Thomson may find old lovers are not forgiving

Comment by Jeremy Skidmore (www.jeremyskidmore.com)

Like the cheating husband who has tired of his mistress and gone back to his wife begging forgiveness, Thomson is desperately trying to get back into bed with agents.

But, following the initial shock and tears of being deserted after a long union, have retailers now got used to life without their former partner and found someone else more exciting to play with?

It seems a long time (it’s actually two years) since Thomson announced with great ceremony that it was slashing base commissions to seven per cent. It was the closest a respectable company comes to sticking two fingers up.

Now it is offering 12 per cent base rates and significant overrides to some agents.

Senior players at Thomson have claimed it was never anti-agent and that very little has changed.

An interesting interpretation. I would call it an embarrassing U-turn. Although some – but not all – the key players at Thomson have moved on since 2005, they would have laughed at the prospect of going back cap-in-hand to agents. Within six months of the new policy, senior players were talking openly about how successful it had been and how bookings through its own shops were going through the roof.

The new stance is a huge boost to agents, whose livelihood was threatened by Thomson and other major tour operators who followed suit.

Far more than just giving independents a cheap thrill, it proves that the sector is alive and kicking.

But what has prompted the U-turn? To be blunt, Thomson’s strategy hasn’t worked.

The operator hoped that by cutting commissions, it would save a fortune. People would go searching for Thomson in their own shops and online.

But the public is far more savvy now and want choice – something they aren’t going to get a lot of in a Thomson shop.

The web hasn’t yet led to a pot of gold. More people are booking on line but everything is price-led and there is brand recognition, but not necessarily brand loyalty. It also costs a hefty price to get recognised on the web with click throughs, which are no guarantee of bookings, costing up to £1.50 each.

For Thomson, the maths hasn’t added up. The loss of revenue from cutting off independents who were keen to sell their holidays has outweighed the savings made from cutting commissions.

The operator needs to sell holidays, flights and hotel beds and suddenly independent retailers look cheap, even at 12%.

But what has happened to agents? Some have been forced out of business by commission cuts. But ironically, Thomson has made the sector stronger.

The survivors have reacted by making themselves available for longer hours, visiting clients in their homes and workplaces, improving their web presence and customer service, putting together their own packages and working with new suppliers. And they’re reaping the benefits.

Independents are no fools. They will accept the new higher rates, because if your client insists on buying a Thomson holiday, you might as well make a decent return on it.

But, crucially, they may not promote Thomson. Look, for example, at Triton agents. They have developed an alternative to Thomson and will never again allow themselves to be at their mercy.

The old partner may be allowed into the house and given shelter in the spare room. But that’s a world away from being welcomed back into the master bedroom with open arms.