Buyer groups defended

MANAGEMENT consultancy Applied Sense has come to the defence of the travel industry’s major buying groups, saying most agency owners are unable to negotiate the complex override agreements they offer.

Responding to CVFR Consolidation Group’s assertion that existing networks offer “little additional value”( TD 10 Jan), the consultancy’s managing director Jorge Fernandez paints a more complex picture and says even small amounts of additional revenue can be significant.

“I don’t believe there is much substance to the argument that there is no significant bottom line additional income on all travel related product in being part of a buying group, including air sales,” Fernandez told Travel Daily.

“This additional income comes from the complex agreements for overrides based on sales and targets that most independent agency owners do not have time to negotiate well.”

Fernandez said air sales continued to be important as they represented about 31- 45% of total gross sales for the average retail agency where consolidation or direct BSP ticketing was involved, and could represent over 70% of turnover for many corporate agencies.

“So any additional fractions of a percentage are significant to revenue & profitability,” he said.

Fernandez also highlighted the benefits of being part of a business peer network, allowing business owners to access and discuss best practice.

Applied Sense is an independent management consultancy specialising in the travel industry.