Operators “paying too much” to agents

Tour operators are paying far too much commission to underserving agents who offer poor levels of service, a seminar was told.

Gary David, managing director of specialist operator Cadogan Holidays, claimed some retailers are raking in the cash while operators earn a pittance.

Mr David, speaking at a debate hosted by CIMTIG in London, also revealed that his controversial tiered commission structure was paying dividends – despite being shunned by agency consortium bosses.

“An agent on 15% will earn £264 for 20 minutes work when booking a holiday for two with Cadogan,” Mr David explained. “We, on the other hand, can expect to make £80 per passenger. Is this fair?”

While agents who offer exceptional levels of service may deserve the rewards, question marks hang over sloppy, unprofessional retailers, he said.

“There are some very poor agents out there. Do they warrant this amount?”

Meanwhile, costs and overheads for operators are “never ending” with the amount needed to serve travel agents “horrendous”.

“We have brochure production and distribution, marketing support and incentives, educationals, roadshows,” he argued. “On top of that consortia request support for joint marketing, a 1% kickback for head office. It is never ending.”

Mr David revealed, however, that his own tiered commission structure, which rewards retailers who actively sell his product, was proving successful with Advantage Travel Centres – even though the consortium’s bosses advised members to derack the brochures.

“Advantage told me they would not sell my product so we contacted all members directly,” Mr David told the seminar. “We had 418 responses from members wanting to working with us. We now do £3 million worth of business with Advantage although head office will no longer deal with us.

“Independents have a mind of their own.”

But he said a similar approach with Lunn Poly failed when the multiple rejected the tiered system.

“Our business with them died within three days,” he admitted.

Earlier, Mr David, an ex-ABTA board member, said consortiums have no right to demand blanket commissions when many agents show no loyalty.

“Some rack five competing products so why am I paying big rates of commission,” he said.

Almost 80% of the operator’s business now comes through the operator’s 800-strong Elite Agents Club.