We recently conducted a survey of Tourism Suppliers to gain some insights into how they work in the industry and with distribution partners. There were several statistics that jumped out at us, but most importantly, a couple of alarming statistics highlighted a broken process – the annual process of distributing supplier rates. This process is one that most Suppliers have just accepted as “the way things are done” or the “cost of doing business”. I was one of these suppliers…I didn’t know I had a problem until I understood the entire process and the consequences the inefficiencies had for my business.
I own a bicycle tour company in Sydney, Australia, and I was like most other suppliers. I would battle through sending out our rates each year, and then I figured I was done. What I didn’t realize was the extent to which I was hurting my business with this casual attitude. The problem comes from my lack of understanding of the contracting process that tour operators go through. In addition, I made the problem worse with my unwillingness to analyze my own processes.
We have broken down the contractor challenges and the effects on suppliers in a previous blog. Today, we’ll take a closer look at the ways suppliers contribute to the problem and some of the denial suppliers go through when looking at their own businesses.
An Industry without Standards
The most obvious, and immediate, concern is that there is no consistent or standard way of sending out annual rates or contracts. Our suppliers said they were sending rates through many different methods: their own spreadsheets, PDF’s, websites, faxes, and phone calls. Yes, some suppliers still fax their rates to partners. In addition to sending out their rates using their own formats, suppliers are often required to fill out tour operator forms in spreadsheets (11%), PDF’s (13%), and website (38%).To help make this a little more clear, we multiplied these percentages by the average number of rates that tour operators get each year. The result was staggering; as an example, an average tour operator would receive:
- 2,550 emails
- 400 different pdf formats
- 350 different email formats
- 150 faxes in different formats
In our previous blog, we showed that tour operators are overloaded by the burden of loading rates. These numbers now make it even more clear as to why this problem exists. Can you imagine going through 350 uniquely formatted Excel spreadsheets to find the information that you were looking for? Not only that, but once you find the information you are looking for, you have to manually type it into your booking reservation system so that you can sell it. This is just the tip of the iceberg.
Bottom Line: Sending rates the same way suppliers always do is having the unintended consequence of overloading tour operators with hundreds of rate formats.
What Does This Policy Mean?
More often than not, due to the confusion all these rate formats cause, 70% of Suppliers said that they have to resend or clarify their rates at least a few times every year! Obviously, this is time consuming and frustrating, especially when you consider that 87% of suppliers spend more than 1 day preparing and sending out rates in the first place.The scary part is that, from last year’s contractor survey, we know that depending on the size of the tour operator and the volume of Suppliers that they have, the tour operator might just file away your rates without ever loading them. This means that all the hard work you put into sending out your rates may end up with your rate not even being available to be sold.
Bottom Line: Suppliers are wasting time and energy resending rates every year, and at the same time, those rates may not even be loaded.
Oops! Sorry About That
In the event your rates actually make it through this process, there is still a realistic chance that your rates get loaded incorrectly during the manual data entry process. In fact, 59% of suppliers said they have had a cancellation or lost money due to incorrectly loaded rates. This means that after all the time, money, and hard work to generate sales, a simple data entry error can cause you to lose money.
The most common ways that money is lost are:
- Prices are too high and the traveler never books the product
- Prices are too low and you don’t make enough money to cover the costs of your product
- Customers get frustrated or upset with the incorrect charges, and has a poor experience with your company
These are very real costs to simple data entry issues, and these issues all stem from the confusion suppliers create by simply doing things how they have always been done.
Suppliers Aren’t The Only Ones Affected
According to our recent tour operator survey, 61% of tour operators have lost money because of incorrectly loaded rates and 33% have this happen multiple times per year! Not only are contractors losing money from errors and inefficiencies, but they are also suffering from a tarnished reputation. When you look at the stats, it is evident that a change needs to happen. However, the problem is that so much time is spent doing everything manually, that no one is able to take a step back and look at the process as a whole.
Bottom Line: Suppliers are losing money by simply doing things how they’ve always been done.
The effects of suppliers choosing to do things the way they have always been done is clearly having a significantly negative impact on the industry. Now, this isn’t to say that suppliers are to blame, it just highlights the fact that the industry needs to work together and communicate on where improvements can be made. With everyone working in their own world, it makes it difficult for the entire industry to advance into the modern era of distribution. It’s time we come together to help all of our lives easier and our businesses more profitable.