CineWorld changes fees policy

After a pilot scheme in Scotland, CineWorld has announced it is dropping on-line ticket booking fees.  

CineWorld is acting in advance of planned government action on credit and debit card charges.  It will knock 70p of the costs of a ticket booked in advance on-line, though fees were previously capped at a maximum of £4.20 per transaction.

CineWorld says their pilot has demonstrated that it makes attenders more loyal to their chain and is helping them break box office records for cinema screenings in the UK.  In addition to dropping booking fees, they are offering a 10% discount on tickets to people who register for their MyCineWorld scheme.

Interestingly, they intend to compensate for these savings to on-line purchasers with a 6% increase in the cost of tickets to people turning up at the cinema to buy tickets.  Cineworld’s Justin Skinner, vice president of marketing at Cineworld confirmed that the company responded to market research: 77% of cinema goers in a survey said it would encourage them to book online, and 86% said discounted tickets would encourage them to pre-book.

Consumer group Which? had made a “super-complaint” about booking fees on top of ticket prices, saying debit card transactions cost businesses about 20p, while those by credit card cost only 1.8% of the transaction value.  Which? executive director Richard Lloyd said: “Which? has long been campaigning for companies to put an end to hidden and disproportionate surcharges, so we’re pleased Cineworld is leading the way and hope that other companies follow their lead.”

What price loyalty and increased attendances?  After a pilot scheme in Scotland, CineWorld has announced it is dropping on-line ticket booking fees for its 79 multiplex cinemas in the UK.  It will raise over-the-counter ticket prices by 6% to compensate for the lost income -and to encourage advance booking.

CineWorld is acting in advance of planned government action on credit and debit card surcharges on top of ticket prices, after the “super-complaint” from consumer’s group Which?  It will knock 70p of the costs of a ticket booked in advance on-line, though fees were previously capped at a maximum of £4.20 per transaction.

CineWorld says their pilot has demonstrated that it makes attenders more loyal to their chain and is helping them break box office records for cinema screenings in the UK.  In addition to dropping booking fees, they are offering a 10% discount on tickets to people who register for their MyCineWorld scheme, intended to encourage loyalty.

They intend to compensate for these savings to on-line purchasers with a 6% increase in the cost of tickets to people turning up at the cinema to buy tickets ‘on the door’.  Since this is the most costly location for sales, it makes sense to charge more for attended service compared to on-line self service bookings.

Cineworld’s Justin Skinner, vice president of marketing at Cineworld confirmed that the company responded to market research: 77% of cinema goers in a survey said it would encourage them to book online, and 86% said discounted tickets would encourage them to pre-book.

The CineWorld trial in their Scottish cinemas in 2011 demonstrated that the increase in on-line bookings more than compensated for the loss of the booking fee.

Consumer group Which? had made a “super-complaint” in 2011 about booking fees on top of ticket prices, saying debit card transactions cost businesses about 20p, while those by credit card cost only 1.8% of the transaction value.  They wanted companies to be clear that these were not processing fees being passed to consumers, but additional profit-making charges.

Which? executive director Richard Lloyd said: “Which? has long been campaigning for companies to put an end to hidden and disproportionate surcharges, so we’re pleased Cineworld is leading the way and hope that other companies follow their lead.”

Clearly, CineWorld intend this to give them a competitive advantage against other cinema chains in the UK.  There is immediate press speculation that others will have to follow suit.

UK Dispatches Programme Exposes Ticketing Practices

The UK’s Channel 4 Dispatches investigatory programme has chosen to cover ticketing in recent episodes this February (Monday 13 February and Thursday 23 February 2012).  First the London 2012 Olympics came under scrutiny, and then the Secondary Ticket Market.  Their methodology was to to send in under-cover reporters to get engaged in companies working on Olympics ticketing and in the self described “fan ticket exchange” sites run by ViaGoGo and Seatwave.

Anyone who works in ticketing is aware of the degree of soft curruption that goes on in ticket allocations, the potential for exploitation of high demand tickets, and the insider commissions and fee splits which benefit particular parts of the sector, usually at the disadvantage of venues and the public. The question has always been how far these practices are in breach of consumer protection laws, advertising standards, and unfair and misleading contract terms. For those working on this, just how dishonest do their employers require them to be?

What the London Assembly wanted to know, the local government for London, was just who had bought the London 2012 Olympics tickets and at what price, since accessibility had been promised by the organisers.  LOCOG were not going to tell them before all tickets were actually sold.

Disptaches revealed that whereas the principle was thought to be that 75% of tickets would be allocated by LOCOG  to the public, that in practice only an estimated 30-40% was available to them for high demand events such as the Men’s 100 metres sprint.  Overall 8% are allocated to sponsors, and 4% to hospitality package providers, but these get much larger allocations for the high demand events.  Hence, the huge disappointment from the public at their lack of success in getting tickets for thse premium events.

Olympic regulations require that seats sold through hospitality packages are restricted to a 20% mark-up, but Dispatches under-cover reporters found that hotel rooms provided at discounted rates to LOCOG had been re-sold in hospitality packages at premium rates.  Hotel chain Premier Inn withdrew from the deal because of this exploitation.

Thomas Cook, Prestige Tickets, and JetSetSports all get large allocations of Olympic tickets for these premium events – despite some of those running the business being involved in Olympic fraud in the past.  Sead Dizdarevic, Chairman and CEO of Jet Set Sports/CoSport has been appointed the “official” re-seller of London 2012 Olympic tickets in many countries, despite being a key figure in the Salt Lake City Olymic bid scandal.  Press reports in many countries comment in astonishment that one company has so many tickets under its control, at the expense of the public, and for its customers in premium rates as there is almost no competition, unlike on the track.  These hospitality packages were also found to be re-selling as a benefit the use of the privileged Olympic travel lanes across London, though the reporters were told this was to be kept a secret.

The reporters experience at ViaGoGo and Seatwave was much more depressing.  From the beginning, in their training by their supervisors, they were reminded not to tell ticket purchasers what was really going-on.  Despite the descriptions on their websites, fewer than 25% of the tickets sold come from fans trying to re-sell tickets.  Most come from allocations from the promoters, from “power-sellers”, from ticket brokers, and from staff making direct purchases from the likes of Ticketmaster.  If they could not get enough tickets by those means, whenever nercessary the companies were buying the tickets themselves, impersonating the public, using numerous credit cards registered at the home addresses of staff.

UK MP Sharon Hodgson’s “Sale of Tickets (Sporting and Cultural Events) Bill” was lost in parliament this year.  Intended to restrict the re-sale mark-up, it would stop the sale of poor seats at hugely marked-up premium prices.  Sharon Hodgson had wanted to know how it was possible for tickets to appear on these secondary sites in large numbers within moments of on-sales starting, at huge mark-ups.  The under-cover reporters saw the accounts indicating that thousands of tickets were coming from producers/promoters such as Live Nation and SJM, and making millions in the process across a tour such as Take That, despite the seats being re-sold often being of poor quality.  ViaGoGo and Seatwave were adamant that staff must not reveal where their highly marked up seats were actually located.

A legal opinion quoted in Dispatches said this was in breach of consumer protection and misleading commercial business, unfair contract terms, and advertising practices.  As the staff of these secondary re-sellers freely said: it was “immoral” and “dishonest” and not to be talked about.  Scotland Yard’s Operation Podium is trying to protect the public from illegal ticket re-sale activity – it would appear they need to pay attention to supposedly legal re-sellers too.

Dispatches: http://www.channel4.com/programmes/dispatches/4od

Richard Howie (UK S.T.A.R. Council member) puts an alternative view in his blog: bit.ly/xZhDuQ

Post Script: Interesting insider feedback on this story: From their beginning, ViaGoGo and Seatwave chose to get tickets from sources other than “fan ticket exchanges”, going to other resellers, brokers and approaching primary sellers, the inventory controllers.  Since some of these were not always reliable sources – “off-street touts” – they ran the risk of selling tickets which weren’t then delivered to them, hence the practice of impersonating individuals to buy tickets to fulfill orders.  The primary sellers – producers and promoters – of course wanted confidentiality, since they claimed in public all the tickets went to their fans.  The interesting question is why Seatwave and ViaGoGo don’t explain what they do when dealing with their customers, instead of misrepresenting the nature of their business.

Which? makes ‘super complaint’ about

Payment charges for ticket purchases could be regulated if the Office of Fair Trading decides they are harming consumers’ interests. Which? Chief Executive Peter Vicary-Smith said “There’s simply no justification for excessive card charges – paying by card should cost the consumer the same amount it costs the retailer. Companies shouldn’t be using card processing costs as an excuse for boosting their profits”. The Which? ‘super complaint’ got extensive coverage in the UK media.

Which? says typical card processing charges by the banks are 20p for debit cards and less than 2% of the transaction value for credit cards. So even a £50 ticketing transaction would incur a maximum of £1, when the standard charge is often £1.50, and some charge per ticket.

Which? says there are huge variations in the amounts charged for similar transactions and payment methods, often indicated at the end of the purchase process, and this is against consumers’ interests. Prashant Vaze at Consumer Focus, another organisation working for consumer protection points out that “The worst offenders even ask for a surcharge on a per person basis”.

In the UK, designated consumer bodies, such as Which?, can make “super complaints” direct to the Office of Fair Trading which has just 90 days to deal with them. They have previously ruled that in other ticketing sectors, low cost airlines for example, all fixed non-optional charges must be included in the advertised/quoted price.

While the low cost airlines are quoted as the “worst offenders”, with some charging for each leg of a journey as well as per passenger, Which? finds that local authorities, estate agents, theatres, cinemas and concert tickets are levying excessive charges. It wants debit card surcharges to be outlawed and controls on credit card surcharges to only reflect their true cost.

Roger Tomlinson

11 February 2011