Norwegian Cruise Line has severed ties with CruiseCompete, a website where travel agents bid for consumers’ cruise business. The cruise line has also warned its agent partners that participating in CruiseCompete may be a breach of contract.
The issue: Rebating.
In a letter sent to Norwegian’s contracted travel partners – and posted online by agents in Travel Professional Community – Camille Olivere, Norwegian's senior vice president of sales, wrote that the cruise line "recently sent notice to CruiseCompete, LLC (CruiseCompete) to ask them to cease using Norwegian's proprietary materials to promote our brand on their site."
As a result, the Norwegian name no longer appears on the list of cruise lines at CruiseCompete.com.
Breach of contract
Olivere said in the letter that some travel partners with higher commissions, group rates and other advantages have, via the site, "chosen to bid down their commission or otherwise use net rates which are intended for packaging purposes to discount Norwegian Cruise Line's product."
This activity is "a breach of the sales and marketing agreement," she said.
She issued a stiff warning to the line's travel partners not to work with CruiseCompete.
"To be clear, going forward we will not contract with accounts participating in CruiseCompete and in the meantime we will avail ourselves of all contractual remedies available to us under the sales and marketing agreements with travel partners including, but not limited to, canceling accounts that are found to have bid on the site," she said.
Olivere was not available for further comment.
Norwegian’s action was applauded by Kelly Rivera of Always the Best Travel in Portland, Oregon. Rivera learned about Olivere’s letter from her host agency, Travel Planners International, and posted it on Travel Professional Community on April 2.
"I think it's a good move for Norwegian because they are trying to establish themselves as a viable product, as opposed to a product based solely on price," Rivera told Travel Market Report.
"I don't know why they do it, but people who bid in there [on CruiseCompete.com] seem to do it at cost or below, and it sets an expectation of the end user that that's a price they can expect," she said.
"I've seen some pretty outrageous pricing on CruiseCompete. When you talk to clients it's like, 'They told you what?'"
Rivera said she hopes other cruise lines follow Norwegian's example.
Bob Levinstein, CEO and co-founder of Des Moines-based CruiseCompete.com / Compete Ventures, LLC, said the company had reached out to Norwegian to address the cruise line's concerns.
"The door is still open, as far as we are concerned, to find a solution. We are all about providing the consumer with choices and fair competition in the marketplace, as mandated by ethics and the law. We hope all of our cruise line contacts and agents feel the same way," he told Travel Market Report.
Not just price
He said that CruiseCompete is about promoting cruising and not just about price.
On its website, a legal notice describes CruiseCompete as providing “a service to match prospective cruise passengers with the travel agencies most likely to offer them the best rates on cruises.”
Levinstein said that "over 55% of the bookings that are generated by the leads from the site are not the lowest price offered."
"Most consumers come to CruiseCompete with only a general idea of the type of cruise vacation they wish to book and use the tools on our site and information from travel agents to decide on a specific cruise line and sailing," he said.
Updates its policy
In the wake of the Norwegian action, Levinstein wrote member agencies with updates to its policy that cruise sellers must conform to cruise line policies or face suspension from the site.
Levinstein’s letter said that CruiseCompete "has decided to take a more active role in enforcement."
Asked about the move, Levinstein said, “We have merely formalized the policies that were previously in place."
CruiseCompete and agents
CruiseCompete was launched in 2003. Travel agents who join are charged a one-time membership fee of $500, but the fee is waived if they respond to at least 300 quote requests in their first 90 days.
Agents pay a fee for each booking they make that is “equal to 2.6% of the gross commissionable fare for the cruise,” according to a FAQ for agents on the website.
The FAQ notes that “[t]he fees aren't due until after the sail date, so you keep more cash in your pocket longer (especially vs. an advertising model, where you pay for the advertising today to generate commission months from now).”
According to Levinstein, CruiseCompete's more than 3,000 agent members include "different types of agencies, ranging from major players to home-based and everything in between.”
"We provide travel agents with a steady stream of easy to manage, highly qualified leads,” Levinstein said.
Since CruiseCompete was launched, “over 3,000 cruise experts have provided over 10 million quotes to over 2 million quote requests,” according to the website.
"Sorry, you were the lowes bidder".