Choosing an Agent: Is Your Cruise Paid For?

This is second in a series of how and when to book a cruise in our current economic climate. The first article, When to Book a Cruise, was originally published for my newsletter subscribers, but was republished earlier this week in this blog as well. The final anticipated series, How to Compare Prices, will be posted in the next week.

As people re-evaluate their travel priorities and budgets, making different spending decisions, there will be shakeups in their travel providers as well. Like in any industry, there will be companies which will close their doors and others which will adapt, provide the services being demanded, and remain strong into the future. It's an inevitable cycle in business, but it's more apparent in times when people are watching their spending more carefully.

When I mention travel companies going out of business, your mind probably goes first to the airlines. And yes, they're the most visible travel providers which we all know have their troubles and financial woes. But I'm actually talking about the travel agencies here. The ones who sell you your vacation and assist you in making your choices.

The first major sign of difficulties in cruise agencies came last week when a major discount agency, Cruise Value Center, closed its doors. It had long had a policy of deep discounts and rebates on cruises, a business model which works okay when times are good and commissions are high. But when fares are dropping, there's no room to discount at all, and the margins which remain don't allow for the continued strength of the business. One would think that discounters would be stronger in this economic environment, but it's actually just the opposite.

CVC actually broke Royal Caribbean, Celebrity and other lines' no discounting policies, which were set up not only to provide a level playing field for agencies, but also as a better way for consumers to evaluate the agents with whom they work. When prices are taken out of the equation, consumers will naturally choose who provides the better service, which benefits the cruise lines and consumers both, not to mention the better agents.

You might wonder why a cruise line cares if an agent rebates part of the commission. After all, they're still getting paid the same. The reason the cruise lines prefer no discounting is because when consumers choose based on service rather than price, resulting in a higher level of service, they usually receive more pre-cruise counseling from their agent, ensuring they're more likely to have a good fit with both the cruise line, ship and itinerary they've selected. Thus making for a better vacation and higher customer satisfaction. This is true not just for new cruisers, but experienced cruisers as well.

More than 90% of cruises are sold through agents of one type or another. Only 10% are direct through the cruise lines. And that's the way the lines want it. It costs them less to pay an agent commission than to have a salaried telephone representative. The agents answer the passengers' routine questions and take far less time on the phone with the cruise line per booking than does a direct consumer purchase. Consumers also fare better as they have an advocate on their behalf and someone whose only interest is in providing the best service so that not only will you come back, no matter what is the next cruise line you select, but also provide referrals for new clients as well. There's more of a vested interest in your satisfaction with an agent than with the cruise line.

But back to CVC and what's happening in the industry. Unfortunately, several of the customers of CVC are finding themselves uncertain of whether or not they will receive the cruises they paid for. Ironically, this is because of the discounts they received. Because the only way to discount lines such as Royal Caribbean or Celebrity is to take payment directly from the consumer, then forward the net amount (the fare minus commission) to the cruise line, generally by check, many customers of CVC had paid their final payments on the cruise, but CVC hadn't yet forwarded that amount to the lines, putting their cruises in jeopardy.

I am always sorry to see an agency go out of business, even a competitor, just as I don't like to hear stories of poor service. I am also sad for their hard-working agents who are now out of a job. It hurts the industry as a whole. I'm even more sad to hear that consumers may have been hurt, though I know they're working to get things taken care of for those passengers. You just never want that kind of uncertainty in your vacation, no matter how it ends.

So how do you choose an agency in tough times? How can you be sure that your agency is in good financial shape and your cruise will be paid for?

Most importantly, know who you are working with. Choose a company with a long history and solid reputation. You want an agency which is well-regarded both by consumers and the cruise lines. There are individual, truly independent agents who do a good job, but an agent who is part of a larger company or consortium is more likely to have access to training, support and even better fares. CVC was well-established, though some of the cruise lines weren't wild about them due to their disregard of their no-discounting policies. However, they weren't at risk of having their access to those lines cut off, so overall on this criteria, they met the necessary elements.

But just as important as the agency is how are your payments processed. Are you paying the cruise line or the agent? What does it show on your credit card statement? How can you be certain your cruise is paid in full?

When you read the stories about agent fraud or consumers who are left without the vacation for which they paid, most of the time it is because the agent never paid the vendor cruise line. The consumer made the payment, it showed up on their credit card statement, but the payment was to the agency, not the vendor. It makes a difference.

You want to make sure that the payments, whenever possible, are paid directly to the vendor, and show up as such on your credit card statement. This is for your protection. You can then check within a matter of a day or two with your credit card company and see the payment processed, and know you're good to go. If you're extremely cautious, you can also ask your agent to send you the guest copy of the invoice from the cruise line showing paid in full. But if the payment is made by the agency not the cruise line, you need to ask a few more questions to make sure you're taken care of.

There are legitimate reasons for payment to be made to the agency instead of the line. For example, in the event of a full-ship or partial ship charter, the agency has already paid the cruise line for the entire ship. This is different than a family or company group, because in that type of group the cabins aren't purchased from the cruise line by the agency and then resold. In the case of a charter, you are actually purchasing your cabin from the agency, so it's only proper you are paying them directly.

There are other instances where it's fine to pay the agency, such as with group cruises where there are additional amenities, like cocktail parties, meetings, tee shirts, group transportation or similar, which are added to the regular cruise fare. Your our agent should be able to explain this type of special circumstance if you fall into one, as well as explain how you're protected and assured your vacation is safe. The main thing is to understand that paying the agent, rather than the cruise line, should be the exception, not the rule.

I'm not going to tell you that getting a good price doesn't matter (and we'll discuss how to compare prices in the next article in this series), but know that the agency you work with, and the service provided matters too. You want to work with someone who provides the best combination for you of value, service and consumer protection. Interview your agent, about their experience, training, but also about their company and policies. It all matters.

Vacations are important, and you should keep traveling. But just as you are being more careful in what you spend, be more careful as well about with whom you spend it.