Another Line Says No to Discounting -- Are Deals Drying Up?

July 20, 2010

(6:15 p.m. EDT) -- Just one week after Carnival told travel agents they could no longer discount fares, Norwegian Cruise Line has announced its own no-discounting policy, which goes into effect on August 1. The two lines are following in the footsteps of Royal Caribbean and Celebrity, who have prevented agents from offering fares lower than the cruise lines' for years.

With so many cruise lines keeping tight control over cruise fares, many deal hunters are wondering: Is this the end of cruise deals, not to mention travel agents?

But first, here are the key points of NCL's new policy, effective August 1:

Travel agents are forbidden to discount the actual price of a cruise.

Travel agents may offer extra-value perks, with some caveats: The perks cannot be cash or cash equivalents (onboard credit, however, is allowed); the value may not exceed 10 percent of the total cruise fare including non-commissionable fares; and the agents must get prior approval from NCL before they can offer these extra perks.

The new policy does not impact group bookings and the perks associated with these fares. It also does not impact amenity points, which are encouraged.

We asked Holland America and Princess Cruises, two of the remaining major mainstream lines, whether they would join NCL, Carnival, Royal Caribbean and Celebrity in banning discounting. Holland America requires that travel agent partners only advertise approved rates; they can promote special prices, discounts or reduction -- just as long as they are authorized by Holland America Line. Meanwhile, Princess spokeswoman Julie Benson tells us that, "Princess doesn't take a position on rebating and we have no plans to change our approach."

So, Are Deals a Thing of the Past?

Not necessarily. Remember that Celebrity and Royal Caribbean have had this policy in place for years, and many cruisers are still getting great prices on those sailings. The cruise lines will still discount cruises that aren't selling well; Bill Kraus, president of Cruise Club of America, tells us that despite heavy bookings in early 2010, the fourth quarter of 2010 and early 2011 are "looking bleak for bookings, and rates will have to come down."

Plus, agents can still block out group space and offer cruise line-approved low rates in that way.

What's Going to Happen to Travel Agents?

The other question we're hearing is whether these no-discounting policies will be the end of travel agents. Reader SEH writes, "This removes my incentive as a customer to use a travel agent if they are not offering me anything…..going through the cruise line is more convenient and I have total control over my booking 24/7. I am afraid this will put the little guys out of business in an already hurting economy."

However, agents seem to have mixed views. Ben Bajak, owner of Cruise Holidays of Mission Viejo writes, "A no-rebating policy is great for the industry, especially for a tiny agency such as ours…. I hope they do the same for the rest of their brands. Then maybe we can sell a little more on service and a little less on the cheapest price." And Joan Hartlieb of Joan's Journeys writes, "All I can say about the Carnival policy is...IT'S ABOUT TIME!!... [it's] service, care and added value [that make] a professional travel agent stand out in the crowd."

Kraus, on the other hand, worries that bookings will start to move away from the travel agents and toward the cruise lines, but acknowledges that not being able to rebate will help his bottom line. He notes that when Royal Caribbean instituted its policy, he saw an initial fall-off in sales, but then his customers starting coming back when they realized they got better service booking with an agency than directly through the cruise line.

Stay tuned to see if other cruise lines follow suit.

--by Erica Silverstein, Senior Editor

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