Price Shopping? Pick Up the Phone

| Feb 11, 2007

With the Internet still in its infancy, and with technological advances changing the way we do almost everything online, it may seem odd to talk about "the old days" of cruise shopping on the Internet. But when it comes to price shopping for cruises, things have changed dramatically in the last couple of years.

When CruiseMates first went online, persons shopping for cruises could simply visit various travel agency web sites, type in the ships, sailing dates, and type of cabin they wanted, and within minutes the best prices available from that agency were on your computer monitor.

This easy form of price shopping is no longer feasible -- not because of technological changes, but changes to cruise line pricing policies.

How Things Changed In an odd twist of traditional business logic, many travel agencies lobbied the cruise lines to institute flat pricing policies. That is, they wanted the cruise lines to ensure every agency was selling the same cruise for the same price. The theory behind the move was to allow the multitude of smaller travel agencies to compete on a level playing field with much larger Internet agencies -- which were rebating part of their commissions, thereby lowering the price to the consumer, so they could capture a larger share of the market.

Of course, in the previous system any agency could have competed with the "discounters" by doing the same thing. However, they claimed their higher operating costs (compared to the online discounters) precluded them from doing this and still surviving and make a profit.

I certainly don't begrudge any business person the right to make a profit; but as a capitalist, I do believe they should do so in an open market -- not an artificially created, restricted marketplace.

Most of the cruise lines, with some variations in their individual systems, have implemented restrictive pricing policies in response to the demands from travel agents.

Individual Company Policies Royal Caribbean Cruise Lines, Celebrity Cruise Lines, and Regent Seven Seas Cruise Line have put policies in place that forbid travel agents from offering prices lower than those cruise lines themselves are charging for the same cabin to customers who book direct, bypassing any travel agency.

There are some minor exceptions, and their policies have been tweaked as time has passed.

For example, Royal Caribbean and Celebrity do offer travel agencies booking group space lower pricing to pass on to their customers, and they allow agencies to offer booking incentives other than a reduced selling price to their customers. All these incentives must be pre-approved by Royal Caribbean/Celebrity. And in most cases these incentive amenities must be purchased by the travel agency from the cruise lines.

Carnival Corporation and all the cruise lines under its umbrella (Cunard, Seabourn, Holland America, Windstar, Carnival, and Costa) do not allow travel agents to advertise prices lower than the cruise lines offer to those who book direct. However, they do allow travel agencies to discount by rebating part of the commissions if they choose to, when dealing directly with a potential customer. (But they are not allowed to advertise those discounted prices, except for group space.)

Impact on Price Shoppers The result of these pricing policies, from a consumer point of view, is that now if you try to simply shop the Internet for cruise prices, you're most likely going to find every web site quoting the same price. But what you need to know is that the price you're seeing on the travel agency web sites is no longer necessarily the best price that travel agency is willing or able to offer.

Today, to find out a travel agency's best price on a particular cruise, you must call them on the telephone, or privately e-mail a request for a price quote. Most travel agencies have toll-free phone numbers so the process isn't more difficult for consumers -- just more time-consuming.

I think this is a very important step for cruise shoppers to know -- so be sure to include phone calls and e-mails directly to travel agents in your cruise shopping regimen.

Go to part 1 of this article: Direct Booking vs. Agents: The Latest Chapter

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