Thomson spells out details of commission cut
Friday, 28 Nov, 2005
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ABTA Convention special report: Thomson sales and marketing director Miles Morgan has revealed more details about the shock decision to cut agents’ commission to 7% and confirmed there will be lower payments for even the most productive retailers.
Morgan said it was cutting base commissions from January 1 to allow it to offer more competitive holidays. Christmas edition brochures will have undisclosed price reductions.
“We will have more aggressive pricing in the brochures, but I can’t say what that will be yet. We don’t think we’ll save anything by doing this, we’re passing on the cuts to consumers,” said Morgan. “If things go well in the post-Christmas period then we won’t have to discount in our shops but if the independents don’t support us, we’ll have no choice but to discount because we’ll have stock that has to be sold.”
Agents which produce high levels of bookings for Thomson can earn more than 7% commission, but not as much as they are currently paid.
“The whole game is the same, but at a lower level,” confirmed Morgan.
He said Thomson had been considering the move for a year. “Since the last ABTA Convention we have been looking at this.”
So far sources at First Choice have said it will follow suit, while Thomas Cook and MyTravel have yet to decide whether to cut commissions.
Morgan shrugged off the threat from Triton, which has said it will not accept a base level of 7% commission (see earlier story).
“It’s their commercial decision to do what they want to do. We’re not that concerned otherwise we wouldn’t have made the decision and we won’t be changing our stance.”
Morgan said Thomson was willing to discuss individual deals with Triton members.
“If you look at Triton, the productivity per agent is very low, because some are very productive and some aren’t. If members want to knock on our door and talk to us individually, we will have discussions with them.”
Morgan said Thomson’s plan was to build greater brand loyalty among customers.
“We want the customer to go into shops and ask for us. Dynamic packaging is increasing but there are also a lot of people who want the security of going with us. The reality is that a lot of people work for 50 weeks of the year and want to know that their two-week holiday is going to be good.”
Report by Jeremy Skidmore
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