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Comparison matrix of key distribution channels
Check out our matrix of distribution channels, key definitions, examples, and attributes. We strongly recommend that as you evaluate potential reseller partners you create a matrix or worksheet and document the advantages and disadvantages of each partner. We will cover this in detail in Chapter 3.
There are a wide range of business practices across the industry, and it is likely that you will encounter examples outside of the ranges and guidance provided. Use this as general guidance only.
COMPARISON MATRIX OF KEY DISTRIBUTION CHANNELS
DIRECT OTAS TOUR OPERATORS, WHOLESALERS, DMCS
DEFINITION
Channels where your customers book directly with you Travel websites that sell experiences Companies that create packages for visitors
EXAMPLES
Website Call Centre Ticket Office Viator GetYourGuide Tiqets Klook TUI Irishtourism.com CIE Abbey UK & Ireland JAC Travel
TYPES OF PROVIDERS AND PRODUCTS OFFERED
COST / COMMISSION
(these are general ranges, but many examples exist outside of these ranges)
CONNECTIVITY
ACCOUNT MANAGEMENT
N/A All types, with focus on tours and attractions and offering more long-tail tours and off-thebeaten track experiences Tours, activities, and attractions
Your cost of marketing and operating direct channels, divided by total number of bookings 15%–30% 10%–30%
Based on your online booking system Typically, extranet. API connectivity is available and preferred Manual process via email or phone, but some have extranets or APIs
N/A Account managers available for large operators; typically, small operators must use an extranet Account manager
TRAVEL AGENCIES
Retail agencies that book travel on behalf of customers
Cassidy’s Fahy’s Feherty’s
Tours, activities, and attractions
15% and higher
Depends on the agency and how they book
No account management, unless it is a large agency group and large attraction
MULTI-ATTRACTION PASS
Mobile passes or booklets that bundle access to multiple tours and attractions in a destination
Dublin Pass Go City
Focus on most popular visitor attractions, but some are expanding to include tours and experiences
25%–40% or even higher
Typically, manual process, with some API capability
Account manager
OTHER LOCAL RESELLERS
Local tour operators, ticket resellers, and hotel concierges that may book tickets to local experiences
N/A
All types
15%–30%
Typically manual
Account manager
KEY CONSIDERATIONS FOR CHOOSING RESELLERS
There are several things to take into account in working with resellers, like source markets, volume, and rates. Here we outline the five principal areas for consideration before selecting a reseller.
01 VOLUME Booking volume is linked to the commission you pay, so carefully consider your approach. Larger resellers like bigger online travel agencies have nonnegotiable terms, unless you are a large and popular attraction or tour in your market. With other resellers, there may be room for negotiation. Some resellers should be able to give you an idea of expected booking volumes but won’t make commitments. As mentioned earlier, resellers are likely to prioritise products more profitable to them. One approach is to offer commission bonuses or “overrides,” whereby you allow for a higher commission or one-time bonus if your reseller partner hits an agreed volume target. Even the smallest of resellers require work. You could set a minimum volume target with each partner but give it time. Often resellers start with small volumes, but as your relationship grows, it increases.
02 COMPETITION If the reseller is already working with your competition, it makes sense for your products to be available. In this case, competition is difficult to define - it's not your direct competition (walking tours, bike tours, etc.), but it includes all other things to do in your destination. These larger resellers are already selling experiences in your market.
03 RATES You should be aware of a maximum commission rate. This depends on your cost structure and your variable costs. For experiences and tours, the cost per guest may vary depending on how many guests you have on a tour. The marginal costs (the cost of an additional customer) may be low or almost zero for some experiences, and for others they might be higher. Understanding your maximum commission rate is key to ensure your reseller sales can support your margin goals.
04 SOURCE MARKETS Generally, you don’t have to worry about where the reseller is finding their customers. The real opportunity for working with resellers is helping you reach customers and markets that you may not reach efficiently on your own. For example, some partners serve specific markets. The OTA Civitatis serves the Spanish and Spanish-speaking traveller.
Often travel agencies and tour operators focus on particular market segments, such as the luxury traveller, or family travel. Seek out distribution partners that fit well with the demographic or customer profiles your tours and experiences are best suited for, helping you reach visitor segments that you cannot reach as cost effectively on your own.
05 SECONDARY SALES Depending on the
reseller’s marketing strategy, you may get a good amount of free marketing from reseller listings. Each time a customer books with a reseller, another ten or 20 people have looked at your product.
Many people will book later, on your own website, or directly with you in-destination. If possible, monitor your website analytics to determine where your website customers are coming from.
Rules of engagement for contracting and partner management
In this section, we discuss contracting with distribution partners, and the rules and requirements of working with distribution channels. This can help you determine if your product and your business are ready for distribution. Get advice for pricing your product for distribution channels including how to create both a rate agreement and your terms and conditions.
WHAT YOU NEED TO KNOW ABOUT PRICING
Price your product appropriately for distribution and include a built-in commission that is paid to the distributor. This is an opportunity to market and distribute your product to an audience you may not reach yourself. A successful product must be priced consistently, accurately, and competitively.
Commission/net rate Your gross or retail price (what you charge the consumer) should be commissionable at a minimum of 20%. Your net B2B rate is your gross or retail price minus 20%. This is the price you will provide to a reseller. Should you offer less than a 20% commission, it’s likely the distribution partner will not be able to work with you.
There are times when a distribution partner may attempt to negotiate a commission amount with you that is higher than that which you’ve provided. The ultimate decision, of course, is up to you and whether the commission agreed is sustainable.
Pricing and contact duration Your price must be sustainable in the long term. Generally, a contract will last one year and will accommodate a schedule, such as 1 April – 31 March.
Should you offer lower prices on your own website versus your reseller partners?
It depends. Some see this as an advantage of experience providers as you can offer lower prices through your direct channels. However, resellers often check the websites of the providers they work with, especially larger providers that are more important to their business.
You run the risk of upsetting your partnership when you undercut your partner. Another approach is to offer slight variations in your products, or additional benefits or services to avoid direct comparison.
You should consider and schedule date-based changes to pricing and other terms based on the seasonality of your business. Consider increasing prices during high season or reduce availability to resellers during periods where you get more direct bookings.
However, resellers also want more inventory during high season. If you need help from resellers during low season, they may ask for access to more tickets from you during your high season. Traditional reseller agreements based on free-sale or block allocation terms without connected distribution often require a fixed price for a year. With a connected distribution partner, you may have flexibility to change prices.
Price uniformity Keep prices consistent across channels so that your distribution network can be confident they have the best price for your product. Advance rates You must have the ability to provide your rates in advance, often six months or more depending on the distribution channel. Simple rate structure Keep rates simple so your product is easy to sell, with the number of price categories at a minimum.
This includes price changes that are affected by the season or time of year. A smaller number of price categories makes your product easier to sell for the reseller, and easier for you and the partner to manage. Special offers (treat all partners equally) If you decide to offer special pricing throughout the year, include all your distribution partners so your prices are consistent. You can offer special pricing to a limited set of partners through your own direct channel if the price period is limited to no longer than four weeks. If the special price period is longer or if you are looking to sell excess capacity on specific timeslots, it should be distributed to all your channels.
ADDITIONAL PRICING REQUIREMENTS:
Your product should be delivered consistently and available at a consistent schedule (e.g., your tour runs every Monday, Wednesday, and
Friday at 10am, 1pm and 3pm). Ensure reliable and efficient customer service for your customers and distribution partners, for example, phone, email, or live chat. Ideally, allow a minimum 24-hour turnaround time for responses. Product categories/types should be kept to a minimum so they are easy to understand and sell. Start with your best-selling products. Your terms and conditions should be concise and easily understood.
RATE AGREEMENT AND GENERAL TERMS AND CONDITIONS
The resellers rate agreement and general terms and conditions are important parts of working with resellers. Here we cover the basics of rate agreements and terms and conditions.
Generally, resellers require a contract to sell your product or service. Typically, this agreement comes from the distribution partner although some visitor experience providers supply their own.
This contract should include a rate agreement and attached terms and conditions. If possible, the terms and conditions should be no more than one page.
WHAT TO INCLUDE ON YOUR RATE AGREEMENT
Guaranteed rate validity dates (e.g., 1 April – 31 March of
XX year). It’s possible to add a disclaimer, such as: “rates are subject to change.” This should happen only in rare circumstances. VAT changes, and blackout periods should be noted. List the gross (retail), net rates and the commission level percentage, including your rates are per person, per vehicle, etc. If you have unique product codes for your tours, list those too. Do your rates include VAT or tax, or is this to be added? Be clear about the tax owed. Include contact details such as company name, address, phone, email, and website. If you have specific contacts for accounting, marketing and sales, list those here. List age ranges (child, student,
senior) and the corresponding price, if applicable. List group rates if applicable. Also list the conditions of the group rate (for example, ten or more). If you offer a Free of Charge (FOC) admission to a tour guide, visiting media or travel industry representative, or travel companion for a person with a disability, specify that in your rate agreement with corresponding terms. List admission or tour inclusions (for example, snacks, admission tickets included) and exclusions (for example, drinks) here. They can also be listed in your terms and conditions, but it is preferable to list them in the rate agreement.
WHAT TO INCLUDE IN YOUR TERMS AND CONDITIONS
Cancellation policy Outline this based on the time a cancellation can occur prior to travel. Check that your policy is in line with what similar businesses in your area offer.
Some resellers, especially online travel agencies (OTAs), are requesting flexible cancellation policies, up to 24 hours in advance or even closer to the date and time of travel or admission; these are practices to consider adopting for your business. Providing clear policies on changes, cancellations and refunds are important to improving overall visitor satisfaction.
Cut-off window This describes the amount of time in advance a booking must be made. If the cut-off for a specific tour is one day, a visitor can book a tour up to one day in advance. This typically requires a direct connection between your online booking system and the reseller’s system. Depending on your business, for example; attraction, tour, transportation, etc., there are different booking windows and requirements. Consider requirements for customers booking directly with you.
Do you require a customer to book 48 hours in advance? You need to make sure your resellers are aware of this cutoff too. If you require bookings to be made at least one week in advance, this needs to be specified. The more flexibility you provide, the more business you will receive. Both visitors and locals tend to book near the date of activity.
Flexibility is key
Resellers (especially OTAs) often push for a late cut-off window, up to 24 hours in advance, or even four hours in advance, as visitors tend to book experiences at the last minute, on their phones or mobile devices when in destination. OTAs may favour providers with flexible cut-off terms. Set your cut-off window clearly and, if possible, support last minute bookings; Flexibility is key!
CONTRACTING METHODS FOR BOOKINGS
There are various booking conditions to consider:
01 Free sale A distributor can sell your product anytime up to your cut-off window without approval from you for every booking. In addition, they can sell as much inventory as they want if there are no limitations in capacity.
02 Free sale with inventory restrictions Often referred to as an allotment or a block, this means that you assign a maximum inventory amount to a reseller, and they sell up to that maximum amount keeping your cut-off window in mind. The booking is automatically confirmed until the inventory is met and cut off window is reached.
03On request A reseller must make a request to you for each booking received and wait for your confirmation. You should confirm as soon as possible, generally within 24 hours, so as not to lose the booking.
04 Direct connect online booking You and the reseller have a direct connection through an API or booking system that allows the reseller to make the booking and receive immediate confirmation.
Key Resources
Sample contract
Each distributor has their own contract with common clauses throughout. You can find some reseller contracts online.
Terms and conditions
Here is a sample supplier terms and conditions with common clauses highlighted. (It is highly recommended that you review these contracts with a legal professional so that you understand your responsibilities and potential liability).
Have a look at the Get Your Guide partner terms and conditions to inform your own T&Cs.
WHAT TO INCLUDE IN YOUR TERMS AND CONDITIONS
Amendment policy There may be times when a customer wishes to amend a booking, for example a date or time, or instances where you want to amend a booking due to operational needs. Consider your policy related to changes made by the customer based on the time the change occurs prior to travel. Look at what similar businesses are doing in your area to inform your approach. Termination policy This deals with contractual obligations if either party should wish to terminate the contract prior to its validity date. Typically, both parties can terminate the agreement without cause at any time once notice is given. Free of charge policy Should include all details concerning who is eligible. In most cases, this will pertain to a group
leader or tour guide (note how many customers are needed to achieve this), a media professional, a travel companion for a person with a disability, or a travel representative, which will help push your business. Note black-out periods or seasonal changes in the booking conditions and in the rate agreement. In addition, if there are non-operating days, list those as well. Include departure dates and times for tours in the booking conditions and in a corresponding fact sheet. Payment policy and banking
Include when payment is due and how to make payments. It is common practice to have a distributor set up on an account basis where they are invoiced every 30 days, for example. In this case, you should complete a credit check with the reseller.
Banking details are generally provided to allow for direct deposit or transfer of funds.
Some resellers, such as
OTAs, provide automated payments on a regular basis based on redeemed bookings during a prior month or payment window. Group policy Provide the minimum number of customers required to access group rates. Note any additional requirements here. A special conditions policy
Such as weather conditions, photography, manner of dress, age, mobility, height, physical fitness, etc. Damages and liability
Should be noted and who the corresponding responsible party is. Also include these details in the reseller’s contract.
