Search:
Carnival Limits Value-Add Gifts to Non-Cash Items
Carnival Limits Value-Add Gifts to Non-Cash Items

Carnival Limits Value-Add Gifts to Non-Cash Items

by Maria Lenhart

July 09, 2012



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.

Anti-rebating stance
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.

Anti-rebating trend
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.”

Self-serving?
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.”

Resources
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


To Post a Comment about this story, click here
Comments

Wendy    July 18, 2012    11:30 PM

Carnival makes it out like they're trying to help agencies, but I think this is just another step towards them eventually trying to cut out all agencies.

It seems to me that smaller agencies that support moves like this think that they'll be at a more level playing field with the big agencies. That might be the case for the immediate future, but they're not thinking about down the road. With the way that cruise lines have been putting the pricing and rebating restrictions that they've been doing over the past few years, I believe they're eventually going to start thinking about reducing (and perhaps eliminating) commissions paid to agencies. What is the small agency going to do when there is no commission to be made? Rather than fighting against the larger agencies, the smaller agencies should realize that they're making money now and probably won't be in the future if they continue to support these anti-travel agency policies. Think about what the airlines did years ago. Same thing could happen here.

I'm surprised the government hasn't stepped in to say that cruise lines can’t dictate what travel agencies do with their commission. If you're paying a company to bring business to your company, why restrict in how they do it? The company that's best at bringing in sales deserves to earn the business and a good commission.

I feel bad that these billion dollar corporations are trying to cut out the livelihood of thousands of people that make up the travel agent industry, who essentially are helping put money into the pockets of the big wigs that are screwing them and are helping guide customers like myself to the perfect vacation. If agencies go out of business, that's going to lead to other companies that depend on them going out as well. Example: if there are no more agencies, this web site and ones like it won’t be able to stay in business, since I'm sure that majority of its readers are travel agency related people.

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. We needed to close any gaps in our policy.

Joni Rein, Carnival Cruise Lines

Carnival’s New Value-Add Policy

Here are the main points in Carnival’s revised policy on value-adds for cruise bookings:

1.    Value-add items must be non-cash equivalent items. Allowable examples include tote bags, hats, beach towels, memory books, sunglasses and Carnival gifts delivered onboard (Bon Voyage items).

2.    Examples of cash-equivalent value-add items no longer allowed under the revised policy include: cash, gas cards, onboard credits, pre-paid gratuities, airline miles, third party cash back offers, free or discounted protection coverage, free or discounted shore excursions, free or discounted hotels nights, reduced airfare, gift cards or anything that equates to a cost associated with the cruise.

3.    There is no pre-approval process for value-adds. However, Carnival reserves the right to review promotional offers to ensure they align with brand guidelines and may request that partners remove or change offers should they not meet these criteria.

Tabs
Leisure Travel Stories
Departments