Royal Caribbean International's Vicki Freed
Q: Why did Royal Caribbean change its policy to make it harder for passengers to cancel?
A: Actually, we simplified the policy. If you look at the old policy, we used to have five different [product categories, now reduced to two]. So it was really hard for travel agents to remember, 'OK, does this fall in this bucket, or in this one or this one? Was it a holiday sailing, what do you view as a holiday sailing?' There was a lot of confusion, so we wanted to just simplify it.
Q: Did you get travel agent feedback before you made the change?
A: We ran it by our travel agent advisory board back in January, and they said, yes you should do it. We said, is this going to affect bookings, what do you think? And they said, "No, we like a much stricter cancellation policy because it allows us to encourage people to buy travel insurance, and it makes the bookings stickier; people are more committed." They were saying, "This is a no-brainer. You should do it."
Q: Why do it now?
A: We did not want to do anything during Wave [season]. That was our decision as a brand. We wanted to do it with new deployment, which we're ... just releasing now. [Royal releases schedules for the Caribbean, Bahamas and Northeast regions for 2017-18 on March 7]. So that's why we're doing it now.
Q: Simplifying the policy sounds logical, but couldn't you have simplified it and kept the same final payment period you had previously?
A: Yeah, I suppose we could have. If you really look at the differences, when you compare it, the 75% of the total price [penalty] for the shorter cruises remains the same, from 28 to 15 days, 50% [penalty] went from 29 days to 56, versus 29 to 42, so that's a little bit more of a window. The [loss of] deposit [penalty] went from 59 days to 74, so there were some small tweaks. They weren't anything significant.
Q: What was the biggest change?
A: On five nights or longer, the first penalty starts at 89 days versus 74.
Q: How does the price integrity policy factor into this?
A: With our new no-discounting within 30 days of departure, we're training the consumer to book further out, and so we don't want a bunch of space dumped back to us close in when we don't really have an opportunity to resell it. If someone's going to cancel now, with 90 days out, it gives us two more weeks to resell that space. Because remember, all bets are off the table at 30 days out. That's the motivation and the reason why we did this. And our travel agent advisory board suggested we do it. And to help travel agents sell more insurance.
Q: How many people cancel before the penalty period to get their money back?
A: I don't think it's many. I think it's a small percentage. But that's why we encourage travel agents to urge consumers to buy travel insurance.
