What's New?
The biggest challenge: zero commission
Remember those heady days when commissions of 10% or more were the main source of income? Well, for most of us those days have gone and the challenge is how to fill the gap. But some agencies are managing change better than others - in fact they're actually making more money now than in the old days.
Amadeus conducted an independent study to look at the demise of commissions, how it's affecting agencies around the world and how both leisure and business travel agencies are implementing and benefiting from the new business model.
The white paper is called "Service Fees and Commission Cuts: Opportunities and Best Practices for Travel Agencies", and starts us off with a brief reminder of what actually happened and why airline commissions have fallen steadily from around 10% of the ticket price in the mid-90s to zero in many markets today.
What may surprise you is the second half of the paper that draws on the experience of those markets that by now have successfully managed to compensate for the loss in revenue by implementing service-fee models. And the best news is that the most successful markets have seen their revenues grow even as commissions have fallen!
The report offers the following tips to travel agencies wanting to implement a successful service-fee model:
- Educate staff with formal training programmes on service-fee schemes and high margin products.
- Communicate service fees to customers up-front, inform them of the new service-fee business model. Research suggests that customers are willing to pay for services which they see as offering true value.
- Automate processes for charging fees to avoid errors and increase your efficiency and productivity.
- Identify those services that customers value most and for which they're willing to pay. The top five identified by the study are:
- trip planning,
- hotel-only bookings,
- special coupons,
- cruises and
- frequent-flyer reservations.
As you well know, it is less painful to learn from the experience of others - they've been there, they've done it. Benefit! Beat the zero and download the white paper NOW!
The paper reveals that - globally - around 34% per cent of travel agencies confirmed that reduced revenue from commissions was the number one challenge facing their business, while in Western Europe this percentage goes up to around 50%. We suppose that you are not surprised.
As a global technology partner to the travel industry, we can add value by sharing our experience of markets and travel agencies which have successfully implemented new business models with those who have yet to go through that transition. That's what this white paper aims to do.
Claude Giafferri
Vice President, Travel Office Products & Solutions