Following the implementation of fuel surcharges by many cruise lines, at least one major tour operator, Globus, is taking similar action to cover its increased expenses on European itineraries, while others have announced they will abide by published 2008 rates.
“We will not surcharge any clients on our European vacations,” said John Galvin, chief financial officer of Collette Vacations. Galvin said that Collette’s usual financial strategy mitigates the effects of currency exchange fluctuations.
Brendan Vacations, Tauck World Discovery and Trafalgar Tours also have communicated to agents that 2008 pricing will remain the same. “Our guests have agreed to travel with us at a price we have both committed to,” Tauck CEO Daniel Mahar said in a letter to agents. “We simply could not in good conscience go back and disregard that commitment by implementing a surcharge.”
Earlier this month, Globus told agents it would begin implementing a currency surcharge of $20 to $190 on 85 percent of its Europe tours, including those operated by Cosmos, Monograms and Avalon Waterways. The supplement applies to 2008 trips booked after January 15 and amounts to 5 percent of the cost of the trip, which on average comes to $90, said Steve Born, vice president of marketing at Globus.
Born added that even with the surcharge, Globus is still absorbing a 5 percent loss on each trip due to the weak exchange rate for the dollar. The surcharge is commissionable at 10 percent. Should the exchange rate improve significantly, the surcharge would be abolished and refunded, Globus reps said.
When asked why the surcharge wasn’t included in 2008 rates, Born replied, “We don’t want to guess or overestimate what a currency implication may be. The prices are set way in advance--in early fall for the next travel year--so rather than pretend to have a crystal ball or penalize all customers based on a assumption for the entire year, we’ve tried to be more accurate based on the real world currency and applying it by region.”
Agents understand Globus’ decision, Born said. “We’ve been polling our sales teams and reservations staff, and the reaction from agents has been one where they understand; they’re not surprised or put off,” he noted. “Our agents are smart and they are in tune to the currency change.”
To mitigate any impact on business, Born said, Globus is making sure it has promotions and incentives to help agents. The same week news broke of the surcharge, the company offered $200 savings per couple on air-inclusive European vacations with Globus, Cosmos, Monograms or Avalon if booked by February 29.
“The silver lining is that it’s in a time like this where agents can explain the value of a tour, because pricing becomes more top of mind [to the consumer],” Born said, adding, “Our sales our healthy and we’re doing better this time of year than this same time last year.”