Carnival Cruise Lines on Aug. 1 will no longer
allow travel agents to offer cash-equivalent booking incentives to customers,
saying that many of its travel partners view the practice as another form of
rebating.
Carnival said that the reason for the new policy is to assure travel agents that their rates will not be "undercut by competitors."
The new rule means agents will be banned from offering onboard spending credits, prepaid gratuities and free or discounted shore excursions.
Carnival said that it would limit value-added incentives to items that have a value of $25 per passenger or less, such as tote bags, beach towels and sunglasses.
Agents who support the move said the practice of offering cash-equivalent incentives undermines pricing, and gives volume sellers an advantage because of their higher base commissions and override bonuses for exceeding sales thresholds. Volume sellers can kick back some of that money to clients while not cutting margins to the bone, they said.
Carnival said that the reason for the new policy is to assure travel agents that their rates will not be "undercut by competitors."
The new rule means agents will be banned from offering onboard spending credits, prepaid gratuities and free or discounted shore excursions.
Carnival said that it would limit value-added incentives to items that have a value of $25 per passenger or less, such as tote bags, beach towels and sunglasses.
Agents who support the move said the practice of offering cash-equivalent incentives undermines pricing, and gives volume sellers an advantage because of their higher base commissions and override bonuses for exceeding sales thresholds. Volume sellers can kick back some of that money to clients while not cutting margins to the bone, they said.
Joni Rein, Carnival's vice president of worldwide
sales, said, "If you are small or medium-size, you don’t have to worry about
larger agencies being able to fund promotions that you can’t."
Rein said a number of incentives were being offered that did not fit with the spirit of the existing policy. Under the new policy, she said, agents can be confident that they can compete on the basis of their abilities as a knowledegable travel agent and salesperson.
Rein said a number of incentives were being offered that did not fit with the spirit of the existing policy. Under the new policy, she said, agents can be confident that they can compete on the basis of their abilities as a knowledegable travel agent and salesperson.
Carnival has long enforced limits on how agencies
could use cash-equivalent incentives. Such incentives could not exceed more than
10% of the cruise fare, and they had to be part of a Carnival-approved sales and
marketing plan. Cash-equivalent incentives could not be permanent offers; there
were limits on how long and how often they could run.
Carnival’s latest move is an evolution of its Advertised Price Policy, which it introduced in 2005. The policy aimed to ensure a level playing field for all agents, requiring them to sell cruises at Carnival’s prevailing rates. At the time, Carnival said it wanted to "minimize consumer confusion over price."
However, Carnival did permit discounting in one-to-one communications, a policy that Carnival revised in 2010 by prohibiting discounting in face-to-face conversations, telephone conversations and emails.
In the latest iteration of the policy, Carnival no longer requires pre-approval to offer value-added items, but does reserve the right to review offers to make sure they conform with the brand’s guidelines.
Carnival’s latest move is an evolution of its Advertised Price Policy, which it introduced in 2005. The policy aimed to ensure a level playing field for all agents, requiring them to sell cruises at Carnival’s prevailing rates. At the time, Carnival said it wanted to "minimize consumer confusion over price."
However, Carnival did permit discounting in one-to-one communications, a policy that Carnival revised in 2010 by prohibiting discounting in face-to-face conversations, telephone conversations and emails.
In the latest iteration of the policy, Carnival no longer requires pre-approval to offer value-added items, but does reserve the right to review offers to make sure they conform with the brand’s guidelines.