Video: How Cruise Prices Work #2: Travel Agent Secrets
Summary: Understand the behind-the-scenes secrets that go into how travel agents and agencies set the prices they charge for cruises to you can learn how to get the best cruise rates.
In our last video, we learned how cruise lines adjust prices based on demand for specific types of cabins on particular sailings. But that's only part of the story. What you actually pay for a cabin depends on who you buy from.
That's right-the deal you get on the exact same cabin on the exact same ship depends on where you book. Here's why:
About 90% of all cruises are sold by travel agents acting on behalf of the cruise lines. For these efforts, the cruise lines compensate the agents in various ways. Agents receive a commission on each booking they make. Agencies may also receive additional dollars from the lines in the form of annual overrides, points good for onboard credits and amenities and co-op advertising dollars based on the total revenue generated for the line by the agency. The commission percentage-often as high as 16% or more-is also based on the level of annual sales generated by the agency for the cruise line.
Agencies with higher commission rates can use some of the dollars they get from the cruise lines to either lower price to the consumer, or give money back in the form on onboard credits-i.e., dollars placed in your onboard account that you can spend on the ship. Agencies may also find themselves in a position where a few extra cabins sold on a particular cruise line will increase their overrides for all sales on that line, so it can actually be to the agency's advantage to lose money on particular bookings in order to make sure they hit their overall goals.
Group space is another place where agencies can get lower prices. Agencies can reserve blocks of cabin space on certain popular sailings in blocks, locking in the prices. So even if prices go up, they can sell these cabins for less than the cruise line or other agencies. Agencies can also get better deals by creating groups-putting together unrelated bookings into groups of eight cabins, and getting additional discounts. This is another situation where it might make sense for an agency to sell a cabin below cost, as they come out ahead on the block of cabins as a whole.
The bottom line for you a cruise consumer is this: you never know which agency will have the best rate on a given cruise. Therefore, you have to shop around.
Because the cruise lines only let agencies advertise their retail prices on their web sites, shopping around means contacting agencies to get custom quotes. You can do this by visiting individual agency web sites, or you can put a quote request into CruiseCompete.com and let the agencies come to you with their prices. Make sure you compare the full cost and value of each offer-include all charges and taxes, plus the benefit of onboard credits-before selecting the deal that best for you.
