Defining adequate compensation

Defining adequate compensation

By Michelle Baran
InsightMassive flooding in Central Europe earlier this month deprived many river cruise passengers of the journey they had paid for, leaving many of them very disappointed and looking for proper compensation. But that begs the question: What kind of compensation is proper?

At least one group of passengers expressed their unhappiness by forwarding to members of the media an email exchange between them and their cruise line in which the passengers requested a full refund for a river cruise they claim was severely damaged by the flooding.

“We missed Koblenz, Speyer, Rudesheim and all the castles along the scenic Rhine River Gorge — which was our primary reason for choosing this particular cruise,” they wrote. “We had a wonderful visit to Marksburg Castle, but it took a multihour bus ride there and back to do so. We paid for eight days on a boat, not partial days on a bus and missed itinerary points. … We did not get what we paid for.”MichelleBaran

In this case, the river cruise line explained that because the rains and floods were a force majeure, or act of God, beyond the company’s control, the passengers were not granted a full refund for the disrupted cruise. Instead, they were provided with a future cruise credit.

Whatever the outcome of this individual case, it was certainly one of many individual customer service disputes that each river cruise line had to resolve on a case-by-case basis.

And while the email exchange brought to light the fact that a number of passengers were unhappy with how the crisis was handled, the situation was just as disappointing for the river cruise companies, which lost untold millions of dollars when they were forced to cancel or shorten cruises. And those losses will continue as the companies honor future cruise credits.

While some travelers clearly felt that river cruise companies came up short in terms of customer service and crisis management, the fact is, the cruise lines and passengers alike suffered losses in the path of Central Europe’s surging rivers.

High waters force American Queen to alter itineraries

High waters force American Queen to alter itineraries

By Michelle Baran
The 436-passenger American Queen will alter its July 5 and 13 itineraries, previously scheduled to operate between St. Louis and St. Paul, Minn., due to high water levels on the Upper Mississippi River, the American Queen Steamboat Co. said on Wednesday.

Severe downpours struck across the Midwest on Wednesday, according to news reports.

Because of the resulting high water levels, the two affected itineraries will now sail between St. Louis and Cincinnati, calling on Chester, Ill.; Cape Girardeau, Mo.; Paducah, Henderson and Louisville, Ky.; and Madison, Ind.

The July 4 precruise hotel stay in St. Louis remains as scheduled at the Hilton St. Louis. The Hilton Cincinnati Netherland Plaza will now serve as the precruise hotel on July 12.

“Delivering a safe, predictable cruise itinerary for our guests is a priority, and sometimes river conditions are outside our control,” American Queen Steamboat Co. President and COO Ted Sykes said in a statement. “We recognize the need to cruise on the Ohio River for our first two July 2013 itineraries and will then return to our regularly scheduled itineraries.”

Guests booked on the July 5 or 13 sailings have the option to rebook a 2013 cruise with no additional fee or stay on their altered itinerary and receive a $500 future cruise credit per stateroom.

River cruise lines lose millions of dollars to European flooding

River cruise lines lose millions of dollars to European flooding

By Michelle Baran
A photo of Passau, Germany, from last week shows that while waters remain high, streets are drying up.River cruise lines last week began to unravel the tangle of dozens of canceled cruises and hundreds of rebookings and refunds they have had to issue in the wake of some of the worst flooding in Central Europe in decades.

The lines also started to take stock of the millions of dollars in losses they incurred as a result of the flooding.

An uncharacteristic level of rainfall at the start of June caused water levels to surge throughout parts of Germany, the Czech Republic, Slovakia, Hungary and Poland.

The rains forced local populations to evacuate, threatened to submerge cities and created a logistical nightmare for river cruise lines that were forced to cancel cruises and alter itineraries along the Main and Danube rivers as well as along the Main-Danube Canal.

“This is the worst flooding that we have experienced in the 20 years we have been operating river cruises,” said Guy Young, president of Uniworld Boutique River Cruise Collection. “This historical flood and the impact on our cruises has certainly been an anomaly.”

Young estimated that Uniworld will be forced to write off more than $5 million in lost revenue due to the flooding, which he said affected seven Uniworld vessels and 16 departures, with five cruises having to be canceled.

The challenge has been not just dealing with the constantly changing situation on the rivers and the affected vessels and passengers but also with the financial fallout of having to re-accommodate and rebook hundreds of passengers while also offering them refunds and future cruise credits.

As of June 13, Avalon Waterways had canceled eight departures since June 1 and made several additional itinerary changes. Most of Avalon’s European fleet was affected in some way by the flooding, which in turn had an impact on approximately 1,000 Avalon travelers at the height of the flooding, according to Patrick Clark, Avalon’s managing director.

But that’s just the start of the problem. Not only are canceled cruise departures lost revenue (affected passengers were offered a full refund), but all the river cruise lines are offering passengers additional compensation, generally in the form of a $500 future cruise credit.

For cruises that were not canceled but sailed an altered itinerary, the company had to either add more land arrangements or swap in accessible sites for destinations made unreachable by high waters. River cruise companies have said they offered some measure of compensation for passengers on altered itineraries.

Avalon also offered to cover passengers’ air change fees and said it was protecting agents’ 10% commission on the canceled cruises as well as full commissions on re-bookings.

“The accounting is the last piece of our puzzle,” said Clark.

“Our approach is to make the right decision for customers,” he added. “If we made those decisions well, we know that the customers and their agents will come back to us.”

Since Viking River Cruises has the most river cruise ships sailing Europe’s inland waterways, the flooding also caused it to do the most juggling. As of late last week, the company had canceled 13 sailings and modified 25 itineraries.

“There is a financial impact anytime we have to cancel a sailing,” Richard Marnell, senior vice president of marketing at Viking, wrote in an email. “With the 2013 season nearly sold out and vibrant sales already for the 2014 season, Viking’s breadth provides the ability to withstand such an impact.”

Viking might be able to withstand the financial impact, but Marnell’s statement indicates another dilemma: where to put all these passengers who now need to rebook their river cruise.

“The biggest challenge will be re-accommodating passengers on a similar cruise this sailing season,” he said. “We’ve experienced such high demand for the 2013 sailing season that we may not be able to reschedule passengers until November or December, or even until the 2014 season.” He added that for affected passengers, 2014 itineraries will be protected at 2013 prices.

Tauck, too, was concerned about lack of available inventory to re-accommodate affected passengers, according to Tom Armstrong, Tauck’s corporate communications manager. Tauck has canceled five cruises on two ships, which affected approximately 450 passengers.

With hundreds, perhaps thousands, of passengers on the prowl for a new river cruise to take, it’s no wonder that river cruise line A-Rosa, based in Rostock, Germany, sent an email to the trade last week offering up its product as an alternative.

“Some may view it skeptically when a vendor offers assistance, as it may be interpreted as capitalizing on the misfortune of others,” David Morris, president of David Morris International, which represents A-Rosa in North America, wrote in an email. “That being said, one primary reason for sending this is that most river boats this summer in Europe are completely sold out, leaving your clients with little or no alternatives.”

Consequently, A-Rosa is offering river cruise passengers displaced by the floods preferential fares on several departures, is waiving single supplements and is offering a $500-per-cabin credit on any 2014 A-Rosa sailing.

“We sincerely hope that your clients are minimally affected by the current floods and hope you can find suitable alternative plans with the river boat company you booked originally,” Morris wrote. “If you cannot, we are here to help.”

As the flooding appeared to slowly recede last week, the devastated areas of Central Europe have begun planning recovery. At least 21 people were killed in the floods, according to news reports, and the economic toll of the deluge in Germany alone is likely to reach about $16 billion, according to global rating agency Fitch Ratings.

As the cities along the rivers begin to rebuild, the river cruise companies are declaring that the worst is over. At press time, Viking had estimated that most cruises would sail with minimal impact beginning June 15 and expected all cruises after June 21 to operate normally. Avalon, too, said sailings over the next few weeks should see minimal impact.

“The floodwaters have been receding rapidly,” reported Rudi Schreiner, president of AmaWaterways, which did not cancel any sailings but saw seven ships and 14 departures affected by the floods.

Schreiner, too, estimated that water levels and cruises should return to normal within the next week.