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Don’t let aggregators control your backend

Most online aggregators do not have access to live availability. Aggregators are defined as an “Internet company that collects information about competing products and services and distributes it through a single Web site” by the The Oxford Pocket Dictionary of Current English. In travel, this could mean anything from a company that lists all tours in an area, like Hawaii Activities listing Hawaii tours or Scubaba listing all scuba companies.

For those unfamiliar with online aggregation, it usually works like this: You list your tour with an online aggregator. Listing is usually free, although some do charge upfront setup and listing fees. For every booking generated via the online aggregator, a commission is paid. This rate most often ranges from 15% to 30%.

Aggregators and live availability

Without access to live inventory, aggregators are forced to use older methods of confirming bookings made via their website, like phone or email. While this might lead some “live and confirmed” bookings to not actually be available, the distinction doesn’t phase the aggregator. They are able to handle the mishaps and are usually able to book their customers on a similar tour or activity.

Do most wish they had access to live availability or that their customers could make “real” live bookings via their website? Of course! In both situations, tour and activity customers would have a much better experience. This was very apparent when answering phone calls for North Shore Catamaran — most unhappy customers were given incorrect or outdated information via an aggregator. (We’re working on some solutions to this at FareHarbor.)

Work with aggregators…

In my last post, I discussed why activity companies should work with aggregators and what type of aggregators are preferred partners. One of the most important points is that tour and activity providers should not limit themselves to a certain number of aggregators as long as the price and marketing/visibility are appropriate. Over the last year, two aggregators have made concerted efforts to monopolize the live availability of their clients. They’ve offered to promote businesses that sign on and have promised droves of bookings if they are the only aggregator allowed to resell an operator or tour. Both are bad options.

…but don’t let them control your backend.

Your reservation system should only be focused on your tour and activity company’s success. It shouldn’t be concerned with which aggregators are providing you business or what you are paying your aggregators. Unlike investment banks, aggregation companies do not have Chinese Walls. This means that the team that controls the aggregator’s SEO or Adwords account might use your company’s reports to improve their efforts. (And don’t forget, if the booking originates on the aggregator’s website, you owe commission). And most important, your most valuable aggregation partners might be scared knowing that one of their competitors now has access to their financial information. This could lead to dropped accounts, business, or even worse, a lawsuit.

And why is it a bad idea to enter into an exclusive relationship with an aggregator? First off, by limiting the number of resellers, a business is limiting its marketing scope, and effectively its direct bookings. Secondly, these preferred partnerships usually come with a higher commission, not lower. A higher commission is not acceptable in a circumstance where an aggregator is demanding exclusivity.

In an exclusive relationship (which is sure to lead to less bookings), the commission amount should be lower. Finally, here in Hawaii, many tour companies have “preferred” relationships with aggregators. Unlike with “exclusive” reselling rights, the aggregator promotes the tour and activity company while still allowing the tour company to work with others.  This rewards both parties for the relationship.

It’s very important to have a hand on how much business aggregators provide and their commission levels (this is easily attainable using FareHarbor’s reports). The next time an aggregator proposes an “exclusive” relationship, counteroffer a “preferred” relationship with a higher commission. And keep an eye on bookings. If the additional commission doesn’t generate enough new business, ask your partner if the commission isn’t high enough, or bring it back in line with your other partners.

If you are in the tour and activity business, I’d recommend you check out FareHarbor. We’re interested in your long term success and in helping you manage and maintain your reseller relationships profitably.