Travel is now a Commodity? | TravelResearchOnline

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Travel is now a Commodity?

This is a premise shared by many agents these days, especially with cruise lines.

The “commodity” idea is a red herring. There has never been a time when someone wanted to pay more for their travel and the hotel room, stateroom, etc has always been just that, a hotel room, stateroom, etc. Price has always been an issue; it was not as transparent as it is now.

Suppliers pay higher commission percentages to travel agencies so agencies would be the suppliers MARKETING and sales avenue. Suppliers knew they could not reach every neighborhood in a city as large as Los Angeles or in a rural area such as Wood River, Nebraska.  Brick and mortar agencies had great displays, brochure racks, and posters on the walls or in the windows. Agents went out into their community and marketed suppliers product. Many agencies sent out supplier direct mail pieces to their client list or took out co-op ads in the local travel section of their Sunday paper. Suppliers needed us to market product.

When the Internet first started, suppliers started to jump on, as did agencies, but it still did not have the reach it needed. At the same time there was a growth in cable channels such as the Travel Channel, TLC, Discovery, Nat Geo, History, etc. along with a growth in reality shows that showed off exotic locations. This helped market supplier’s products either directly through paid advertising, by doing a show on a specific destination such as Disney World or indirectly by showing and highlighting these destinations.

In the last few years, we have seen the phenomenal growth of social media, coupled with the ease of access to this social media. At first it was forums such as this one  (TRO) setup for whatever interest you had. Now with one tap on your Smartphone, someone can send a message out to thousands or possibly even millions instantly. You can research and book travel right from your phone. Clients can instantly share information about their travels while traveling.

 Suppliers have become aggressive in their marketing on these media platforms and they are getting the benefit of thousands of other websites promoting them at the same time. I typed in major cruise line in Google and I got 3,960,000 results. Only one of these is the official website of this cruise line, but the cruise line is getting the benefit of all the other pages loaded by travel agencies, past guests, fans, critics, blogs, etc. They pay for nothing for this marketing.

The suppliers are aware of the discounting agents are doing (yes, mostly online agencies, but other agents are doing the same in an effort to close the sale and not lose a client.) The supplier does not need us as their marketing avenue any longer and since agencies are closing sales by discounting (rebating their commission), suppliers do not see the need to pay these higher commissions. Once your client goes on their trip, the supplier has all the information they need to market direct to that client.

Success for travel agents will be by adding service and value to the potential client. The travel agent industry will need to shift from being a retail industry where compensation is based on what you sell, to a service industry, where the client pays you for the service and value you add.

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  4 thoughts on “Travel is now a Commodity?

  1. Janet Staton, CTC says:

    Tim, where have you been the past 15-20 years?
    Your philosophy is “right on” but agents have been doing just what you suggest for a long time.

    As a former store-front owner (I did SELL it in 2008) and now an at-home parttime agent, I have to charge for my expertise. And I am worth it. You need to think that……

  2. I believe the best agents and tour operators add value to every booking. We have been to the desired location. We know the weather, the altitude, the potential problems, the layout of the airport, and in our case, we have ridden the luxury trains and stayed in the hotels that match them. We have met the train and hotel managers, know them personally by name, and they know us. We know what cabins or rooms our guests would love, anad those they would not. We know what trains they should take, and those they should not. We can advise where to dine, where to shop, what time of year to go, what train is the greatest in the world because we have been on all of them. (We are not just looking this stuff up on the internet.) First-hand information and experience in itself is value added. It’s time all agents realize they are not just order takers. They are fulfillers of dreams and makers of memories for a lifetime.
    Sincerely,
    Eleanor Flagler Hardy
    President
    Manager, Luxury Train Division
    The Society of International Railway Travelers

  3. Tim Richmond says:

    Quote: “Tim, where have you been the past 15-20 years?Your philosophy is “right on” but agents have been doing just what you suggest for a long time.
    As a former store-front owner (I did SELL it in 2008) and now an at-home part-time agent, I have to charge for my expertise. And I am worth it.”
    I am very aware agents have been dong this for years. The point of the article is that suppliers paying us not for the value we add for clients, but for our value to them as their marketing and sales distribution. Suppliers do not care about the value you add, that is the key to the success of YOUR business, not the suppliers. The suppliers concern is getting their product in front of as many potential customers as possible (marketing) and then having those sales closed. That is why they paid the higher commissions.
    Now, they do not need travel agents as much as their marketing distribution. They have seen agents (agencies) can close sales on a lower commission by rebating, so that is why we are seeing lower commissions and why they are cutting commission overseas and you can bet it will come over here. You last line is the key to agents success:
    I have to charge for my expertise. And I am worth it. The “charge” will not be to the supplier or paid via commission from the supplier, but will be from the client paying you for that expertise.

  4. Suppliers have always felt the need to solicit via brokers like myself yet discounts through our channels only satisfy customers eager for incentives and the best possible deals. Reciprocate content for shared revenues and match seo, with reo. From a business and tech stand point that is.

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