In our latest podcast episode, we cover off our top tips for working with the travel trade. We invited special guest Kerry Lahood from Southern Discoveries to join us for a chat about best practice, what to expect, what you need to prepare and how to maximise your sales opportunities with the travel trade.
What are the benefits of working with the travel trade?
One of the biggest advantages of working with the travel trade is the fact they mostly book a long way in advance. Agents can book up to 2 years in advance for their customers – this does vary by market and the style of travel – ie if you’re part of a group itinerary, the bookings will be made a lot further in advance generally than an FIT booking.
When most direct bookings tend to only confirm 1-3 days ahead, it’s great to have bookings in your system for much further out. This helps you plan your staff resource better and also allows you to ‘bank’ money knowing that the agent booked customers are coming in the future.
It also means that those customers are already committed to coming to you, so there is very little risk of them arriving in NZ and deciding to do something else instead – something they have absolute freedom to do if they haven't booked ahead of time.
We know marketing to new customers costs a lot of money (& there is significant competition) so if you can aim to have 25-40% of your business pre-booked ahead of schedule, this makes it a lot easier to fill in the spaces you have via direct marketing efforts.
Working with the trade also helps word of mouth marketing too – if a travel agent booked customer has a great time and feeds that back to their agent, imagine how influential an agent is when booking their next NZ holiday. If they have confidence in booking your product and know customers will be taken care of and have an enjoyable time, they will be more likely to try and sell more of your experience as part of their itinerary.
How do I choose which trade partners to work with?
Firstly, it’s okay to not work with everyone. In fact, this would be a little silly to even try. Here are the top things to look for when choosing who you might target in the travel trade.
a) Look for partners who align with your values
b) Do your research on which markets suit your experience and look for operators that service those markets
c) Be honest about which markets your business can look after – eg do you need language capability
d) Look at the wholesaler, IBO or travel agent website, brochures etc to see what kind of business they do (group, incentive, FIT) and if they even visit or promote your region
e) Ask loads of questions to understand their business. They might not be able to sell your product now, but there might be an opportunity for product development, or with further acquisitions/changes within your business (or even in a new job you might get at some point)
Why do I need to pay 20-30% commission?
It’s really important to first understand the tourism distribution channel.
You might be working with an inbound operator based in Auckland, but it’s important to note that they are not selling directly to the traveller. There are often another 2 parties in the booking process / distribution channel.
Think of it like this.
A customer walks into a High Street Travel Agency in the UK to make a booking to come to New Zealand. The travel agent will call their local tour operator (wholesaler) who will generally have NZ specialist staff who can confidently sell NZ and recommend hotels, transport options and activities back to the travel agent. When a booking is made, the wholesaler will then book it with an inbound operator in NZ who will handle the communications with the tourism operators here, they will be a point of contact for the customer if anything goes wrong along their journey and will be the party that makes payment to the NZ supplier. Each of the middlemen in this scenario clips the ticket to make their work worthwhile, so you’re effectively paying for a presence in the High Street, NZ Specialist knowledge in the wholesaler to put your product in front of the traveller, and the relationships that the inbounders build with offshore wholesalers to promote and sell NZ in the first place.
I like to compare the cost of having to do that yourself – it would be multiple trips to the UK and potentially some advertising in mass media which is hugely expensive. The 20-30% that you’re paying ONLY on bookings that are delivered to you seems relatively cost effective right now.
Once you understand the tourism distribution channel, you will then understand that you don’t pay the same commission to everyone in the chain. Eg i-Sites work directly with the customers so therefore you would start by offering 10-15% commission to that channel. Reserve the 20-30% for the inbound operators who have a lot of additional steps in the chain.
What do I need to do when visiting the travel trade?
a) Have a plan – know what you’re wanting to achieve by your call. Is it an update, are you looking to get your product included into a group series programme?
b) Have your rates set for the next two years. Yes it’s hard sometimes to predict what costs will be doing, but you need to trust your own knowledge and make an estimate. As mentioned above, agents work a long way in advance so you need to too.
c) Know your product intimately – understand your company policies, know what you are able to negotiate on, have clear terms and conditions.
d) Have a good library of image and video assets that you own the rights to and are willing to share. This will help sell your product.
e) Have a recorded training webinar available that can be shared with all of the reservations staff to watch and get to know your product if you can’t make it there to do in person.
f) Follow up! If you say you’re going to do something, make sure you do. And even if it’s just a thank you for the time and visit, it’s always important to follow up.
g) Train your reservations and accounts teams on your new relationships, have a central database for negotiated rates so there is no mix up when invoices are issued.
h) Be willing to listen – you never know what opportunities might come out of it.
Working with the travel trade can be a very rewarding and profitable exercise for your business, and we hope these tips have helped you have a little more confidence in building relationships with the trade. If you need some help, please get in touch. I am now taking registrations of interest for our market representation programme.