Carnival Cruise Lines is imposing stricter parameters on the value-added extras that agents are allowed to give clients.
Starting Aug. 1, agents will be prohibited from giving clients cash-equivalent value-adds, such as onboard credits, pre-paid gratuities, discounted shore excursions and gift cards.
Under Carnival’s new policy, only non-cash items valued at $25 or less per passenger, such as tote bags and Carnival gifts, will be allowed.
Leveling the playing field
Carnival’s current policy, implemented two years ago, allows non cash-equivalent value-adds that are less than 5% of the Complete Cruise Fare or $25, whichever is greater. In addition, the line allows for cash-equivalent value-adds that are less than 10% of the Complete Cruise Fare (with an approved marketing plan).
While the policy has been successful, travel sellers with small and medium-sized agencies have asked for something stronger that would put them on an even footing with larger players, Joni Rein, Carnival’s vice president of worldwide sales, told Travel Market Report.
“Our partners were telling us that it was not enough, that there was still a disadvantage for the smaller partners who did not have the financial wherewithal to compete,” she said. “We needed to close any gaps in our policy.”
Under Carnival’s current policy, larger agencies have been able to offer incentives to clients that small agencies cannot afford, according to Rein.
“They were doing things like reducing deposits, waiving part of the deposits and offering vacation protection insurance as a free value-add,” she said.
Rein said that revising its policy gives Carnival the strongest anti-rebating policy in the industry. (For a comparison of the rebating policies of major cruise lines, see "Cruise Line Rebating Policies: A User's Guide and Chart".)
“We are showing our commitment to the entire distribution system,” she said. “When small and medium can compete, they get better opportunities to sell their expertise and not worry about being out promoted by others.”
Good for consumers and agents
Carnival’s revised policy is a win-win for both travel agents and their clients, according to Amber Blecker, owner of CruiseOne in Aurora, Colo.
“Anything that removes price and other non-service elements from the booking process is a boon to travel agents and consumers,” she said.
“It allows passengers to view travel agents not as discount providers, but instead see the true value they bring to the transaction with their knowledge and expertise,” she added.
“They can also make better decisions as to which agency really provides that additional value, instead of just choosing on who adds more bells and whistles.
Some may find it restrictive
While many agents will applaud Carnival’s move, others may find it too restrictive, said Michelle Fee, CEO of Cruise Planners in Coral Gables, Fla.
“It will depend on whether or not they tend to give away the farm,” she said.
Fee said she supports Carnival’s decision, calling it part of a positive industry trend.
“We’re seeing the cruise lines doing this more and more – not giving any one agent a better deal,” she said. “I am always for some kind of anti-rebate policy. It makes the industry cleaner.
“When you spend a lot of time with a consumer and then they go on the Internet to find one more extra perk – it really deflates you,” she added. “You end up matching it, so you won’t end up with zero.”
Cruise Planners franchisee Nancy Yoffe called Carnival’s move limiting the dollar value of client gifts “a good thing,” commenting that it “allows anyone to be able to compete on a pretty even basis.”
But Yoffee took a cynical view of Carnival’s motives. “I think Carnival is doing this because they want more direct bookings, and they want to go around the travel agent all together.
"This way, Carnival is on a level playing field with us, the travel agent community, not us on a level with other agencies. In other words I think their motive is self-serving.”
For more on cruise rebating, see Travel Market Report’s previous coverage:
Agents Applaud Stricter Anti-Rebating Cruise Policies
Rebating on Cruise Sales: Where Do You Stand?
Are Value-Adds Discounting? Agents Can't Agree
Cruise Line Rebating Policies: The Great Divide