Have you paid your suppliers lately? | Travel Research Online


Have you paid your suppliers lately?

Does anyone watch The Amazing Race? Have you noticed the commercials for the Allure of the Seas? How about the new Disney commercial?  I heard that Sandals has a new one out there too; but I have not seen it yet. Is this an indication that the Great Recession is finally over and people are again receptive to spending some bucks for a travel experience?  Does this mean that our businesses will begin to trend up? Not likely if a prospect saw any of those commercials, the call to action is to call the vendor. Period. Not even the small “or call your travel agent” tag.

Having been in the industry for a while, it is certainly disappointing to see that most suppliers are slowly migrating away from the whole “valued partner” concept; but in some ways, I can’t blame them. Since 2001, business has been very tough for everyone and to a degree it has been every man for himself. Who hasn’t cut back on their expenses? Who hasn’t looked for a way to save a buck or two? For years, I have been saying that the industry is moving to a non-commissionable model where travel professionals will need to stand on their own two feet if they are looking to succeed. They are going to have to buy product at net, add value, and mark it up accordingly. It is the true retail model. And with that mindset, believe it or not, everyone will come out ahead.

The travel suppliers will have a reduced cost (no more commissions), the playing field will be much more level (not entirely, but a lot closer), and travel professionals will no longer be beholden to the whims of some cost cutting boneheaded CEO who may not even know how to spell travel. Give it some thought. Isn’t it refreshing?

Of course, this is a completely different mindset. But it is one that can start being implemented right now while you are still earning commissions. If you position your value in your market, you will have customers. Bring value to their experience and you have a repeat customer. Today’s consumer is not stupid. They know that when they buy online (any product) that it is the bare bones deal. I can buy a suit at Lord & Taylor and it comes on a nice wooden hangar in a nice cloth bag to keep it fresh and it comes with one of those lint roller gizmos. The salesman thanks me for my business and wishes me well. When I order it from their website, it comes in a brown cardboard box, wrapped in a clear plastic bag, thrown from a brown truck onto my doorstep. I know that. I get it. I have a choice. And I chose to buy from the store with the smiling salesman. In either case, the end product is the same, but the experience is entirely different.

But back to the three commercials (sort of sounding like an Old Spice commercial now), there was no tag to call your travel agent. I have never bought an ad on network television but I know they are really expensive and I would want to get the biggest bang for my buck. And I am pretty sure that suggesting that potential customers go someplace that will cost me is the way to go. As a business owner, if the phone rings and a customer simply wants to book a trip, what do you do? Do you work with the customer and book the trip? Or do you pass the customer off to an independent contractor that is earning an 80% commission split? I think you know the answer.

So how do we get tagged in these commercials again? I bet we will pay for the opportunity. Yes, I bet the co-op model will also change. Rather than the suppliers helping to fund our marketing efforts, we will see suppliers looking to be paid for their marketing efforts. You might think this is crazy, but it has been happening for years in media markets. Apple Vacations runs huge ads in the Sunday newspaper featuring all of their specials, at the bottom of these ads you will see a listing of several agencies in that market. Who do you think pays for that?

  3 thoughts on “Have you paid your suppliers lately?

  1. Yvonne Gardner says:

    There will be no level paying field!!The vendors will advertise their net price on the internet, and when the client comes into the office and says I can buy the trip for 3000.00 and you are charging me 3500.00(so we loose the sale)
    Come on vendors, do you think we travel consultants are DUMB?
    Get over it—you vendors and tour operators are the ones that wanted us to sell your product. We don’t believe any of your baloney. All CEO’s are alike—money-money-money!! If this isn’t the anti trust, what is?

  2. natalie says:

    There are some vendors where they offer net pricing, like consolidators and DMCs, where their pricing is truly lower than gross price to the consumer allowing a profit margin. I have no problem with these vendors since it is a win win – the consolidator gets the sale helping their contracts with the airline, the travel agent makes a decent profit & the consumer saves moeny vs buying direct from the airline.

    If this were the case with the cruise lines and other tour vendors I wouldn’t have a problem with it but then why change the model, they are just providing the mark up via commission instead of net price? Are they going to offer net pricing allowing 20-25% markups? I think not. Cruise lines in particular already have a strained relationship with travel agents via the NCF game so why add fuel to the fire unless they really do want to cut out their biggest outside sales force? Well at least they wouldn’t be able to play that game since they would have to eliminate the non-commissionable fare category. It either is commissionable or is tax, and we all know NCFs are tax.

  3. Brian Tan says:

    John, this is right on. On Zicasso, we partner with the industry’s top 10% travel specialists — and most of them work with net rates that they mark up. In some cases, with the home-based businesses, the distinction between “travel agent” and “tour operator” model is blurring.

    It’s certainly not easy for an agent to contract with each hotel, guide, etc. but one can certainly work with inbound operators / DMC’s and get net rates.

    John, perhaps you can elaborate a bit more on why “suppliers will have a reduced cost (no more commission)”. While they’re not paying commission, they have to give a lower net rate to agents.

    Thanks for your insights.

    Brian Tan, CEO

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