Tour operators remain firm on their pricing policies, dismissing recent pleas from agents for price parity. This ongoing debate highlights the challenges in balancing fair pricing and competitive advantage.
Industry’s Stance on Price Parity
The major tour operators, dubbed the ‘big three’—Tui, easyJet Holidays, and Jet2holidays—remain steadfast in their decision to maintain the existing pricing policies. Despite a fervent plea from Lynne Cuthbertson of The Big Surprise, urging these operators to standardise prices to avoid the impression of overcharging customers, these companies have shown no intention of altering their current model. The call for price parity is not a novel issue; it has been a persistent concern for independent agents who advocate that such a move could enhance sales and loyalty.
Responses from Major Tour Operators
Both Jet2holidays and easyJet Holidays have reiterated their commitment to their established strategies. A representative of Jet2holidays pointed out the success of their transparent pricing policy, which has been in place for over a decade, benefitting both the company and independent travel agents. Besides this, their Partners2Success initiative further aids agency partners in expanding their business by providing effective collaboration mechanisms.
An easyJet Holidays spokesperson emphasised their dedication to supporting the 7,000-plus agents they partner with, underlining the significance of promotions and trade-only incentives. Additionally, they are enhancing tools within their trade portal to better facilitate agent operations.
Agents’ Perspective on Profitability
Lynne Cuthbertson’s letter, which drew much support from her peers, criticised the disparity between promised commissions and actual earnings. Describing the commission promises as ‘smoke and mirrors’, she highlighted that most agents make merely 2% to 6%, counter to the publicised 10%-13% commission. The letter revealed her exasperation over the hours wasted in comparing consumer and trade platform prices.
Cuthbertson, who began her career in travel just under two years ago, stated her necessity to price-match in order to secure deals. As a new entrant to the industry, finding a balance between consumer expectations and fair earnings remains challenging. Her business heavily relies on major operators for 40% of bookings, necessitating time-consuming price comparisons.
Support from Established Agents
Support for Cuthbertson also comes from established agents like Lee Harrison, co-owner of Malvern World Travel, who voiced the necessity of evaluating the profitability of each sale meticulously. He argued that price parity would simplify sales processes and increase upselling opportunities for agents. Harrison highlighted the ease of transactions when clients do not perceive discrepancies between trade and online prices.
Jet2holidays, despite being a minor player in Harrison’s business, does not appear on their independent agency finder. This omission, he argues, is detrimental considering the monthly sales volume. Chris Bailey, managing director of Bailey’s Travel, echoed similar sentiments, criticising the financial viability of significant discounting to accommodate commission variations.
Concerns over Commission Reductions
Bailey argued against reducing commission rates to as low as 5%, advocating for sustainable remuneration strategies that allow agencies to operate profitably while compensating staff adequately. He maintained operators must understand that price parity is crucial not only for profitability but also for the employers’ ability to remunerate above industry averages.
The notion of becoming a ‘busy fool’, highlighted by Bailey, underscores the inefficiencies created by current price disparities. He emphasized the importance of ensuring that operational efforts align with financial returns to maintain sustainable business practices.
Operator Reluctance and Market Competition
Bailey further expressed concerns that major operators may lack the confidence to strive for price parity due to competitive fears. The apprehension of losing out to online competitors perpetuates a reluctance to adopt parity despite potential sales benefits through agent channels.
Despite the challenges, there is a mutual recognition among agents that deliberations on dual pricing must continue. The pressing issue of dual pricing, evidenced by agents’ experiences, requires more spotlight and industry discourse to drive meaningful change. This also highlights the need for concerted efforts among agents to advocate for balanced and equitable pricing policies.
The Path Forward
The ongoing dialogue signals a move towards bridging the gap between operators and independent agents in the pursuit of mutually beneficial policies. The discourse surrounding price parity is expected to influence future strategies, urging a recalibration of practices that could improve relations with agent partners and enhance market competitiveness.
The debate surrounding price parity reflects a broader industry challenge. As operators and agents engage in discussions, a focus on collaborative solutions is crucial for future harmony and success.
