Every now and then, it’s useful to take a peek behind the scenes in the travel industry to see how the machinery works. But don’t stare — it could drive you mad. That’s what almost happened to me when I tried to mediate the case between Jerri Olsen and Carnival Cruise Lines.
Before you continue, a warning: The following case contains information that some travel agents might find offensive. The rest of us are likely to just be confused.
Here’s Olsen’s gripe.
My husband, son and I took a cruise on Carnival that got shortened by a day. For the inconvenience Carnival gave us a 20 percent discount on a future cruise.
Carnival said the discount would be on any price we were able to get. We signed up for a cruise that met the requirements. We called an agent who did not know about our discount when she quoted us a price for the cruise. When we told her about the discount she said she would not deal with it. I had also been getting quotes from a Carnival agent.
The difference between what Carnival quoted and what we paid for the three of us was $86 The agent booked tickets for us and 6 other people who we convinced should take the cruise with us. Shortly after booking with this agent I called Carnival and was told we would receive a refund of $243, which was 20 percent of the ticket price, and it would be back on my credit card in 7 to 10 days.
We received a credit of $64.
I started calling both Carnival and the agent trying to get the rest of the promised refund. I tried to get this resolved before the cruise. The agent keep telling me she would check into and call me back. That never happened and unfortunately the agency has since gone out of business.
Can you offer any suggestions on how to get Carnival to make good on the offer they promised us?
On the surface, this looks like a case in which Carnival didn’t honor its deal. But it turns out this was the tip of … oh, let’s just scrap the tired nautical metaphors. There’s a lot more to this story.
Here’s Carnival’s response.
According to our records, Ms. Olsen had been offered a 20 percent discount which could be applied to any fare extended by Carnival. In the meantime, it appears that the travel agency involved with the booking offered Ms. Olsen a discount of their own based on rebating part of their commission. This is not something that Carnival was aware of at the time nor is it something we condone.
We also do not account for commission rebating by travel agencies in our billing and refunding process. The total amount due at the time of booking was $1528. This amount includes the cruise fare and government fees and taxes for both guests. A 20 percent discount in the amount of $127 was applied to Ms. Olsen’s fare, bringing the new total to $1,400. The commission due to the agency was $138, leaving a net due to Carnival in the amount of $1,262.
According to our records, the guests paid $1,342 (apparently based on the rebating arrangement with the travel agency). The difference of $80 was sent to the agency as part of their commission. Given the guests’ arrangement with their travel agency, we were unable to refund them any monies as they had underpaid the reservation. Any monies due to the guest would have been forthcoming from the agency and not from Carnival. Carnival fully honored its commitment to apply a 20 percent discount to the cruise fare.
Whoa. So the travel agent, who is now out of business, cooked the books and put Olsen in an awkward position. How interesting.
Some travel companies consider rebating an unethical practice, as my colleague John Frenaye pointed out recently.
Earlier in this post, I suggested the information you’re about to read might drive you mad. And I certainly am mad. I think Olsen should have been aware of this issue so she could have made a purchasing decision based on all the facts.
If her agency had quoted her a total price that included a complete breakdown, including their commission, taxes, fees and port charges, maybe she could have.
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{ 19 comments… read them below or add one }
Something is not right here. If carnival does not condone or is not aware, why are they sending reduced commissions to the agency? They are obviously aware and by sending their check, they obviously condone.
And only in cruise line speak (second only to airline speak) is 20% of $1528 — $127. According to my calculator that is 8.3%. But I am sure the discount was on the base fare and not the gov’t taxes, fees, and port charges and the ubiquitous NCF fee that no cruise line will explain yet serves to merely reduce the base fare (commission to agents and refunds to clients) and increase their bank accounts.
And I thought the lady said that the agency would not work with the discount coupon?
But, I am not so sure I would accuse the agency of “cooking books” until you see the paper trail as you suggest–complete with the breakdown and where the discounts from CCL and and the agency were applied and on what amounts.
How in the world does Carnival decide that a 20% discount on a $1528 fare is $127?
20% of $1528 is $305.
The $127 refund is 20% of $635.
Is Carnival really insisting that $893 of the $1528 total are taxes, fees, and commissions?
Even without the travel agent’s hanky-panky, Carnival’s math doesn’t add up.
Wow, talk about a plethora of “guilty” parties.
Cruiser books through 3rd party Travel Agent.. fully aware that they would have to “skip” the travel agent to apply the coupon. Not a choice I would’ve made.. but hey.. to each their own.
Carnival Phone rep “promises” a particular refund amount. Shouldn’t a company honor the promises of it’s employees? Boo Carnival.
From the math above.. it looks like the “cruise fare” was approximately $635. Out of over $1500? Huh.
Anyway.. where I would fight Carnival is this… Did they promise 20% off of a future cruise EXCLUDING taxes and fees? I guess it depends on the coupon. If it was a promise of 20% off a future cruise.. then they should get 20% off.
Either way.. Boo to Carnival. Third party TA aside, they could have had a good PR story with a good repeat cruiser who actually BRINGS business to them. For the low discount price of approx $160 USD. I mean.. really..
Instead, they now have another bad PR story in the press.
Hope the price of being “right” is worth it guys. This former marketer thinks you’re nuts.
A couple of things come to mind here….first of all, the client should have initially said he had a coupon, not spring it on at the last minute. However, when given the coupon, the agent should have said that she would have to recalculate the pricing, and could have worded it such as “the coupon is valid only on published fares, and since we have advantageous wholesale pricing with the cruise line, a discount has already been given and cannot be combined 2 discounts together…” (the coupon itself most likely said that could not be combined with other offers).
I also see that the coupon was given by CCL because of a service deficiency on their part…but when redeemed, they want the travel agency to eat the commission on the discount they gave because of their non-performance, i.e. rather than give commission on the base fare before discount, they give it only on the base fare net of discount. The time and effort it takes to handle a reservation with one of these coupons is MORE than it takes for a regular reservation, and the initial problem for which it was issued had nothing to do with the agency…hence, either CCL should be paying a redemption fare (like other retailers do on in-store coupons) and/or a service fee should be charged by the agency for handling it, but they should be upfront on it, i.e. there is a $20 handling fee for the processing of all coupons/vouchers.
Quick question for Chris, or any travel agent that reads this blog… why are commission refunds considered unethical? I don’t consider “undermining the commission structure” (from the linked article) to be a valid reason not to give customers a price break. To be frank, how much a particular agent gets paid is between the agent and their customer. This practice may make other agents unhappy, but I don’t see the ethical problem here.
SirWired
I’m still stuck on how 20% of $1528 is only $127. And I’ve barely gotten over the bit about Carnival giving a 20% discount for a lost day of cruising, rather than a refund for the part of the trip they couldn’t deliver. If the folks from Carnival (and other cruise lines) are reading this — now you know why I take road trips instead of boat trips. Seriously. If you were honest and straightforward in your pricing, I bet you’d have a lot more business. — Aaron
I have to say that I am behind Carnival 100% on this one. Let me explain. Carnival did nothing wrong by giving the customer a 20% discount on a future cruise. Most people know that anytime a discount is given, it does NOT apply towards taxes and other charges. When was the last time you had a coupon for something, read the fine print, you are still responsible for the taxes. So Carnival upheld their end of the deal.
The travel agency is completely at fault here. In some cases Carnival does not send out commission checks to agencies. If the client pays the agency with cash or check, and yes this happens frequently, then the agency can with hold their commission and just send the cruise amount to Carnival. In this instance it would be easy for the agency to “adjust ” the cruise rate the client pays.
I hate to say it but with the agency out of business. I think the client is out of luck.
@katt
It is not a true statement that discounts do not apply to taxes and other charges. It depends on the structure. If taxes and other charges are based as a percentage of the base rate then a discount will usually reduce taxes and charges. If the taxes and charges are a fixed sum, then you would be correct.
Regarding rebating as an unethical practice, that crap. For a business practice to be unethical, at the very least is needs to harm the consumer. However, in many industries, the various power that be have removed that fundamental rule and replaced it with one which states, anything which harms the financial structure of the industry.
That’s the basis for claiming that back to back tickets are unethical. That’s the basis for claiming that a real estate agent undercutting the market is unethical. And its the same nonsensical reason that a travel agent shouldn’t rebate a portion of their commissions.
Basically, it adds competition to the marketplace and forced people to compete either on price or service.
Shame on Carnival.
Most agencies that rebate cruise prices also discount the credit as it reduces their commissionable cruise fare, so they can no longer give as large of a discount based on the higher cruise fare/commission. Regardless of that, I have always found a discount agency, even with a cruise line fcc is better than going with the cruise line direct for the final price. The couple times I had one, it still worked out so much better in my favor. I am sure that Jerri still came out ahead.
Well, except that Jerri’s agency closed. So in this situation. Notsomuch.
The client should have been upfront about the coupon. And once she heard that the agent wouldn’t deal with the coupon she should have left and either dealt with Carnival directly, or preferably found another agent.
This all started because of a total fare difference of $86.00. By the way, can anyone tell me what other industry gives back a portion of their commission?
@Katt – under any mathematical arrangement I can think of 20% off a cruise also gives you 20% off the tax too. If tax is a percentage of the fare then the fare is also reduced. Similarly, I cannot imagine that the fare here was $635 and the taxes and port fees amounted to $900. Something is not right in Denmark . . .
I can see the Cruise being $479×2 – plus $299 for a third person sharing the cabin – which brings you to $1257 – add $120 each in taxes and fees and you are too the $1520+/- figure mentioned. Thus – the credit should be around $191 – does anyone not see it as weird here that it seems like Carnival is only given the 20% off to one person? In which case, depending on the costs, might only be somewhere around the $64 actually credited . . .
Hey – I hope that the travel agency remitted the funds to Carnival – since most times the commission is paid first which then means the last payment goes to the cruise company!
why does it always seem that the shadiest of travel practices always involve cruise lines? When ever I read something in the travel industry that makes me sit up and say “WTF” a cruise line is usually involved in it somehow. I’ve never taken a cruise…and honestly, I don’t think I ever want to! the more I read about issues on cruise lines involving massive illness, shady billing and roulette dockage, it doesn’t make me feel good about cruising!
Ed
web/gadget guru
Over and over these articles scream the same message: DO NOT USE A TRAVEL AGENT. DO NOT USE A TRAVEL AGENT. DO NOT USE A TRAVEL AGENT. DO NOT USE A TRAVEL AGENT. DO NOT USE A TRAVEL AGENT.
Actually, she probably had a cruise with airfare included, so the cruise line DOES only discount the base fare, not including port charges, taxes or airfare costs. As to how Carnival does not know they are rebating when they are sending in lower commissions, there is no way for the cruise line to know how the client has paid – if by credit card, check or cash, and the agency does not have to pay the total amount due, and may actually send an agency check for the balance due the cruise line MINUS their commision is paying by check! We always tell our clients to pay by credit card, as they have a valid chain of evidence as to what was paid, and one more advocate on their side in case of any problems. Otherwise, the client should ONLY work with a reputable company they are familiar with. Which is why we are members of ASTA and CLIA, as well as the Virtuoso consortium of travel planners.
I have sailed 3 times with Carnival. The first two times were great but this last one which ended on June 13 with Glory cruise ship was a disaster. The air didn’t work in my room and I reported it each day. A maintenance person checked it on the third day and they gave me a fan. I reported it again and they said it met the standards. My daughter had a room just two floors higher and the air was great there. I’m sure if all the rooms met standards ( like they reported mine to be) no one would cruise. The air was better in the hallway. I considered leaving the door open.
I’m sorry the Olsens had such a bad experience, but at least they GOT a refund – which is more than I can say. I have cruised Carnival half a dozen times (each trip a little less wonderful than the one before), but my last Carnival cruise was the last straw. It was such a disaster (problems every day and no one on board would address any of them) that I sent a three-page single-spaced typed letter explaining all of the things that had happened. Carnival’s response? They were sorry we had had such a bad experience and they would have a “free gift” waiting for us in our cabin on our next Carnival cruise. I told them no thanks, I didn’t need another key chain and my last Carnival cruise was my LAST Carnival cruise. The sad thing is that it would have taken only $20 to make me happy. The only problem I could put a monetary value on was the shore excursion which cost $49. It was cut in half because of hurricane damage to the island’s infrastructure so we received only half of the tour we paid for, but we weren’t told of the shortened itinerary until after the trip was under way so we had no chance to opt out. Obviously it’s not the amount of money involved here; it’s the principle. Carnival’s attitude and the tone of the letters they sent me were so arrogant that it really wasn’t worth pursuing, but I have cost them more than $20 many times over in potential passengers that I have directed to other cruise lines (so far at least half a dozen families that I can name) and countless others that I have discouraged from even considering Carnival. I know it’s not a drop in the bucket compared to Carnival’s bottom line, but it makes me feel better knowing that I am probably saving my friends from unfortunate cruise experiences on the most customer satisfaction unsavvy cruise line out there. The Google ad at the top of this page offers Carnival cruises at 75% off. I’m not surprised that they’re having to discount so deeply. I have taken more than 20 cruises but never again will I sail with Carnival.
Mona P., Admin. Asst.
Friendswood, TX
I don’t know why more people aren’t saying there should be a refund for one day’s travel, rather than a discount on a future cruise. What if you don’t want to or can’t take another cruise? If you buy something and don’t get the entire thing, you deserve a REFUND, not a credit. Evidently, Carnival must be really going downhill if so many people have problems. My son, daughter-in-law and 4 year old granddaughter recently took a 6 day Carnival cruise. Their cabin evidently was adjacent to or under a disco and they were unable to get any sleep because of how loud the music was in their cabin until the wee hours of the morning. They requested another cabin, but were told none were available. My poor granddaughter is on video begging her daddy to shut off the music, so she could go to sleep. Upon complaining to Carnival Customer “Service”, they also offered a discount on another cruise. There won’t be another cruise since, unfortunately, this was their first cruise and now they are soured on the whole cruising experience because they were so tired, they didn’t enjoy anything. I realize some people are never happy with anything, but it seems there are just too many complaints about Carnival. They obviously don’t care how many unhappy customers they have and evidently don’t care how much business they lose due to their unhappy customers telling everyone who will listen about their experiences. Very sad. When I relayed the story to a friend who is a very frequent cruiser, she asked which cruiseline, and when I said Carnival, she simply said, “No Wonder.”
The cruise my wife and I just took was on the 8 day Spirit to Mexico. our suite was #8273 category 11. This cruise was a special one inasmuch that it was a 10th Anniversary as well as my wives 15th year of being cancer free. my agent put that info. in the records. I want to make this very clear, I was not expecting a bottle of Dom Per. but when nothing showed up in our room I was extremely disappointed .CARNIVAL YOU MESSED UP! IT WAS A SPECIAL TRIP COSTING MUCH DINERO..YOU MISSED THE BOAT…NO MORE CARNIVAL FOR US AND THIS WAS OUR 6TH CRUISE WITH YOU.