Wholesale cruise agencies- unethical??
 

I have posted a reply to someone in a thread titled "military discounts" regarding a wholesale agency they recommend. They recommend a company that is selling cruises for wholesale (published rate minus all commission) and only netting the transaction fee of $35 per booking plus enrollment fees. I basically advised them of the new "no rebate" policy set by RCCL in August that constitutes that no agency can rebate or sell a cruise for lower than the cruise line's published rate. Other cruise lines may follow suit to the same or varied degrees in the near future. This policy has not been popular to travel agents who at one time could rebate part of their commission to be competitive in the market or even make up for agent error. However, in the cruise line's eye they are trying to drive out the true rebate agency that is selling cruises for less than they themselves can (cruise lines sell at published rate) and in turn hurting the travel agent as well. I would like to get some feedback from anyone who has insight. Any cruise line employees out there? Seems that cruise lines are really between a rock and a hard place here.

Not all agencies sell RCCL cruises at the same price. RCCL has some key accounts which allow them to sell the cruises cheaper then agencies who do less business with RCCL. Plus, agencies can still get group rates and sell their cruises cheaper that way.

I think agents should be able to price their cruises however they want. If someone only wants to make $35 commission, that is fine.

I thought the deal was the agencies couldn't "advertise" cruises cheaper than the cruise line; not that they couldn't sell them cheaper. I also see that many agencies are offering things like a visa gift card.

Peter

Travel agents could find themselves in the same situation as they have with airlines. The airlines don't pay agency commissions any longer, the agencies now charge a fee for their services on airline tickets. The cruise lines could follow this path.

Talked to several T/A's on our recent cruise. Seems they are offering anywhere from free travel ins. to ship board credit. I agree, t/a's should be able give up part of their commission if they choose to.

Peter P.E. only RCCL/celebrity does not allow you to sell lower than published. Other cruise lines such as Carnival are the ones with rule you can't advertise lower than published (supposedly as of January), however you can still rebate with them. The incentives are a way around the RCCL rule I guess. There are some real good articles if you do a google search on the rebate policy. Many agents started out mad at the cruise lines that they no longer had any control with pricing RCCL. However, RCCL argument is that the product belongs to them and they have the right to set the price. A travel agency never holds inventory (purchases for resale) and therefore the product never really belongs to a travel agency. RCCL further states it is not trying to do away with travel agents. A question may be "why would they want a travel agent to sell a product when they themselves will make more money to sell the product at the same price without having to pay a commission to the agency?" Their answer is that for all consumers who buy direct, they actually make more calls to RCCL than the actual purchase call. To service this consumer, RCCL pays staff to man the phones, etc. It actually is a wash to them because when an agent books it is usually just one or two calls and the agency handles all the service calls from the consumer. The cruise line wants to control the published price and keep the service of it's clients at a high level whether they book direct or through a travel agent. Wholesale agencies that short pay to the cruise line by all commission are lowering industry standards. But, in trying to do away with wholesale agencies it is in turn taking away some control from the agents. I think with creative marketing skills (selling out of group space, gifts to clients, etc) the "no rebate" policy will become more popular. It will also have consumers searching for service rather than pitting one agency against another for peanuts. I am debating this outloud because I still am not sure what I think about it. For example...did you know a travel agent themselves can't book with RCCL and call in payment minus the commission even when they themselves are sailing!!! That seems unfair!

Continued....unless they pay by agency check which is becoming a thing of the past I understand.

who cares. travel agents (as proven by airlines no longer paying commissions) are no longer in a position of power in the distribution of travel products. there are many other option...all cheaper. relying on the artificial price controls that you talk about is a very short term liferaft for the industry. travel agents simply cannot compete with lower cost distribution channels.

think of the overall economy of it...it is far cheaper for the cruiselines, airlines, etc. to answer their own calls with a low cost call centre (offshore perhaps) than to pay a travel agent with big commissions to do it (and pay whether there are calls or not). your theory sounds good but if this is the main value-add, your industry is in big trouble.

My sentiments, exactly. If you don't provide any value to the transaction, you won't survive.

Peter

I think there is a misunderstanding of the issue here. This issue is regarding wholesale agencies. They are the very reason you may no longer be able to go online and find competitive rates. These agencies are selling for less than the cruise lines are selling for themselves (net rates). First, I must say that once upon a time I worked in a call center for a major on line vacation agency (no longer). The prices are only cheaper going through the internet if the agency (these are agents too by the way) hold group or block space on the sailing or rebate part of their commission (preferential rates for large agencies are not large price differences). Unless you are going direct with the cruise line, the on-line companies are agents. I am making the public aware of what wholesaling has done to the industry. The cruise lines themselves do not approve this practice. When you refer to getting cruises "cheaper" on the internet, the very control that these online agencies had to rebate part of their commission has been taken away by the wholesale agency. So if you want to be able to go online and find competition between agencies then you would not be for the wholesale marketing in question. This is what is behind RCCL/Celebrity inforcing the "no rebate" policy.

Example: PUBLISHED Cruise base price is $1000.00. Port charges and gov. tax is $200.00. This is the rate seen on Royal Caribbean cruise lines. Travel agents MUST sell for the exact same rate (thus no rebating). RCCL pays X agency 10-15% of the 1000.00 base price commission depending on the production of the agency. BEFORE RCCL implemented the "no rebate" rule, a large agency that made 15% could discount the 1000.00 by 50.00 per person and still make the same amount as the small agency making 10% on the same booking. The large agency had advantage over the small one. This was one scenario. Then the rebate agency could sell the same cruise minus all commission of $100-150 for 850.00-900.00 plus fees, charge a membership fee plus $35.00 service fee per booking. This agency would call in payment for $850-900 plus port and tax of 200.00. The cruise line says it is implementing the "no rebate" policy to help out the little agent. But, when you look at the second scenario you will also see they are doing it to save themselves. The rebate agency is selling for less than they can. So in order to do away with rebate agencies (if you look online, no rebate agency sells RCCL/Celebrity) it has now taken away the competitive market for the agency and the consumer. You will see very little price difference for RCCL/celebrity versus other cruise lines. (group contracts are still allowed) There is a good and bad side to this. I was trying to make others aware of this information as most do not understand it. To compare airlines to the cruise lines is like comparing apples-oranges. Airlines for example used to pay travel agents commissions out of the published rates. Regulations never allowed someone to charge an airline ticket at net or rebate in any way. Do NOT be fooled to think that doing away with the commissions in the fares did away with travel agents booking airline tickets. Travel management companies knew way in advance about the wave of the future and were being paid by back end management fees years before this transition. They are still runnning strong. The large corporations that use these travel management companies are paying for a multitude of travel management services. I really feel sorry for those who want to slam travel agents because they are ignorant to the fact that while change in the industry is inevidable, there will always be a need for a liason between the powers that be and the consumer in some capacity.