Direct Booking vs. Agents: The Latest Chapter

| Tuesday, 14 Sept. 2010

Recently on our message boards we have seen a tremendous growth in the numbers of posters who suggest people should book directly with the cruise lines.

In previous articles, we've discussed changes in cruise line policies that restrict the pricing flexibility of cruise travel agents, or restrict their ability to advertise discounted rates.

What may not be common knowledge is that these flat pricing restrictions were put in place by the cruise lines after persistent lobbying by travel agencies who wanted them. The reasoning was that with flat pricing policies, the multitude of smaller agencies would be able to compete with the much larger agencies, and with online agencies that were discounting prices for consumers by reducing their commissions.

This has become a "be careful what you ask for" scenario for travel agents.

 

The Flat Pricing Dilemma

I believe the resulting pricing policy changes are having a more negative effect on their business than was anticipated by the agencies who lobbied so strongly for the changes.

It's true that, with some exceptions, pricing on cruises is "flat," so travel agents are indeed selling the cruises at the same, or very similar, prices. However, an unforeseen result -- and an unfortunate one, for the travel agents -- is that many customers are now booking directly with the cruise lines. Apparently many consumers believe that since the price is the same, they are better off dealing directly with the lines.

There are also those who encountered difficulties with their cruise bookings in the past when dealing with agencies. When they call the cruise line to discuss problems or changes they'd like to make to bookings, they are told they must address the issue with their travel agent. Combine this with the knowledge the pricing is the going to be the same, and they believe the better option is to deal directly with the cruise lines.

In my view, these are misperceptions. When you deal directly with the cruise line, you are left without an advocate if you have a problem with your booking or during your cruise -- because the person you booked with is working for the cruise line, not for you. In most cases, the booking agents at the cruise lines are not trained travel agents, they are simply employees hired to sell cruises. They aren't there to give advice and guidance, and perhaps suggest other ships better suited to your needs.

The cruise lines, though not blatantly, do encourage customers to book directly, because when you do so, the line makes more money from your booking because it doesn't have to pay a commissions to an agent. (Thus it would make sense for the cruise line to rebate a portion of that amount back to the purchaser, but they can't, because that would be perceived by travel agents as undercutting them -- and they still depend on agents for most of their bookings).

 

The Renaissance Experience

Renaissance was the first modern cruise line to begin allowing passengers to book directly, bypassing the travel agent community. Though the company certainly accepted travel agent bookings and paid commissions on them, the travel agency community encouraged its members to boycott Renaissance. Although that was not the only reason, Renaissance did go out of business, so the boycott by agents seemed effective.

Ironically, travel agencies have since moved from boycotting a cruise line for its direct booking policies to requesting other lines implement similar policies -- an it's an irony the agents haven't seemed to notice.

The cruise lines are making more on those direct bookings, and they are selling many more cruises directly to customers. Some travel agencies insist they are better off because now they are making full commissions on their sales, without having to kick back a portion of their commissions in order to compete -- so lower sales don't necessarily mean lower profits.

Those of us who buy cruises are likely paying five to eight percent more than we were when an open, competitive market existed. But nonetheless, cruising still represents the best value for money of any vacation type.

 

The Agent Advantage

In spite of what may have been a lack of vision by the travel agent community, I still think it's important for passengers to buy cruises through travel agents.

I would never suggest anyone should pay more if the travel agent's quoted price is higher than the cruise line's. If that happens, run from that agent! But if the quotes are equal, I encourage everyone to book through a travel agent.

Agents will work for you, and provide service that the cruise line's booking agents cannot. They will be available to represent your interests with the cruise line if problems arise. They will be able to monitor price changes on the cruise you booked to take advantage of rate reductions. Many agents will notify past clients of special deals or group rates that occasionally arise, and advise you of other discounts you may be eligible for. Experienced agents will work to know you, and perhaps suggest other cruise lines or ships better suited to your vacation dreams. And good agents can normally offer clients value-added incentives that the cruise line may not.

Get a sneak preview of part 2 of this article: Price Shopping? Pick Up the Phone

 

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