Arnie WeissmannMy friend Ray Snisky, president of Funjet Vacations, has a bone to pick with me. Travel Weekly recently ran a story Page 1 story about how one of his upper-echelon producers, Foremost Travel and Tours, was angry with a policy that was being enforced by Funjets parent, Mark Travel Corp. [Agency takes issue with Mark Travels no rebate policy, Feb. 7].

The policy in question was a level playing field rule. Mark had been actively working to prevent high-volume producers from advertising discount prices that were made possible by rebating a portion of their commission. Foremost was crying foul.

A level playing field policy is by no means unique to Mark -- everyone from Carnival to Tauck to Starwood has a version of it. What was unique in this instance was that a high-volume retail producer was fighting back.

Generally speaking, level playing fields are hugely popular with retailers, most of whom are in lower commission brackets and cannot possibly match the discounts of high producers. (In some cases, the discount is greater than the whole commission earned by a smaller retailer.)

Snisky did not understand why Travel Weekly gave such prominence to the story. He felt that by giving Page 1 exposure to Foremosts grievances, his company came off as a big gorilla dominating a smaller player. He felt Mark was simply acting rationally to protect its brand. And he pointed out that he had received dozens of e-mails from retailers who support Marks position. If that policy is wrong, just about every major supplier is wrong, he said.

I told him that we were not attempting to pass judgment on whether Marks actions were right or wrong but were giving prominence to a development in a story that has, in the past, demonstrated high reader interest.

That said, Ill add that I dont think the issue is black and white. In fact, good guys and bad guys dont come into the picture at all. This is a story about power. Just power. Its the latest installment in the epic struggle for dominance between large distributors and suppliers.

In our industry, suppliers often have the advantage in that power struggle. They may find its good business to collaborate with retailers, but when push comes to shove, they dont have to. Airlines unilaterally decided to cut commissions to its distribution chain, and, in the end, distributors were powerless to stop them. In what appears to be a more benevolent action, the level playing field rules have been handed down by suppliers as a gift to a majority of distributors -- at the expense of a minority group whose business plan called for rebating. In the case of level playing fields, suppliers interest in protecting their brands aligned with smaller retailers desire to prevent competitors from offering discounts.

In the long term, suppliers and small agencies may have an even deeper common interest. The supplier-distributor relationship is not supplier-centric in all industries. Colgate cannot tell Wal-Mart not to discount toothpaste -- it doesnt have power in that supplier-distributor equation. Nor can Random House dictate discounting rules for the books it hopes to sell through Barnes & Noble or Borders. In both these industries, distributors have grown so powerful that the supplier is clearly subservient.

It could happen in travel, too. And once large distributors get the upper hand, both suppliers and smaller distributors suffer. (Wal-Mart concurrently puts smaller competitors out of business while dictating policy to suppliers.) The biggest threat to both suppliers and small distributors is not disintermediation but mass-market shift from a broad range of distributors to a few very large ones. In this light, its easy to see why suppliers demonstrate great ambivalence toward Expedia, Travelocity and Orbitz.

I dont think Ray Snisky should worry that Mark Travel might come off as a big gorilla to our small-agency readers. Its a jungle out there, and sometimes theres great comfort in knowing you have the same interests as a big gorilla.

Comments

From Our Partners

Crystal Cruises – What’s Next, 2020 & the 30th Anniversary Collection
Crystal Cruises – What’s Next, 2020 & the 30th Anniversary Collection
Watch Now
HAL_AlaskaCruising_Hero
Capitalizing on a Peak Year for Alaska Cruising
Read More
2020 Elite Island Webinar
More Family Fun in St. Lucia @ St. James’s Club Morgan Bay
Register Now

JDS Travel News JDS Viewpoints JDS Africa/MI