Following the launch of Royal Caribbean’s refundable deposit scheme, Jack Carter speaks to agents and the line’s VP Gerard Nolan to weigh up the pros and cons

It was the final working week before the industry paused for the Christmas holidays and the attendees at the annual CLIA Cruise Forum were understandably in a jubilant mood as they took their seats for a morning of panels and keynote speeches.

On stage that day was Gerard Nolan, Royal Caribbean’s vice president & managing director, EMEA, who after six months in the role was now defending the line’s controversial decision to introduce refundable deposits.

In response, Nolan asked agents who were concerned about a potential increase in cancellations and wasted hard work to wait to see the data before judging the success of the initiative.

Fast-forward to today and Nolan believes the early booking patterns indicate that guests are enjoying the added flexibility. Talking to Cruise Trade News, he says: “We’ve seen slightly different behaviour in the six to eight weeks since the scheme has been in play.

If you’re sailing closer to home, the take‑up on the refundable scheme has been steady, but we’re seeing more of these types of bookings come through for those who are going further afield.”

Over the past couple of years we’ve seen a growing trend where more people go for the refundable option

Nolan says this isn’t a surprise given that long-haul bookings, which might involve a larger number of guests, are more complicated than, say, an ex-UK sailing to the Mediterranean.

“If you look at cruises to long-haul destinations, about five per cent of our business will come through the refundable deposit scheme; for a cruise closer to home, that figure is around one per cent. That doesn’t differ dramatically from what we’ve seen in other markets.”

While data on how the UK cruise market is responding to refundable deposits is still relatively low, looking at behaviours in other markets where the scheme has been present for some time could give an indication as to how this will play out in the long-term.

“Take the likes of Germany and Spain, where we’ve had this scheme for a long time,” Nolan says. “If you look at the data, around 92-94 per cent will book using the non-refundable deposit scheme. However, over the past couple of years we’ve seen a growing trend where more people go for the refundable option.

“What we don’t really see, which I think was the concern from the agency community, is people taking this option, holding and then cancelling.

“When I look at the data from the specific agencies that raised concerns, there isn’t necessarily any difference between bookings using non-refundable and refundable deposits. I know it’s a small amount of data and we need to see how it plays out, but it doesn’t feel like this concern is valid.”

Agent worry

While Royal Caribbean argues that refundable deposit schemes don’t lead to an increase in cancellations, the reason for this could be that many agents choose to stay clear of these types of bookings altogether.

One such agent is Shona Thorne, managing director of Thorne Travel, who says the heightened risk of cancellations means it’s not worth her time.

She explains: “We don’t promote [Royal’s non-refundable deposit scheme] as this doesn’t get the customer’s full commitment. You can spend a lot of time to find the right ship and then they cancel, despite all your hard work.

I often prepare lots of quotes for people who end up not committing… it creates extra work for me even though I know they won’t be traveling on them all

“We haven’t lost any bookings and I think it mostly impacts direct customers, but we try to keep away from this area. We’ve had lots of bookings with Royal Caribbean but no one is asking for the scheme, or booking multiple cruises with the intention of cancelling some.”

One agent who has seen cancellations as a result of low deposit schemes, however, is Sarah Bolton, a homeworker for Travel Counsellors. She says January in particular is rife with deal chasers looking to capitalise on low deposits from other cruise lines, which is why she has made a personal decision not to push no-commitment schemes such as Royal Caribbean’s.

“I often prepare lots of quotes for people who end up not committing,” Bolton explains. “For example, I had one customer last month who booked three different cruises requiring a £50 deposit each, and they openly said they wouldn’t be doing them all. There was limited availability so they wanted to book all three and then decide which one they wanted later.

“They only lose £50 a head on the ones they cancel, but it creates extra work for me even though I know they won’t be traveling on them all. It also reduces the inventory for the cruise line. I don’t see why they do it.”

In response to the trade turning away from refundable deposit schemes, Nolan says agents should put the customer’s interests first. “If you think about the growth of instalment payments and how people currently pay for things, they’re less willing to put the whole sum down.

“Giving this option is fundamentally the right thing to do for the guest. Agents need to decide what’s right for their business, but we’re giving them the choice, so why wouldn’t they pass that choice onto the guest?”