Bad decision by RCI

[Hilary]

The more I think about the new policy by RCI about not allowing discounts, the more I think it's a really bad marketing plan. Heck, the TA's will be happy because they potentially get more commission, but if they are booking fewer RCL and Celebrity cruises because of it, the gain is lost in the decline of business. The other lines have a perfect opportunity now to steal loyal RCL and Celebrity cruisers by watching the prices on those lines and lowering theirs...and advertising that fact.

 

With so many vacation choices, I can easily see that my booked Horizon cruise in December will be my last Celebrity cruise and that I'll either spend my vacation dollars on land trips, or on HAL or Princess, both of whom I like. Sure, I'll still check pricing and itineraries like I always have, but with discounting, a cruise is as much as a land vacation through my timeshare benefits, so without discounting the land vacation may win out everytime.

 

I can only hope that RCI will see the error of their ways and at least modify their policy to make it more like Carnival so it's about advertising, not discounting. I'm very sad that RCI seems determined to lose a loyal Celebrity cruiser, but it is ultimately their loss as I have too many other choices where to spend my vacation dollars. Bummer for them, they may be missing out on my piddly $4000+ when I cruise....but we little people sure add up, don't we?

 

Ultimately only time will tell. Waiting patiently for now....

[scapel]

Hilary,

I think that RCI will not allow advertisement for lower fares. Your travel agent get's the booking for a certain price. What they sell it to you for is their business.

[Ships R Great]

Hilary, HAL and Princess will be doing the same thing as of a later date.

[ljones]

Scapel - The RCCI / Celebrity press release includes "sell" not just advertise. It is copied elsewhere on this site. And, I agree absolutely with Hilary. I have been loyal to Celebrity - but I have every intention of now looking elsewhere. If all the lines institute the same policy, I will find the vacation that is the BEST $$$ VALUE. I had already booked a Feb 2005 on Celebrity and it may be my last. If Celebrity /RCCI expects me to pay several hundred more for the same itinerary as another line - they have made a mistake. And, as has been observed with overpriced Rock concerts - they are NOT selling out in most venues.

[TWELVEOHONE]

Hilary

 

Carnival will be doing the same thing. Several luxury cruise lines started this several montrhs ago and I am sure most other will soon follow.

 

Think about GM's Saturn car, no discounts sold like crazy. How about Llardro's or Swarovski's discounting us prohibited.

 

Unfortunitly, discounting and rebating has gotten out of hand putting many agencies out of business. This will leave the larger discounting agencies to dictate to the cruise lines. Look at Wal-Mart, need I say more.

[ArtM]

Saturn did sell like crazy until the novelty of a fixed price wore off. It also did not help that Saturn did not keep up with the innovations of its competitors.

 

The success or failure of a new pricing scheme ultimately depends on how the crusing public perceives the value of the product that Celebrity is offering relative to what other lines offer.

 

Art

[CGTNORMANDIE]

This move by RCI might be illegal. If they are telling the TAs that they can not give the pax a discount then it becomes a "restraint of trade" which is illegal. I beleve this is a matter for the FTC to look into.

 

ROSS

[Bruin Steve]

This policy seems to be the one that will be followed soon by everyone...Remember, there are now very few distinct cruise lines...RCI owns both Royal Caribbean and Celebrity...Carnival owns Carnival, HAL, Princess, Cunard and others...Both of these companies are going to this "policy"...The fear of those who worried about all the mergers appears to be coming to fruition--The "monopoly" can set its own prices and policies...

 

In my mind, here is what this does:

 

For the past several years, you could group cruise customers into three groups by how they purchased their cruises:

 

1) Those who booked directly through the cruise line (at FULL FARE).

2) Those who booked (AT FULL FARE) through local, old fashioned TAs.

3) Those who booked (AT DISCOUNTED FARE) through large volume TAs or Internet booking sites.

 

For those in Group 1, the cruise line pockets the entire fare.

For those in Group 2, the cruise line pays a small commission and the TA makes a small commission.

For those in Group 3, the cruise line traditionally pays a larger commission, the TA keeps part of it and uses the remainder to rebate to the customer as a discount.

 

For a large part, the TAs and services in Group 3 have far less contact with their customers (although this varies). A lot of those customers don't book with these services for the advice, the personal contact or the service. It's largely that the customers have shopped for the best price and don't care where it comes from. These TAs have, over the years, grabbed a larger and larger share of the market...and since it has long been established that the lines pay a higher commission for volume (they wanted to reward those agencies who really pushed THEIR product), these agencies continued to take high commissions allowing them to continue to rebate...and to advertise that discount...over the internet...which allowed them to increase their volume...

 

The net result is that the small local TAs--the ones to whom the cruise lines were paying the lowest commissions--were getting a shrinking share of the business...and cruise lines were paying higher commissions...and those who knew how to take advantage of this were cashing in on discounted rates and lower prices...

 

By not allowing discounting, the consumer will have absolutely no advantage in dealing with an internet TA service or a high volume TA that may be located 3,000 miles away...What would be the point?

 

That will tend to put some of these TAs out of business...or at least shrink them back down to the equivalent of the local TAs...

 

That will leave everyone to fall into either Group 1 or Group 2...Which has two advantages for the cruise lines:

1) A good number of folks who used "internet TAs" will now just book directly with the cruise line and the line can pocket the entire fare witout any commission.

2) Those using a TA will more than likely just use someone local, since the price will be the same...none of these local TAs will do very high volume so the lines will pay less in commission...

 

In order for TAs to do high volume business...or for the "internet TAs" to stay in business, they will have to find some new way to make their services attractive...but for the consumer using these services, that generally translates to a "deal" of some kind...and the lines seem intent on preventing that...

[TWOFERTWO]

Bruin Steve

I like and agree with your analogy! :)

[linda47]

I, too, am very upset about this new policy. Just recently, cruisers were being urged to book far in advance because the ships were filling faster. Perhaps, we need to rethink this. If the ships aren't being booked, the cruiselines will discount cruises closer to the sailing date. I know many people have to plan far in advance, as do I, to a certain extent. I'm fortunate to be able to plan in a shorter period of time if no one else at work has already taken that week.

 

I guess we'll just have to see what happens. This would be a good time for the all inclusive resorts to lower their rates in order to 'steal' cruisers. If the cruiselines begin to see a slowdown in bookings, I guarantee this policy will not last.

 

And for everyone who will still book a cruise, use a travel agent. That will mean the cruiselines will HAVE to give some of it's money to the 'little' people.

 

I'm glad I have two cruises already booked at good rates. They may be my last.

[TWELVEOHONE]

Bruin Steve

 

Your analogy is wrong in one big area, group 2 & 3. Cruise lines do not pay large discounters more commssion size of agency has nothing to do with it. Commissions usually based on volume and I know many full service "old fashion" agencies earning higher commission than some of the discounter on line.

 

I think cruise lines are looking at the future, they do not want a few large discount agencies getting to powerful as they dictate to the cruise lines. The out of control discounting has put many good agents out of business eliminating competition.

[tbelian]

Has anybody actually booked a cruise today?

 

Did you really pay list price?

 

Inquiring minds want to know.

[Cruise Junky]

Has anybody actually booked a cruise today?

 

Did you really pay list price?

 

Inquiring minds want to know.

 

I checked Travelocity and their prices haven't changed since Friday. It'll be interesting to see what they are on the 20th.

[AuntieBon]

Does this the prices shown in the brochures are the ones they expect us to pay? If that's the case I guess next month's cruise will be my last. Can't afford those brochure prices :eek:

[Cruise Junky]

Does this the prices shown in the brochures are the ones they expect us to pay? If that's the case I guess next month's cruise will be my last. Can't afford those brochure prices :eek:

 

Brochure prices are ridiculous...I'm hoping their meaning their website prices which are still high, but not as bad as the brochures.

[lddam]

Throughout all this hubbub, I keep coming back to the one constant found in an open marketplace, the Law of Supply and Demand. Cruiselines are profit making corporations and can do whatever they deem appropriate toward achieving the goal of the enterprise - increased profits. As consumers, our right and responsibility is to make "value judgments" and seek the greatest return for our vacation dollar. Even with these new policies, some of us will continue to view cruising as a good value, and some of us will not. If enough individuals are in the ranks of the latter and seek value in other vacation venues, then the goal of the cruiseline would be negatively impacted and profits would decline. Under that scenario, the cruiseline would then be compelled to take appropriate action to lure consumers back to their product.

Granted, this wheels of this process grind slowly, and one has to be willing to be inconvenienced for a period of time until declining revenues impact the corporate ledgerbook.

 

As for me, my interests are not so narrow as to restrict my vacation options only to cruising. I will continue researching various cruiselines, and if I determine a particular itinerary to be a sound value, then I will book that cruise. If the cruise industry makes their product "cost prohibitive", then I will simply take my vacation dollar elsewhere. Their loss, not mine.

[greeneg]

Throughout all this hubbub, I keep coming back to the one constant found in an open marketplace, the Law of Supply and Demand. Cruiselines are profit making corporations and can do whatever they deem appropriate toward achieving the goal of the enterprise - increased profits. As consumers, our right and responsibility is to make "value judgments" and seek the greatest return for our vacation dollar. Even with these new policies, some of us will continue to view cruising as a good value, and some of us will not. If enough individuals are in the ranks of the latter and seek value in other vacation venues, then the goal of the cruiseline would be negatively impacted and profits would decline. Under that scenario, the cruiseline would then be compelled to take appropriate action to lure consumers back to their product.

Granted, this wheels of this process grind slowly, and one has to be willing to be inconvenienced for a period of time until declining revenues impact the corporate ledgerbook.

 

As for me, my interests are not so narrow as to restrict my vacation options only to cruising. I will continue researching various cruiselines, and if I determine a particular itinerary to be a sound value, then I will book that cruise. If the cruise industry makes their product "cost prohibitive", then I will simply take my vacation dollar elsewhere. Their loss, not mine.

 

 

 

I think that you have said this very well and are right on the money. What will keep customers returning are all the things which make up the total called "Value". Value is a lot more than just price: it's the sum total of the experience; ship and it's amenities including food, cleanliness, service and staff attitudes, itinerary, customer service before, during and after the trip, things like that. As long as people perceive that the experience is worth the price, then they will tend to come again and again.

 

Celebrity is a pretty good example of this, a very significant percentage of their customers represent repeat buisness. We have certainly been very well pleased with all aspects of their product and plan to continue with them. So far, their marketing strategy seems to be effective.

[Giorgi-one]

Iddam:

 

I agree with your analysis except for one aspect. It may not take very long to determine impact on cruise lines. A few half full cruises will go a long way unless RCCL is willing to make up for loss of tips to their workers until they can convince cruisers to pay the higher fares.

[Jett456]

I just checked an online discounter I frequently use as a barometer for good prices (sorry can't tell - new rules). The only price they have listed is the same price that Celebrity has listed on their website. I used the galaxy 9/27/04 sailing out of Baltimore. Carnival cruises are still showing web rates vs price/rates which are the cruiseline rates.

[lddam]

Iddam:

 

I agree with your analysis except for one aspect. It may not take very long to determine impact on cruise lines. A few half full cruises will go a long way unless RCCL is willing to make up for loss of tips to their workers until they can convince cruisers to pay the higher fares.

 

Giorgi-one,

 

Truth be told, I hope your opinion of a time frame proves to be correct. Being on a fixed retirement income limits our flexibility, and as long as prices remain reasonable, we prefer cruising vacations to land travel - unpack once and see the world.

 

Dave

[woodofpine]

It seems to me that RCI with Celeb is commanding $$10-15% more and dilivering same...

[woodofpine]

In other words CHeap is Cheap! Me'God don't complain about less service, nickle/dime when the ships are bigger and better by far than 10 years ago, and the fares are cheaper than 10--20 years past...

[Ricks]

All I can say is I'm gald I have my 2 (red) time share weeks... Land ho......:cool:

[ocngypz]

Loyal cruisers who are satisfied with the product, don't jump ship due to pricing. They merely book lower accommodations or cruise less frequently (in the case of those who do multiple cruises per year).

 

Even without agency commission rebates, fares are lower than what they used to be on Celebrity.

 

Cruises are not going to go out 1/2 full... if large amounts of inventory remain, the cruiseline will use promotional pricing to firesale the inventory.

 

Why should an agent have to rebate their commission to save the passenger money???

[fredhanson]

Why should an agent have to rebate their commission to save the passenger money???

 

For the same reason that Amazon and other interbased-based companies "rebate" part of their profits to those customers willing to exchange the time and effort doing their own research in order to spend less and use their savings on other things. Other retailers (independent book stores or store-based travel agencies) can charge more than the 'net companies and still stay in business by offering services that the customer is all too happy to pay for. The producers (publishers or ship owners) set their selling (wholesale) price to make their profit and should not get involved with how the retailers run their shops.