Looking Back: The Effects of RCCL Non-Rebate Policy

Implications:  
In August 2004 RCCL issued a new policy in regards to rebating and now over two years later it is important to review the results of this policy and to see if it has been successful.

The policy was enacted to control pricing and create a level playing field. By controlling pricing and policing the agencies did RCCL increase sales? 

                                                


 

Analysis:

While this may sound great to some agents- larger commissions on the product and they wouldn’t have to compete with the Expedias and large call-centers of the world- this also had severe ramifications that are certainly being felt now.

First of all, I have always envisioned Carnival roaring with laughter. They fully understood that Royal Caribbean was going to lose a substantial share of the market.

Their cruises were always priced high, but the travel agency community always compensated for that by rebating to the client. We tried to make the price attractive to close the sale. Now our overall sales with Royal Caribbean are down by 25% and up by 25% with the Carnival family of products. Coincidence, I think not.

We have one chance to impress a client when they call- to give them the best deal. We do not want to loose business because of policy so we begun to offer an alternative for the Royal Caribbean client. We could offer a cruise from the Carnival family at a much more attractive rate and those sales soared.

With the glut of inventory on the market you think someone would tell Royal Caribbean to change the strategy- it is not working. You need all the help you can get to move the inventory. Carnival is still laughing.