Abta reports more agents changing business models
Ian Taylor
ian.taylor@travelweekly.co.uk
Agency business models are increasingly changing with some agents experimenting at selling Linked Travel Arrangements (LTAs), a category of booking created last month by the new Package Travel Regulations (PTRs).
Abta financial protection and financial services director John de Vial said: “Agents are choosing more-complex business models. “We’re seeing a steady migration
to mixed-business models because the margins are greater. It’s a sensible way for agents to develop their business. Abta is seeing more dual members and dual members tend at heart to be retailers.” In June, Mark Tanzer, Abta chief
executive, reported “a big growth in dual membership”. The new PTRs and LTAs are
driving some of the change. De Vial said: “When a consumer
books a flight, most agents try to sell additional stuff. The agent’s margin is going to come from the other stuff. Some of that activity will fall within the package regulations and some within
He said: “We’re seeing [agents]
“A lot of agents are carrying on as before, while some are embracing the [package] changes”
LTAs.We are seeing changes.” But the trend is not solely driven
by the regulations. De Vial pointed out: “Agents doing Flight-Plus was a longer-term trend, [although] Flight-Plus has been abolished [aside from] legacy bookings moving through the system.”
take different strategies. A lot are carrying on as before. Some will recognise they achieve lower margins from acting only as retailers but won’t want the risk involved. “Some will say ‘I may as well
take the role of organiser’. They’re embracing the changes, saying ‘If it’s an LTA anyway, we’ll make it a package’, [telling customers] ‘Book it all now and have these additional protections.’” At the same time, De Vial said:
“I’ve seen some [agents] do no follow-up call until 24 hours [after
DE VIAL: ‘We’re seeing a steady migration to mixed- business models because the margins are greater’
LTAs AT A GLANCE
w A Linked Travel Arrangement involves “at least two types of travel service for the same trip or holiday” concluded by “separate contracts with the individual service providers” where a trader: a) “Facilitates the separate selection and separate payment of each travel service [in] a single visit or contact with a point of sale”; or
b) Facilitates “in a targeted manner, procurement of at least one extra travel service from another trader [within] 24 hours [of] confirmation of the first travel service”.
w A ‘trader’ can be a retailer (agent or OTA) or a travel organiser (formerly known as a ‘principal’).
w ‘Travel services’ comprise: transport, accommodation, car (or other vehicle) rental, and “any other tourist service” ‘material’ to the booking, such as event tickets.
an initial booking] because they want to avoid selling a package. “We’re seeing all this go on.
I’m sure we’ll see some people changing [their model]. I’m sure we’ll see changes in selling systems to support this. But it’s too early to know how it will settle out. My guess is we’ll have to go a year or 18 months before we see.”
Association ‘tidies up’ membership rules to align with PTRs
Abta has amended its articles of membership to bring them into line with new Package Travel Regulations, with the changes agreed at its annual general meeting in July. The amendments involve no
more than “a tidy up”, according to Abta’s John de Vial. But any member who has been solely trading as an agent and now organises packages or sells Linked Travel Arrangements
(LTAs) is likely to see a change to their bonding requirement. De Vial, director of financial
protection and financial services, said: “Abta has a system for all categories of turnover where we require a bond, and insurance provides cover if the bond is not sufficient. “We have different levels of
bond in relation to the type of turnover. We had agents selling
Flight-Plus in ‘the old world’. “We’ve had agents organising
packages for some time and it’s growing. All we’ve done is bring [the wording] up to date with the new regulations.” He insisted: “Agents can still
be an agent. They can still sell a package as an agent or principal [‘organiser’]. “But if they organise a package or an LTA, the level of bond and the
insurance premium may change. “This affects members only if
they have been trading as an agent and they now engage in organising packages or selling LTAs. Then we’ll review the value of activity.” De Vial added: “We assess the
bond according to the value of the holiday, the risk value of the trader and the payment terms. Taking 100% upfront is a different risk profile to taking a deposit.”
16 August 2018
travelweekly.co.uk 63
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