Countering recent trends, Funjet Vacations recently reduced commissions for its lowest-producing agents. Senior editor Michelle Baran spoke with Funjet President Mike Going about the decision and the state of the packaged-travel industry.
Q: You recently announced a guaranteed 5% scheduled air commission on certain air-inclusive packages. Was that an in-house investment?
A: It's a multimillion-dollar investment in commissions, and we do expect that that investment turns into revenue growth. And quite frankly we're seeing that since we made that change.
Q: On the other hand, you have reduced low-producing agents' commission. There seems to be two different messages there. How do you rationalize that?
A: It's less than 2% of our business. It's purely not a financial play. An agent can basically make what they want to make with us with set-your-own-commission, 2% upsell programs. They can get back to that 10% today, without any intervention from me. What we're looking for is to inspire those agents to engage with us, pick up the phone, call a salesperson, commit to some volume, because you're looking at less than a booking a month. So we're looking to say, "Let's cut a deal, let's get back to the commissions you minimally were at with some volume commitment and/or more." We're putting our money where our mouth is across the board with engagement, listening to agents upfront on very expensive, positive changes and then holding a little bit of accountability to people we think have the opportunity to do a more with us.
Q: If it's not financially necessary, why do it if it just makes Funjet look less agent-friendly?
A: We're not afraid to take risks. It gives us the opportunity for a larger discussion. I'd love to sit with an agent and go, "Funjet looking bad? Gee. I've got multiple million-dollar investments just in commissions." We haven't even started talking about people, sales resources, marketing resources, co-op monies, which quite frankly I'd like to see more agents getting a piece of, than sitting there taking one of the smallest pieces of a program and having that define me. If someone wants to think of me that way, I'll risk it. We'd rather push it and be aggressive and inspire agents to bring us more, make more and acquire new customers.
Q: Is the idea that you would want these agents to either go with a competitor if they're not 100% committed, or completely come into the Funjet fold?
A: It's all the latter. We don't want anybody to have to go anywhere else. And what we're finding is that these agents are waking up to the full-blown proposition with us, our collective of brands, our suite of offerings, and the group as a whole is responding -- they're engaging with us. It's having the desired effect that their engagement turns into an increased opportunity for both of us.
Q: How have recent changes in the wholesale space changed the competitive environment?
A: What MLT was a year ago and what they are now is different. What Apple Leisure Group and [Travel Impressions] and Cheap Caribbean together were a year ago, they weren't together, now they are. I'm not going to make a value judgment on that, but agents are doing that every day. In the wholesale space, the landscape has been changing. ... I don't disrespect or underestimate any competitor out there. Everyone is being aggressive.
Follow Michelle Baran on Twitter @mbtravelweekly.