Somak considers swapping commissions for flat rate fee

Africa specialist Somak Holidays is considering moving to a flat commission rate as it consults agents on ways to reduce the cost of distribution.

Chief executive Ash Sofat said discussions with a small number of agents were at a very early stage and that the operator would not do anything that trade partners were not happy with.

But he said increased competition from direct channels for some product meant agents faced a stark choice: a flat fee for each sale or a percentage of nothing as business went elsewhere.

“We are looking at several ways of going into partnership with trade members to distribute more efficiently and lower the cost of distribution,” Sofat said.

“One option is fee-based remuneration rather than commission, where we pay a flat fee regardless of the cost of the booking. We are playing with the numbers. It’s something we need to explore.”

Sofat said the scheme would be applied only to certain types of holiday where margins were being squeezed due to an increasing number of direct sales. Conventional commissions would be retained elsewhere.

He said there could be tiered payments to encourage agents to upsell, with bonus payments for higher-value sales. Somak sells 96% through the trade and Sofat said there was no intention to change that. However, its suppliers were using technology to sell direct to the consumer.

He said this was one reason the operator was investing in new product and concepts that destinations were developing, including three properties that it owns.

“It’s down to us as travel professionals to create markets where commission is still applicable,” he said. Sofat added Somak would also look to have closer dialogue with small rival niche operators about working more closely together.

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