapest price. Of course, we check out the internet company before booking with them.

 

It would be like telling a gas station operator that he had to sell gas for the company's set price or he would have his cost raised, raised again, and maybe have his supply cut off until he capitualtes to the company way.

 

What cruise prices skyrocket if Carnival is sucessful in this.

 

Just an opinionm-- no flames please.

[Salty Dawg]

Cruiseco---

 

Are you saying that the internet TA's just can not send out email ads or publish prices in the newspaper?

 

What about if you know your cruse ship, date, and itinerary, and look them up on the TA's automated pricing site? Is that prohibited too?

[cruiseco]

Cruiseco---

 

Are you saying that the internet TA's just can not send out email ads or publish prices in the newspaper?

 

What about if you know your cruse ship, date, and itinerary, and look them up on the TA's automated pricing site? Is that prohibited too?

 

Carnival can't control what a cruise is sold for but they have a lot of power when it comes to how their product is advertised. If agency X wants to sell you a cruise after subtracting out all of their commission that's their right.

 

But the only way they can rebate so much of their commission is because they get so much commission. Base commission is usually 10%. But if Carnival likes you they might give you an override taking your compensation up to18% commission. But that's not chiseled in stone. Get on Carnival's bad side and you might go right back to 10%. They can giveth and they can taketh away.

 

Now what makes Carnival mad is when Agency X steals a booking from Mom and Pop Travel by rebating 8% of their 18% commission. Maybe M&P Travel only makes 12% commission. The net result to Carnival is that Agency X has not generated any new business for Carnival. They've just moved a booking from a 12% agency to an 18% agency. Carnival pays 6% more in commission than they needed to and for what? For the priviledge of having to provide more phone support for clients of a mega-agency that can't be bothered to do it themselves.

 

One other very important source of income for any agency is the co-op advertising allowance. Depending on the ad Carnival might pay up to 50% of the cost. Why pay money to support ads that basically do nothing but move passengers to a high-commission agency from a low-commission agency?

 

This probably also applies to internet advertising and the cost of hosting that internet site with the automatic quote feature. If Carnival doesn't like the numbers you're putting out on the web they can yank all of your co-op dollars and chop your commission overrides down to nothing. (I think the threat of cutting an agency off altogether is just that -- a threat. The problem would never go that far). How long can one of these major agencies survive at 10% commission and no co-op? Not long.

 

So, there's no censorship issues and no restraint of trade issues. Just an issue of Carnival being able at any time of taking back the two things that make mass-rebating possible -- commission overrides and co-op advertising funds.

[GoinCruisin]

Well, maybe alot of people have missed ALL of the posts here over the years from people who had problems with their ONLINE TA. All of the people that never had a return call, who they could not get in touch with to pay their final payment, who could not talk to when the pricing was adjusted, needed a name change, had to cancel, didn't receive tickets, had general questions... Customer service has nothing to do with selling a cruise... selling is selling (they do that quite well), customer service happens after the sale which is where many of the "superstores" fall short and just disappear. Carnival has enough to deal with, which is why they use TA's to begin with... good grief, they are overbooking sailings now more than ever, problems with pranks, people wanting a free cruise because they didn't get a towel animal, and then the TA problems... they are simply saying that a TA cannot "publicly advertise non Carnival approved rates", which is how most of these TA's reel someone in.... How many out there actually advertise a rate but when you finally book you find out that port charges and taxes are additional? Carnival does not use this policy, why would they allow an agent working on their behalf do it? It makes complete sense, I would bet that the changes will be nominal, but also customer sat ratings will increase (stockholders like this)...

[Stircrzy]

Enjoyed your photos on Webshots!

 

Thanks for posting them.:D

[emerald777]

Well, maybe alot of people have missed ALL of the posts here over the years from people who had problems with their ONLINE TA. All of the people that never had a return call, who they could not get in touch with to pay their final payment, who could not talk to when the pricing was adjusted, needed a name change, had to cancel, didn't receive tickets, had general questions... .

WHich is exactly my point of why I would just book with CCL directly so I could call them and ask my questions. And it's not just ONLINE agencies. The few problems I've required assistance for were caused by my brick and mortar agent, no problems yet with the 2 online agencies I've used. And the B&M agent gave no price break at all, it was the same rate advertised on CCL's site. But at the time I was not as experienced as I am now and thought I should use a IRL agent. Never again! It's either best price on-line or directly with cruiseline.

[hdawson]

I think this is aimed at the boiler room type of agencys. Often the person at the other computer has no or limited information about cruising, cruiselines or ships. Some have used unfair sales tactics that we've read about on these boards and what they do does reflect on Carnival or any other line. The release did say, case by case.

[gatour]

Cruiseco pretty much got it correct...

 

"Nothing says that the agency can't discount as much as they ever have. They just can't advertise Carnival sailings at a price that doesn't reflect Carnival's true price. Once you contact the agency they're free to discount as much as they want to."

 

I buy many products over the 'net. One of them is a multinational corporation with many retail/internet retailers. I would be looking for a particular product from that multinational corp. and when I hit a retailer's website they would show the MSRP. They would then have a blurb about not being able to advertise a low price, but if you click a button

you can get a quote. The quote would be the street price.

 

Whenever I see an advertised price for a cruise, I learned a long time ago that until I get a quote for the cruise and specific date it is not a real price.

[TBR]

I think this is aimed at the boiler room type of agencys. Often the person at the other computer has no or limited information about cruising, cruiselines or ships. Some have used unfair sales tactics that we've read about on these boards and what they do does reflect on Carnival or any other line. The release did say, case by case.

Hdawson is exactly right,in addition the turnover at the cruise lines call centers is very high. The cost for cruise lines to staff a call center is large,having to field calls from customers who cannot get an answer from a online TA.

 

The airlines have found out how much it cost them to staff a call center vs paying a commission to a TA only when they sold something, Orbitz which is owned by several large airlines are now partnering up with TA's to use their res system and pay a commission to the TA for booking made on orbitz.

 

Delta recently conducted a survey about charging a fee for passengers who use Delta's call center,no charges as of now but beware,the airlines are bleeding red ink and looking for revenue.