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Thursday, October 04, 2012

Top 10 Travel Distribution Fallacies - #10 Eliminate travel agency distribution first


The Travel Agency Channel is the first one that I should eliminate


If you take an honest look at your distribution by channel, you will likely find that over the past decade, the agency channel has become a more cost effective channel, even with GDS usage and commission or override costs.

Analysis of your revenues and your costs for this channel are essential. And contrary to popular belief, direct distribution over the Web is not free.

If you sell higher priced or higher margin products and services through this channel than you are able to on your own Web site, then you may be losing more in revenue than you are gaining from the reduction in booking fees and commissions if you are shifting away from the agency channel on purpose.

If you heavily utilize wholesalers and consolidators, or the Online Travel Agent (OTA) “merchant” model where you may be giving up 20–30% off your rack rate pricing, then this group should be your first target to review, not retailers.

Bottom line is "don't get carried away by emotion" and definitely don't cut off your nose to spite your face.

Profitability is king.  Long live the king.
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