7 things worth knowing about how travel agents and tour operators operate and the key differences
1) Hotels sometimes have to pay to feature in big tour operator brochures
Don’t assume that because a hotel is featured in a big UK tour operator brochure that it’s there on merit only. Many hotels have to pay, whether it be directly, or indirectly through a marketing campaign or as part of a wider partnership with a tourism board. Hotels that have money, are more likely to get featured in brochures, on websites and in marketing and advertising.
2) Big tour operators are restricted to what hotels they can sell
Tour operators and wholesalers don’t want to take on smaller hotels as they often can’t get the availability of rooms in the numbers that they need. It’s unlikely you’re going to get to stay in a cute little five-room hotel which is off the beaten track if you book via a big UK tour operator or walk into a high street travel agent.
These guys have preferred suppliers which can mean that some of the best little hotel gems don’t get a look in because these small establishments can’t work on an ‘allotment basis’ – this means that the hotel in question has to commit to giving the wholesaler/tour operator a certain number of their hotel rooms a week/month that only they can sell.
It also means that they have to discount their rates and give the wholesaler a NET rate, so the wholesaler and the tour operator, and possibly even a travel agent can add their profit margin. High street travel agents are mainly affiliated with a tour operator which means that the tour operator and their affiliated travel agent will need to make a profit margin.
3) High street travel agents work on commission and are not without bias
They can make anything between 10 and 20% commission on your booking depending on which tour operator products they are selling you and it’s worth noting that many of them are not without bias. Whilst they, for the most part, will have your best interest at heart, some might not want to work as hard as others to make their money.
Again, the mainstream travel agents are definitely (based on their business model) limited in what, where, how and why they sell a holiday-they often can’t give you the flexibility you need.
4) Big hotel chains incentivise travel agents to sell their rooms
It’s perfectly normal for big hotel chains to incentivise a travel agent to get them to sell more rooms. This might be by promise of a free stay in their hotel, extra commission or a place on a travel agent FAM trip. Again, not without bias.
5) Legal contracts between a hotel and a tour operator/OTA means big hotels cannot sell their hotel rooms online on their own website cheaper than a tour operator
But yet the hotels make less on a tour operator than a direct booking because of the commission the hotel has to pay, so calling the hotel and booking directly over the phone can sometimes result in getting a better deal, a better room, and more added value.
That being said, if you are booking a multi-centre trip (you are staying in more than two hotels) it might not make sense to book your accommodation across lots of different channels and it’s not without risk.
6) Hotel rates through tour operators are changing all the time thanks to dynamic booking systems
Big tour operators can feed into big bed banks via XML links, which means they can book rooms immediately online from their allotment of rooms reserved only for their customers. Once again it’s always worth cross-checking the rates.
7) Using a personal independent travel agent who is not associated with a big tour operator means less bias and more choice
Independent travel agents act, first and foremost, on behalf of their customers, and a good one is worth their weight in gold. They are more likely to have seen first hand the destinations and hotels they are going to suggest to you. Whilst booking directly with a hotel and using local currencies can be a win, it can also be a fail.