Friday, 21 April 2017 08:25

Dynamic rates put pressure on smaller players

Written by 
The need to increasingly access live rates requires increasing investment in technology.

However, as this investment is often outside the reach of smaller operators, some operators suggest that smaller players are likely to start giving preference to suppliers who continue to provide tour operators with STO rates.

Onne Vegter, MD of Wild Wings Safaris, says more and more companies are making live rates and availability accessible online and the challenge for the industry is to standardise the technology so that operators do not have to invest in multiple platforms to access live rates and availability from many different suppliers. He says, what is needed is investment in an online portal where the inbound industry is able to access dynamic nett rates from various suppliers.

Jan Jenkins, MD at Umvuselelo, suggests that rates will begin to filter the suppliers that smaller operators choose to work with. She believes that bigger players will start to gravitate towards chain hotels, while smaller operators may choose to do business with more boutique hotels that offer them better rates.

The biggest ongoing challenge for tour operators and DMCs with regard to dynamic rates is the ability to quote accurately, forward contracting, and having accurately priced online brochures and listings, while maintaining a decent margin or commissions, says Vegter.  “I expect the inbound industry will eventually follow a similar model to that of the outbound agencies and airline specials, where a set number of seats (or rooms) are allocated to agents or operators at their preferred STO rates in order to include in their brochures and packages.”

Some operators have found increased benefits in amalgamating under a single business brand.

Travel Smart Crew Africa, a business owned by 16 independent operators, has managed to help its shareholders access tools that aid them in doing business, says Illana Clayton, CEO. The group tries to manage system loading and rate management demands centrally, and also share the costs among them. “The days of one static contract, loaded once a year are changing,” says Clayton. Travel Smart Crew Africa is able to bring dynamic rates and live availability to both shareholders and other DMCs via a web portal.    

Are we likely to see more consortiums form?

Vegter says that while there are benefits in joining a consortium, such as increased buying power, pooling resources, and strengthened negotiating power with suppliers, some smaller operators have long managed to get by on their own.

Still, Vegter says there is a need to develop a non-profit consortium of operators that are able to combine their resources while at the same time maintaining their independence, to negotiate for a stronger position in the market to protect operators’ margins.

Jenkins says the industry is more likely to see an increase in personalised service. She says each business has its own way of working and a consortium will hinder this.

Source: TU

Our Sponsors

  • Street Child Logo

  • Selling-Travel-black
  • One & Only
  • KZN-Logo