Globus Debuts Updated Policy to Prevent Commission Rebating
Tour operator Globus has introduced an updated rebating policy that forbids its partner travel agencies from publicly advertising Globus products at discounted prices. According to Globus CEO Scott Nisbet, the company instituted the policy in response to agencies that had complained about the practice of discounting. Although Nisbet acknowledged that discouraging any discounting of its products would help maintain brand integrity, the real driving force behind the policy change was input from travel agents.
“A few years ago we were one of the first tour operators to cap discounts at 10 percent,” said Nisbet. And that worked well for many years, but in 2009 with the economic situation, discounting reared up again as a hot topic. We’re hearing about it from agencies, and we’ve been working on putting together a policy that’s going to be helpful to the agencies.”
Globus pays travel agents base commissions of 10 percent. But with overrides based on volume, commissions can go as high as 17 percent. Some agencies have developed the practice of rebating a portion of their commissions to enable them to advertise lower prices in order to win marketshare and then make up the difference in the reduced margin by selling more volume. Under the heightened challenges of the recession, a number of agents had complained that the market was becoming too much of a price war.
Under the new policy, travel agencies cannot advertise Globus products at a discount and remain a partner of the company. “You can lose your commission, you can lose your ability to sell our products if you don’t adhere to the policy,” said Nisbet.
Globus notified its partner travel agencies about the policy change in a letter sent out a few weeks ago. Nisbet said the company has dedicated resources to police the web, magazines, newspapers and public advertising in order to enforce the policy. “If you go on the web now, you won’t find Globus products discounted,” said Nisbet. For more information on Globus, visit www.globusjourneys.comor www.globusfamilypartner.com.
