RCCL Cancelation Refund Calculation

[Bob26]

Not to start a "flaming war" - just a word of caution on how RCCL calculates the price of refund for cancelation.

 

Due to family circumstances, I had to cancel a cruise recently. It was 11 days before sailing, and we did not have insurance. According to RCCL website, the penalty in this case is 50% of "Total Price".

 

I am not going to use real numbers to avoid violating board rules, but let's say that I paid $1100.00 for a cruise, I was expecting to get $550.00 back. Imagine my surprise, when I got only $490.00.

 

When I called Customer Service, they agreed that amount that I paid was $1100.00. However, when they calculate refund, they used something called "total price" amount - in this case $1220.00. I was unable to understand where this amount came from and how was I supposed to know about it.

 

In any event, 50% of that amout is $610.00 - this is the penalty that RCCL charged me. At the end - $1100.00-$610.00 = $490.00 is what I got.

 

Customer Service representative failed to explain to me why this double standard is used when calculating refund.

 

I am in process of writing a letter to RCCL complaining about this practice. I would appreciate if anyone who knows the address of Customer Service could publish it

 

Thanks.

 

Bob.

[hdawson]

Maybe your travel agent could figure it out or get an answer.

[Bob26]

I just got off the three-way conference call between my agent, RCCL rep and myself. Here is the scoop:

 

The price that I have paid ($1100.00) is a discounted price due to my agent working for Key Account agency and RCCL running a sale when I initially booked the cruise. However, $1220.00 is a total price, like MSRP for a car. So, when RCCL calculates the amount of refund, they go against MSRP, not against what you have actually paid!!.

 

It even became comical at some point:

 

Rep: The penalty is 50% of the price

Myself: How much is that?

Rep: $610.00

Myself: Great, if this is 50% of the price then I should get 50% back - $610.00!!

Rep: It doen't work like that

Myself: How does it work?

Rep: We get 50% penalty - $610.00, you get 50% refund - $490.00

Myself: How is that 50/50?

Rep: It is difficult to explain

 

RCCL rep again failed to point me anywhere on their website where this information is being disclosed.

 

Bob.

[cruisingagentone]

Could it possibly have to do with commission that the agent was paid?

[JDee]

I thinks it's called "Fuzzy Math".

[stillfrantic]

Was the TA commission protected? When HAL offered full refunds to the Sept. 4 cruisers because of the hurricane, it was a "Full Refund, Travel Agent Commissions Protected" We booked directly with HAL, so we got the 100% refund. Others who booked with TA got the refund minus the fee paid to the TA. It was up to the TA whether to refund that portion or not.

[Bob26]

I am not sure if that difference in money due to commission paid to TA. During the call neither RCCL nor TA were upfront about it. TA has not made any offers to remedy the situation either.

 

Bob.

[cruiseco]

I thinks it's called "Fuzzy Math".

 

Not fuzzy math. Just what happens when a TA rebates a part of the commission. Here's an example:

 

The true price of the cruise is $1220 but the TA rebates back $120 so you're only paying $1100.

 

Here's the important part: The cruise line COULDN'T CARE LESS what side arrangement you have with the TA. As far as they're concerned the price is $1220. If you look at the legal, binding contract you have with RCI that's the figure it shows and that's the figure you're responsible for. A rebate doesn't lower the contracted fare. It's just a side agreement with the the TA saying that the client in this case will pay $1100 of the total and the TA will make good on the rest.

 

You have to cancel in the 50% penalty period. The cruise line is going to keep 50% of the $1220 fare ($610) no matter how much you paid.

 

So they subtract the $610 penalty from the total amount of the payments they received. If they only received $1100 then all they're going to refund is $490 ($1100 less te $610).

 

If they were to base the penalty on the amount actually charged by the TA they would have no way of knowing what penalty to charge. For example, if the client had paid by cash or check the TA would have forwarded a company check to RCI for the net amount due (minus the TA's commission). Let's say the TA is making 15%. The net sent in would have been $1037. How would they know the amount you really paid the TA? It could be anywhere from the $1037 up to $1220 depending on the amount of commission rebated.

 

This is one reason to watch out when booking a cruise on a rebated fare. The TA will NEVER explain beforehand that some penalties (when figured as a percentage of the fare) will be higher than what you expected. If the penalty is expressed in a set dollar figure ($150, $500, whatever) this never comes up because it doesn't matter.

 

Again, the cruise line does not have any obligation to stand behind an agreement you have made independently with a TA. That's none of their business. Your contract with RCI is for $1220 and that's what the penalties will be calculated on.

[cruiseco]

I am not sure if that difference in money due to commission paid to TA. During the call neither RCCL nor TA were upfront about it. TA has not made any offers to remedy the situation either.

 

Bob.

 

Of course the TA wasn't upfront about it on the call. He/She knows EXACTLY what has happened here but admitting it to the RCI rep would be admitting that the agency is violating RCI's policies prohibiting rebating.

[xpcdoojk]

Of course the TA wasn't upfront about it on the call. He/She knows EXACTLY what has happened here but admitting it to the RCI rep would be admitting that the agency is violating RCI's policies prohibiting rebating.

cruiseco, I am sure you are exactly right, and this is the funniest thing I have read all week. I thank you profusely for illuminating the real world so well. thank you, thank you!!!!!:cool:

 

I love it when one party thinks they are cutting a fat calf, and find out they are the one getting sliced!:D

[cruiseco]

Just to be clear, this isn't an RCI-only situation. Any cruise line that levies cancellation penalties as a percentage of the contracted fare does the same thing.

 

And the same type of situation can pop up elsewhere. For example, if you buy the Princess Cruises "Love Boat Care" insurance they charge a premium based on the contracted fare, not the fare less any rebates you may have negotiated with the TA. (Note: these figures may be way wrong since I haven't looked in a Princess brochure for a few years but the idea is correct):

 

Say your Princess Alaska cruise is selling for $1650 but your TA is rebating some so the fare you'll pay is $1450. The price for the insurance for a cruise costing $1501 - $2000 is $99. For a cruise costing $1001 to $1500 it's only $79. If you want the insurance through Princess you'll have to pay the $99. Again, they really don't care what kind of a deal you have with the TA. In their book the fare is $1650 and that's that.

 

By the way, how many of you, if you're lucky enough to get a substantial fare reduction (not a rebate but a genuine drop in the fare after you've booked) check your insurance cost? All of the major insurers will refund part of your premiium if a price drop puts you in a lower premium bracket. There's your money saving tip for the day.

[xpcdoojk]

Just to be clear, this isn't an RCI-only situation. Any cruise line that levies cancellation penalties as a percentage of the contracted fare does the same thing.

 

And the same type of situation can pop up elsewhere. For example, if you buy the Princess Cruises "Love Boat Care" insurance they charge a premium based on the contracted fare, not the fare less any rebates you may have negotiated with the TA. (Note: these figures may be way wrong since I haven't looked in a Princess brochure for a few years but the idea is correct):

 

Say your Princess Alaska cruise is selling for $1650 but your TA is rebating some so the fare you'll pay is $1450. The price for the insurance for a cruise costing $1501 - $2000 is $99. For a cruise costing $1001 to $1500 it's only $79. If you want the insurance through Princess you'll have to pay the $99. Again, they really don't care what kind of a deal you have with the TA. In their book the fare is $1650 and that's that.

 

By the way, how many of you, if you're lucky enough to get a substantial fare reduction (not a rebate but a genuine drop in the fare after you've booked) check your insurance cost? All of the major insurers will refund part of your premiium if a price drop puts you in a lower premium bracket. There's your money saving tip for the day.

I have been a big beneficiary of the cruise price dropping, but since I don't buy insurance I was able to take advantage of that great tip! :D It is a good thing to know, again thank you for sharing your insight.

 

jc

[stillfrantic]

HAL bases their insurance cost on the total, printed in the book fare. Doesn't matter what the passenger actually pays HAL directly....the insurance is based upon the cost as printed in the ridiculously high fare printed in the book.

 

The asking for a reduction in insurance cost if the trip price goes down is a great tip. Would never have thought of that!

[vossjemi]

My navigator cruise in 1/04, I was lucky enough to take advantage of a price drop...around $200. That kicked me into a lower category on the insurance, and RC automatically lowered my total amount due for both the price drop and the insurance. I didn't even think about it lowering the insurance....RC brought it up! (I had called about the fare reduction, but didn't know I'd get an insurance reduction too)

 

We booked with RC last time, but an online ta this time....and insuremytrip. No price drops this year though....Right now there are no balcony cabins available for our PC cruise, but one or 2 pop up occasionally. Last week one popped up, and RC's price was $750pp MORE than what I paid! Ouch!

[FnyFACEnAL]

Great info!! No more TA's for us, thank you!

[cruiseco]

Great info!! No more TA's for us, thank you!

 

That certainly wasn't the point of my posts. If the cruise had gone off as planned the original poster would have realized a $120 savings over what he would have paid dealing directly with the cruise line.

 

And the cancellation penalty is exactly what it would have been if he had dealt directly with the cruise line. Not a penny more, not a penny less.

 

My point is that when a TA is disclosing the cancellation penalties to the consumer it has to be based on reality. 50%?? 50% of what? The consumer needs to know that in order to make an informed purchase decision. The TA just needs to spell out the penalties clearly. Go with "If you cancel 11 days prior to sailing your penalty will be $610." Not "If you cancel 11 days prior to sailing your penalty will be 50% of your cruise fare." Then there's no surprises.

[Arizona Cruz Chic]

Talk about confusing.....

whatever your reason for cancelling, I hope all is well with your family.

 

 

 

***

[bUU]

I had suspected early-on in this thread that the problem was that the travel agent wasn't refunding half of their commission so all the customer was getting back was 50% of what the cruise line got. I also suspected that that may have been because of the now-forbidden practice of rebating.

 

If the latter is indeed the case, it is yet-another excellent foundation for the new policy: Travel agents can IMHO be expected (but not required) to offer the same refund policy as the cruise line, but cannot IMHO be expected to refund the same money twice (since part of the 50% had already been refunded in the form of the rebate)!

[Ocean Boy]

Of course the TA wasn't upfront about it on the call. He/She knows EXACTLY what has happened here but admitting it to the RCI rep would be admitting that the agency is violating RCI's policies prohibiting rebating.

And how, exaclty, do you know that the cruise wasn't booked before the no rebate policy went into effect?

 

If they were to base the penalty on the amount actually charged by the TA they would have no way of knowing what penalty to charge. For example, if the client had paid by cash or check the TA would have forwarded a company check to RCI for the net amount due (minus the TA's commission)

Sorry, but all the charges on my credit card have always been directly by the cruise lines. Never have I paid a TA and then have them forward payment to RCI on a TA company check.

[Bob26]

Just to clarify, I made my reservation before new pricing policy went into effect (arond March '04).

 

Secondly, this was not some sort of shady deal between myself and TA, keeping RCCL in the dark. As a matter of fact, RCCL charged my Credit Card, $1100.00 and considered it to be a fair price for the cruise. Until they needed to refund it... At this point, different rules kicked in.

 

Double accounting - that is what I am complaining about.

 

Bob.

[xpcdoojk]

Just to clarify, I made my reservation before new pricing policy went into effect (arond March '04).

 

Secondly, this was not some sort of shady deal between myself and TA, keeping RCCL in the dark. As a matter of fact, RCCL charged my Credit Card, $1100.00 and considered it to be a fair price for the cruise. Until they needed to refund it... At this point, different rules kicked in.

 

Double accounting - that is what I am complaining about.

 

Bob.

Bob, sorry if you misunderstood, nobody thinks you did anything shady! Seriously! The problem is the nature of the rebating beast, and I think that your TA should have been upfront with you, and saved you a lot of wasted effort and anger at the cruiseline. Cruiseco, has described the nature of the transaction in all of its glory. The cruiseline did nothing wrong. Your agents only transgression was not telling you upfront what the reason for you not getting your extra $60.

 

jc

[MGoBlue2]

I just got off the three-way conference call between my agent, RCCL rep and myself. Here is the scoop:

 

The price that I have paid ($1100.00) is a discounted price due to my agent working for Key Account agency and RCCL running a sale when I initially booked the cruise. However, $1220.00 is a total price, like MSRP for a car. So, when RCCL calculates the amount of refund, they go against MSRP, not against what you have actually paid!!.

 

It even became comical at some point:

 

Rep: The penalty is 50% of the price

Myself: How much is that?

Rep: $610.00

Myself: Great, if this is 50% of the price then I should get 50% back - $610.00!!

Rep: It doen't work like that

Myself: How does it work?

Rep: We get 50% penalty - $610.00, you get 50% refund - $490.00

Myself: How is that 50/50?

Rep: It is difficult to explain

 

RCCL rep again failed to point me anywhere on their website where this information is being disclosed.

 

Bob.

It's quite easy to find on the website just go to FAQ - Purchasing a Cruise. This is what it says:

 

 

 

If I have to cancel my cruise, will I get a refund?

 

 

You will get a full refund if you notify us in writing 70 days (60 days for 3 & 4-night cruises) prior to your sailing date. Consult the chart below to determine the cancellation charges applicable later.

Note: No refunds will be made if you do not show up for your cruise or if you interrupt or cancel your vacation once it has begun.

 

Days Prior to Sailing Charges Per-Person

 

3 & 4 Night

60 or more No Charge

59-30 Deposit amount

29-8 50% of total price

7 or less No refund

 

7-Night

70 or more No Charge

69-30 Deposit amount

29-8 50% of total price

7 or less No refund

 

8-Night or longer

70 or more No Charge

69-30 Deposit amount

29-15 50% of total price

14 or less No refund

 

 

Holiday Sailings:

 

Days Prior to Sailing

 

Charges Per-Person

 

90 Days or more No Charge

89-30 Deposit amount

29-8 50% of total price

7 or less No refund

 

 

 

Note that it says the charge is 50% of total price (not your refund).

[rcicruiser]

Bob It is not you who may have made a shady deal, the agent may have discounted the cruise to get you to boo with them. If they did that they could be in trouble that is why the TA is not saying anything. If they get caught still discounting then they could be in trouble. The price you got from the TA may not be the the price that RCI gave the agent.

[rcicruiser]

The cruiseline is basing the refund on what you should have paid before the TA rebated it. The price that you where given by the TA may not be the price RCI quoted the TA. They rebated it so you would book. That is why you did not get back a full refund. The rest of the money went to the TA as commission.

[Erie Dave]

I never noticed this before, but on my recent cruise, the fare wasn't listed in my docs. I am not sure if this has been the case in the past, but this time the fare was simply listed as "as agreed." In this case, I am not really sure what RCI charged for the cruise, I only know what I paid for it. Is this kinda wierd, has it been happening for a while, or is it new?