To the hundreds, perhaps thousands of people who booked cruises, paid their deposits and in some cases full payments, it’s of little solace to hear this recorded phone message:
“Thank you for calling South Florida Cruises. We are presently closed due to the fact that we are undergoing a financial restructuring. We will remain closed for an unknown period of time, but we do hope to reopen and resume business at some time in the future. If you provided us with deposits or final payments, we have our records of the transactions and will contact you directly with additional information about your specific situation. We will attempt to update this recording with additional general information as it develops, but you may want to contact your individual cruise lines until South Florida Cruises is reopened. And thank you for calling South Florida Cruises.”
South Florida Cruises, based in Ft. Lauderdale, was one of the country’s largest cruise retailers, selling discounted vacations to some 25,000 customers a year. On Sept. 19, the agency closed its doors, first saying it had phone and computer problems. Then the firm said it was filing for Chapter 11 protection from creditors in U.S. Bankruptcy Court in Ft. Lauderdale. So far it hasn’t. Nor has it contacted its clients. A call to the firm’s attorney was not returned.
On the heels of the South Florida Cruises closing, Aaaabco Cruise Center in North Dade, Fla., another cruise-only agency, also unplugged its phones, leaving clients high and dry.
The abrupt closings not only stunned clients, but cruise line executives and state officials.
Seeing a long-planned vacation scuttled is painful. Ron Grant of Skokie had paid about $6,000 for his Mediterranean cruise on Princess Cruises. This would have been his fifth booking through South Florida Cruises, he said. He paid the agency a deposit of $1,100 by check, the remainder he charged to his Visa credit card.
What Grant said he’s received so far is aggravation. Princess canceled his cruise because the line never received the final payment from South Florida Cruises. Grant said he received a temporary credit from Visa while it investigates his claim. Grant’s trip cancellation insurance did him no good because the policy covers only airlines, cruise lines or tour operators, not the booking agency.
The sudden closure of South Florida Cruises presented a vexing problem not only for clients, but for the cruise lines themselves. People still wanted their cruises.
Carnival Cruises, for example, said it has dealt with just under 200 bookings jeopardized by the agency closings, said spokeswoman Jennifer de la Cruz. “We’re working very hard to give those people the best deals that we possibly can.” She noted that people who had charged their cruises on credit cards had some recourse through their credit card company. Those who paid by check will have to use legal means to recoup their money, she said.
“We’re trying to deal with individuals on a case-by-case basis,” said Rich Steck, a spokesman for Royal Caribbean Cruise Line. “We’re trying to reach some solution that gives us revenue and them (people booked through South Florida Cruises) a vacation. It really isn’t fair to expect us to give them a free vacation just because they gave some guy money who ran away with it and the cabin didn’t get paid for. If there’s some way we can arrange to take care of the people that’s equitable to both of us, we try to work out a satisfactory compromise so they get to take their vacation.”
RCCL’s Rob McLeod, vice president-passenger relations, summed up the agency closures with the “well-worn axiom, caveat emptor (let the buyer beware).”
But, he added, some unfortunate conclusions have been drawn in some areas. One, he said, is that all agencies that use 1-800 lines are bad. “That’s quite unfair because they are not all bad. Some have chosen to do business that way nationally and are well-funded, responsible business organizations. The reality is that 800-line agencies are not the only travel retailers that go bankrupt.”
McLeod said the best way for consumers to protect themselves is to use their credit cards, which warranties service. (He noted there were instances in the South Florida Cruises and Aaaabco case where people paid by check or cash.)
A cruise line official, who asked not to be identified, blamed the failure of South Florida Cruises and Aaaabco on their deep rebating policies and the fact that some consumers will deal with anybody to save an extra $50.
“Let’s say the agency gets a 15 percent commission from the cruise line,” he said. “We found instances where the firm was rebating away everything but $50 of its commission on a $4,000 sale. So they would have gotten in the range of a $600 commission. Now that was the firm’s choice. But decisions like that lead to cash flow problems.”
The official opined that the agencies had set up merchant accounts, which permitted them to receive cash from the credit card charge to pay bills or whatever. The client’s payment for a cabin never reached the cruise line. “Oddly enough, some of these people wanted us to protect them at the rebated rate.”
Normally, when cruise-only agents book a cruise for a client using a credit card, the agent phones the credit card data to the cruise line, which does the credit check. When the client gets his credit card statement, it shows the money went to the cruise line, not the travel agent. So take note.
When the deep rebaters get into a cash flow squeeze and can’t pay their employees, their phone bills and their rent, the official observed, they topple like a house of cards.
Another problem in this mess rests with a Florida law. South Florida Cruises was a registered and bonded agency with the state’s Department of Agriculture and Consumer Services. But Florida law requires only a $25,000 bond of sellers of travel in case of a default. Some firms are even exempt. So when you file a complaint with the Division of Consumer Services (Mayo Building, Tallahassee, Fla. 32399; 904-488-2221), don’t hold your breath for a quick refund.
