Dyamic packaging is set to grow 15% to 20% this year as agents prepare to be hit by reductions in commissions from the major tour operators, a leading supplier to the sector has predicted.
Writing on his blog, On Holiday Group chief execeutive Steve Endacott says he expects to see the proportion of tailor made holidays sold by ‘wiser agents’ to rise to between 40% and 50%.
He said this prediction was prompted by suggestions from the major tour operators indicating a move to 4% commission on their holidays leaving agents having to add a booking fee to make money.
“…given all the noises coming out of the major tour operators, 2014 is likely to see agents commissions on the ‘differentiated’ holidays sold by the major tour operators cut to a flat 4% plus booking fee.
“This is because the growth of their internet sales combined with an oversized retail chain will mean they have excess internal distribution capacity and therefore can take or leave third party shops on their terms.”
Endacott, whose company owns accommodation-only supplier Holiday Brokers, said agents have good access to capacity from budget airlines and there will be millions more seats available for them to package together.
He doubted the airlines’ claims that agent bookings account for less than 10% of their business.
Endacott predicted improved costs due to the strength of the Euro against the Pound will be passed on to the consumer in the price-sensitive dynamic packaging sector.
He struck a generally upbeat note on the prospects for sales in 2013 saying the British weather and the fact that there is not due to be a major sporting event or royal celebration will spur demand.