Why more cruise passengers are choosing refunds over credits

Whenever cruise lines have discussed their quarterly earnings with Wall Street analyst this year, they have disclosed a number that before 2020 did not exist: the percentage of guests opting for a cruise refund versus a future cruise credit (FCC).

And since the beginning of the global cruise shutdown in March, that number has slowly but consistently shifted in favor of refunds.

Carnival said on May 14, 60% of passengers on canceled cruises had taken FCCs while the rest requested refunds; as of Sept. 20, the number opting for FCCs was 45%. Royal Caribbean Group said in May that 55% of passengers took an FCC; it said this month that slightly more booked passengers have opted for a full refund (50%).   And Norwegian Cruise Line Holdings said May 15 that slightly more than half its passengers had opted for a refund; it said Aug. 3 that approximately 60% of guests had requested refunds.

There are many possible reasons for this shift, but travel advisors point to at least two.

The first is simply that far fewer people have fully-paid cruises on the books anymore, as opposed to when cruises suddenly stopped sailing in March and cruise lines had to cancel thousands of sailings.

As Brad Tolkin, co-CEO of World Travel Holdings, explained, “Now, most bookings don’t have full payment, so it’s just a deposit.” And the 125%  value of a fully paid cruise costing thousands of dollars is far greater than that of a deposit of a few hundred dollars.

“Now you are looking at lower numbers and much lower additional credit,” he said. “Therefore they’re saying. ‘I’ll take the refund and won’t have to deal with FCC.'”

Also a factor, some advisors say, is that as the pause in cruising has continued to extend, and the Covid-19 pandemic is not ebbing, the continued cancellation of cruises and overall uncertainty around a restart is making people less likely to choose an FCC.

Vanessa McGovern, chief sales officer for the host agency Gifted Travel Network, saw this happening over the summer.

“At first, it was more FCC, but now, as things keep getting pushed out and out, more clients are opting for the refund,” she said in August. “They’re just not sure. Nobody knows.”

So while advisors may be spending less time convincing cruisers to take an FCC, they are still focusing on getting them used, and some cruise lines are trying to help.

Carnival Cruise Line recently launched a “Future Cruise Credit Toolkit” on a dedicated part of GoCCL.com that includes a lead reporting tool to help agencies note and follow up on pending FCC’s; a communications schedule to help travel advisors organize client follow-ups; and personalization tools for agents to customize messages based on client interests.  

“Clients with FCCs are such important leads for travel agents,” Adolfo Perez, Carnival’s senior vice president of global sales and trade marketing, said in a statement about the toolkit.

Royal Caribbean International also offers travel advisors tools to help them reach out to clients about their FCCs, such as customizable emails.

While the FCC uptake may be down, and it is good news that most 2021 bookings are new as opposed to rebooking of canceled sailings, for advisors, the thousands of FCCs still out there represent a golden opportunity in an otherwise difficult time: people who have indicated they still plan to cruise.