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First Choice set to follow Thomson with 7% commission
Monday, 25 Nov, 2005
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ABTA Convention special report: First Choice will follow Thomson by reducing its base level of commission to 7%.
First Choice mainstream sector managing director Dermot Blastland said it could not afford to have higher costs than competitors and shrugged off threats by independent consortium Triton to stop selling operators which cut commission.
“We’ve not made an official decision yet, we’re still looking at the situation, but clearly we can’t allow our competitors’ costs to be lower than ours,” said Blastland.
“The thing about Triton is that they’ve come out of the tardis in the wrong year. The playing field has changed.
“What we’ve said to them is that we’d like to work with select clusters of agents which promote First Choice and pay them more, but they don’t want that. The consortiums always use the example of Sony being sold by all retailers, but that’s a ridiculous analogy because it doesn’t even happen anyway.
“The fact is you can’t have 1,800 retailers all promoting an operator, it doesn’t work like that.”
Blastland said operators were concerned that their commissions were being given away in the form of discounts by independent retailers.
“The interesting thing about the Thomson announcement is that it has said it wants to regain control of the pricing of its holidays. It is fed up of paying retailers a certain level of commission and then seeing them give that away. That is certainly an issue.”
Around 75% of Thomson’s business is sold through in-house retailers and Triton accounts for about 10% of Thomson’s business. Blastland estimated that its own in-house sales were slightly lower but that Triton accounted for a similar number of its bookings.
“If you look at the way the market’s going in terms of directional selling, everyone will have moved to where Thomson is within 18 months.”
MyTravel is refusing to comment, but is also expected to cut base level commissions to agents.
Report by Jeremy Skidmore in Marrakech
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