PHOTO: Dan Sullivan IV is helping drive the next step in Collette's evolution. (Courtesy of Collette)
Collette, the Pawtucket, R.I.-based tour operator, recently expanded its trip insurance policy to cover travel agent commissions when a client cancels a booking for a reason that is covered by the policy.
The policy change was driven by Dan Sullivan IV, the son of the owner of Collette. Sullivan is passionate about looking out for the interests of the travel agents who bring the company most of its business. His role with Collette is director of strategic accounts, in charge of looking after the company's travel agency accounts.
Collette's relationships with travel agents were not always so good.
Sullivan's grandfather took over the company in the 1950s from Jack Collette, who founded the company in 1918. When Sullivan's father took over the company in the 1970s it was still a small company that operated regionally in Rhode Island and the Boston area, offering tours primarily along the eastern seaboard of the U.S.
As late as the 1980s Collette operated some travel agencies of its own in Rhode Island and Massachusetts. The company was still a retailer. It had not yet discovered how to be a wholesale tour operator working through retailer travel agencies.
But things changed in the 1990s when the company set off on a growth cycle. It expanded its range of destinations, introducing tours to the Canadian Rockies, Ireland, Italy, California, Florida, and then as far as Australia and New Zealand.
By the mid 1990s travel agents were Collette's largest source of business. Then in the middle of the next decade Collette entered its first relationship with a major travel agency group.
"That really opened our eyes to how to work with the travel agent community," said Sullivan. "We then realized that there was a ton of opportunity in working with travel agents if we do it the right way."
Core Beliefs
As Collette began to explore the opportunity of working through its travel agency network, the company decided it was time to formulate its core beliefs.
"That's when we started to really look at our business strategy and our policies not in terms of short-term financial considerations, but in terms of our core beliefs," said Sullivan. "We began to form our policies around those beliefs."
It was the practice of creating policies around core beliefs that led to the change in the company's trip insurance policy to cover travel agent commission. When the policy was put in place, it was not sure what the financial impact of the policy would be.
"It was nearly impossible to predict the financial implications of the policy," said Sullivan. "You would have to run through different possible scenarios and see what the outcomes would have been." The company ran the numbers on their 2013 financial results and found that if the policy had been in place it would have cost the company a significant amount of money.
[BLURB]"We see it as our duty to protect the integrity of our travel partners. And we believe travel agents should be able to make a good living from selling our product."[/BLURB]
[/CALLOUT]
"The truth of the matter is that we came up with the policy because of a core belief, not a short-term financial result," said Sullivan. "We see it as our duty to protect the integrity of our travel partners. And we believe travel agents should be able to make a good living from selling our product."
According to Collette's core beliefs, travel agents who have invested a significant amount of time and effort in making a sale should not lose it if the client cancels for a reason that is covered by the policy. So the policy change was made. The financial results of the policy change would have to be evaluated later.
Initially it was easy to see that the policy change was going to cost the company money. The long-term effect could only be guessed at.
"The change was purpose driven, not financial," said Sullivan. "The policy aligns with a core belief." But Sullivan does believe that when a company makes decisions that are aligned with its core beliefs, the long term financial effect will be positive.
"People love our insurance, and they love it even more now that it covers commissions," said Sullivan. "It's certainly a hard thing to measure, but if we have more agents pushing our product because of this policy, it will have a good long-term financial result."
Eventually, the company will do some analysis to determine the financial effect of the policy, but it won't change the policy, Sullivan said. But if the past is prologue, then there is a precedent that confirms that following core beliefs instead of quarterly bottom lines results in a stronger business long term.
Cutting off the Discounters
In 2012 Collette turned its back on a substantial source of business from online companies selling Collette at discounted rates. The policy change came about because of a personal experience of Dan Sullivan IV.
Three companies, Affordabletours.com, Cheapertravel.com and Touringforless.com, had hit upon a business model that was based on cutting the price of the tours drastically, and buying key words from Google so that people who searched for Collette would come to these companies, who were offering the tours for less than their list prices.
The discounters could rebate some of their commission to bring down the price of the tours. They could then market aggressively through key words and when people came upon the cheaper prices they would often dump the agent they had been working with to take the cheaper price, or would demand that the agent match the price.
A church group that had set up a tour with Collette through a travel agent in Westlake Vilage, Calif., googled Collette, came across a discounter that had purchased the name "Collette" as a key word from Google, and threatened to drop the agent to go with the cheaper price.
[BLURB]"If a travel agent is gracious enough to hand out our brochure, I don't want them to get burned because someone found a discounter website of someone who figured out how to buy our name from Google. The agent I saw get burned was a good guy."[/BLURB][/CALLOUT]
Sullivan felt that a great injustice was being perpetrated. "The travel agent who is trying to sell us, they're the one sitting with the client for 45 minutes talking about the product," he said. "If a travel agent is gracious enough to hand out our brochure, I don't want them to get burned because someone found a discounter website of someone who figured out how to buy our name from Google. The agent I saw get burned was a good guy. He almost lost the sale and to save it he had his commission cheapened a lot."
His passion aroused, Sullivan looked into it and found that it had happened a lot. Many times agents made a sale only to have it snatched away at the last minute because a client came upon one of the discounters.
"I saw a lot of people getting burned," said Sullivan. It became an opportunity to stand up for the company's core belief in supporting local businesses. "We want to support the brick and mortar travel agencies, not the big box retailers."
Collette notified the three biggest discounters and told them it would no longer be selling its products through them. It also refused an offer from one of the country's largest retail chains to sell travel through it.
"I heard they sell a billion dollars worth of travel," said Sullivan. "They talked with my father about partnering. He decided not to work with them."
Sullivan feels no animosity toward the discounters, he said. "I respect what they are doing as entrepreneurs, but it's not in line with our strategy, so we told them we are respectfully going to part ways."
The Evolution of a Tour Operator
Collette's relations with travel agents were not always that way. "A lot of people thought we weren't good with agents," said Sullivan. "At times we dug holes for ourselves by being aggressive with groups." That's over.
While Collette used to go after direct group business, today when a group leader calls Collette, the company will try to connect them with a local travel agent rather than take the sale directly. "Some groups want to work directly," said Sullivan. "We prefer not to."
Working with travel agents lowers the company's cost of doing business, said Sullivan. Taking business direct from consumers increases the company's costs. "We have to take all the calls," said Sullivan.
Plus, travel agents add value to the sale through their counseling and service to clients. "The reason we walked away from the online discounters is because it devalued our product," said Sullivan. "It goes against what we believe. My personal experience with it lit a fire under me. I'm deeply passionate about it. I had it happen to me. I saw how wrong it was, how cheap it made me and my travel agent feel. I'm on a mission to protect these travel agencies."
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
Topics From This Article to Explore
