Q&A: The Future of Agent-Tour Operator Relations

In the last decade, technology’s overwhelming influence has led tour operators in two opposite directions when it comes to distribution – fostering more direct-to-consumer sales, but also strengthening many tour firms’ focus on the travel agency sales channel.

The choice of strategy that a particular tour operator takes depends a lot on the kind of product it sells, according to Bob Drumm, president of General Tours World Traveler.

General Tours’ programs — small groups, customized trips and small ship and river cruises — incorporate complex itineraries and tailored features. So it’s not surprising that 90% of its business is generated by travel agents, a figure that’s been constant during its 66-year history, according to Drumm.

Travel Market Report talked with Drumm about developments in tour operator distribution strategies, direct sales and tour operator-agent relationships.

What trends do you see in tour operators’ distribution strategies that relate to travel agents?
Drumm: B2B, business to business, is now not terribly dissimilar to B2C, business to consumer. They’ve merged in terms of the techniques used. Distribution is more automated, more electronic than it used to be.

That means we treat agents just as other companies would treat paying customers. We have more email marketing, multiple ways of delivering brochures. Agents are also using our websites much more readily than used to be the case.

Does viewing agents as customers translate into new ways tour operators do business with agents?
Drumm: We have a loyalty program that is increasingly important to agents. http://www.generaltoursrewards.com We go there in advance of any broad industry release to post new opportunities for discounting or special trips for agents. The special trips, launched two weeks ago, offer agents and a companion 50% discounts on select departures to many of our destinations worldwide.

We also have an agent concierge. If agents have a particular issue, clients who need special attention or in-depth questions on a program, they can go to the concierge for assistance.

How have trends in consumers’ travel preferences affected how you work with agents?
Drumm: There’s a drive to the exotic destinations today. I was just asked, for instance, for my help in customizing a trip to Mongolia and Lake Baikal in Siberia for an agent’s clients. Agents might be challenged in working out these kinds of programs. That links us more closely to  them. Agents today are not just booking a standard itinerary; people want experiential travel.

So the nature of a tour operator’s product dictates how it works with agents?
Drumm: We’re in the era of the big box store, yet at the same time New York City, for instance, is filled with small boutiques. Some clients want large group tours, some want tailored programs.

Larger tour operators have larger sales teams and bigger consumer brands, in other words, those with names consumers recognize. We don’t have a big brand for consumers. So the nature of our product makes us here at General, for example, work more closely with travel agents. We rely on the travel agent marketplace.

Do travel agents deliver a higher-yield customer than direct sales?
Drumm: Yes. Agents definitely bring in higher revenue than direct sales. Our bookings with agents have more expansive itineraries. An agent can say to a client, if you’re going to be at a certain destination or nearby, here’s something you might not want to miss.

 It means that agents are enhancing the customer’s purchase, making suggestions and commenting on the destination. Agents are excellent salespeople, because they are close to customers and understand them.

To what extent do tour operators work with the large online travel agencies or OTAs?
Drumm: Most tour operators work with them to some degree.

The OTAs are well-run and productive, but they are more marketing-based than service-based organizations. They don’t have the same relationships with their clients as other [traditional] agents do, so the clients they provide us are different.

How do tour operator relations with OTAs compare to your partnerships with traditional agents?
Drumm: The OTAs are another kind of agent and they provide a different set of clients. They cast a wider net in terms of clients, capturing clients that might be more tech-savvy or those who see where the discounting is. Sometimes the OTAs will have multiple agents serving the same client and they haven’t met that client.

So our relationship with those agents [OTAs] is quite different. There’s not as much tailoring of our trips. We communicate with these agents via email more than by phone. We have the same drive to satisfy OTAs as other agents, but it’s a more arms-length relationship by definition.

What about home-based agents who have increased in number? Are they a challenge for tour operators to reach?
Drumm: These days it’s hard to distinguish between a home-based and a non home-based agent. They all operate the same way now because of technology. It used to be an issue, but now if you’re a professional agent you can work in a variety of settings servicing your clients. We don’t even know if an agent is home-based or working out of an office.

What do agents need from their tour operator partners? What do tour operators expect from agents?
Drumm: Agents need loyalty, responsiveness and speed. Speed is very important these days because our mutual customers are demanding it. It’s a world of instant delivery.

As for tour operators, we love repeat sales. The preferred relationships with agents and consortiums that fill our industry now are a positive thing.

What’s your take on cruise lines’ moving to more direct sales while many tour operators remain focused on agents?
Drumm: There are tour operators totally dedicated to the direct marketplace. They are good companies that decided that their marketing model is to go direct and not pay agent commissions.

It’s different for a cruise line, however. Cruise lines have a piece of hardware they have to fill, just like an airline. Tour operators have a different kind of product. We’re not seeking just to fill one vessel. Our job is to provide programs and complicated itineraries.