Qld to investigate claims of ticket commission gouging
Queensland’s State Government has announced an independent review to investigate allegations of commission price gouging on tickets to attractions.
Consultant Ian Kean will head the review.
Allegations persist that tour desks have been demanding commissions of up to 45% of ticket prices from operators. As tour desks sell tickets on operators’ behalf, operators are wary of defying the demands in case their products suddenly get dropped. But operators are already facing hefty overheads in an extremely tough market with the Australian dollar at a very high level. Price gouging could send them broke.
The state’s Tourism Minister Jan Jarratt said the industry had been reporting desks charging high fees. The investigation would seek to ensure that tour operators were not being disadvantaged.
Some tourism businesses on the Gold Coast say tour desk operators are increasingly demanding 20% or even 25% of the ticket price as a commission, instead of the 15% which used to be the norm.
The Australian Competition and Consumer Commission has already scrutinised practices in the industry but it found they reflected market forces. However the ACCC warned operators that any banding together to demand a set fees would contravene the Trade Practices Act.
The Brisbane Courier-Mail quoted Association of Marine Park Tourism Operators chief executive Col McKenzie saying that without any established benchmark for tour desk commissions, tour operators had little choice but to pay up.
He said demands for commissions of up to 50% of the ticket price had been made. More commonly were demands for 35% “or they won’t sell the product”.
Such abuses were well known in Cairns and the Whitsundays, McKenzie said.
The final report to the Queensland Government should be delivered by the end of June.
Written by : Peter Needham
“Price gouging” is just another bleat about the unfairness of the world. If the operators depend on the tour desks to sell the tickets, then they should address that issue, not run to the government to play umpire in a matter in which it has no expertise.
There’s absolutely no way this is going to go anywhere. Commissions to tour desks have long been an auction, where the highest bidder gets the business. Let’s face it, business is all about “What’s in it for me?” and tour desks are no different. If it’s not commission, its other gratuities (wine, sweets, movie tickets, beer, spirits & much, much more). Is the government going to ban these little (or not so little) “relationship builders”. I think not. it’s illegal to conspire on prices, commission rates etc under the TPA, so this problem won’t be solved so long as agents are happy to accept increased commissions, and desperate operators are prepared to be part of the auction.
This is long overdue. We have a small tour company providing tours to Cape York. The standard commission for this type of tour is 20%. Doesn’t’ sound like much until you do the math. Tour price is $3600pp and most bookings are made by couples. At 20% this equals $1440. When you work this against the total contact time you get an hourly rate that would make the best paid miner jealous. I’m not against agents and I am fully aware of the important role they play within the industry however when the seller makes a profit equivalent to the supplier the system is out of kilter. We are lucky in that we have been in the industry for a long time and knew to factor the commission rate into the price. Many operators do not and this can be their downfall.
As a trainer I have heard horror stories, especially in the backpacker industry, of the power that the big tour desks wield over the operators, to the point of dictating prices that operators can sell their products at. If they don’t agree then their product will not be sold.
In the late 90’s a number of sailing cruise operators in entered into a commission war offering up to 50% per sale. At that time I was acting as an agent for two specific companies that were supplemental to mine (Yes, I have been on the other side of the fence) and had numerous operators wanting me to sell their product. All this war resulted in was bad publicity for the Whitsunday’s. As operators had to tighten their belt to compete maintenance on vessels was reduced. A headline at the time that received both national and international attention read ‘Whitsunday sailing on the nose, 21 people 1 toilet.’
I have been preaching for years that commissions need to be regulated. Possibly a sliding scale where 20% is paid on low end product reducing as the value of the product increases. The bottom-line is that without the operators there is no need for tour desks. At the end of the day it is the tourist who is wearing the cost
Simular to Mark I have been on the other side of the fence for years always chasing a higher commission rate but nowadays I find myself living on the Island desperately trying to keep our business afloat.
We have launched new products, created a unique island adventure for all to enjoy and continuously get great feedback. But yet it seems to always be by chance that our customers hear about us.
As one of the smallest operators on the island coupled with the increasing running cost we cant afford to be paying high commission rates to travel agents. The most frustrating thing I find is that larger companies are paying up to 50% in commission on a $350 tour. How do they do it and still make money? It’s a monopoly and one that we can’t afford to be part of.
So what do we do? Going direct to the customer will result in a massive marketing bill and the burning of bridges with travel agents. Cutting our commission rates across the board to a reasonable 15% will not allow us to compete with larger operators. Increasing our prices to compensate for agency commission will make our tours all together less attractive to the consumer….
The frustration that is apparent in Ruth’s comments is the lament of so many small tourism businesses. How do you compete with the big players? Tourism Queensland has created TQ digital specifically for that purpose. This is a service that is open to all tourism operators in QLD and is a free service.
We have been working with Susan Maynard at TQ Digital and the support and advice that she has offered has been invaluable to us. TQ also has an excellent ELearning download which gives you step by step processes to build your online presence. Double Thumbs Digital on Facebook has some excellent free downloads that will help operators understand the web and how to get your product to where the prospective clients can find it. Google has just released a download called ZMOT which is an amazing resource.
We have set ourselves a goal of selling at least 70% of our product direct to consumers by 2013 and this will be mainly achieved through the digital area.
While I do not agree with the comments made by Andrew Thompson he is absolutely correct in that the operators have to take action. There is no profit in sitting back and waiting for someone else to fix it for us. The rapidly evolving arena of digital marketing offers opportunities for small operators to market their product in ways that were previously unavailable, both financially and logistically