Royal Caribbean Cruises will no longer be
doing business with "card mills."
In a move that
touched off immediate, widespread accolades from industry trade
groups, other travel suppliers and travel agents, RCCL last week
informed giant YTB Travel Network and two other firms that RCCL's
three cruise lines were terminating business relationships with
them and with all other firms the cruise line referred to as "card
Card mills are
generally defined as host agencies that sell ordinary consumers
access to benefits designed for travel agents.
RCCL revealed its
new policy in a letter to travel agents stating that Royal
Caribbean International, Celebrity Cruises and Azamara Cruises were
all taking action against these types of companies "in an effort to
prevent a growing and troubling trend within the travel
RCCL would not
publicly name the companies with which it had terminated its
relationship, but Kim Sorensen, CEO of YTB, confirmed that he had
learned on Oct. 8 that Royal Caribbean was terminating its
relationship with YTB as of Nov. 9.
Sorensen said that
he would ask to meet with RCCL in the hopes of reversing the
decision before it takes effect.
He said RCCL didn't
take "enough of a look at our business, and we want the opportunity
to show them that."
Lisa Bauer, senior
vice president of sales for Royal Caribbean International, would
not confirm that its policy specifically targeted YTB or similar
firms, but she said in an interview that RCCL had notified three
companies and that they were "the most egregious and the largest
and the ones everyone's very familiar with."
The RCCL letter
said the targeted companies "offer normal consumers the ability to
become a 'travel agent' or 'travel agency' or receive 'travel agent
credentials' with little or no professional training or
Bauer and Dondra
Ritzenthaler, senior vice president of sales for Celebrity and
Azamara, both signed the letter and sent it to travel agents on
Oct. 9. Bauer said she was immediately inundated by e-mail from
travel agents applauding the decision.
that any loss of revenue RCCL experiences from the canceled
business relationships will be made up for in additional market
share that agents give RCCL because of the decision.
"I believe our
brands will get more support as a result of this," she said, adding
that the three businesses did not represent a sizable percentage of
RCCL's business and that the card mill model hurts the cruise
YTB, which reported
$226 million in 2006 sales, earning it the No. 35 spot on Travel Weekly's Power List, said it had booked
$13 million in cruises with Royal Caribbean so far this
Many agents told
Travel Weekly that they commended RCCL's decision (see box below, for additional comments).
"I applaud Lisa
Bauer for her actions," said Pam Vermons of Glendora Travel Service
& Cruise in Glendora, Calif. "All I can say is, it's about
time, and I hope they stick to their decision and enforce
Bauer said that
besides the three firms it was now terminating, it will continue to
look at the issue and at other alleged "card mills." These
retailers are often identifiable, Bauer said, by having a large
agent membership with low per-agent returns.
"If someone has
lots of agents but the revenue per location is really small, it
does cause you to wonder what the business model really is," she
RCCL said in the
letter that there was a host of negative consequences of the
card-mill business: Consumer experiences with untrained agents
tainted their encounters, the business reputations of accredited
and certified travel agents were being undermined, the costs of
Royal Caribbean's operations had increased by having to provide
benefits to people for whom they were not intended and customer
services that Royal Caribbean expected a travel agency to provide
were not being provided, despite the payment of a full
Bauer said that
RCCL could enforce the decision because it could identify any host
agency for which a travel agent works. She said that agents must
have a state business license and either a CLIA, IATAN or ARC
number, in addition to a letterhead or Web site and W-9 from their
Bob Sharak, CLIA's
executive vice president for marketing and distribution, said that
to obtain a CLIA ID card, an agent must be affiliated with an
active CLIA member agency and that the agency owner or manager must
approve the application for the particular agent. The agent must
also complete mandatory CLIA training.
Though YTB is a
"networking company," Sorensen he said it puts "major emphasis on
the travel side. ...We want to legitimize the concept with our
On the other hand,
he said, YTB makes no pretense of competing with "high-touch,
high-service" travel agents. It is after the consumer who is
comfortable booking on the Internet. He denied being a card mill,
asserting that the travel emphasis was what differentiates YTB from
card mills, which are merely networking businesses.
He also said that
YTB did not sell access to travel discounts meant for the trade and
that YTB issued an entry-level ID card that looks nothing like the
IATAN card and was meant for use at time of booking, not for
obtaining travel benefits.
YTB has an
arrangement with major suppliers, including Royal Caribbean,
whereby YTB screens its outside agents (called referring travel
agents, or RTAs) for their productivity before allowing them to
take a supplier's fam or other offer meant for selling agents. He
added that he assumed most suppliers did not accept the YTB card as
justification for trade benefits. "I don't know how to deal with
that if suppliers do accept it," he said.
Sorensen said that
RCCL's "senior management may have succumbed to the petition out
there," a reference to a petition drive that has attracted hundreds
of signatures from agents urging suppliers to either not support
multilevel marketing businesses or to differentiate between them
and traditional agencies. (See also: "Agent's crusade against travel MLMs finds backers on
Bauer denied having
been influenced by the petition, saying she had not seen
"It was completely
our own internal decision," she said. "The [card mills] were
causing disruptions. Some of our advisory board members were saying
it really is commoditizing the industry."
RCCL's decision has
put other cruise and travel companies on the spot, since many
travel agents expressed the hope that they would follow its lead.
As of press time, no other cruise line had made any official
statement about its own dealings with so-called card
Carnival Cruise Line's senior vice president of sales, said that
her line has always had a "strict policy in place" denying travel
agent benefits to card mills.
"Since these folks
are so large in numbers, it was always difficult for us to
determine who were the real producers in the group," she said. "We
took that no-benefits approach early on, so this has not been a
problem for us. Many of their agents sail but at normal Carnival
consumer rates. Simply put, they are denied travel agent
Line did not respond to requests for comment.
president of Unique Vacations, worldwide representative for Sandals
and Beaches, said that Sandals does not work with agents who do not
invest in travel industry education.
"It is a clear
distinction that we made long ago," he said. "Anyone who does not
have a relationship with their customers and is not promoting
brands runs the risk of being cut out of the marketing
spokeswoman Laura Bryant said, "At Enterprise, National and Alamo,
we require only a valid IATA or CLIA card that must be presented at
the time of rental for an agency-industry car rental discount. An
invalid or suspicious card would not be accepted for a discount and
would be reported through our security processes."
contact the reporters who wrote this article, send e-mail to
Johanna Jainchill at [email protected] or Nadine Godwin at
Gay Nagle Myers, Dan Luzadder and Michael Milligan
contributed to this report.