Chapter 13: Cruise pricing and selling.
As far as advantages and benefits go, cruises may have more than any other travel product. These advantages and benefits apply not only to the client but to the travel agency as well. However, it is the travel professional's responsibility to make every effort to match a cruise line and ship to the client's personality and travel budget. Possibly one of the best things about selling cruises is that doing so is just plain fun.
It is very important for the travel counselor to understand how to use the cruise brochure as a sales tool and accurately calculate the cost of a cruise. Just as in selling tours, thorough record keeping and documentation for all transactions and payments for cruise sales is essential. To accomplish this, as well as accurate commission calculation and tracking, the travel professional must have a complete understanding of the procedures and terms that are used.
At the conclusion of this chapter, you should be able to:
* use a cruise brochure as a sales tool.
* identify the type of cruise line and the clientele to which it caters from the brochure.
* understand which cabins provide the most comfort and stability.
* use a cruise brochure to calculate a total cruise cost.
* describe how to make a cruise reservation.
* explain how payments are handled and agency commission is received.
early booking discount
guaranteed share fare
passenger departure tax
to be assigned (TBA)
For most travel counselors, the brochure is the most widely used selling tool for cruises. No matter which cruise line's brochure you pick up, the layout of information is very similar to any other. The first several pages of a cruise brochure usually consist of pictures of passengers enjoying themselves, shipboard activities, food, and ports of call. You can learn a great deal from these pictures and so can your clients.
The pictures give you a clue to the class of the cruises offered. By looking at the ship's rooms and the dress of the passengers, you can usually determine if the cruise line could be considered moderate or deluxe class, casual or formal, and the average passenger's age.
What age group does the cruise line seem to cater to? Are the passengers in the pictures mostly young families with children, or are they generally older? Do the pictures seem to put more emphasis on fun and activities, or is an atmosphere of elegant relaxation stressed? These first few brochure pages help you to suggest the right cruise for the right client.
After the first several pages, you usually find two or three pages for each ship in the line's fleet. Each ship's deck plan, itinerary, ports of call, sailing dates, and prices are found on these pages. Most of your work in selling a cruise is done from the individual ship's pages.
Toward the back of the cruise brochure, you usually find a chart that is used to determine airfare from the passenger's home city to the port city. Accompanying this chart are the explanations of which passengers (if any) qualify for free airfare and the restrictions or limitations of the airfare.
In the back of the brochure is information about pre- and post-cruise extensions. These are usually hotel packages in the port city and may include a rental car or transfers to and from the hotel. You may also see packages for weddings, honeymoons, anniversaries, and birthday celebrations.
The last few pages of the brochure generally have detailed information covering deposit amounts, when final payment is due, the cancellation policy, trip protection, tipping guidelines, meal seating times, embarkation and debarkation times, and so on. This final section of the brochure may also include a "know before you go" area that answers a variety of questions about cruising in general.
All cruise pricing is based on cabin category, not on an individual cabin basis. Cabin category means a group of cabins, sometimes located throughout the ship, that has a common price. Prospective cruise clients generally select a cabin category that fits within their travel budget. Rarely does a cruise client request a specific cabin without considering the category price first.
Cruise prices are also based on travel season. Some cruises have two seasons, while others may have three. Generally, more popular travel seasons are higher in price and less favorable seasons are lower in cost. Figure 13-1 illustrates cabin category pricing that could be found in any cruise line's brochure.
When it comes to correctly reading the cruise pricing in a brochure, the most important fact to remember is that every amount is per person. This concept includes the cruise price itself as well as the cost for trip protection, air add-on, pre- and post-cruise packages, and so on. As with tour prices, the assumption is that two people are traveling together.
The cabin category price chart shown in Figure 13-1 identifies each category with numbers; however, some brochures use letters or a combination of both. Each category is color-coded and these colors match cabins on the deck plan (not shown here). The color-coding makes locating cabins in each category easier.
It is very important that the travel counselor make every effort to assist the client in selecting a cabin category that not only fits in his budget but also provides maximum comfort. As a rule, this is not as easy as it may sound.
The least expensive cabin categories, while obviously having the advantage of lower prices, have three disadvantages.
1. They usually have upper and lower berths instead of one or two beds on the floor.
2. They are located in less favorable areas of the ship.
3. They cannot accommodate more than two people.
As you might imagine, cabins with upper/lower berths may not be practical for many clients, especially older clients, honeymoon couples, or travelers who are physically challenged.
Clients who are concerned about seasickness prefer a cabin that is midships and unfortunately, lower-priced cabins are often located in the forward and aft sections. As you have already learned, cabins located fore and aft experience more pitch than those located midships.
Larger cabins and suites are often located on the higher decks. These cabins provide wonderful views of the sea and the ports; however, do not be fooled into thinking that they will feel less motion. By looking at the diagram in Figure 13-2, you can see that higher decks may experience more roll than cabins on lower decks.
Lower-priced cabins are also usually inside, so clients who want a window or porthole are not content with an inside cabin. Families of three or four people cannot book a lower-priced cabin because these cabins generally have only two beds, and of course, they are bunk-bed style.
As with most travel products, selecting the lowest priced product may not offer the value the client expects. When selling cruises, like tours, travel counselors must be mindful that price certainly isn't everything. Potential cruise clients, perhaps more than other clients, come to understand that personal comfort while onboard is worth a great deal and it usually takes priority over obtaining the lowest possible fare.
Basic Cruise Fare Calculation
It would appear that establishing a client's cruise fare is simply a matter of selecting the cabin category and establishing the travel season. Unfortunately, nothing could be farther from the truth. In almost all situations, some type of discount applies. Experienced travel counselors would never quote cruise fares directly from the brochure; they call the cruise line, check their CRS, or access the line's Web site to check for discounts and specials, and then they determine the fare.
[FIGURE 13-2 OMITTED]
Almost all cruise lines offer discounts of varying amounts based on the cabin category selected, called early booking discounts. The brochure does not necessarily indicate just how far in advance the booking must take place; hence, the need for the phone call, CRS, or Internet access.
Not a week goes by in which travel agencies do not receive faxes from one or more cruise lines advising the agency of special programs. Cruise specials are usually made available for selected ships, sailing dates, and perhaps cabin categories. The reason for the specials is to boost sales on ships and sailings that currently have low bookings. These specials can take the form of a flat dollar discount or they can be something as impressive as a "2 for 1" offer.
Some cruise lines offer special discounts for past cruise customers, a cruise line loyalty program, and members of the American Association of Retired Persons (AARP). It may be difficult for travel counselors to stay abreast of all the special programs but standard discounts, such as these, are always advertised in the cruise brochure.
Regardless of the nature of the discount or special, the simple fact is that the amount shown in the cabin category price chart is the maximum fare that could be applicable.
The current trend in cruise pricing is that the amount shown in the cabin category chart includes port charges but not airfare or other taxes. Port charges are taxes levied by the government of each port of call against the cruise line. These taxes are shown as a total per person, and are then included with the cruise price. It is interesting to note that port charges are not commissionable and must be subtracted from the cruise sale before the agency commission can be calculated.
All cruises that depart from or return to a U.S. port are subject to other taxes as well and these taxes are not included in the cabin category price chart. As part of the travel counselor's fare calculation, a per-person passenger departure tax must be added. Passengers on cruises returning to the United States are subject to a customs fee per person. These taxes are established by the U.S. government, and are of course, subject to change. Like port charges, these items are not commissionable to the agency.
Cruises that begin and end outside the United States may be subject to a variety of other taxes and fees. These are not usually included in the cabin category price. Generally, the total of all other fees and taxes is shown somewhere on the same page as the cruise fares and must be added to the fare when calculating a client's total cost. Any tax or other government fee is not commissionable to the travel agency.
Most cruise passengers require air transportation from their hometown to the point of embarkation. Within the cruise brochure, usually at the back, is an airfare chart. Figure 13-3 illustrates a partial airfare chart that might be seen in any cruise brochure.
As you can see in Figure 13-3, airfare is shown for cruises that begin in Miami, Los Angeles, Alaska, and San Juan. As you might imagine, an actual list of departure cities is considerably longer than the four cities shown. In fact, airfare charts may list 75 or more departure cities in the United States and Canada.
Like cruise fares, these airfares are approximate, and the actual amount must be confirmed with the cruise line. As you know, air travel within the United States is subject to PFCs, segment fees, and fuel surcharges, and these items are not included in the airfares shown. When airfare add-ons are offered for cruises that begin outside of the United States, taxes from these countries may also apply. The actual amount of PFCs, segment fees, fuel surcharges, and in some cases, taxes for air travel to other countries, must be obtained from the cruise line. PFCs, segment fees, and taxes are not commissionable.
At first glance, the travel counselor may feel that the airfares offered by the cruise line are higher than the applicable excursion fare. In fact, this might well be true. But, most travel counselors agree that the advantages of booking air travel with the cruise line far outweigh a slightly lower fare obtained separately. Consider the following.
* Purchasing airfare from the cruise line usually includes transfers from the airport to the pier for cruises around North America and may include transfers for cruises in other parts of the world.
* Purchasing airfare from the cruise line safeguards the clients should there be flight delays. The cruise ship will delay departure as long as possible when flights are delayed. Should the ship sail, late arriving passengers will be transported to the ship's first port of call and the passengers may receive some form of compensation from the cruise line.
Pricing for Special Situations
As already discussed, cruise pricing is stated per person with the idea that two people share a cabin. But, what if your client is traveling alone? Each cruise brochure details its single's policy, usually on the same page as the cabin category price chart. Figure 13-4 shows a sample single's policy.
FIGURE 13-4 Sample single's policy Cabin Categories 1 through 4: 150 percent of the double occupancy rate Cabin Categories 5 through 8: 200 percent of the double occupancy rate
Some cruise lines offer a program for single travelers who are willing to share a cabin with up to three strangers of the same sex, assigned as roommates by the cruise line. This program is generally called guaranteed share fare. When this policy is offered, it represents a huge savings, but the idea of sharing a cabin with total strangers usually outweighs the savings in most clients' minds.
[FIGURE 13-5 OMITTED]
A handful of cruise ships have cabins designed for occupancy by one person and these cabins are listed on the price chart. However, if you compare the cost of a single cabin to the per-person double occupancy rates, you will see that single cabins are considerably more expensive.
When more than two passengers occupy a cruise ship cabin, the third and fourth travelers usually pay a lower rate than the first two passengers. If you refer to Figure 13-1, you can see that the prices for the third and fourth guests are the same, regardless of travel season. However, there are two different rates based on the passenger's age.
Cruise Fare Calculations
In this section, you will be working with two clients traveling together, simply because most people travel in twos. Most travel counselors agree that the first step is to calculate the commissionable amount of the sale. To accomplish this, add all commissionable items together, subtract included port charges, and multiply by two (two clients). The second step is to add all noncommissionable items together (don't forget port charges) and multiply by two. Finally, add the commissionable total and the noncommissionable total together. You now have the total amount of the sale and the amount you quote to the clients. Figure 13-5 demonstrates this calculation.
Travel counselors can make cruise reservations for their clients in three ways: in their CRS, by phone, and on the Internet. Of the three methods, most travel counselors still make cruise bookings by phone. Regardless of the way a booking is made, the travel counselor must have all of the necessary information about the client and the selected cruise before he begins the booking process.
Many travel agencies have devised a reservation worksheet to assist with gathering information. CLIA has developed a similar form, called a Cruise Data & Reservation Sheet that can be found in the back of the CLIA Manual. CLIA's reservation sheet is very thorough and contains spaces for all pertinent data.
Reservation sheets of this nature help travel counselors by reminding the counselor to ask specific questions of their clients. Without these reminders, counselors may fail to ask about the client's citizenship, special diets, meal seating preferences, and so on. Counselors should also ask if the client will celebrate anything during the cruise. Many cruise lines provide, at no extra cost, special amenities for birthdays, anniversaries, and honeymoons.
After the travel counselor has gathered all of the necessary information about his client, the counselor is ready to make the reservation.
Booking by Phone
Most travel counselors call the cruise line to check availability on the selected ship and sailing date and to confirm the price. The actual booking may not take place during this phone call; usually, the reservation is made during a second call.
The first thing the travel counselor does is identify himself and his agency. From there, the counselor indicates the ship, sailing date, number of passengers, and cabin category. The reservationist may offer the counselor several specific cabins within the selected category. The counselor uses the brochure's deck plan to show the cabins to the client (assuming the client is in the agency). The counselor and client then make a selection about the preferred cabin.
The reservationist may offer a to be assigned (TBA), or a guarantee instead of an actual cabin. A TBA or guarantee means that the desired cabin category is sold out or close to being sold out. The reservationist is offering to guarantee the price and that the cabin assignment, made on the day of sailing, will be of equal or higher value. In other words, the client may be upgraded to a substantially more expensive cabin category for no extra charge. The drawback to this situation is that the client has no control over the cabin's location on the ship. A TBA or guarantee may not be advantageous for the client who must have a cabin located midships.
With this much completed, the reservationist then asks a variety of questions, including the following.
* What are the passengers' names, exactly as shown on their driver's license or passport?
* What are the passengers' ages and citizenship?
* Is air transportation needed, and if so, from what city?
* Have you advised the client about entry documentation?
* Do your clients want trip protection?
* Are your clients celebrating a special occasion?
* What is their dining preference: early or late?
After all of the necessary information has been given to the cruise line, the reservationist goes over the pricing and payment due dates. Most cruise lines give the travel counselor an option date; that is, the date by which the cruise line must have the deposit. Option dates are usually seven days from the date the booking is made. Deposit amounts vary by cruise line and the length of cruise, but are usually a flat dollar amount.
At the conclusion of the booking, the reservationist gives the travel counselor the confirmation number. Sometimes this is referred to as the booking number or reservation number. Regardless of what it is called, it is the identifier for the booking. This number must be used on all communication about the booking with the cruise line. Without fail, the travel counselor must record this number as well as the reservationist's name.
The fact that the deposit is not due immediately is a benefit to the client who is reasonably sure about the trip, but must discuss the travel plans with others before making a commitment. During the time between when the booking is made and the option date, the client has time to finalize his travel plans. If he decides against the cruise, he can cancel the booking without penalty. If he decides the cruise is exactly what he wants, all he has to do is make the deposit.
Certain cruise lines can be booked in each CRS. In some CRSs most of the popular cruise lines have booking capability, but other CRSs may offer only a few cruise lines. Travel counselors have been relatively slow to change from booking by phone to booking in their CRS. As more travel counselors come to appreciate the Internet, most industry experts agree that it will become the automated booking tool of choice.
All of the major cruise lines have Web sites, but this does not automatically mean that the site can handle counselor bookings. Within a cruise line's Internet booking area, there must be a place where the travel counselor can identify the travel agency. Depending on the cruise line, the agency's identification can be by agency name, phone number, ARC number, or CLIA membership number. Without this means of identifying the booking agency, the cruise line is not able to pay commission.
Web Activity Access the following cruise lines' Web sites to learn if they have an "agents only" area: Carnival, Disney, Holland America, Norwegian, Premier, Princess, and Royal Caribbean. An agents only area does not guarantee that agency bookings are possible, but it is a good indicator that they are.
During the automated booking process, the counselor enters the same client and cruise information that would otherwise be given to the reservationist by phone. At the conclusion of the booking, a confirmation number is appended to the reservation. The travel counselor should hardcopy the reservation, with the confirmation number, and keep it as a record of the sale.
Both forms of automated booking may offer advantages to the travel counselor. As we all know, calling many travel suppliers results in lengthy periods of time on hold. Booking via the computer eliminates these delays and speeds up the booking process. Some cruise lines may offer an additional percent or more commission for automated bookings, and any opportunity to increase revenue should not be taken lightly.
As you have already learned, making bookings in the CRS usually reduces the agency's cost for the CRS. Although this is not a direct increase in revenue, it is certainly a reduction in expense. As you can see, using the CRS or the Internet to make cruise bookings may, and usually does, affect the agency's bottom line in a positive fashion.
Most travel counselors create a file folder for each cruise sale. Within this folder should be the reservation worksheet, a hardcopy of an automated booking, the cruise brochure, and an action summary. The action summary is used to record all conversations, correspondence, payments, and transactions for the sale. In addition to being an ongoing record that covers all aspects of the sale, the action summary serves another important function. Should the booking counselor be out of the office, any other travel counselor can easily see what has been done, answer questions from the client, process payments, and so on.
As invoices are received from the cruise lines, these items should be kept in the folder as well. Keeping all paperwork about the sale together and in an orderly fashion substantially cuts down on the possibility of misplacing something, errors, and missing payment deadlines. Like tour sales, accurate and complete record keeping on every cruise sale is essential.
cabin category A group of cruise cabins that have a common price. travel season Various tour or cruise departure dates with a common price. early booking discount A price reduction offered by various cruise lines and tour operators when reservations are made a minimum number of days before travel. port charges Fees levied by each port of call applicable to all cruise passengers, paid as part of the cruise fare. passenger departure tax A tax imposed on cruise passengers departing a U.S. port. customs fee A charge that is part of an airline ticket or e-tkt, made by the U.S. government for all passengers arriving in the United States from abroad. single's policy A vendor's policy for single travelers. guaranteed share fare A cruise line policy whereby a single traveler pays a reduced rate and is willing to share a cabin with up to three strangers of the same sex. reservation worksheet A form, usually designed by a travel agency, that is used to accumulate data about a client and the booking being made. to be assigned (TBA) A cruise line policy in which the price is guaranteed but the cabin grade may be of equal or greater value. The actual cabin assignment is made on the day of sailing.
PAYMENTS AND COMMISSIONS
When a travel counselor makes a cruise booking for his client, all payments must be handled via the agency as well. In other words, the client cannot send a personal check to the cruise line or call the cruise line with a credit card number. It is interesting to note that some cruise lines will not take a booking directly from a client; the reservation must be made through a travel counselor.
Most clients pay by credit card, for both the deposit and final payment. From the travel counselor's point of view, this method of payment is the simplest. Here are the steps a travel counselor takes for payment by credit card.
1. For bookings made by phone, the counselor calls the cruise line and asks the reservationist to retrieve the booking by confirmation number. Automated bookings are retrieved the same way by the travel counselor in his computer.
2. The credit card number is given to the reservationist or is entered in the computer on automated bookings.
3. The cruise line obtains the approval code and processes the charge.
A few cruise lines require that an imprinted and signed Universal Credit Card Charge Form (UCCCF) be sent to the cruise line for all credit-card sales. In fact, some travel agencies use the UCCCF for credit-card sales even when not required to do so by the cruise line. Even when the UCCCF is used, the three steps listed previously are the same. It certainly is more secure to have the client's signature on charge sales, but in an attempt to reduce paperwork, most cruise lines and travel agencies do not use the UCCCF.
The minimum commission paid to the travel agency by the cruise line is 10 percent for the cruise, air add-on, trip protection, extensions and event packages, and prepaid shore excursions. Some travel agencies, because of their sales volume or consortia affiliations, receive from 11 to 15 percent or even more. The override commission usually applies to the cruise only, not the other commissionable features. When a cruise has been paid for by credit card, the cruise line sends the travel agency a commission check. When this check is sent depends on the cruise line. Some lines send the commission after the final payment has been received, while others wait until the cruise has been completed.
Some clients elect to pay for cruises by using a personal check or cash. This creates more paperwork for the travel counselor but may result in the commission being received earlier than it would be on a credit-card sale. Here are the steps for check or cash transactions.
1. The client writes a check for the deposit amount, payable to the travel agency.
2. The agency deposits the client's check and writes an agency check to the cruise line for the same amount.
3. The client writes a check for the final payment amount, payable to the travel agency.
4. The agency deposits the client's check.
5. The agency subtracts the amount of the commission due from the amount of the client's final payment and issues an agency check to the cruise line for the net amount.
When a travel agency issues a check to a vendor, it is very important that the booking number be written on the check. Some travel agencies attach a brief letter with all payments by check. The purpose of this is to make certain that the cruise line applies the funds to the correct booking.
As you can see, there is more work involved when payment is by check or cash. However, the agency takes control of the commission at the time final payment is made. The agency does not have to wait until the cruise line sends a commission check, as would be the case in a credit-card transaction. From a cash flow standpoint, most travel agencies would rather that payments be handled by check instead of credit card.
net amount The portion of a traveler's final payment (less commission) that is sent to the vendor by agency check.
After the travel counselor receives the client's cruise deposit, it is to everyone's advantage to send the client a confirmation letter. By taking this extra step, the travel counselor puts in writing exactly what has been booked for the client. If the client, counselor, or cruise line has made a mistake, it may very well be caught because of the confirmation letter. There are four main areas of information to cover in this letter.
A good beginning to the letter is to thank the client for his business. Then, state exactly what has been booked and the progress or status of the reservation. The travel counselor should advise the client of what is and is not included in the price. Nonincluded items need not be listed individually; rather a statement such as "items of a personal nature" will suffice. As with any travel product, cancellation of a cruise can result in penalties. If the client has not purchased trip protection, the travel counselor should detail the cruise line's cancellation policy and recommend insurance.
What Would You Do? Your clients have decided to take a cruise and they have selected one of the least expensive cabin categories. They want to wait to make their reservation, thinking the rates may go down and they will be able to save a lot of money. 1. Is this reasoning justified? 2. Would you recommend that these clients wait to make their cruise reservation? 3. What risks do you see in waiting to make the booking and what advantages might there be in making the reservation now? FIGURE 13-1 Sample cabin category price chart Cruise-only rates-- rates include port charges Category Value Season Suites 8 $2,459 $2,679 Ocean View 7 $1,459 $1,659 Ocean View 6 $1,379 $1,589 Porthole 5 $1,289 $1,489 Interior 4 $1,269 $1,459 Interior 3 $1,239 $1,439 Interior 2 $1,189 $1,379 Upper/Lower 1 $1,129 $1,299 3rd & 4th guest 12 and under $879 $879 3rd & 4th guest 13 and over $989 $989 Vacation Protection 16 and under $59 $59 Vacation Protection 17 and over $99 $99 FIGURE 13-3 Sample airfare chart Los San Miami Angeles Alaska Juan Akron, OH $329 $499 $819 $449 Albany, NY $339 $529 $759 $469 Albuquerque, NM $379 $319 $629 $699 Allentown, PA $309 $529 $769 $449 FIGURE 13-5 Cruise calculation example Per-person cruise fare $1,479 Per-person port charges -129 Per-person airfare +329 Per-person insurance +99 Per-person discount -200 $1,578 $1,578 2 = $3,156 (commissionable total) Per-person port charges $129.00 Per-person air charges +65.95 Per-person departure tax +3.00 Per-person customs fee +1.75 $199.70 $199.70 2 = $399.40 (noncommissionable total) $3,156 = $199.70 = $3,555.40 (total sale)
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|Title Annotation:||SECTION IV: Selling the Cruise Experience|
|Publication:||A Guide to Becoming a Travel Professional|
|Date:||Jan 1, 2005|
|Previous Article:||Chapter 12: The basics of cruising.|
|Next Article:||Chapter 14: Setting sail.|