ITCS and smaller agencies are losing out on ‘bread and butter’ sales in a challenging market as larger agencies use volume and cash flow to secure bookings with small deposits and absorb the risk of doing so.
In a conversation on Open Jaw by Travelinfo, agents gave voice to this issue and named STA Travel’s current deal, which allows clients to secure certain packages with R1 000, as a key challenge. Flight Centre Travel Group SA was also mentioned on Open Jaw as an agency that had offered similar deals.
“When a large agency offers the same package at the same rate, but can allow the client to secure the package with a far smaller deposit, it becomes difficult for ITCs [and smaller agencies] to compete. We have to ensure that the deposit we receive covers the cost of airfares upfront in case the client cancels,” Stuart Goodall, an ITC based in Johannesburg, told TNW. He added that in the current market, increasingly price-sensitive clients were taking their business to agencies that could secure the booking at a lower cost.
Lize Maartens, STA product and marketing manager, told TNW that STA Travel had created a flexi-product range to for customers who previously saw travel as inaccessible. “[Our research shows that] the increase in sales achieved by offering this product far outweighs the risk associated with cancellation.” She added that STA had strong relationships with its suppliers, allowing for the offer to include accommodation and touring.
Carlos Luis, land product leader at FCTG, confirmed that FCTG had offered similar deals in the past and added that the agency had done so by absorbing the risk internally.
“It is always going to be more challenging for the smaller guy when the economy falls on tough times,” said Otto de Vries, ceo of Asata, adding that ITCs and smaller agencies could compete by emphasising the personalised service they offered and the attention to detail the client could expect to receive from them.
