NCL: Rebate Policy Encourages Marketers, Not Discounters

Following closely on the heels of Carnival Cruise Line’s announcement of an expanded pricing policy, Norwegian Cruise Line has announced what it calls “an upgrade and more clearly defined rebating policy, which encourages travel partners to grow as marketers and not as discounters.”

Asked why Norwegian Cruise Line has decided to upgrade its policy, a spokesperson told Travel Market Report, “Our reason for implementing the revision to our policy is that we have for some time been asked by some of our biggest travel partners to have a clearer policy on rebating. Although we have had a policy, it has not been clearly understood or effectively and equally managed across our travel partners. This revision adds structure to the policy, and makes it easier to understand, and easier to enforce. This will make our travel partners stronger than ever.”

Additionally, the spokesperson said the revised policy will simplify the pricing message for consumers. “As the supplier, we should be the one to set the price for our products, and the consumer can now rely on the fact that prices being presented in all the different arenas and by all our partners are official prices and promotions of the cruise line.”

No Rebating

As of August 1, travel sellers may not rebate in the form of price in any way. Further, in order to advertise value-adds as part of a promotion, a travel agency must formulate a marketing plan and submit it to their sales representative for approval.

Specifically, travel agent partners of Norwegian Cruise Line may offer a discretionary value-add so long as it is not cash or a cash-equivalent (except onboard credits); the value or perceived value does not exceed 10% of the total cruise fare including non-commissionable fares; and the dollar amount or percentage of the value add is not included in any marketing or advertising, with the sole exception of onboard credits.

Additionally, funds to cover the marketing plan that includes the value-add will be deducted from the travel partner’s commission, the cruise line said.

Jim Antista, president of Missouri-based The Cruiseman, explained to Travel Market Report that by stating this, NCL is saying that “anything you want to give away is coming out of your pocket.”

“That has always been true,” he added. “If you offer a discount, that comes out of your pocket. If you offer a freebie, the freebie is coming out of your pocket. Anything we have ever given to a client has always eventually come out of our own pocket – with the exception, of course, of some sort of amenity that was provided to groups, such as an onboard credit or a free photo. That’s different.”

Value-Add Marketing Plan Request

In order to offer a value-add to passengers at the time of booking, travel agencies must obtain prior written approval from the Norwegian Cruise Line sales department. The value-add cannot be cash or a cash equivalent, except in the form of onboard credits – none of which can exceed 10% of the total cruise fare including NCFs in value or perceived value.

To receive approval, travel agencies must contact their sales representative (most often a business development manager or representative) and submit a sales and marketing plan. Once received, the sales department will approve one of two options: A value-add promotion that does not exceed 10% of the total cruise fare (including NCFs) and that is not cash or a cash equivalent (except for onboard credit). Or, travel agents can choose from a menu of “acceptable” value-adds to use for marketing purposes in conjunction with a pre-approved sale or promotion. The sale or promotion will be given a definitive booking period by Norwegian Cruise Line.

Once the sales department has approved a sale or promotion, the line will program its internal system to support the promotion and automatically add the value-add to all bookings made within the promotional time.

Among the value-adds that Norwegian said is not allowed are cabin upgrades and gift cards from retail stores.

In its announcement to travel agents, which was e-mailed along with a short FAQ section, Norwegian Cruise Line made it clear that the advertising of rates below the current acceptable pricing to a private membership is considered rebating and will not be allowed.

Credit Card Payments

Another way in which Norwegian Cruise Line is enforcing the no rebate policy is through its payment regulations.

The line now requires all credit card payments to be made to it at the Gross Price due for all bookings made on or after Aug. 1.

According to Norwegian Cruise Line, any travel agent that violates any terms of its new policy will be “subject to penalties up to and including a stop sell.” The line said it may also pursue “any and all legal remedies available.”

The new policy will be policed for Norwegian Cruise Line by travel partners themselves, the Norwegian spokesperson told TMR.

“They will competitively see any prices that fall outside of the policy and will send these for investigation and potential action to sales@ncl.com.”

Agent Support

According to the Norwegian Cruise Line spokesperson, the line “has already had a lot of support from small and large travel agents alike on this revision to our policy.”

“All of this is welcome news to me because it will slow down the few remaining discounters,” said The Cruiseman’s Antista, who added that he doesn’t discount, nor does he do much gifting.

Michael K. Flink, of Montana-based Freedom Travel, told Travel Market Report he feels both Carnival and NCL are “on the right path to leveling the playing field with my small agency and the big Internet people.”

He added the enforced price consistency also will cut down on consumer shopping as it should prevent someone from booking a cruise online and then calling the cruise line or travel agency several times to get “good info” regarding the booking.

Echoing similar sentiments of skeptical support that several agents expressed after Carnival’s announcement, Amber Blecker, of a Colorado CruiseOne, told TMR, “I applaud everything the lines do to level the playing field to help agents such as myself, but am not sure this will change the end result, only add a layer of added bureaucracy.”

Agents with questions about the new policy can address them to sales@ncl.com.