Industry Update
Opinion Article 9 July 2020

Restoring Consumer Confidence Via Wholesale Travel Flexibility

By Larry Mogelonsky, Managing Director Hotel Mogel Consulting Limited

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Meeting via a Zoom call, no matter the internet connection, is a weak substitute for a fireside face-to-face chat about the state of the industry. But c'est la vie during a pandemic.

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And so, it is that I had a chance to connect with Frank Demarinis, President and CEO of TravelBrands Inc., itself a travel group operator and wholesaler based out of a suburb of my home base Toronto, Canada. The company serves as a vital supplier to the Canadian travel advisor industry, as well as to many other international markets, through its multi-channel distribution network.

With 35+ years' experience in the travel industry, Frank has been through 9/11 and the great recession, so he's weathered a lot of storms. An ardent traveler himself, his optimism was refreshing in the face of COVID and speaks to how suppliers - as well as all operators for that matter - may come to the rescue in the face of mangled consumer confidence regarding their hotel and group travel purchases.

What is the biggest hurdle that we have to overcome?

Nothing happens until we restore consumer confidence; safety is every traveler's primary concern. Until we rebuild their trust, it is going to be a battle that we will never win. And the first step is reassurance; reassurance that when they make a booking for a trip in the future, and conditions worsen, they can get their money back.

But why not a credit for future travel?

A credit for future travel is simply not going to cut it with the average traveler. Think this way: many get only one precious vacation a year. They plan for this trip and save or may even borrow money to pay for it. Now the date of the trip approaches and the situation becomes such that they cannot travel. A credit towards future travel is often a totally unacceptable substitute.

Well, what is the issue then?

It really is quite straightforward. Let's say a TA sells you a package consisting of air and land arrangements. The trip is prepaid to the TA; the TA pays the suppliers. The TA gets commissioned once the trip is consummated. But let's say you cancel. The TA cannot issue you a refund until the supplier refunds the money to them. So, if the suppliers are withholding the refunds - of money they have not yet earned - there is little that the TA can do.

But what about wholesale contracts that create preferential pricing for packages?

The system has to change. Post-COVID, flexibility is the critical buzz word. Try to explain to a supplier that you want a best rate, preferential terms and a 100% attrition clause all at the same time! I'm not saying it is going to be easy. Rather, those suppliers who are able to respect the end-customers' needs are going to be the ones that survive and flourish.

Is this a systemic issue or one related to just a few players?

We are all in this together - cruise lines, airlines, hotels, car rentals, attractions and everything in between. We need to work collaboratively. We desperately need transparency on pricing and terms that reflect the current situation. United, we can bring travel back. It is not going to occur overnight. But, the sooner we start on this track, the faster this will happen.

Do you think that the pandemic has created an opportunity for TAs?

Absolutely! When travelers are insecure, they want a live agent on the other side of the phone or website. They will have a myriad of questions that cannot be answered by some computerized bot, if at all. Try and get that level of confidence from an OTA; it's not happening.
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