Thomas Cooke made headlines when the 178-year-old British travel giant collapsed earlier this year, but it certainly wasn’t the only supplier to go out of business, leaving travelers and their advisors out to dry with bookings canceled at the last minute and disappearing commission payments. And it most likely won’t be the last.
So how does a consortia or host agency help? What role does an advisor have? And how can advisors protect themselves going forward?
Leaders from host agencies and consortia spoke to Travel Market Report about the issues, and most agreed that, after the banner year of supplier issues that the industry has experienced in 2019, the role of the community of advisors is more important than ever.
‘Eyes and ears’
For Signature, there’s been nothing usual about the last year of supplier defaults. Alex Sharpe, president and CEO of the Signature Network, told Travel Market Report that, in his nine years at the helm before 2019, the network has never had a default with a preferred supplier. This year, they had three.
“It’s a big deal, but in the overall scheme of things, we’re not talking about a big percentage of our revenue,” he said, adding that what Signature does take more seriously than the loss of business is the potential loss of faith in an advisor that might come from a client after a default.
“We take the tarnishing of their reputation very seriously. We work for them, both figuratively and literately. The heads of our agencies are my bosses. We can’t just say, ‘Hey, sorry.’”
Just this year, Signature has added a number of new steps to its supplier-vetting process, including a change of ownership clause in the annual agreement, referrals from other tour operators, and more.
But, according to Signature’s Phil Cappelli, the group’s recently added senior vice president of preferred partnerships, the biggest defense against trouble with a supplier isn’t necessarily the consortia’s vetting process, but rather the community of its members.
“If our members start to see something, we want them to say something. That’s so important,” Cappelli told Travel Market Report. “We want to make sure we have as much information as possible. Our ask to everyone is to leverage Signature’s competitive advantage in our network. That’s so important to everything we do.”
For TRAVELSAVERS, its role between advisors and suppliers is to “protect the advisor” and that begins with a “vetting process before preferred suppliers even have access into our programs,” according to the group’s CMO Nicole Mazza.
"We are highly confident in our list of preferred suppliers and our due diligence process that includes a review of supplier finances (if they are a publicly traded company), in-person interviews, industry recommendations, and credibility,” she told Travel Market Report.
All of TRAVELSAVERS’ partners must have liability insurance and must be in good standing with USTOA or CLIA. And, like Signature, after their acceptance into the network, TRAVELSAVERS relies on its network of agents to be the frontline for potential supplier issues when things go wrong.
Just like both TRAVELSAVERS and Signature, Virtuoso has its own vetting process, which welcomes preferred suppliers onboard only after completing. That process includes onboarding and training. Virtuoso’s monitoring of a supplier, after that initial process, is unique to every supplier, but it includes “attending events, and ensuring that a payment is timely,” according to Cece Drummond, Virtuoso’s director of tours and on-sites.
And while that vetting process does serve a huge purpose, once a supplier is onboard, it is again the strength of the network that can help find problems before they rear their heads.
“They are the eyes and ears that are out there. We say to them, all the time, if you see something, say something. Please let us know,” Drummond told Travel Market Report. “I won’t know if a partner is late paying commission unless something alerts that to us. Then it’s a big red flag and we need to investigate.”
Cruise Planners, like TRAVELSAVERS and Signature, also has a strong vetting process for its supplier partners, but there are other steps required for the host agency that encourage the relationship between a supplier and advisor to be as transparent as possible.
“We do vet, of course. We’re not going to bring in just anybody,” Michelle Fee, Cruise Planners co-founder and CEO told Travel Market Report. “We look at different vendors, some are small but they’re mighty.
“If you’re going to come in our door, you don’t have to spend a lot on marketing based on the volume of business we do with you, but you do have to take part in our training and events, because we want agents to know who you are, so we’d rather you spend your dollars there and we’ll do webinars,” she said.
When should an advisor speak out?
Most agreed that missed commission payments, no matter how uncommon from a supplier, could very easily be a reflection of financial troubles from a supplier, and that advisors need to reach out to their consortia.
“A large flag is lack of communication and delays in non-disputed commission payments, which our agencies often report,” Mazza said.
“In so many of these instances, we know after the fact,” Signature’s Karryn Christopher, EVP marketing & preferred partnerships said. “When we raised the red flag, that’s when we realized so many people have not received commissions for a month. You should be making sure that you are getting paid 60 days after travel, and that could be an indication that there are cashflow issues.”
Other times, it could be as simple as when the usual booking processes go wrong.
“Any issues regarding customer service, most of the time they are resolving it with the partners themselves. But it could be customer service issues with their clients that they are facing at a particular booking,” Drummond said.
How advisors can vet for themselves
For advisors who maybe don’t have the support of a consortia or host, there are a number of things they can look out for when dealing with suppliers.
“Do your homework. Make sure that the chosen supplier is carrying liability insurance; and in the case of a tour operator, is a member of USTOA, which offers protections. Check in with colleagues to be certain that their business dealings reflect the way you wish to be treated,” Mazza said.
“Certainly, there’s a lot of research that’s available online. They should be talking to their colleagues, ask who should they recommend, who is their company, who are they affiliated with, if it is a publicly traded company or if they are members of USTOA or ASTA,” Drummond said.
“USTOA is a very important affiliation, and I think about half of our preferred suppliers work with USTOA – it’s another sign that these companies are serious about their financial help and are associated,” she added.
One thing Signature does, that advisors who don’t have that support might consider, is to make sure you know everyone your client is going to come into contact with.
“You need to have all of the details and make sure that whoever your customer is coming into contact with — we need to know who’s going to be on the ground, who is going to be greeting them — the more info you have, the more confidence you have in the overall experience,” Christopher said.
“If an advisor is concerned about working with a partner, they really want to ensure that a client’s booking is secure. Touch base on that, call the supplier directly … say ‘I’m just confirming that this is all intact.’” Drummond said.
Other steps, including purchasing travel insurance and encouraging a client to purchase with a credit card, can help, too.
“We always advise them to sell travel insurance to their clients and always accept credit cards” that will provide some recourse after, Drummond said.
This article is a new feature for Travel Market Report called Thought Leadership, where our staff queries industry leaders about the most current issues impacting the travel advisor business. Thought Leadership will be published once every quarter in 2020.