A LITTLE over a year ago, the Monopolies and Mergers Commission told us what everyone in the travel industry already knew – that the multiples, with the exception of the now rebranded AT Mays, directionally sold to customers.
Crucially, the Government ruled the public was not disadvantaged, although its demand for greater transparency between agents and operators has still not happened.
An Office of Fair Trading spokesman has said there will be action on transparency “shortly”.
Meanwhile, directional selling has hit extraordinary levels, as highlighted at Travelworld. Airtours, which acquired the 122-strong chain in December, now makes up 63% of the retailer’s business. Six weeks ago it was 17%.
Figures also show Thomson accounted for 66% of Lunn Poly’s business in the post-Christmas period compared with 40% a year ago. Meanwhile, its share of other operators has slumped.
Going Places has doubled its business with Airtours in the past two years and virtually stopped selling the market leader.
“Only one in a 100 customers who go into a Going Places shop are sold a Thomson holiday,” pointed out one industry observer (see chart, right).
Post-Christmas, some 62% of Thomas Cook’s business is for in-house operator Sunworld.
Campaign for Real Travel Agents chairman Chris Kirker believes this increase in directional selling is against the public interest. “Consumers are simply not given a choice of product or price,” he said.
“It is becoming increasingly prevalent that the multiples are just becoming distribution points for major tour operators.”
Going Places managing director Peter Shanks defended its policy. “We have always made it clear that we will look to sell an Airtours product if we think it is right for the customer.
“If the customer is happy with their holiday we have done our job properly.”
Thomas Cook retail managing director Andrew Windsor admitted the company was pushing its own products more than ever and focusing its marketing and advertising on in-house operators for the first time.
“We will give customers a choice but promote the benefits of our products,” he said.
For Thomson, the push through Lunn Poly is having a damaging effect elsewhere.
Preferred Agents such as Bakers Dolphin are even struggling to hit their sales targets because Lunn Poly’s share is so large. Sources said retailers cannot match the deals offered by Lunn Poly on Thomson and are selling away from the operator.
“That is why Thomson is desperate to buy miniples. It needs the distribution to push its products,” said the source.
Lunn Poly communications manager Natasha Tobin said it made commercial sense to push in-house operators.
“But it is never to the detriment of the customer,” she stressed.
Carlson Worldchoice retail managing director Steve Endacott said that following the buying frenzy of the past 18 months, mass market operators now have an extensive range of products that meet the requirements of customers.
“A few years ago, agents would rack 180 operators and had no chance of getting specialist knowledge,” he added. “By concentrating on a smaller number of operators, particularly their in-house operators, the retailer can get this knowledge. This has to be better for the consumer.”
nSee Viewpoint, page 11