LUNN Poly’s shop network will be squeezed within five
years and financial pressures could mean reduced commission to travel agents.

Speaking at The-Week.ending Breakfast Briefing in
London, TUI northern Europe chief executive Peter Rothwell warned of an
inevitable migration to more cost-effective distribution to meet customer
needs.

“There will probably be fewer Lunn Poly agencies,” he
said, but stressed shops would remain the biggest distribution channel for
“many years”.

“We’re looking at leases fairly critically to see over
time if we will reduce the estate. Some will fall by the wayside, but you will
see new openings and relocations.”

There is already evidence of a shift in bookings from shops
to call centres, and now these are coming under pressure from the Internet, he
added.

“There is a migration from agents. And now call
centres are being cannibalised by the web,” Rothwell said.

He admitted TUI UK would have to look at cutting
distribution costs through agents.

“I’m concerned about the amount of money that goes
into distribution as far as mainstream packages are concerned, including
brochures. Shops will have to reduce costs to stay in the game.”

Commission payments to agents could also be squeezed.

“Realistically, there will be pressure on rates to
come down,” he said. “We’re not going to sell everything net and make people
pay mark-ups in shops, but agents need to consider what they are costing the
customer.”