New Royal Caribbean Pricing Policy

[TBR]

Listed below are FAQ's. Royal Caribbean International® and Celebrity

Cruises®

Announce Policy Change

 

 

"Royal Caribbean has always believed that our agency partners work hard for

their commissions and should keep them", said Jack Williams, President and

COO of Royal Caribbean International and Celebrity Cruises. As part of our

2005 planning process, we are reviewing everything from compensation to

group policies to our new dedicated sales coverage. Rebating is damaging

to our distribution system and by taking these policy actions, we believe

significant improvements for our travel agency partners and our guests will

be achieved".

 

Effective August 16th, 2004, any agency that advertises either Royal

Caribbean or Celebrity cruises or cruisetours at any price point other than

a published pricing program or contracted promotional fare will be subject

to a reduction in the co-op support provided by the cruise lines and other

effects such as a reduction in the base commission paid on all future

cruises booked by that agency. Advertisements shall include, but not be

limited to, TV, radio, newspaper, catalogs, direct mail, and all on-line

vehicles such as search engines, websites, e-mail, pop ups, and banners.

Our existing marketing policies with respect to group bookings will remain,

for the time being, unchanged.

 

Q & A (the FAQ's on the sales intranet will be posted early next week)

 

Are agencies permitted to advertise KAF, EZN and EZA? What about net

fares.

 

KAF, EZN and EZA are all published pricing programs. The advertisement of

these programs falls under our guidelines for advertising groups, which are

not permitted to be advertised in newspaper, Radio or TV. They are

permitted on-line and in North America. Net fares are contracted and are

already subject to marketing restrictions.

 

How will we enforce this policy?

 

We will review all Co op to ensure the prices advertised are published. All

sales personnel should immediately reinforce this policy with their

accounts and report violations of this policy to their Directors. In

addition, agencies will be able to report any violations to a special

e-mail that will be set up early next week.

 

Enforcement will include going to zero Co op, and 10% base commission, and

potential loss of VVI. In addition, repeated infractions will result in

loss of ability to sell our two brands.

 

What about cash back offers or upgrades, or if any agency wants to use

their commission for a value add and not lower their rate?

 

Only promotions that are driven by RCL are permitted to be advertised.

Agencies using commission to fund other offers will be in violation of our

policy. (other than GAP)

 

What about rebating in the calls centers and over the phone?

 

We will monitor agencies and will not permit agencies to promote, "Call us

for lower Celebrity or Royal Caribbean rates, or specific sailing's, or

specific categories." We will do mystery calls and police this practice.

[bolt]

:confused: Let me make sure I understand this....So if I have prices on a cruise discounter thru a online agency, which are much lower than quoted thru RCI I should book before Monday? I guess for some agencies this will be a good thing and for some a bad thing. One of my best friends and traveling buddy works for a travel agency and I usually can beat her prices and we end up booking over the net. Or she takes my info and makes it work for the same price.

 

I guess if that is the case it answers that question I keep asking myself....so I book or should I wait.

[brn2crz]

"contracted promotional fares"..

 

That is what My "gal" at the online agency I use basically told me allows them to sell at a lower price.They negotiate a contract that allows this.Hopefully,this will remain true.

[vossjemi]

[/left]

BTW, this happens to also be my favorite agency and they seem to have removed the above information from their site. I was attempting to show it to my wife this evening and it is either gone or buried under a bunch of links. Hmmm...

 

 

I just ckd and it appears to still be there. The first advertised Panama Canal cruise on the Century has a link to value added dollars.

[alcman]

Smeyer418,

 

Your legal analysis is wrong. At no time has any cruise line ever claimed that the travel agent is the agent of them. If that were so, they could bind the cruise line to anything within the travel agents apparent authority. If anything, cruise lines have conspicuously acted to distance themselves from any actions or liability of a travel agent. By the way, most travel agents advertise themselves as "independent". When the two biggest cruise lines in the world suddenly put a starnglehold on price competition, there is plenty of good reason to conduct an anti-trust analysis. Many states have statutes that bar producers from selling products at mandated prices and this may very well be a violation of those statutes.

 

Jerry

[dougp26364]

E-mailed the TA I do business with. The short answer was it only affects "advertised" prices but will not affect their quotes. I guess we'll just have to see how everything shakes out.

 

As for "price fixing". In most states it's actually illegal to rebate insurance premiums. Thus "fixing" the price an insurance policy can be offered at. Independant agents are not free to rebate a portion of their comissions in order to be competitive. I do not believe that there is any price fixing in the legal sense going on here. Just an enforcement of the cruise lines advertised price. Price fixing would be if ALL the cruise lines agreed to charge the same price eleminating compitition between the cruise lines. Even if RCI enforces a one price for every TA rule, it is not eleminating compitition between itself, Carnival or any other cruise line. Thus there is no antitrust case here.

[smeyer418]

Smeyer418,

 

Your legal analysis is wrong. At no time has any cruise line ever claimed that the travel agent is the agent of them. If that were so, they could bind the cruise line to anything within the travel agents apparent authority. If anything, cruise lines have conspicuously acted to distance themselves from any actions or liability of a travel agent. By the way, most travel agents advertise themselves as "independent". When the two biggest cruise lines in the world suddenly put a starnglehold on price competition, there is plenty of good reason to conduct an anti-trust analysis. Many states have statutes that bar producers from selling products at mandated prices and this may very well be a violation of those statutes.

 

Jerry

 

 

Jerry sorry but who do you think the TA represents? Do you pay them? There is a difference between unlimited power agent and an limited power agent with limited authority? Can a life insurance agent change the terms of a life insurance policy? There is a reason that the terms and condition of the cruise ticket says the travel agent has no power to change the terms and that the reps of the travel agency don't bind the cruise line---its because they are AGENTS. Believe that if they weren't agents of the cruise line they couldn't control their advertising(as to price)either. Also what states bar "producers" from selling at mandated prices? Do mean a producer could bind a company who sales widgets at $1,000 to sell them for a $1? Do you mean distributers who buy from a manufacturer and then can sell them for whatever price they deem over or under MSRP? I am not sure what you mean by "Producers"(I was going to say Bialstock and Bloom but I didn't think that was funny)

[bUU]

Everything I've read indicates that travel agents are not legal agents of the cruise line, but rather buyer's agents. Buyer's agents are agents of the buyer, paid by the seller.

[smeyer418]

You know that is always something I wondered about but if they were buyers agents, the cruise line would have no control of them. While I think for simplicity purposes some people say they are buyers agents the reality is they are agents of the cruise lines. Who pays them really does have a lot to do with this especially since how much they get paid is undisclosed. However I don't think it matters that much in this in this issue. The anti-trust issue would be the same. If they are buyers agents paid by the cruise line then the cruise lines couldn't control how much they are paid and rebating would not be controlable. If you read what it says above it looks like any rebating will result in sanctions. Hey does any one know what VVI or GAP is I know what a co-op ad is (its an ad that the cruiseline pays all or partly for)

[vossjemi]

I guess I'm still a little confused about the value added dollar thing. I mean....I see an add on that website right now for a 10 day PC cruise on the Century "from $829pp plus $150 XX value added dollars". How is that not advertising a discounted or rebated price?

[bUU]

if they were buyers agents, the cruise line would have no control of them

Cruise lines don't appear to have any control over TAs -- only over how the TA offers their specific product. For example, I haven't read anything about a cruise line restricting TAs from offering competing products, or even from recommending one product over another.

 

While I think for simplicity purposes some people say they are buyers agents the reality is they are agents of the cruise lines

It isn't that simple. The concept of agency implies empowerment to commit. If you really want to speak about "reality," in the absence of evidence to the contrary, it is probably safest to think of TAs as sales clerks. A particularly good analog would be the sales clerk as Tweeter, who's selling you a Cingular cell phone service, or a TiVo or DirectTV subscription. They can't commit on behalf of those companies, anything other than those companies have already agreed to commit to, but they can sell you the service.

[whitshel]

It sounds like "MAP" pricing in the retail world, "Minimum Ad Pricing". Some vendors can restrict ad pricing on thier products to retailers. It only applies to advertising though. A good example would be when microsoft introduces a new version of windows, everybody advertises it for $89.99, microsoft sets a MAP price of $89.99 no ads under that price. If you dont advertise it you can sell it for what ever you want, ie; Costco, they always have it for less, thats because they dont advertise. They do this so retailers like wal-mart don't undercut the cost so much that its hard for the little guys to keep up. Sounds like what rccl is doing here, you cant advertise specials below thier price, but you can sell them for less. Just a thought:D

[BADBUOY]

No discounts on your cruise ticket but go ahead and take an extra 10% off your JR bill.

 

Hope this meets with your approval.

 

Mr. Williams

[Ocean Boy]

No discounts on your cruise ticket but go ahead and take an extra 10% off your JR bill.

 

Hope this meets with your approval.

 

Mr. Williams

 

Thanks! Badbuoy. I knew there would be a silver lining in all of this. Now I will sleep well tonight!!

[brn2crz]

sorry

[Let'sGo!]

I've just read through this lengthy thread - as I too received one of those emails from an online agency. Now my head is spinning!

Seriously, if everyone has to quote the same price as RCCL, then why would there even be a need for travel agencies at all? Surely that's not the case? I do hope I'm understanding this is all about "advertising."

(Thank goodness my cruise for next April is already booked and 2/3 paid for!)

[richs52]

I emailed my TA who works for an online company, and she said no need to worry...agents cannot advertise discount rates BUT they can still sell discounted rates.

[wblynch]

All I know is if I have to pay the full RCCL price I'm going to look for other vacation venues.

With RCCL cutting the pay for on board staff, and they've been cutting the food quality for a long time already, it's starting to seem like Las Vegas.

It used to be Las Vegas was a very cost-effective vacation. Cheap rooms and buffets plus "free shows" helped make up for the gambling losses. PLUS, in those days you could actually win from time to time.

Then Las Vegas built all those monstrousities, starting with the Mirage, and all of a sudden rooms are over $300, buffets are $40 and the shows are $75.

AND, now they've got everything cranked down so tight you can't even win a little.

Las Vegas quit being a vacation destination for us several years ago.

These cruise lines have got to start offering something more than rock walls and singing waiters if they want to keep people coming back.

I think Jack Williams is just trying to get a big quarterly bonus.

[wblynch]

Has anyone else noticed that RCCL's television advertising has all of a sudden dried up?

They aren't even giving free cruises to the winners on Amazing Race anymore.

Something's going on and it don't smell good.

[bUU]

Interesting. [QUOTE]Through April, the most recent data available, Las Vegas hosted more than 12.5 million people this year. That was 7.5 percent better than the first four months of 2003 and more than 5.5 percent ahead of the pace set through April 2000, the same year Las Vegas went on to report its best-ever 12-month visitor count of 35.85 million.[/QUOTE] And of course we know that the cruise ship industry is booming.

Someone must be happy with what these suppliers are offering...

[mojo4trav]

[quote name='vossjemi']I just ckd and it appears to still be there. The first advertised Panama Canal cruise on the Century has a link to value added dollars.[/QUOTE]
Thanks for pointing that out...before it was linked clearly and seperately from any actual cruises...looks like they moved it to individual pricing pages.

[NYDee]

It looks like from some of the emails the online agencies are sending they may be trying to incite their customers. Or they don't understand the policies.

[bUU]

[quote name='NYDee']It looks like from some of the emails the online agencies are sending they may be trying to incite their customers. [/QUOTE]They almost surely have the most to lose from these policy changes, and therefore the most to gain from exaggerating the impact of them on customers.

[Leosmom]

for clarifying RCI's new policy. Now, can you tell us why we
would need an agency when your pricing would have to be set at
the same price we would find on RCI's website and you cannot
discount or rebate? Seems to me we will not need an agency
in booking future cruises with Royal Caribbean or Celebrity.

[NYDee]

[quote name='bicker']They almost surely have the most to lose from these policy changes, and therefore the most to gain from exaggerating the impact of them on customers.[/QUOTE]

I wrote my response when I thought, for RCI wording, that the agencies could sell the cruise lower, but not advertise it. From the cruise agency response it would seem that they must sell the cruise for RCI's price. This will definately hurt the consumer. I don't use online TAs. I use the same brick and morter TA I have used since our first cruise. It has always been able to provide competative pricing. It will be interesting to see how this shakes out. We have 3 cruises booked through spring of 2006 so probably won't be personally effected for another 6 months when we book our fall 2006 cruise.