It’s too easy to blame the big guy

There’s been an interesting debate raging over the last few days following Adventure Tours Australia’s announcement it is closing Western Australian budget touring brand Planet Perth. The general consensus seems to be big corporates are evil, don’t understand the budget travel market and backpacker businesses are much better off in the hands of small, local operators who are able to get, and stay, close to their customers.  

This analysis has the benefit of playing to the ‘little Aussie battler’ fraternity, but has the disadvantage of being a load of bollocks.

The idea that TUI – the European travel giant which has been sending boozed-up Brits to Spain on cheap package holidays for decades – doesn’t understand budget travel is frankly laughable. Trust me, mainstream tour operators in Europe know all about thin margins, piling it high and selling it cheap.

What companies like TUI bring to the table is massive distribution channels and an operating professionalism often lacking in so-called lifestyle businesses. They also know plenty about customer service, with CRM technology far in advance of anything in the backpacking sector, and a commitment to sustainable development which was forged long before it was the trendy thing to do.

As an industry, we should welcome any company which drives up standards, no matter how big or small it is.

What TUI doesn’t have is local knowledge of the Australian backpacking sector – which is why, when it acquired ATA, it kept the existing management team in place. Is anyone seriously suggesting Ken Hart and Greg Zammit  don’t know what they’re doing?

In this case, it was TUI’s misfortune to buy into the sector just before the GFC ripped the guts out of it. Planet Perth isn’t the only WA business to suffer from a downturn in customers in 2010. I don’t suppose Tourism WA’s apparent indifference to the backpacking industry helped much either.

But that doesn’t make it evil, stupid or incapable of operating niche businesses in local markets. After all, that’s what it’s been doing – mostly successfully – for years.

My guess is many of those lining up to say ‘I told you so’ now would happily throw in their lot with the next TUI that comes along waving its chequebook.

22 thoughts on “It’s too easy to blame the big guy

  • January 27, 2011 at 5:38 pm

    A little history folks!!! Pre 1992 backpacking in Australia was still in the dark ages . We closed up hostels for the winter!!! Can you believe that?…. The word backpacker was quite new in Australia. VIP backpackers was 3 years young and Ken and Greg had their hostels and decided to run their own tours Round the rock.
    They then made an amazing leap and spent money promoting their product in Europe. Until they sold they have spent millions of dollars promoting Australia to the benefit of us all. To those with small minds out there this happens to be a lot of money. All of us in the industry owe to some small part a lot thanks to those two.
    TUI is the best thing that has happened to our industry so far,There is no other company that has their marketing power or influence and they will even bring them to your front door. You just have to smile and take their dollars. For those who do not spend one cent on overseas marketing you may still carry on leaching , they will not complain about small operators to you i promise . However here’s a radical thought, how about if we congratulate them and inquire if there is anything we can do to help them help ourselves . Remember, we have all the local knowledge and collectively working together surely that counts for something.
    OH i nearly forgot my place !! I am a small business and i know everything there is to know about backpacking ……now where is my bat and ball.!!

  • January 27, 2011 at 7:15 pm

    Geez Martin, have TUI hired you to write puff pieces, or are you doing a favor for some mates? Why are you sprinting to their defense amidst what is a tame and fairly rational discussion. Hardly the objective words of an editor interested in level debates.

    You are by the way wrong on a few counts. But I cannot say why.

    And Paul and Martin: nobody is questioning the Integrity of Ken or Greg Z. Their names haven’t been mentioned except by the pair of you. And Paul, on what basis is TUI the best thing that’s happened to our industry?

  • January 27, 2011 at 10:50 pm

    What about whenTUI give all travel agents 10 to 15% commission as a maximum. Will they end up buying out peter pans and their five companies? This may be huge for our industry.
    Greg and Ken have been fantastic marketers for Australia and spent millions of dollars to generate millions fir themselves too. They didn’t just do it because they are nice blokes.
    Competition is healthy in all sectors.putting all your eggs in one basket is stupid. That’s how our industry is now. There aren’t many independents left who can survive. Times are tough. Look at all the people that have been sacked/made redundant/walked or just left the industry.
    Next months expo will be interesting in Melbourne. Who will know anyone?
    I’ll say it again. Exciting times!

  • January 28, 2011 at 2:56 am

    Backpacking pre-`92 was in the ” Dark ages”, Paul? Nah, can`t agree with that statement. Maybe you were on the West coast then, I dunno.

    Back in those halcyon days, we had 5 different bus companies bringing us smiling, sunny backpackers up the East coast, no travel agents / hostel chains directing backpackers to ‘their’ chosen destinations, 10% maximum commission and no ridiculous regulations.

    Guests were booked in to their next chosen hostel by each hostel as a courtesy, often using a 1800 booking number, and there were few, if any, international packaged tours coming here to send their unfit clients on adventure activities (such as Tully rafting and Bungee jumping), meaning fit, out-there backpackers were the main source of bookings and the fun police hadn`t buggered those experiences up as yet.

    There was no overseas marketing but free independent backpackers were flocking over, enticed by stories their returning older siblings and friends had told them and imagining themselves in the Top End doing a Croc Dundee (yes, Hoge`s film and adverts were still the biggest media influence even in `92:I know, I used to ask `em).

    There were many other positives about those times (number one being WE WERE ALL MAKING MONEY!!!!) but I`ll save that for my opus at a later date. Change is inevitable and when it came, it came with good intentions.

    Bureaucrats started to come up with a range of compliance laws, so the Governments (local, state and federal) could get their piece of the action and entrepreneurial companies saw higher profits in towelling up visitors on their companies` tours BEFORE they left their own country, introducing the beginning of the foreign wholesale market ( and the ridiculous 25% ‘inbound’ commission charged by those doing it: totally beyond a backpacker operators financial limits…. I thought back then!)

    Yes, Greg et al did a great job in confirming they`d have a greater piece of the tour pie by investing in overseas advertising and the industry as a whole benefited (but, as I pointed out, even in tiny Mission Beach, we have never had numbers like back then (`88-92) since the years the ‘big guys’ (is this a size-ist thing, Laney?….) got involved and the funneling of East coast travellers began.

    Anyhow, evolution being what it is, we have some VERY large players in our once smaller, owner-operator/ family/mum & dad owned industry and I`m not arguing that they don`t have a place in this segment . With the high Aussie $, we are either a desperate participant or a very interested spectator in the subsequent race to the bottom where tariffs and profits are concerned.None of us are doing joyful backflips in this industry right now, are we?

    2011 is a time for careful thought, where the TUI`s of our industry face the same problems as operators as small (and smaller) than me: how do we remain relevant, profitable and stable with these dynamic circumstances (rising dollar, rising costs, floods,etc) beyond our control?

    TUI are newish players on our scene, but, as has been pointed out, are receiving expert advice from their experienced staff and they have time on their side. It`s a good time for ALL OF US to examine our operations, as TUI is, and make the right decisions about how we go about our core business.

    I wouldn`t go as far as John Jerrico & describe these as ‘exciting times”: I mean, was the Cuban Missile Crisis exciting? More like effing scary!!

    I,myself, believe we are living the ancient Chinese curse : “May you live in interesting times”. I dunno why we were given the curse but I`m investigating the cause (has Greg Cole ever been to China…..?)

    Either way, I hope all the folks with their motivations in the right place are, once again, thriving when the dust clears.

  • January 28, 2011 at 7:25 am

    Jeez you are thoughtful Scotty! Here here, I agree !
    And 25 % is a minimum for inbound agents. Try 35 to 40%. that’s interesting times!
    Ps the 90 ‘s were awesome! $2.50 for 40 smokes, $3.50 for 5 liters of goon, and $4.50 for4 liters of Nickoff. Remember that?!

  • January 28, 2011 at 8:14 am

    Do we need the BIG GUYS ?…Short answer YES Their marketing clout and the custom they bring by sheer volume flows downstream and lots of individuals in that supply chain derive some benefit as do local businesses from every tourist dollar spent.
    Do we need a monster to BUY everything because it can? NO. We still need fair competition that keeps us on our toes…hopefully striving to provide a better service to our client base. (can you hear the violins?)
    BIG IS BEAUTIFUL that’s the catchphrase around the world, Governments everywhere have learned the bigger you get the more YOU CAN PAY so over-regulation has reared its ugly head in nearly every industry nowadays. We will just introduce this regulation and make them comply, bit more red tape, the big guys will pay the small guys will get out and take their bat and balls with them.

    Safety should never ever be compromised that’s a given but the added cost imposts burdoned on the travel/tourism industry alone are playing into the hands of the big guys.

    I have no arguments against guys who are struggling deciding to move on and sell out that’s business and commonsense the trouble is if the big guys buy something they generally rebrand it under the one corporate umbrella.

    All individuality is lost. Another crazy practice that a lot of the bigger boys do is TRY TO BE IN EVERY MARKET SECTOR. So we have the PREMIUM BRAND then to cater for the peasants and other sectors we will offer a cheaper brand/s doing the same tours competing against the premium..WHY?

    I am going to stick my neck out…(nothing unusual) and make a wild prediction.

    The traditional TRAVEL AGENCY is heading the way of the Dinosaur. They said it would never happen to another COMMISSION driven industry STOCKBROKING and how wrong was that instead of paying big commissions on trades today nearly all trades are done for a flat fee off $15.

    If you know what you want and dont need specific advice its a simple deal. Haowever, if you need professional advice from your stockbroker there is a user pays fee for this service.

    TRAVEL is bound to follow suit, it’s almost there now with faceless websites doing
    significant sales for those who know what they want. There will still be a place for a full travel agency service that can sit down and spend the time with you to plan a day by day package BUT YOU WILL HAVE TO PAY FOR IT.

    Like the supermarkets Travel Agencies quickly learned that SHELF SPACE is a valuable asset and like the supermarkets the travel agencies jumped on the bandwagon and introduced over ride commissions and the piece de resistance
    PREFERRED PRODUCT which removed THE LEVEL PLAYING FIELD from the game. He who PAYS the most is PREFERRED over another and if you offer just the standard lousy 10% commission we might not even bother to put your brochures on display.

    Trade Practices rules make it ILLEGAL to refuse to sell any product so to get around that the smart guys relegate OTHER PRODUCT to a box in the back room
    ONLY to be retrieved if YOU the customer ASK for it by name.

    We need to eliminate 40% commissions to International Wholesalers AND NEED TO RETURN TO A LEVEL PLAYING FIELD. where EVERY PRODUCT EARNS 10% commission and is given FAIR AND EQUAL representation.

    The industry needs a shake up and a WAKE UP CALL.


  • January 28, 2011 at 12:23 pm

    I’ll need a cup of tea and a quiet room to digest all of this. Some really good points raised especially predictions on the future of high commissions. I agree with Daryl, the back of the current model will eventually be broken. It is full of holes and relies on tactics not win-win strategies to succeed. But I’m sure it works for some, which is usually the way of the world.

    @Scotty, regarding the curse of interesting times: yes, ’twas I making things interesting. Kind of you to say so. The curse can be lifted by opposite forces, that is to say those less interesting continuing to be so. Keep it up.

  • January 28, 2011 at 1:50 pm

    Thanks, John. I never smoked but I like the look of those grog prices!

    Darryl, you might be the future director of the Australian-backpacking version of “Loose change” but I agree with many of your points and think you`ve put it out there when it comes to high commissions and stockbroking: time will tell….

    Evolution, of course, is an ungoing process. Whether travel agents prosper or fail is uncertain. Corporations will do what they do to deliver a profit. Level playing fields are all well and good but rare (look at Coles and Woolies dropping the price of milk to kill off some opposition! Glad I`m not a dairy farmer…..)

    As a smaller operator with a long history, I am naturally inclined to mourn the ‘good ol` days’ but must adapt to modern realities.

    Booking agents provide a service that modern travellers feel they need: until the mindset of travellers moves away from having their holidays plotted out for them by a notionally-experienced third party, paying a fifth to a third of one`s profits for a guest one would normally have had stay commission-free is a reality even we hostels must accept.

    To me, it`s all about care factor. I don`t care how large a corporation( the “Big Guy”) is, if they keep that as a core value in their business, more power to their arm (there are hostels with a zillion beds that look after their guests WIV FEELING: there are some others that are like a hospital or prison by comparison…)

    Travel agents, same-same.

    The salient factor is we must all remain profitable for the long-term future of the industry as a whole: guests MUST feel they are getting bang for their Aussie buck and operators need to bank something at the end of the week.

    Until this is the case across the country/industry, we have our work cut out for us, whether M.Lane or B.Schultzy in stature..

  • January 28, 2011 at 2:02 pm

    Hmmmm, got that one wrong, Greg: I was alluding to you insulting a key Chinese spiritualist ( in your truly inimitable manner) during a visit, thus generating the curse.

    Uninteresting, moi?

  • January 28, 2011 at 7:20 pm

    I am then truly cursed.

    The question is do BP travel agents add any value in simple transactions? I’ve been involved in a fairly major ghost-shopping exercise over the last week. The results were along the same lines as Greg Zammits observations a few weeks back: dissapointing. The answer to my question i posed above is overwhelmingly no they don’t. Ask for something complex and we were told to “have a look on the Internet.” I think they thought they were really helping us by sending us online.

    Its always been hard to find good domestic travel agents. International is a different story. The ones we did get had to be trained. The ones we (not me, too old) encountered this week were neither good nor trained it seemed.

  • February 5, 2011 at 11:21 am

    I think this debate is missing the point a little. Martin mentions professionalism and standards, and that is where the real focus should be – the sector should welcome any player – big or small – that is committed to business improvement and the enhancement of the Australia tourism sector’s reputation and attractiveness as a destination. I interviewed ten tourism Hall of Fame recipients around Australia in November 2010 (mostly small to medium size, two backpacker operations) and what struck me was the commitment by all to some degree of strategic planning – even if it was confined to setting and reviewing goals. Lifestylers would also personally benefit from actively looking to improve their businesses, if they want to improve their satisfaction from the business and realize a better price when it’s time to sell.

  • February 15, 2011 at 7:12 pm

    I have no problem with TUI as I can’t imagine they’re a fan of the big commission either. Unless they buy all the competition (which the ACCC probably need to keep an eye on), then Big or Small all face the same challenges. It’s just the zeros that differ.

  • February 16, 2011 at 12:47 am

    Take three proffessional companies that were independantly run and consolidate into one … Tui have ripped the guts out of the WA inbound industry.
    (Edited by Thumbrella for legal reasons).
    Word from the premium agents apart from those that are ATA controlled is that that these three independant companies have become souless and do not reccomend them . WA is cliquey and TUI can suffer in there jocks .
    Long live freedom of choice !!!

  • February 26, 2011 at 2:07 am

    The east coast should be wary of what has happened in WA .TUI has let competitors fight amongst themselves meaning chiefs of companies are left scrambling for their own beliefs.what it means is they hide similar products behind a veil of different brands that offer a different price point (edited by Thumbrella for legal reasons). Try and tell me the average consumer can’t see through it and why the WA industry had gone to shIt , ATA are not immune and just caught up in the shitheap . At the end of the day they have to explain why they mismanaged planet Perth and ride off millions of dollars in losses . TUI paid good money and will want to know why ? ATA can redirect all the business it wants back to adelaide but all it’s doing is losing the WA tourism jobs and money , but I guess thumbrella is too concerned about the revenue it generates through global companies to give a shit about the industry it stands for .. Yes I mean TNT magazine

  • February 26, 2011 at 8:39 am

    Shhh. (Edited by Thumbrella for legal reasons). Local businesses lose money and they shut them down and people lose jobs. These guys wear losses like some sort of badge of honour. It’s a disgrace.

    What sort of leadership accepts bonuses in the face of operating losses, company closures and job cuts? And will this filter down to the “new” leaders of TUI companies?

  • February 26, 2011 at 8:39 am

    Thanks for that Anonymous

    For the record, Thumbrella has no relationship to TNT Magazine – they are two completely separate companies.

    Not sure you can accuse Thumbrella of failing to give a shit about the industry when we produce this site at great cost in terms of our own time for little or no return – you won’t see too many ads on here.

    It’s a bit of a labour of love to be checking and responding to comment streams on a Saturday morning I can tell you.


    Martin – Thumbrella

  • February 26, 2011 at 9:28 am

    I am a small operator and have many reasons to be fearful/critical of “the big guys”. I have stated my argument on this & other posts already.

    One thing I`ll also not be backward in coming forward on is Thumbrella.

    You can site many different news stories about any subject you wish & you`ll find Aussie newspapers/media will have different slants, based on their philosophy(or they`re owners……..). Try reading The Age and then compare with The Australian…..!)’

    I reckon we should let Martin decide on the slants/subjects HIS online magazine chooses to cover: the posts on the floods, cyclone & earthquake, for instance, have been all about positive coverage and dissemination of information and I, for one, would like to thank him and his team for the huge help they gave (and continue to give) our area since Yasi hit.

    Pretty good job for a soccer mad Pom trying to make sense of life in paradise……. kind of Stranger in a strange land,eh, Laney? Keep up the good work.

  • February 27, 2011 at 5:00 pm

    Thumbrella’s stated intentions says “everything” under the travel and hospitality umbrella. Given Thumbrella relies almost totally on the industry for things to happen to make news then Martin really can’t choose what he publishes. He can edit it for legal reasons or to keep it clean, and he can put a slant on it to promote further discussion.

    So I disagree, Scotty. If Martin is to run a credible news source he has to publish the good, the bad and the ugly whether he likes it or not. And he does. If he didn’t then some sources would simply choose to keep schtum on events, leads, and stories. Then its back to the Burma Daily News for Mr Lane.

  • February 27, 2011 at 6:50 pm

    How unusual! Greg Cole taking issue with me. But does he really….?

    ” So I disagree, Scotty. If Martin is to run a credible news source he has to publish the good, the bad and the ugly whether he likes it or not. And he does.”

    I really don`t think you are dis-agreeing, as you`ve pretty much echoed what I wrote, haven`t you?

    Other than choosing not to pursue a vendetta against TUI by looking for dirt on non-mainstream sites, which seems to be your present hobby-horse( for some reason……) you personally have accused Laney of having “slow news days” over stories he`s run in the recent past that you`ve thought weren`t worth running…..can`t have it both ways.

    I merely pointed out Laney`s slant is of his own choosing & not all stories will be seen to be worth covering by him and his staff. You`ll find my example of broadsheet newspapers was an accurate analogy, Greg.

    IsTUI mole a mate of yours…….?

  • February 28, 2011 at 10:13 am

    I worry about you Scotty. You need to keep your blood pressure in check.

    Any publisher worth their salt can take and handle criticism. It shows people are reading and listening and its exactly the sort of response they hope for. The crew over at Mumbrella would be mental wrecks if they took things personally. But no, they don’t take it that way.

    You seem to think its personal. Why is that? Your response is childish because its directed at me personally, and makes assumptions and accusations void of any facts. From that I assume you take major issue at people disagreeing with you, especially people you personally don’t like – which is something you go to great lengths to point out. We know, Scotty, ok. We know.

    Your sarcastic response “How unusual, Greg Cole taking issue with me…” I have no issues with you, Scotty. None. In fact, I even support you on issues regarding high commissions and similar topics. You just happened to be the one responding to something I disagreed with and have an opinion on. If I agreed with you I would have said nothing.

    I’ll continue to support you on those issues I believe in and think need changing. I’d politely ask though if you could tone down your stance towards me. It’s not me who looks bad.

  • February 28, 2011 at 12:48 pm

    Oh, come on, Greg! There are agendas in the mix here on Thumbrella, everyone knows that.

    As I`ve said before, it`s a great place to thrash out industry issues. I comment on the ones that may affect me both directly and indirectly, as simple as that.

    Glad you`ll support me from time to time. I also support you on things like our need for an industry body, etc. As I`ve said to folks before, you are our industry`s Paul Keating equivalent at inventive invective and it`s better to have you inside the tent than outside and from a great height!

    As for your change of heart towards TUI/high commissions,etc, the truth is in the many posts you`ve made on this very forum over the past few years. Maybe I`m childish and need to control my blood pressure but one thing I have always possessed is an excellent memory.

    I`m a bit busy directing volunteers & insurance assessors at the moment, so I don`t have time to personally go through and cut & paste.

    I think you`d find it rather interesting to check it out, Greg, for your own edification. Maybe we`re dealing with a situation like Sam Rockwell found himself in the recent fillum “Moon”?

    Anyhow, back to work.


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