Carnival to cut pay to agents making own pricing scheme

[BigDave]

I agree this is bad for the customer, and frankly most of us will see little return for this.

Thats what we get when 2.5 companies run most of the cruise business to the US.

I'm counting Star's NCL as .5 since they only have the NCL brand in the US, and the reported service and food quality has been so bad lately most wouldn't consider them (heck, I wouldn't)

[sdscreenwriter]

For all those who are supporting this, I value your opinion, but large corporations are movitvated by one thing: money. This, over the long run, will clearly NOT benefit any travel agents, even the ones who do follow the 'approved' rate advertising. Listen to those comments by the CEO, they are moving toward eventually bringing all the business in house.

The strongest force for the CUSTOMER in the free market is choice. The descriptions of the cement company in Mass. is the way this works, and with more and more ships in the hands of less and less companies, the prices will go up.

So I always support choice for the customer. If someone wants full service and needs awesome customer service: great! Let them book through a full service agent and have that agent get the full commission. I think this is a needed service for those who don't want to put in all the work to become their own expert in the field. Let them have the TA be the expert.

For those of us with the cruise I.V. in our arm 24/7, who know every cabin on every ship and all we need is someone to punch in the numbers, take our payment and send us the docs, and who want to save hundreds, or thousands of dollars since we have done the work: great! We should have the CHOICE to do that as well. If we are not worried about great customer service (which, by the way, I have always had anyway with my online TA), or about our agency going under, let us take the risk to save that money.

Our upcoming cruise has 21 people on it. The rates I got compared to Carnival 'official' prices means we are saving almost $3000 for the group. We have the best cabins on the ship in each category we wanted. I don't mind doing to work to make this happen. But that should be my choice.

Here's hoping we will continue to have that choice.

Brian

[Peanuts]

I will go with customer service first and then price. I have booked with the same TA for every cruise but our first one. She knows what DH and I like and the price for the cruise has always been competitive. If there is a price reduction we get it without asking. She will usually call me and tell me it was lowered.

We just booked a cruise on the Imagination, June 2005 as a college graduation trip for our daughter and her family. I booked directly with Carnival and transferred the booking to our TA. She called me back to tell me the price was $$$ less. Works for me!!

[Arlene F]

One thing that concerns me is that some online booking agents are nothing more than a sideline occupation for persons who are not true "travel agents".

I personally know one of these on-line agents who has a full time job in a different field and the only "travel" experience this person has is their own 3 or cruises they have taken.

To read their website one is immediatly given the impression that this is a fully staffed fulltime experienced travel agency. Prices are no lower than Carnival (for instance) in fact they were the exact same price when I checked. So what does this agency offer that a passenger can't get for themselves by booking directly with the cruise line. Also with some of these so-called "travel agents" one's recourse is limited should a problem arise.

Perhaps this move by Carnival will weed out those on-line travel agents who are really not qualified to sell their services to consumers. I personally do not believe that taking a couple of cruises qualifies one as a "travel specialist".

Arlene

[bthorn1108]

[quote name='GoinCruisin']No, those are group cruise rates that Carnival approves... It is directed to the TA's that advertise anything that Carnival does not approve or fall within their guidelines... Groups could not get the $25 deposit without Carnivals approval, since the deposit goes to them...[/QUOTE]

Alot of the group rates that have been posted are not Carnival's base rates, they have been discounted, probably by cutting commission. I have compared them in the past to group rates that were available and they usually came in less and it wasn't because Carnival gave them a lower group rate. A group rate is a group rate, available to any TA.

[mencik]

Group rate prices differ because some TA's give back the Tour conductor credits to the group, keeping only the base commissions. Some groups qualify for special pricing discounts in addition to the "regular" group discounts. Some TA's also discount the base commission in addition to all the above.

None of that changes with Carnival's announced policy. What does change is that some of the mega-agencies will not be able to constantly rebate all but a small amount of their commission on individual sales and ADVERTISE that price. They can still rebate it if they want to, they just can't advertise it. It also means that if they have a an online booking engine, it can't show a great discount achieved by rebating the commissions.

Personally, I like what Sandals has done to help the small TA compete against the larger firms. They have a low price-match guarantee. If a customer finds a bona-fide offer at a lower price, the TA can contact Sandals to match that price. Instead of overrides in cash, Sandals offers override commissions in the form of extra co-op advertising dollars. The agency effectively gets the extra money by having to spend less on advertising, but doesn't get it back in cash, eliminating the incentive to rebate.

So, what does this mean for consumers? Yes, you may have to pay a little bit more. However, you also won't have to shop until you drop to find the lowest fare. For the smaller TA, it means we won't spend as much time researching port activities, flights, and other things for customers that either have no intention of booking with us because we can't match the mega agency price, or in many cases have already booked with the mega-agency, but can't get them to provide the customer service that Carnival and other lines are paying them to provide by paying the commissions.

[BigDoug]

[color=green]Does anyone else see any correlation between this board's crack down on discussion of TA's or online web sites and this move by the cruise lines to stop the discounting? I stated about two weeks ago in a post discussing the board's new policy that it was about the money. Now, here is the notice from the two biggest cruise lines that they will cut off advertising funds and cut commissions if anyone advertises discount fares. How coincidental. I don't normally subscribe to conspiracy theories but this one is too much. I just went to my favorite online web site to check pricing and behold, there in big red letters is a notice about a 10% price increase due to RCI's and Carnival's crack down. This new policy on discounting is NOT good for the consumer. It will only benefit the cruise lines and brick and mortar TA's. This can only stifle price competition and cause us, the cruise passengers, to pay more so brick and mortar TA's can keep their high commissions. However, this will only last a short time until the cruise lines eliminate commissions to TA's altogether. If you don't believe me, check into that other travel industry, the airlines. The airlines now book most of their flights directly. If you use a TA to book your flight, you will usually get charged a fee by the TA. This is the model the cruise lines want to copy. The customer paying the commission directly to the service provider unless they book directly with the cruise line.[/color]

[Ricks]

In two years we will be looking for a cruise like we do for airfare. [u]"BOTTOM LINE"[/u]

[VentureMan_2000]

If you don't like it, you can always show support with your feet. Nothing worse than a capitalist complaining about capitalism.

[emerald777]

[QUOTE]Effective Monday August 16th, [u]NO AGENCY[/u] will be able to sell at a price point other than those priced directly by Royal Caribbean & Celebrity cruises. Agencies will no longer be able to offer special deals through their booking engines, telephone cruise specialists, or opt-in private email lists. "Royal Caribbean International has clearly stated to us that rebating on any level will be a violation of their new policy" stated Ron Russo, Executive Director. "Agencies will need to focus on service, expertise, efficiency, and value added items.......[/QUOTE] So much for "They can still discount, they just can't advertise it.....". And as for all you TAs who keep saying what's the big deal, so you pay a little extra, just think of the wonderful service you're going to get.......I say (insert big raspberry blowing smiley here......). No offense, but I really don't give a crab's a$$ if the smaller agencies will do better now. Call me selfish, but the only bottom line I'm interested in is my own.

[sdscreenwriter]

Well said Big Dave, Rick, etc.

The only thing we can hope for is that some enterprising company with a go-getter attitude and about billion $ laying around will order a few new ships, tell the TAs to do it any way they want, undercut the monopolies of RCCL/Carnival, take away some of their customers and force them to drop prices. The Southwest Airlines model. Every time Southwest has one of their sales (which is almost all the time), most of the big boys will drop their prices to match on that route.

'Course once I make my first billion...could be me!

Brian

[dewhit6959]

All the recent discussion and publicity concerning cruise prices is part of a larger picture of strategic marketing by the cruise lines. All this talk about penalizing your best producers in your outside sales force is a bunch of hogwash.The shakeout within the cruise lines marketing arm is beginning.
If you,as an agency, are in good graces with the cruise line and have a kickback over a normal commission, it is because you are moving more product. It is not because they like you. The problem within the cruise industry now from a marketing standpoint, is that you have too many agents, order takers and part timers. The actual product, the cruise, is under good control, it is the outside sales marketing that is creating problems that are wasting manpower and losing money.
The large discounts offered by some of the small players are "mismanaged profit potentials" to the company. Every small timer that makes $150.00 is hurting the the cruise line net profit. The internet has blessed the cruise industry, but it is also a curse in regards to revenue and needs reigning in to control the product more effectively. But, before you kick some of these spare bedroom operations and boiler rooms to the curb, you have to protect yourself legally.This latest move will do that. Many of these operations will not understand what has happened to them as they are just trying for a sliver of pie, and are missing the corporate long term strategy. Expect the major cruise managements to buy some regional agencies and form new agencies to control their own initial marketing and customer contact from step one AND to make in roads into their own feeder systems, i.e. airlines, hotels, bus and tour operators, casinos and port operations. Two of the big systems have contracted to run ALL cruise and passenger operations for the Rome port authority in the near future.
The same discounts will be available as before and should continue thru this year and 2005. The consumer is going to have to look harder and the surviving agencies are going to have to sell themselves better and provide better customer service and the salesmanship to "close" on cruises with that initial customer inquiry. This industry is in growth mode one now and the market share is still expanding. This announcement of fare structure and penalties, etc, etc., is the cover to get a lot of small thorns out of their hide and exert more control over the entire process.
They are not going to haul garbage overseas on the new ships under construction and in the contractual stages, so now is not the time to "redefine" who they need as passengers and what they pay. "Get the money and get them on the boat" is the word of the day this year. Passenger numbers are rising and the companies are entering a "shakedown" period in regards to revenue , efficiency and growth. It is no longer a niche maritime industry. Companies such as Dobbs Intl. and many airline concessonaires, will seek to service the lines. Eventually, shipboard kitchens will be a thing of the past. There will be new ports and even new destinations, entirely new entertainment on board. This animal is growing big. There will be others that see the potential in the cruise and entertainment venue and make their play. If you have any doubt of this, forget the equipment and track the movement of senior officers of these companies. Also check where the new blood is coming from. A ship is a piece of machinery, nothing more these days. Older ships will see new life with smaller more regional lines and those that seek to create niches. Passengers will embark from multiple ports and disembark at various different ports, all on the same cruise.
It is highly likely that all the newer ships will be owned by the companies, but by larger interests such as GE Capital,Citi Group, Redmon and others.Some will find life in lease pools. You will begin to see the major players from the hospitality and gaming industry make their move in the near future.
The hook is not fully set yet, but the recent fare publishing guidelines are a step in the direction. You ain't seen nothing yet.

[mencik]

[quote name='dewhit6959'] The large discounts offered by some of the small players are "mismanaged profit potentials" to the company. Every small timer that makes $150.00 is hurting the the cruise line net profit. [/QUOTE]

Most of what you said in your post make perfect sense, except for the quote above. The big discounts are being offered by the mega agencies (not the small timers) who end up making a net commision of about $15 - $20 per cruise, but because they can sell so many, they make out. The small guy who only sells a few but takes the $150 commission (on a $1500 cruise sale that is the norm) isn't hurting the cruise line net profit at all. If anyone is hurting the net profit, it is the mega discounter, as the public then expects everyone to be able to sell for those lower prices, including the cruise lines themselves. In fact, given the overrides (higher commission rates) these big guys get, even if the small guy rebates their entire commission, they cannot compete with the big guys on price alone.

The little guys tend to provide better service, but the public (for the most part) is not willing to pay for that. I wish I had a dollar for every "customer" that called seeking information on port tours and other cruise related information that has already booked with one of the mega discounters. When I ask why they haven't contacted their TA that booked the cruise, many reply that they have tried, but have not had any success. So, either I (and other small agents) or the cruise line end up providing the customer service that the cruise line is paying the mega-discounter to provide. Since they have passed most of that commission back to the customers in order to do volume sales, they can no longer afford to provide that service. It is for those reasons that the cruise lines want to change the commission structures to avoid that discounting.

[CruisnMom007]

This bites! I always shop around for the better prices on my cruise. As I do with anything. I am actually doing all the work in researching and have always done very well. I do the same thing for my family Hawaiian vacations. I love it so much that I am now taking classes to become my own travel agent.
From what I learned from Carnival is that the TAgency ends up taking a loss to give their clients such good rates. That has been the case in our travel purchases.
Also,,,,,I will book a cruise with a TAgency that has purchased a block. Carnival does give them the cost break and they pass it on to their clients. Some do anyway...mine does. That is the case in the cruise we are about to go on.

Oh well, we will just have to see what happens.

[BigDoug]

[PHP]From what I learned from Carnival is that the TAgency ends up taking a loss to give their clients such good rates. That has been the case in our travel purchases.[/PHP]

[color=green]It's a little naive to think a travel agency will sell something at a loss. A TA is only a collection agent for whatever it is selling. The price is set by the cruiseline, airline, resort or whatever. The TA can however cut their commission, sell groups, etc. to lower the cost to the consumer. An agency would go broke quickly if it sold travel at a loss. The idea behind RCI's and Carnival's new policy is to "level" the playing field. All sellers will have the same advertised price. The consumer will not have access to any discount/rebate information without contacting each and every seller individually. By doing this, the new policy actually "tilts" the field in the cruiseline's favor. If everyone has the same price listed, why not book directly with the cruiseline. When the percentage of passengers booking directly reaches a certain point, the cruiseline will be able to reduce or eliminate commissions altogether. The TA's should be fighting this policy, not embracing it. [/color]