Can increased occupancy through commissioned travel agents be bad business?
A small capacity travel venue may not always be wise to accept travel agent commissioned business. One reason for denying commissioned agency business may be obvious: paying the commission fees cuts into profit margins.
Most people in the travel industry would argue that the added exposure through the travel agency will fill empty rooms and unused services, thus improving the bottom line of the business by helping it run near to capacity.
However, a small capacity operator, who is regularly approaching full capacity, may not be wise to lock-up a limited availability product at smaller profit margins.
In the case of our dude ranch, Marble Mountain Ranch, we target a guest audience of about 30 resident guests. We have a comparatively short prime season of 10 weeks in June, July, and August. So, in simple math, we need to book 300 people a year, out of a world population of about 7 billion individuals. You would think that it should be an easy task to harvest 300 bookings out of a possible 7,000,000,000 souls. Right? Ah ” WRONG!
One of the single largest investments we make in capital expense and in time commitment is in bringing guests through our front door and landing them in a saddle. I spend endless hours in the realm of public relations, marketing, and social media. The internet has completely transformed traditional marketing tactics and created a marketing world that evolves too quickly for most people to stay up with. My successful marketing strategy today, will be outdated next month.
So, it is tempting to hand off a piece of the sales program to an outside travel agent. The travel agent could bring people through my doors without any time obligation on my part and fill up the beds, keep the horses occupied, and the cash flowing! It’s a happy dude ranch day! Well, it’s once again not that simple.
The internet has changed how people present their goods and services. It has reversed positions of empowerment and elevated the consumer over the retailer. Prior to the internet, consumers had a difficult task of navigating product availabilities, and comparisons. Today’s consumer is educated, and empowered with product review sites and agglomerate retail websites. The entire travel industry is available for review at the touch of a keypad. The resourcing job of a travel agent is now largely done by website travel directories and discount pricing websites.
Today’s travel consumer can easily navigate the global travel offerings from the convenience of their home computer, i-pad, cell phone or other mobile devices. The traveling consumer can also get travel reviews, check prices and availability on the computer screen of his/her automobile the moment they arrive in a new city. The same information can be reached across the globe for the savvy traveler making more long term arrangements. The point here is that the resourcing of services is now easily done directly by the consumer, and it can be done with confidence afforded by third party review sites. What then does a travel agent do to earn the service fee? Perhaps the details of an extended and elaborate itinerary, for an affluent traveler may be the niche for a modern travel business. The travel agent may also have a better niche servicing the larger facilities that have more of an inventory of open spaces.
In the case of our smaller California dude ranch, we sometimes find it tricky to have an informed consumer resource us, contact us for space availability checks, discuss the details of the holiday, and place the reservation on hold, only to finally have their agent call and offer the clients credit card while demanding a commission. In this case, I suppose we should save both us, and the consumer, money and finish the deal directly with the consumer.
The bottom line for us, as a small capacity vendor, is that we find better communications with our clients with direct client conversations. We can also offer better pricing sans a middle-man taking a commission. The conclusion for our business is likely to be a cessation of commissioned sales to outside agents, and a push to continue direct client marketing. With 7 billion global residents, who likely each own 2-4 internet devices, it seems like we should be able to connect with at least 300 of them. Well – here goes! Just grab that mobile device, search “best california dude ranch” and look for www.marblemountainranch.com
Doug Cole
Marble Mountain Ranch