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Commission cuts the ‘most significant development for 15 years’
The raft of commission cuts sweeping the industry is the most significant development in the sector for the past 15 years, Libra Holidays sales director Paul Riches has said.
“In terms of the relationship between agents and operators and the future of travel agents, it has changed everything,” he told TravelMole. “It completely blows apart the traditional business model.
“It will put the cost-base of agents under even more pressure and if tour operators get it wrong, they too will be under pressure.”
The comments came as more operators began reviewing their commission terms and agreement with agents as the fall out continued from Thomson’s move last week.
Richies said Libra had no immediate plans to reduce commission but said there could be “tweaks” in the future.
“We have existing commercial terms with retailers and we have no intention of breaking those,” he said. “If our model works in today’s environment – which is very different from yesterday – than we will carry on as we are.”
Speculation was intensifying that MyTravel will follow the commission cuts of Thomson, Thomas Cook and First Choice. Observers said it was inconceivable that the operator will not head down the same path.
“As First Choice and Thomas Cook have already indicated, Thomson’s rivals simply cannot afford to seen as uncompetitively priced in what we all know is a price sensitive market,” said one source.
MyTravel, which is in a closed period, said it was “taking a step back” from the issue and declined to comment further.
Attention will now focus on the independent sector to see how they react to the cuts and whether they too will take a harder line.
However, observers said specialist operators are highly unlikely to follow suit, at least not to 7%.
“Unlike the mass market operators, independents need the distribution of the retail consortia,” said one.
Report by Steve Jones
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