Agents Applaud Royal Caribbean’s ‘Price Integrity’ Policy

Royal’s Adventure of the Seas. Photo: Prayitno

Cruise retailers say they’re delighted that Royal Caribbean International has further refined its year-old policy to curtail last-minute discounting. The line said recently that 30 days before departure is the new cut-off for fare reductions, except for short cruises of three or four days, since those voyages typically are booked close-in.

In April 2015 Royal took a hard line against last-minute discounting, saying the practice damages the brand, annoys passengers who book early, and frustrates agents, who must continually track fare changes as clients’ departure days approach.

At the time, Richard Fain, chairman and CEO of parent company Royal Caribbean Cruises Ltd., told stock analysts that RCI would employ a “price integrity policy,” and no longer would offer last-minute discounts on bookings in North America.

“Depending on the type of cruise that last-minute may be 10, 20, or 30 days out. But from that point on we will hold our price at the prior level,” he said.

The new 30-day cut-off is being embraced by retailers.

“Customers, of course, would like to see fares keep getting lower and lower, but Royal is trying to be a better partner with us.”

— CruisePlanner’s Wendy Cushing, in Sagamore Beach, MA

“Royal’s average sticker price has been climbing upward over the last 12 months, so it’s working out well for retailers,” said Anthony Hamawy, president of Cruise.com. “From the retail side, it means higher commissions. And from the consumer side it creates confidence—if you book in advance you’re getting the market rate and a good deal, your rate won’t go down if you wait.”

Hamawy said the new policy doesn’t put Royal at any competitive disadvantage.

“Norwegian, as an example, will have a handful of sailings called No Frills, where they lower their price closer in, but they pull out all the value-add offers. There are some [customers] who would rather give up an onboard credit, or free tips or a drinks package, and get the lower price, and that’s fine for attracting the price-sensitive cruiser. They’re getting a lesser product for less money,” he said. “But sustaining price integrity benefits consumers who book in advance. In Royal’s case, its value proposition is resonating very well with the consumer, and from my perspective Royal is having a very strong year.”

CruiseOne agent Paula Kaisner, based in Austin, TX, agreed that she’s seen no competitive disadvantage. “I have not had any clients who went with another line due to a rate offered on a close-in cruise departure. [With Royal’s new policy] the commission stays stable and that is always helpful,” she said.

Last-minute discounting is a menace, according to CruisePlanner’s Wendy Cushing, in Sagamore Beach, MA. And Royal’s price integrity policy is working well, she said.

“It’s much better for us because if we book someone two months out and they are paid in full, and then they see a lower price [advertised], they go ballistic. Customers, of course, would like to see fares keep getting lower and lower, but Royal is trying to be a better partner with us. A lot of agents complained about them lowering their prices close-in,” she noted.

Cushing says there’s been no backlash against Royal’s tighter pricing policy, and like Hamawy and Kaisner, she doesn’t feel that Royal is losing bookings to lines that keep discounting, such as Norwegian and Carnival Cruise Line.

“First, to me, there’s no comparison between Royal and CCL. The people who are loyal to Royal would never go to CCL. It just isn’t up to snuff when it comes to quality of product, in my opinion. My customers don’t compare the two of them at all,” she said, adding that “the budget-conscious are loyal to CCL but that doesn’t mean it’s a better product.”

Cushing is selling more Royal now than she was a year ago, “getting higher commissions with the higher prices and less stress from customers who see lower fares after they’ve booked.”

She hopes other lines will follow suit. “Last-minute discounting messes people up. Clients get angry and we look like liars telling people that [a certain price] is a good deal or the best they’re going to get.”

Royal also tweaked its cancellation policy, and Cushing said that so far it hasn’t affected her Royal business. Earlier this month the line implemented a policy that states clients must cancel 75 days before departure to receive a deposit refund on cruises of four nights or less, and 90 days on cruises of five nights and longer. Previously, the time limits were 60 days and 75 days, respectively.

“Going from 90 to 75 days [on those longer cruises] doesn’t sound like much but to some people it is a big deal. There are people—not a wide swath of people—who are on the fence about canceling. As the departure gets closer they may say ‘I’m not sure’ or ‘I’ve got issues at home’ or whatever,” she said. But other lines haven’t followed Royal on this policy change either. “I guess they are waiting to see how the industry will handle it.”

CruiseOne agent Kaisner said Royal’s new cancelation structure hasn’t been an issue for her agency so far.