- By Rene A. Henry
The cruise line industry is notorious for its pricing. Every cruise is promoted as being a deal. 2-for-1 offers. 60 percent off. An 82 percent savings. But a savings of what and two for what? Everybody loves a bargain, especially a 2-for-1 sale in this economy. But sometimes with a 2-for-1 offer the buyer does not get 2-for-1.
Cruise lines have misled consumers for years with regard to pricing. In the more than 200 articles he has written, Thomas A. Dickerson, a justice of the Supreme Court of the State of New York, cites scores of lawsuits against cruise lines involving false, misleading and deceptive advertising. The industry is a crisis in waiting if consumer advocates, the Federal Trade Commission, the Department of Justice and some state attorneys general decide to investigate pricing practices.
The Internet is filled with so many complaints about cruise lines it would take volumes to document all of the cases. This reflects how customer service has become an oxymoron with so many cruise lines. There are a handful of exceptions and they continue to be the best in the industry. The industry needs to be less honestly enthusiastic about promoting its so-called bargains and more enthusiastically honest when it comes to pricing.
According to the FTC, one of the most common forms of bargain advertising is a price reduction. Most consumers believe that a list or suggested retail price is the price at which a product or service is generally sold. If this price was not offered to the public on a regular basis for a reasonably substantial period of time, but inflated, then it could be considered fictitious, the bargain deceptive and the reduced price in reality is just the regular selling price.
Cruise lines are synonymous for fictitious pricing. I have been unable to find any travel agency or passenger that ever paid the so-called “brochure price” or the price from which reductions are made.
Further confusing the issue are web-based discount clearing houses which may offer even lower prices than those offered by the cruise line or through travel agents. According to Vacations To Go, an Internet clearing house for discount cruises, some cruise lines offer additional regional discounts for people who live in certain states or provinces, customers who are 55 years or older, airline employees, police, firefighters, EMTs, teachers, active and retired military personnel and former cruise passengers.
No one I know has travelled as extensively as my good friend Sir Clive Banfield of Charlotte Amalie, St. Thomas, U.S. Virgin Islands. He has taken more than 300 cruises since his first in 1955. He tells me that he has sailed on ships of more than a score of cruise lines and not once ever paid the full listed or brochure price for a cruise. And he adds that he does not know anyone who has paid the so-called fictitious price.
When I hear of a 2-for-1 sale, I think of Safeway selling two $1 lemons for $1 or the equivalent of 50 cents each. Or Nordstrom’s selling two $50 shirts for $50, a savings of $50 or the equivalent of $25 each. And Wolfgang Puck having a luncheon special on $25 entrees at Spago where I can pay $25 and my friend and I can each have a $25 entree for the price of one, or I can pay $25 and just eat two entrees. All prices are based per person, per sale, per customer.
So when I received a promotional mailing from one of my favorite cruise lines offering 2-for-1 fares, up to $1,000 savings and all inclusive wine, spirits and gratuities, I had my travel agency, Corniche Travel in Los Angeles, check it out. I’ve sailed on their ships a number of times and have praised them in my articles and books for their customer service.
However, my math doesn’t synch with cruise line pricing. I interpret 2-for-1 as being where an individual can pay one fare and two people can cruise for that amount, or the individual could pay that and cruise alone. I asked my agent at Corniche to check out a cruise the brochure listed at $6,420 with a special discounted price of $2,140, if booked before the end of June.
You can imagine my surprise when she came back and told me she was quoted $4,370. Somewhere along the way the cruise line discriminated against single travelers and marked up the original high-end, pre-discount price about 150 percent. Applying this same pricing principle to retailers, the lemons would be sold to a single buyer for $1.50, the shirts for $75 and the entrees for $37.50. The industry is becoming infamous for its pricing policies.
There is one company that is an exception and a shining star in the industry – American Cruise Lines, headquartered in Guilford, Conn., and the country’s largest cruise company. The line does not discriminate against single travelers and its listed brochure price is its only price. It flies the U.S. flag on the newest fleet of small ships in the industry and abides by all U.S. regulations and pays U.S. taxes.
“Over the years we’ve experienced an increase in solo travelers, so we naturally want to provide them with the best accommodations,” said Susan Shultz, the company’s director of sales. “All of our ships boast single staterooms and single rates so passengers traveling alone do not have to pay a single supplement rate, which is often upwards of 175 percent.
“When renovating the Queen of the West, our paddlewheeler on the Columbia and Snake Rivers, additional single staterooms were added to meet the demand. Furthermore, aboard our newly built paddlewheeler,Queen of the Mississippi, 15 percent of the staterooms are singles, an industry high.
“Our ships are very appealing to single travelers due to their small size and personalized service, a hallmark of our cruise line,” Schultz added. “Passengers traveling alone feel comfortable and at ease among like-minded guests and a friendly all-American crew.” American Cruise Lines has 35 itineraries along the inland waterways and rivers of the Pacific Northwest, Alaska, the Mississippi River System and the U.S. East Coast from New England to Florida.
The world’s two largest cruise lines are headquartered in Miami – Carnival Corporation and Royal Caribbean Cruises Ltd. Carnival has a fleet of more than 100 ships that sail under a number of brands and controls 49.2% of the market. Unlike American Cruise Lines, the ships of both Carnival and Royal Caribbean fly foreign flags and are exempt from both U.S. regulation and taxes.
With most cruise lines, forget trying to get your money back if your plans change even in the event of a medical or family emergency. The lawyers have written the contracts completely in favor of the cruise lines and passengers have waived away virtually all rights, even if the ship loses power and floats aimlessly for several days or runs aground and sinks. They also disclaim any responsibility or being accountable for the shore excursions they recommend. Even the medical practice or malpractice of the officer-doctor on board is exempted from any cruise line responsibility.
Holland America, owned by Carnival, even refused to honor its own pricing mistake. When the cruise line accidentally sold cabins for $849 that normally cost $1,399 a person on 10 sailings aboard its MS Noordam, it required the passengers who booked the fares and who had confirmed reservations to pay the difference or it would deny them boarding. Compare this with a mistake U.S. Airways made several years ago when it erroneously listed and sold flights for an unbelievable $1.86. The airline honored its mistake and reaped a public relations windfall.
In the face of crises that have plagued the industry and the economy restricting consumer discretionary spending, cruise lines are doing well. According to North American Cruise statistics reported by the Maritime Administration, more than 10.9 million passengers were on 4,222 cruises in 2011 for a total of 71.8 million passenger nights, an increase of 2.8 percent over the previous year. These people need some guarantee or protection and recourse when a cruise line behaves badly.
It would be refreshing to see several cruise lines break from the industry pack and think of the customer first before Congress does it for them. Sen. John D. (Jay) Rockefeller IV (D-W. Va.), chair of the U.S. Senate Committee on Commerce, Science and Transportation, is planning hearings to see if American consumers are protected. “Complicated ticket contracts limit passenger rights and antiquated laws prevent passengers from collecting fair compensation,” he said.
But with the cruise lines so lawyered-up and spending millions to lobby their special interests, I believe that the changes will have to first come voluntarily. In the past four years Cruise Line International Association, the industry’s trade association, spent $8.562 million and Royal Caribbean $6.847 million on lobbying. This does not include money given directly to members of Congress, PACs or Super PACs or routed through law firms. I wonder what Sen. Al Franken (D-Minn.), who in 2004 authored Lies and the Lying Liars Who Tell Them, would think about cruise industry pricing.
My favorite cruise line did get my business. I still consider them one of the very best. And the cruise is going to destinations I want to see.
Rene A. Henry, born in Charleston, WV in 1933, lives in Seattle, Washington. He has authored eight books and writes on a variety of subjects. In his book, “Communicating In A Crisis,” he devotes one chapter just to crises in the tourism and travel industry as well as one on customer service which should be on the must read list of all management in the cruise lines industry. For David M. Kinchen’s review of “Communicating in a Crisis” click:
Many of his widely published articles are posted on his website www.renehenry.com.