In a competitive environment, suppliers may be inclined to cut out the middleman, but tour operators warn that the importance of trade relations can’t be underestimated. What does being trade-friendly entail? Dorine Reinstein finds out.
Suppliers have seen the percentage of bookings placed by direct clients increase substantially over the years, according to Andrew Iles, CEO of Ashtons Tours, Safaris & Shuttles. “Suppliers now find that they could be competing with the trade for the same client, who could so easily book direct, which puts the quality and strength of the supplier-trade relationship squarely in the spotlight.”
Iles warns, however, that suppliers need to acknowledge that the trade will always be able to reach markets and clients that they themselves can’t. “They should steer very clear of underestimating the value and importance of the supplier-trade relationship, no matter what technological advancements unfold in the future.”
Onne Vegter, MD of Wild Wings Safaris, agrees and says it is important to support the industry value chain, as tourism suppliers can’t exist in silos. “Instead of fighting to get a bigger slice of the pie, by working together we can grow the size of the pie for everyone. In the current online age, trade-friendliness is sometimes seen as working against the trends toward direct bookings, OTAs and dynamic revenue management. But this is not the case. It is about recognising the important role of different players in the trade and the value they bring to suppliers, and not undercutting or undermining them.”
Vegter says minimising trade business is shortsighted and could cost the supplier dearly when a slow-down in tourism is experienced. The traditional supply chain also offers value when faced with language barriers and consumer protection laws.
How to be a trade-friendly supplier:
- Keep your rates transparent and fair
Trade-friendly suppliers ensure that their agents always have the latest product rates and information, says Iles. “Trade-friendly suppliers avoid undercutting their agents when quoting direct clients and they ensure that their agents have adequate time to promote any specials that they might offer,” he adds.
Rowena Roberts, owner of Boundless Africa, adds that it is important that suppliers also offer reasonable rates and don’t suddenly introduce a 20% hike when the exchange rate is in free fall. “Consistent contact with the tour operators is also important so that they are ‘front of mind’. Finally, sending out rates without having to be nagged every year goes a long way.”
Discounts and specials should also be available to the trade and not only to the end-consumer. Vegter emphasises that suppliers need to honour their published rack rates, and they should not undercut their agents, DMCs and tour operators by offering discounts to direct clients. “This makes us look overpriced and damages our brand reputation, and therefore the relationships between us and our customers, and between us and such suppliers,” he says.
According to Vegter, best available rates (BAR) pricing should never undercut contracted STO rates. He says: “If revenue management demands a reduction in published rack rates, BAR need to remain commissionable. Dynamic pricing is a reality and presents challenges to the traditional practice of brochuring and forward contracting agreed to between tour operators and their agents abroad. Being trade-friendly is to recognise this reality and never damage long-term relationships with loyal operators for the sake of short-term revenue management to fill beds during a quiet period.”
“I have come across a few hotels now moving towards things like BAR rates or special offers directly to consumers that we cannot compete with,” agrees Abigail Shaw, Director of Bushbaby Travel. She avoids marketing these suppliers to her clients. There are plenty of fantastic hotels, lodges and guest houses that value the trade relationship on a higher level and would not do this.”
Lance Zackey, Sales and Marketing Director of Rove Africa, has also seen a number of tour operators undercutting retail agents by using negotiated STO rates and offering pricing direct to the consumer. “This does mean a keener pricing structure to the consumer at the end of the day. But it is to the detriment of the Industry as a whole. This is firstly not how negotiated STO rates are meant to be used and, secondly, by doing this they are not protecting the industry as a whole, or the destination, meaning the product becomes devalued and looked upon as a discounted, inferior, and free sale for all.”
- Honour trade bookings
It is important for suppliers to be open with the trade and honour trade bookings to create long-lasting relationships. Says Shaw: “We work with lodges who will come to us when a client has tried to book direct and encouraged them to book via us once again. That leads to long-term relationships and loyalty.”
Vegter agrees and says suppliers should never accept a direct booking for which an agent or operator is already holding a provisional booking. “We have a number of loyal suppliers that we support extremely well, not just because they honour their rack rates and offer us decent STO rates, but because we know they would never sell a room to one of our clients if they approached the supplier direct after having heard about the supplier from us.”
- In good times and bad
It is important that suppliers make sure that rooms and inventory are available at tour operator rates at peak times, such as festive periods, even if the rooms can be sold at a higher revenue through other channels over that period, according to Craig Smith, Director of New Frontiers. “It’s a quid pro quo for trade business in quiet times when demand is low.”
- Make the process easy
Trade-friendly suppliers need to provide their agents with user-friendly booking systems, says Iles.
“Efficiency, timeous replies and quick turnarounds make all the difference in winning business,” says Brad Glenn, MD of The Inside Edge. He says technology has changed the way in which we engage. “The expectations, particularly around the speed of responses, is now virtually instantaneous with the advent of smart phones, tablets and laptops. We are always on and open for business.”
One way in which suppliers can make the booking process easier for tour operators, according to Smith, is by waiving deposit conditions as these require two wire transfers from the overseas booking agent.
Vegter agrees that flexibility is important when it comes to payment methods. “Certain suppliers have such strict payment terms that we are unable to block book rooms in order to offer guaranteed scheduled departures, for example. Or they have such strict payment terms for short notice bookings (like demanding payment within 24 hours) that we simply cannot quote them for short notice enquiries,” he says. “A trade-friendly supplier understands that this booking process takes time and allows for it with more flexible payment terms.”
- Don’t forget the commissions
Although a contentious issue, commissions are an important part of the value chain. “Suppliers need to understand the distribution channel and respect the commission basis that is required to sustain this: a DMC will supply an overseas tour operator, who will need to commission a travel agent, so there are feasibly three links in the commission chain,” says Smith.
- Respect the client
Being customer-friendly is just as important as being trade-friendly, says Shaw. “It’s important to take on special requests and personalise a stay, such as, for example, guaranteeing connecting rooms when booking a family. If our customers are happy, we are happy!”
“Everything that is done has to be in the interest of the end client and to make the entire process easier and better for them,” says Glenn. “With incredible access to information and the ease of travel, clients have a huge amount of knowledge at their fingertips, so service and value are the key differentiators.”
Smith agrees and explains that tour operators expect suppliers to treat their agents as they would treat the end user and ensure that the agents experience the highest standards of customer service. He says: “They expect suppliers to acknowledge the importance of the relationships that exist further along the booking chain between the suppliers’ agents and the companies and individuals who book through those agents. As far as possible suppliers need to protect and respect those ‘more removed’ relationships and never do anything to cause a negative impact through their own actions and reactions.”
