ADV12: Support partners to keep commissions
Head of commercial John Sullivan told delegates at this year’s annual conference in Malta that reductions in commission levels over the past year, such as Complete Cruise Solution’s decision to cut payments to 5% for sales of its cruise brands, were likely to be followed by other suppliers.
He said: “It’s clear to us that every Advantage member needs to get behind Advantage’s preferred partners, if not we will be powerless to continue what we enjoy now. It’s unlikely to stop here [commission cuts]. Can your business survive on low commissions if others follow?”
With reduced consumer demand and challenging trading conditions, both last year and this year, there was pressure on members to perform and retain commercial terms, he added.
Sullivan said the consortium currently enjoyed “best in class” commissions with a 1% competitive edge over other agency rivals and delivers more than 30 incentives a month to members.
The consortium now has long-term deals with 80% of its supplier partners, compared to 70% last year, allowing it to concentrate on “making partnerships work”. But Sullivan told suppliers not in long term deals to review their offerings. “If you are not in a long-term partnership [with Advantage] you need to consider changing your business model,” he added.
Advantage chief executive John McEwan added that retail distribution was becoming more important for independent tour operators as major operators Thomas Cook and Tui Travel focused more heavily on inhouse distribution for sales. Already 80% of Tui’s sales were inhouse, he said.
“For independent operators it’s crucial they have strong distribution partners. With Thomas Cook and Tui putting more focus on inhouse products, there will be less access for independent operators.”
Sullivan also called on more suppliers to join Advantage’s Gateway selling system for leisure agents. So far 60 suppliers are on the system and 360 Advantage members are using Gateway to book holidays for clients. “By integrating more partners [on the system] will increase usage and more members will be attracted to the selling system,” he said.
McEwan said the system – which aggregates suppliers’ content into one system – could save agents as much as 30 minutes’ time per