Top Industry Executives Discuss

The question of relationships among Hosts, Home Based agents and vendors was one of the critical issues discussed by top industry executives at the Travel Trade 17th Annual Travel Industry Summit conference in Bristol, England.
This question vexes all parties in the newly emerging relationships, said executives from suppliers and Host agencies, as well as representatives of the Home Based segment.
The Host agencies want to preserve their relationships — and commission levels — with their networks of Home Based agents and the suppliers want to reach out to Home Based agents to recognize them, but feel a Host can thwart their outreach efforts.
The discussion was generated by Travel Trade editor and publisher Joel M. Abels, who asked the executives about the future of the travel agency distribution system.
The question of relationships resulted from a discussion of direct selling, generated by the Abels question, in which Carnival president and CEO Bob Dickinson said that Carnival now is 15% direct and if it weren’t, he’d be out of a job. He said that the reason why Carnival goes direct is because travel agents are not picking up their sales as the cruise industry expands.
But he pointed to one Host agency, America’s Vacation Center, as an example of the kind of growth agents could realize in cruise sales as the result of cultivating relationships with their preferred vendors.
America’s Vacation Center co-president Brad Anderson acknowledged Dickinson’s remark and said, “To address the direct selling issue, Carnival really has helped us understand the new model of selling over the phone.
“They taught us how to change our model from strictly full service brick-and-mortar to one that includes agents who specialize and are fully focused on selling.”
Regarding Carnival’s level pricing, Anderson said, “I love level pricing — it has helped tremendously and we thank them for opening up their selling secrets to us.”
Other supplier executives said they want to develop such productive relationships with Host agents and their Home Based selling networks, especially when the agents are willing to invest in their relationships as has America’s Vacation Center.
Trafalgar Tours president John Severini said that in the past year Trafalgar has made a concentrated effort to address agents, including Host and Home Based, by increasing its sales force by 40%.
“We look for the people who have the potential to deliver business and whether they will put in the resources to grow their business,” said Severini. “We are also interested in helping Home Based agents increase their revenue if they are willing to work with us and go through our online training.”
But, as Insight Vacations president Marc Kazlauskas asked, “How do we reach Home Based agents? Their Hosts won’t give us their addresses. How do we get them their documents? We count on agents to tell us how to get them materials and our new brochures.’
Added Brendan Worldwide Vacations president Gary Murphy, “We also find that we have to depend on the Host to reach out to Home Based agents but we want to reach out to Home Based directly.”
Host agent Scott Ahlsmith, president and CEO of Magellan360, said that one way suppliers can reach Home Based agents is to change their legacy sales forces.
“Home Based agents really want visibility and recognition from suppliers at the local level. They want to be invited to local seminars and on fams and inaugurals. They want to be recognition for their productivity. Suppliers can provide that recognition through the Host, which is a one stop for the vendors.”
Donald Gould, chairman of the Host agency GTM Group, added that vendors’ sales forces have to adapt this new Home Based distribution system and work through Hosts.
However, both Dickinson and Carnival senior vice president of marketing and sales Vicki Freed said that Host agencies are not giving Carnival information on where their Home Based agents are located.
Speaking to Carnival’s efforts to recognize Home Based agents, Freed said, “We tweaked our res system to handle this with secondary numbers that identify Home Based agents and that enable local Business Development Managers to recognize the Home Based agent’s productivity.”
Cruise Planners vice president of industry affairs Mike Wild said that Cruise Planners uses that secondary number and it works very well. “The Carnival BDMs get to know who their producers are and they work with these agents very closely.”
Tony Gagliano, president and CEO of International Travel Planners, said his Host agency uses the Carnival secondary number system, as does Magellan360, whose CEO Ahlsmith cautioned, “Our big concern is that there will be some backdoor direct marketing to our affiliated Home Based agents or the consumer.”
Jurni Network and Nexion general manager Mike Baldwin added, “We have preferred supplier agreements and our concern is that while today we may be earning 15% because of our volume, the supplier will find the top 20% of our producers and pay only them the top rate.”
That comment generated a discussion of the 80/20 rule — 20% of agents generate 80% of an organization’s sales.
GOGO Worldwide Vacations president Michelle Kassner said that it is the marketing organization’s and Host agency’s responsibility to get their affiliates to move market share to their preferreds, and if the 80/20 paradigm is improved vendors will have no reason to deal directly with their productive agent partners.
“Well-run co-ops influence their members and the business for us is there,” she said.
But Chris Dane, president of Unlimited Travel Solutions, stated the marketing organizations’ conundrum: “Once the marketing organization gets their members up to the top of the scale, many suppliers will say, ‘Well, I won’t pay that level anymore.’” They’ll only pay the top agents the top tier.
And Brendan’s Murphy stated the suppliers’ problem, “A lot of times agents individually will come to us to double dip.”
Vacation.com senior vice president of industry relations Martin Braunstein said that Hosts fear that suppliers don’t believe that the Host agency with its co-op help them grow their sales with certain agencies.
“Then the suppliers cherry pick the top agents away and they say that they, the supplier, built them or it was their agent but that the consortia did not do anything. There needs to be a policy that states that the Home Based agents are the Host’s and that suppliers can have access to them so long as the Host is recognized.”
But Dickinson said that is not an issue. “What happens is that the coop still provides services to that agent even when that agent works directly with the vendor.” He argued that in a free market, an agent can do business with whomever the agents wants and in any way they want — the co-op or Host cannot restrict access.
But Ensemble Travel president and CEO Jack Mannix said, “There is no barrier to exit from us and the only reason members stay is because we add value to what they do. To the point Bob Dickinson has made about an agency getting to the volume level where they are a house account: If you think about your top producers, 90% of them belong to some marketing group or a Host agency and they do so because they get something out of it. I think it is free market already. Host agency and agent members and suppliers will deal with these agency groups because we add value.”