Agents caught in the web(1)

As hoteliers grapple with pricing strategies on the Internet, inbound tour operators in Asia are caught in the middle. They are the ones who get the wholesale rates, and some are passing them on to websites while others are still uncertain in this rapidly-changing business environment.

At the recent PATA Travel Mart, almost every inbound agent said they had been approached by startups for hotel rates. Thus far, inbound agents say, the requests have only been for hotel rates, not tour rates. "No one seems to want packages," said one major operator.

Thus far, Hong Kong, Thailand and Malaysia are said to be the main markets which have seen the most activity in terms of local agents passing on nett rates to websites. One Hong Kong-based agent told TravelWeekly East he has no hesitation about passing on his nett rates to cyber agents.

"Why not," he said, adding he puts on a 10 percent markup. "This world is very cruel, if I don't give, someone will give." His only concern is being paid and he collects money directly on every booking made. He is receiving 20 bookings a day through third party websites. In contrast, Paul Chiu, managing director of PC Tours & Travel, Hong Kong, said that while he has been approached by cyber agents, "we are not involved yet because hotels are quite sensitive and quite rightly so. Our wholesaler clients are also sensitive about this."

"I am not sure of the side effects of this development because I have no experience of it. I understand other agents have given their rates. Will this put me at a competitive disadvantage? I don't know. But so far our traditional business is doing well, we haven't seen any erosion." Chiu said that while his agency gets rates for different market segments, "with the Internet, the world is one button.

"The revolution of our business will happen but I am not sure how I will be positioned in it. Perhaps we need another type of rate structure. Everyone has to make a living, somehow it will balance itself out."

Chiu said the key was to focus on what you do best. "I am still seeking how to protect our partners - hotels and wholesalers. There is a degree of ethics and professional conduct." Clement Tan, sales manager of RMG Tours Singapore, is also caught between "loyalty to wholesalers and the worldwide web".

"Web agents have asked us for rates but at this point in time, we are saying no. But you never know, we may be forced into a situation. We are not the cheapest in the market and someone will always come up with a better price."

Tan also believes tour operators in Singapore face a different challenge - are they as necessary to the tourism experience as operators in more diverse destinations? "Other destinations like Malaysia and Thailand are offering a total experience. Singapore is unique, it's three to four days and it's so easy to get around."

One operator who has no qualms about working with web agents is Asian Trails which gives volume deals for volume production, said group managing director Luzi Matzig. "Many hotels don't like it but they shouldn't worry where we get the business from, even it's from the Internet. It's another channel of distrubtion and it is up to the agents how they develop sales, whether through brochures or websites."

His main concern is getting paid and he collects upfront. Asian Trails sees about two million baht (US$53,000) a month in web bookings from third party agents. "If a hotel sets conditions, then we will abide by the conditions but it will be to their disadvantage. We do get contracted rates by market but we try to discourage such deals. We deal with 300 hotels in Thailand and it would get complicated."

While Matzig concedes that hoteliers should be concerned about yield erosion, "it's a new way of doing business", he said. "One or two have called and said they are unhappy. We say, fine, we will delist you. No hard feelings."

The Big Impact
January - March 2023 eBook

How is 2023 shaping up for Asia’s travel industry?

Read Now

JDS Travel News JDS Viewpoints JDS Africa/MI