Luxury cruise lines crack down on agents who rebate onboard

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Crystal Cruises last week became the latest luxury line to shore up its anti-rebating efforts, with a new policy aimed at reducing onboard solicitation of cruise clients and discouraging passengers from shopping their future bookings while onboard.

Rebating is the practice by which an agent surrenders part of a commission in order to lower a fare. In some cases, this is done onboard a cruise when a rebating agent attempts to lure passengers away from their current agent by undercutting the price of future cruise sailings.

Crystal’s move follows on the heels of Prestige Cruise Holdings, parent of Regent Seven Seas Cruises and Oceania Cruises, adding muscle to its existing anti-rebating rules in May, and Paul Gauguin Cruises enacting a tougher policy earlier this month.

Under Crystal’s new rules, when a passenger makes a future booking with the line’s onboard cruise consultants and subsequently asks that the booking be transferred to another agency, a reduced commission of 5% will be paid to the receiving agency regardless of when the transfer is processed.

The policy is effective immediately for all new bookings and any agency-unassigned bookings made on or after June 12.

The line operates the 1,070-passenger Crystal Serenity and the 922-passenger Crystal Symphony.

Agency-transferred bookings that originated onboard also will be excluded from any earned overrides and group tour conductor credit, Crystal announced.

Conversely, when the onboard booking remains with the original agent, the full commission will apply.

Crystal spokeswoman Mimi Weisband said that booking transfers typically become an issue after the world cruise, since onboard solicitations are prevalent during segments of the lengthy voyage.

“There’s a lot of money at stake,” she noted.

Some cruisers, Weisband said, “shop their future booking” while onboard, to agents sailing on the ship or to other passengers.

At the same time, some agents “incentivize their clients to lure other guests,” she said.

“Off the ship, if a traveler doesn’t have an agent, it’s not wrong to recommend one’s [own] agent if one appreciates their service,” Weisband said. “What is wrong is when a guest already has an agent who booked them on their current cruise and other guests are incentivized to bring them to their agent.

Jack_Anderson“In the past couple of months, Jack Anderson [Crystal’s senior vice president of marketing and sales] has been going from city to city on a weekly basis to meet with agents and consortia,” she said. And during those meetings, she said, rebating “has come up enough as an issue for us to take even stronger action.”

While acknowledging that its new onboard policy might not represent a “complete solution” to the rebating issue, it will help to provide a level playing field, Anderson said.

“We believe that a Crystal cruise vacation should be marketed and sold on the unsurpassed ‘World’s Best’ customer experience, and that all of our retail travel partners should compete on marketing creativity, knowledge, sales skills and service, not by giving back hard-earned commission.”

In recent months, many agents have voiced support for the cruise lines’ anti-rebating efforts, though Douglas Crosby of Holiday Cruises & Tours in Henderson, Nev., said it’s unlikely the practice will ever be eradicated.

“Someone onboard just puts the word out: ‘Don’t book onboard. Come to us, and we’ll do better,’” he said.

Nevertheless, Crosby supports the effort by Crystal, which is his agency’s top-selling line in terms of revenue.

Crystal’s new onboard policy “will discourage some agents, knowing that if they get a booking transferred it will reduce their income,” he said.

“I don’t understand why people would want to give away their income by rebating,” he said. “But there are some situations where it gets really serious. [Clients] will come back from a cruise and say, ‘Well, I can get this if I go to this other agency, so what are you going to do for me?’”

Crystal’s action, he said, “may slow down” the onboard solicitation problem.

Prior to announcing this latest policy, Crystal already had several anti-rebating rules in effect. For example, travel agents are prohibited from advertising Crystal fares at a lower cost than the line’s authorized fares; value-added amenities cannot exceed 8% of the cruise fare; and bookings transferred after deposit and prior to final payment earn a standard 10% commission, without overrides.

Prestige Cruise Holdings added new restrictions to its anti-rebating policy. It requires final payment in the gross amount due, and it provides no commission to a receiving agency if a booking is transferred more than 30 days after the booking was made or anytime inside the final payment window.

The logic, Prestige said, reflects the idea that a client should know within 30 days if he or she is happy with an agent’s efforts.

If a booking is transferred beyond the 30-day time frame, Prestige still provides a 10% commission to the originating travel agency that lost the business.

Prestige also limits value-added amenities to 5% of the cruise fare, among other new rules.

Paul Gauguin Cruises, which operates the Paul Gauguin in French Polynesia, enacted an anti-rebating policy effective June 1. Under its rules, agencies may not advertise a lower price than the line’s published fare.

Its policy stipulates that final cruise payments by credit card must be made for the full gross amount, but agents may pay a net price at final payment if full payment is made with a travel agency check or wire transfer.

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