It was about a decade ago that I first heard dynamic packaging described as every agent’s dream. Cheaper prices, greater flexibility, thousands of hotels and flights, and variable margins were each tempting propositions to agents. Together, they were considered irresistible.
Times were different then too. Operators quickly understood the internet’s capabilities and were setting up new, direct sales channels. There was also concern that Thomson’s cutting of commission to 7% in 2005 was the shape of things to come – leading to Advantage, Worldchoice and Global creating the super-consortium Triton, to fight back. Dynamic packaging would give agents the weapons they needed to survive – and thrive.
And yet when John Hays stood up on Sunday at his Independence Group’s conference and revealed Hays Travel agencies ceased all dynamic packaging in October 2014, it made sense.
So what’s changed? Hays said selling packages has allowed his agents to return to what they are best at, understanding their customers and ensuring they are sold the perfect holiday. Nor do agents need to worry when things go awry, whether from day-to-day problems, natural disasters or the current increased risk of terrorism. They know the operator will step in.
Agents have also caught up with the internet, realising if it can boost a rival’s business it can boost theirs too. They also know its limitations: Travelport’s Simon Ferguson predicted that the proportion of online bookings will soon level out at 50% as customers realise complex trips need human attention while the sheer weight of choice online is grinding consumers down.
Agents and operators also seem to have realised that working together may not always be perfect, but is less lonely than working apart. Of course, some agencies are still dynamically packaging and doing very well, but I believe Hays’ new stance will be mirrored by others.
A new golden age of cooperation and trust between agents and operators, perhaps – at least, until something else comes along to drive a wedge between them.
Consulting editor, TTG