Tuesday, June 19, 2012

Cairns tourism demands more red tape?

There was a recent report in the Cairns Post, with lively comments, on the always controversial topic of tour desk commissions. The report relates to an issues discussion paper that has been released by DEEDI and prepared by Tourism Services Pty Ltd: Review of Tour Desk Commissions.

Most of the media reports and commentary seem to focus on issues of regulation and licencing to an almost disillusioning degree. Only a few months ago business surveys in Cairns said that 'red tape' was the biggest problem!? I'm not sure how a licence is supposed to solve the principal issue, which was supposed to be the cost of tourism product for the consumer? The discussion paper itself suggests that it would be a difficult business to licence and so regulate.
"There are no precise numbers of distributors operating in each Queensland destination. Operators in Cairns estimate that there are 800 tour desks between Mission Beach and Cape Tribulation. One operator advises that their sales representatives service 450 local tour desks. In Airlie Beach, one operator estimates there are 70 tour desks in town with 12 located in shops along two blocks of the main street. One Gold Coast operator estimates there are 600 tour desks on the coast. One operator’s sales staff service 200 Gold Coast tour desks. At a rough estimate, there would probably be close to 5,000 businesses in the state that would operate as tour desks."
"A rough estimate is that there would be at least 4,000 to 5,000 tour desks in Queensland that would have to become licenced and some government policing mechanisms and resources would be necessary to ensure compliance."
There are also suggestions of behaviour which should rightly attract the attention of the ACCC. There are comparisons with such as real estate agents and financial planners. These are hardly areas where commission regulation has proven effective. The word 'competition' appears only five times in the discussion paper so perhaps it should be expected that the key discussion issue was mostly neglected:
This approach is multi-faceted, and involves changes to industry practice and industry self-regulation; with strong government support. It includes:Operators providing net rates to distributors and scrapping current commission arrangements; Moving away from parity of pricing to dynamic consumer pricing for all tourism products; Developing cooperative, destination-based, inventory/pricing/yield management systems for all operators to use
This approach addresses other structural issues within the industry and provides opportunities for operators to better control distribution and manage their yields more effectively; thus assisting increased profitability and increased reinvestment in product quality and service.
The context is that this aligns with the way other consumer choice and marketing has developed, particularly such as air travel:
It proposes that the current practice of parity of consumer pricing, regardless of the location, time and method of purchase, be dismantled. This practice is now unique to only some tourism products and is out of sync with the dynamic nature of current consumer purchasing practices.
Operators would offer net rates to distributors; different net rates to different types of distributors if necessary; and allow distributors to sell products for whatever prices they choose. This would increase consumer competition and distributors would compete for business on their own terms (and on their own margins).
Consumers would have choices of when, where and how to purchase tourism products, just like all other products; and their decisions on purchase timing, location and method could influence the price they pay. This is not something new to consumers. They currently have these choices for air travel, accommodation and for all other purchases – fruit and vegetables, TV sets, computers, clothes, etc.
Regardless of that, in the Cairns Post report both the CEO of Quicksilver and Col Mackenzie appear to dissent in favour of a licence and commission regulation? A previous media report suggested that online tour bookings were growing but obviously not yet to an extent to challenge tour desks distribution power and pricing. There are many innovations happening such as this posted at Springwise recently in Madrid for rental of pre-loaded ipads.

Interesting to think about in comparisons to media upheavals and changes at Fairfax this week. I was actually surprised by this chart on the rapid descent of print advertising in the USA rather than a long slow erosion from online competition. Something to think about for tour desk distribution? In the end the world will not give you a choice.

1 comment:

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