Q: To drum up more cruise
bookings, my agency is thinking about marketing cruises in several
creative ways, such as advertising discounts below published rates,
offering to cancel and rebook clients when prices drop, letting
other agencies buy cruises through us to maximize sales, giving
away certificates good for cruises and sending e-mails to members
of groups and associations that sell their membership lists. Are
there any legal problems with any of these marketing methods?
A:
Each cruise line has the right to tell travel agencies how cruises
can or cannot be sold. They can regulate agencies' sales and
marketing by imposing whatever restrictions they wish. If a cruise
line does not like what an agency is doing, the former has the
legal right to stop doing business with the latter.
The cruise line has
these rights by virtue of general principles of agency law. As long
as a travel agency sells only as an agent and does not assume an
inventory risk, the cruise line has the same rights over the agency
as it does over any of the cruise line's own employees when it
comes to the conditions for making sales.
As it happens, the
largest cruise line, Carnival Cruise Lines, prohibits agencies from
engaging in every one of the practices named in your
question.
According to
Carnival, every agency sale is made under the Carnival Cruise Lines
Travel Agency Policy, which can be found at www.bookccl.com, and
which is now attached as an Exhibit A to the override agreements
that Carnival gives to its preferred agencies.
While you could
argue that these terms and conditions cannot bind you if you have
never seen or heard of them, your point is moot because as a sales
agent, your agency could be cut off by Carnival at any time for any
reason. Therefore, you can simply treat the rules as guidelines
that will tell you whether and when Carnival will exercise its
right to cut you off.
Carnival's rules
have about 6,000 words of detail. Here are the most relevant
rules:
"
Advertising in any media must not contain any message that states,
directly or indirectly, that Travel Agency will sell Carnival
products for less than the Approved Rate.
(Note that it is
not prohibited to sell at less than the approved rate. You just
can't advertise that fact.)
"
Carnival prohibits the Retro Dilution [canceling and rebooking at a
lower price after fares go down] of its products.
"
Wholesaling of Carnival products is strictly prohibited without the
express prior written consent of Carnival.
"
Carnival's Property [trademarked name] may not be used on
promotional cruise certificates ... without Carnival's express
written authorization.
"
Materials promoting Carnival may only be ... e-mailed to
individuals who have requested the promotional
information.
The purpose of most
or all of these draconian restrictions is to level the playing
field among agencies by prohibiting a small number of large or
well-financed agencies from grabbing too big a share of the market,
which would in turn disrupt the cruise line's ability to price its
products.
Large agencies
resent these intrusions into the free market, but small agencies
appreciate them. Unless they have lucrative specializations, small
agencies remain in business today only because of supplier policies
such as these.
Mark Pestronk is a Washington-based lawyer specializing in
travel law.