ASA Adjudication on Carnival plc
Carnival plc t/a
100 Harbour Parade
13 June 2012
Holidays and travel
Number of complaints:
Three ads for a Norwegian Fjords and North Cape Discovery cruise, departing on 22 June 2012, were published in the April, September and December 2011 editions of the Cunard brochure. All of the ads featured different promotional offers and gave a "Voyage Only Fare" and a "Voyage Only Fare Less Savings". The “Voyage Only” prices differed between each of the editions of the brochure.
The complainant challenged whether the "Voyage Only” prices in each of the ads were genuine, because she believed the cruises were not sold at those prices and that the savings claims in the "Voyage Only Less Savings" sections were therefore exaggerated.
CAP Code (Edition 12)
Carnival plc t/a Cunard Line (Cunard) said that Cunard Voyages brochure November 2011 – April 2012 was published in four editions and featured a “Voyage Only Fare” and a “Voyage Only Fare Less Savings”. They said that both of the prices were “from” prices and that the brochures made clear that those fares might rise throughout the life of the brochure. They said the “Voyage Only Fare” was the price at which they expected to be able to sell the applicable voyages when pricing was first set, based on their estimate of what market conditions would be like at the time at which the voyages went on sale. They said prices were set months before the publication of the brochure.
They said the “Voyage Only Fare Less Savings” was the “Voyage Only Fare” minus the relevant early booking savings that were applied in the brochure in question. They explained that these savings were applied until they had sold at least 10% of the inventory at the maximum saving and that the savings were usually, market permitting, decreased resulting in an increase in fares. They said the hope and expectation when the pricing was set was that the fares would increase to the “Voyage Only Fare” and beyond (once sufficient inventory had been sold in order to enable them to increase the fares further and market demand was such as to support the raising of fares). They said the strategy was to incentivise early booking and the aim was to increase prices above and beyond the “Voyage Only Fare”. They said that in the past this had been possible and that it was in their interest to maximise prices.
With regard to the voyage that was the subject of the complaint, they explained that the fares changed throughout the three editions and that the fourth edition would be published in March 2012. They said that the fares that were paid increased from the starting fare (in the first edition) in small increments up towards the full “Voyage Only Fare” so that some of the bookings made during that time were very close to the full “Voyage Only Fare”. They said that for the time during which the voyages had been available for sale, 20 of the 438 places had been sold within a very small percentage of the full “Voyage Only Fare”. They said that economic conditions throughout all of 2011 meant that it had not been possible to increase the pricing in line with their target. They explained that, in respect of the voyage in question, just prior to the final brochure being issued, they had not reached the level of sales that they hoped to have sold. They said this was a challenging commercial position, resulting from the economic conditions and low consumer confidence, making it more difficult to increase their pricing in line with how they would have hoped. They said that, for other voyages they had met their target of increasing prices to the full “Voyage Only Fare”.
They said that, notwithstanding the economic pressures to date, their intention was to revert inventory in the Cunard Voyages brochure November 2011 – April 2013 to the “Full Voyage Only Fares” for a period in February 2012 so that the voyages would be sold at the “Voyage Only Fare” for a sustained period.
Because the entire 2011–2012 brochure period was not yet complete, they also provided sold data from 2010–2011 period to demonstrate the number of voyages on which bookings were made at the full “Voyage Only Fare” (of which there were 145). Cunard provided detailed sold data for seven of these 2010–2011 cruises. They explained that where the full “Voyage Only Fare” had been reached, it had occurred as a combination of fares available with travel agent exclusive offers such as on board spending money, fares with a past passenger loyalty discount from full “Voyage Only Fare” and fares that had naturally reached the full “Voyage Only Fare”. Cunard presented data to show the number of bookings made at the full brochure fare as a percentage of the whole ships' inventory and as a percentage of those bookings that were made through 'brochure channels' (i.e. excluding those bookings to which the brochure fare is not relevant such as bookings made overseas, bookings made on tactical promotions such as staff concessions, friends and family concessions and late, non-brochured fares). The percentages of those bookings that were made through 'brochure channels' were 11.84%, 15.02%, 16.43%, 5.36%, 3.42% and 3.51% respectively.
The ASA noted the “Voyage Only Fare” was the price at which Cunard had anticipated they would be able sell the cruise from but that, due to the fluidity of the pricing structure and the many discounts and offers that occurred during the early stages of selling places on the cruise, it was often the case that the discounts would reduce toward the end of the booking period for each brochure, resulting in bookings incrementally increasing in cost until the “Voyage Only Fare”, or above, was achieved. We understood that the intention was that the “Voyage Only Fare” in the ad was a "from" price and that Cunard's intention was that these prices would be exceeded in some cases. We noted Cunard's comments that the unstable economy had resulted in a change in customer booking habits and that therefore Cunard had not always been able to increase pricing in line with its planned approach, resulting in a significantly lower number of places being sold at the “Full Voyage Only Fare”.
We understood that in the period during which the three brochure ads that were the subject of this complaint were published, booking numbers had reduced at that point in the selling cycle compared to previous years resulting in a low number of the full “Voyage Only Fares” being achieved. We also noted both fares (the “Voyage Only Fare” and the “Voyage Only Fare Less Savings”) fluctuated over the different editions of the brochure but that it was towards the end of the selling phase (in the final editions of the brochure) that Cunard intended to reach and exceed the final “Voyage Only Fare”.
We understood that, for each brochure, there were a number of incremental rises from the discounted price and that these moved up toward the “Voyage Only Fare” and that it was often the case for each brochure booking period that where the “Voyage Only Fare” was not achieved, some bookings were made at near to the “Voyage Only Fare”. However, because of the change in economic conditions and consumer spending we noted that Cunard were not able to always meet their target of increasing the early booking fares to the full “Voyage Only Fares”. We noted Cunard intended to revert to the full brochure price (of the November 2011 – 2013 “Voyage Only Fare”) during a sustained period between the third and fourth edition of the brochure in order to ensure they could sell at the final “Voyage Only Fare” and beyond. Because each edition of the brochure included different prices and a different period by which a booking needed to be made, we considered that each edition of the brochure should be considered as stand-alone ad. We considered that this was also the case because the average consumer was only likely to look at one edition of the brochure and make their booking accordingly.
In the absence of full sales data for 2011–2012 brochure period, we considered that alternative sold data from the previous year would be sufficient to demonstrate that the full “Voyage Only Fares” for the cruise in question were commonly being paid by consumers. We noted Cunard had provided sales data for its 2010–2011 cruises and the “Voyage Only Fare” price had been reached a number of times in the third brochure selling period and that, where it had not been met, some bookings had been made at incremental prices between the discounted price and the “Voyage Only Fare”. However, we noted the percentage of bookings made at the “Voyage Only Fare” was not significant for each brochure period and that in some brochures the “Voyage Only Fare” was not reached in a sufficient number to demonstrate that this was a price from which places on the cruise were regularly being paid by consumers.
We understood that changing consumer spending patterns and the economic climate had resulted in a shift in the booking pattern, resulting in few of the full “Voyage Only Fares” being met for that period. We also noted the sold data from the previous brochure period demonstrated that there had been a low percentage of sales at the full “Voyage Only Fares” which suggested that the 2011–2012 full brochure price were being set at a level which was unlikely to be regularly paid by consumers booking through the brochures.
We considered that consumers would expect the “Voyage Only Fares” listed in the brochure(s) to be genuine maximum prices which consumers regularly paid and that the full “Voyage Only Fare” less savings was an accurate representation of how much money they would save by booking at that time. We noted it was in Cunard's interest to make as many bookings as they could at the full “Voyage Only Fare” and that this was a price that they intended to achieve and which their pricing mechanism was focussed on achieving. However, whilst the “Voyage Only Fare” less savings were themselves genuine prices that increased incrementally as time passed, we considered that because the “Voyage Only Fares” were not commonly being paid by consumers booking through each of the separate editions of the brochure, these “Voyage Only Fares” therefore exaggerated the value of those discount prices. We therefore concluded that the brochure ads breached the Code.
The ad breached CAP Code (Edition 12) rules 3.1 (Misleading advertising), 3.7 (Substantiation) and 3.17 (Prices).
We told Cunard to ensure the “Voyage Only Fares” detailed in each brochure edition were commonly paid by consumers.