Tour Operators and Cruise Lines Cut Agency Commissions

After the success of airlines in cutting travel agency commissions, some of Europe’s tour operators have jumped onto the bandwagon and taken the opportunity to cut their commission rates. Presently, analysts say the hotly-debated move of some British Tour operators to cut agent commissions to 7% could very well start a domino effect across Europe and even into the North American market.

The ruckus began with Thompson and was followed by two other British tour operators, First Choice and Thomas Cook, who emulated Thompson Tours in cutting commissions to 7%, according to press reports.

This was closely followed by an announcement by Carnival UK managing director David Dingle, who said his company was examining the possibility of reducing rates with Royal Caribbean and Island Cruises. Paying agents less, he explained, would mean they could not throw commission away on discounts.

Observers predicted that, as with tour operators, once the cruise market leader cuts commission, others would inevitably follow.

The move is expected to spread further unease through the trade, which is already faces reduced commission from mass market tour operators and minimum commissions from airlines. Agents say they fear that soon every sector will start to review its rates of pay.

Judith Thomas, Chairman and CEO of the National Tour Association, said in a recent interview that North American tour operators are just starting to talk about the European move to cut commissions.