Some of the most successful travel agencies in the current market are those whose business model is based on dynamic packaging. But on the high street, the market is still for the taking. If you want to break into the dynamic packaging sector, here are 10 rules to follow.
1. Be in it for the long-haul
Dynamic packaging is “not for the faint-hearted”, according to Barrhead Travel chairman Bill Munro. Although it allows agents to compete with internet pricing, he says it can go wrong if agents aren’t careful about adhering to law and industry standards. He recommends that agents do a significant amount of research to make sure they operate legally.
Agents can’t afford to ignore dynamic packaging any longer, adds Bookable Holidays sales director Tim Reed. “If you have got a regular customer who can’t get what they want with a traditional package, dynamic packaging is something agents should consider. Look at the bed banks and the budget airlines, and nine times out of 10 you get what you want.”
2. Know your competitor
If agents haven’t got the technological might to take on the big online dynamic packaging agents, they can still use dynamic packaging to beat the agency selling packages down the road.
Youtravel sales and marketing director Paul Riches says: “You should be looking at a dynamic package to get a better price or give added value to the customer, such as a hotel upgrade or a free transfer. If you are clever with dynamic packaging, the value you can give is better.”
3. Choose your destinations
Bookable Holidays’ Reed says: “The key is knowing your local airport and its routes, particularly if many operators don’t fly from there. We do a lot of departures from regional airports.”
Riches points out that agents can also show the value of the flights they source for their customers by comparing them to more expensive ones earlier or later that day. “The skill in providing good value for money starts with the best flights,” he adds. “It gives the customer a better holiday at a better price.”
4. Choose your market
Riches says: “Either find a niche area or find where the masses are going. Four-star all-inclusive is a good place to start – it is my top seller. Aim for the general family and couples market.”
5. Get the right technology
Technology is key to how much product you can access and how quickly. The big dynamic packaging agencies have bespoke systems that can build millions of offers overnight, all dynamically packaged.
Peter Whittle, business development director at Traveltek, says: “Better technology gives agents a lot more flexibility to offer a wider range of products. It puts an agent in control of their business in terms of their margin.”
6. Get your head around the law
There are high street agencies that are able to sell dynamically packaged holidays within the law as they have the necessary legal paperwork and business infrastructure in place, such as Atol coverage and public liability insurance.
However, if your agency doesn’t have these, Sarah Lacy, a partner at travel legal specialist Travlaw, says there are certain processes agents should avoid to make sure they retain agency status, avoid ‘packaging’ and do not become liable for VAT under the Tour Operators’ Margin Scheme.
These are:
- Don’t control or change the price of the products – that is, don’t mark up;
- Don’t pick elements and bundle them up and sell them as an inclusive package;
- Don’t impose your own amendment or cancellation fees;
- Do, if you wish, charge a consultancy fee, but it needs to be clear in the price.
Lacy says: “Look at the paperwork as well as what you are doing in practice. Agents need to make sure they are acting as an agent both on paper and off it.”
7. Be diligent about invoicing
It’s more important than ever for agents to make sure their invoicing and terms and conditions are absolutely clear, otherwise they could find themselves liable if a supplier fails.
Chris Photi, senior partner at accountancy firm White Hart Associates, says: “Your invoices and terms and conditions must clearly state whether you are acting as the agent or principal.
“Where this can get confusing is when the agency has either an Atol or a Small Business Atol and puts together its own packages as well as selling other principal’s packages or product.”
Both the CAA and Abta offer precise advice on invoicing to ensure agents don’t confuse booking confirmations with Atol receipts.
8. Decide who you are going to work with
Reed from Bookable Holidays says: “We deal with only a handful of decent bed banks. We have got four that we normally direct our business to and we trust them.
“When looking in to this, it’s worth asking whether the bed bank is buying its own stock or whether it is buying from another bed bank which has different cancellation charges, which could be passed on to the agent.”
9. Prime your sales technique
Even though the internet is awash with direct offers, Riches reckons agents can still persuade customers that they are the best place to book and that they shouldn’t worry that suppliers are named on the paperwork.
He says: “On any particular day, or even hour, the price could be different to what it is in the next hour. If you look at something and find a good price, buy it or tell the customer to buy it. With dynamic packaging a price is likely to go up rather than down. A good agent would tell the customer that they would find them the best price.”
10. Add the extras
This is an obvious way to increase your commission, but suppliers say many agents still do not offer products such as car hire during their consultations.
Tony Seaman, sales and marketing director at Attraction World, says: “Agents aren’t making the most of what they can do when the customer is in front of them. After sorting out the flights and accommodation, they should be asking ‘what do you want to do?’”