My 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.