Tour operators commit to agency commissions

Global Travel Group Conference Special: Tour operators have dismissed accusations they are set to slash agents’ commission – but admitted they will continue to seek direct sales. In a rare display of unity, TUI, MyTravel, First Choice and Cosmos all insisted they will not desert the retail trade and would continue to support independent agents. Addressing retailers at the Global Travel Group conference in Cyprus, TUI UK commercial director Derek Jones robustly refuted claims from agents that operators “will become like Ryanair” and cut commission. His comments came as Thomson revealed that 67% of sales were now in-house. “Why would I do that [cut commission]? I am comfortable paying commission,” he said. “I don’t understand the logic of closing off an entire distribution channel. Any agent who can deliver incremental business I want to work with. I want to take a bigger market share through every channel.” First Choice sales director Martin Froggatt also denied the accusation, claiming it will always look for third party distribution. “There is no way on this earth we’ll ever get to 100% direct,” he said. “We don’t have shops in every town and cannot afford the fixed costs of a retail network of that size.” It may deal with fewer agents in the future but would not slash commission, he added. Cosmos managing director Terry Williamson said £35 million had been spent supporting the trade – money it was not about to waste through a direct sales drive. “Our aim is to grow business through the independent agent sector,” he said. Operators responded impatiently to criticisms that direct booking numbers are too prominent in brochures, stressing they must give customer every opportunity to book. “We spend £16 million a year printing and distributing brochures. We have to maximise that cost,” said Airtours Holiday sales and commercial director Steve Barrass. “If an agent does not close a sale when the customer is in the shop we need to give them the opportunity to book later before they go elsewhere. Direct numbers in brochures will not disappear.” Froggatt said First Choice has £3 million worth of risk every year and needs to explore every distribution avenue. Earlier in the debate, Jones said Thomson had seen a rise in direct bookings but stressed it was not looking to cut out agents. Booking through a high street agent often remained the cheaper option for customers, he added. Report by Steve Jones

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