Closing Your Deal

Closing Your Deal

Consumers, too, must be fair.

Recently we were enjoying a Saturday evening out with friends when the subject of their upcoming trip to Argentina came up. They know I’m a sub-Saharan mostly East African expert, not an Argentinian one, but they had already asked me to review their communications with the companies they had been working with for some general advice, and arrangements were moving to something final. So the question came up, “Should I ask them for a better deal?”

Asking for a better deal towards the end of an vendor-consumer relationship is a recipe for disaster. The consumer is asking the vendor to reduce his profit, since if the details are presumably fixed, there’s nothing else to reduce. The answer to my very good friend was, “No.”

The travel industry is sick. It’s as sick as the economy as a whole, because it doesn’t get adequately compensated. Except for the top executives of a few big airlines or hotel companies, travel industry employees are suffering terribly, and as a result, the products they produce, maintain and sell are deteriorating. This long-term illness is caused by consumers forcing increased productivity, which in travel means decreased unit profits.

It didn’t use to be that way. Anyone who has traveled for only 10 or 15 years may actually not have experienced the gilded age of travel. But those of us who were traveling 40 years ago are drowning in nostalgia.

Buying travel today is a mixture of a poker game and a stock market.

It’s pretty easy to determine the cost of most source travel products, and this is precisely because they’re pretty simple. An overnight at a BnB, a guide to take you fishing, joining others for a bus tour down the Champs Elysees – it’s not rocket science to add up all the things that make these work and then, add a reasonable profit. And for more complicated things, like a flight from JFK to Buenos Aires, that too in the scheme of worldwide business isn’t all that difficult. Sure, as things get more complicated, there are more variables (like fuel), but that’s exactly why airline prices fluctuate. Determining the net cost is pretty straight-forward.

That’s why the government was able to set prices so fairly until the 1980s. Yes, that’s right youngsters, there was no priceline back then! It was Big Daddy who figured out the cost of your airline ticket from Chicago to New York. And He was really very good at it. Airlines prospered, employees prospered, even the technology prospered so wonderfully and quickly that we even traveled to the moon! And back! That’s more than happens to many travelers’ Thanksgiving vacations these days.

And guess what? It was fun. And it was easy. And above all, it was fair.

What happened? Read Robert Reich’s excellent little cheat sheet, Supercapitalism. There are many references to travel. Deregulation was fast and scarey, and suddenly pricing was left entirely to the market. No longer did you add up bolts, paint, engines, and variables like fuel, and come up with a cost, because there was now a horrible new variable that never existed before, one that loomed above every sale – whether it was a big sale like an airplane ride or a small sale like a ticket to a play. It became such an important super component that it overshadowed all else. That new Super variable disallowed during the wonderful years of regulation was : “And so, how much are you’re willing to pay?”

Advantage, Consumer.

There are lots more consumers than there are crepes stands on the Boule Mich. And without any government to manage this interaction it grew really ugly. Prices tumbled. Fist fights broke out on rue St. Germain. (Well, I’m not exactly sure about that.) But competition was so intensified, so out of control, that suddenly our seats in the airplane began to shrink, our meals on tour began to look like they were on the wrong end of a telescope, and the people trying to “help” us on the phone were in the witness protection program and spoke perfect Urdu. We sit for 14 hours squashed into containers smaller than my guitar case, starve, miss many days of vacation trying to get there and back. Many times, we’re never really sure what we’ll be doing even after we’re on our way home. But, hell, did we get a good deal!

That’s the stock market of tourism. Bargaining down to nothing, with nobody to stop our self-destruction.

Do you know how many airlines and travel companies went bankrupt in the last 20 years, and are now doing business, again? More than not. Yet we still give them money. We still risk losing everything in order to get a better deal. In the late 1980s and early 1990s more than $200 million travel dollars was lost by consumers. Most of this was with big airlines like Eastern, Braniff and yes, United and Northwest. But there was also a lot of money lost with big tour companies like Hemphill Harris, Lindblad, Far & Wide; hotel chains and car companies like National. But, but.. but… you say, aren’t some of those companies still around? Yep. And you’re still giving them money. But boy, what a deal they give!

Oh, Big Daddy, where art thou?

That’s the poker game of tourism. Bluff till your out.

OK, so you’re still going to Argentina, and it’s unlikely Big Daddy will help us out before you’d like to tango. So what do you do, right now?

As the consumer, we’re mostly to blame for this mess, so it’s mostly up to us to play fair. Don’t start something implying you’re going to finish it, when you have little intention of doing so. Don’t tease a sale for information. Don’t broadcast your request to a dozen hotels or tour companies without letting them know that’s exactly what you’re doing. When 5 reply with an offer, thank them and let everyone that replied know exactly how you chose and at what price.

Way too often, today, consumers engage a travel supplier in a back-and-forth that they imply from the start is an exclusive relationship. Then, after weeks of fine tuning a vacation, and in the absence of any hanky panky, the consumer still remarks, “You know times are really hard. We’re not sure we can do this, now.” That’s terribly unfair. It’s an obvious ploy to “get a better deal.” And you know what’s going to happen?

You’re going to get a “better deal.” And all sorts of corners you never imagined existed will suddenly be clipped away. Without any way of you knowing, a great vacation idea will become a horror tale. But boy, what a great deal you’ll get!

Until Big Daddy comes to our rescue, as surely he must in travel as he must with Citibank and Ford, we’ve got to be civil, transparent and honest from the getgo. There’s nothing wrong with beginning a conversation with a vendor by with telling him outright that you’re “just starting” and most importantly, “you’re not the only one we’re asking.” This is the way to go when you know pretty much what you want to do.

And there’s also nothing wrong with vetting vendors, first, and then querying one exclusively. This is obviously the way to go when you aren’t so sure what you want to do. Instead of asking multiple vendors for a price, you spend your time and energy finding someone you decide you can trust to decide those things for you. This could be a travel agent, or a wholesaler, or an inbound operator, or your mother-in-law. But once you’ve vetted your vendor, trust him!

I’d say the vast, vast majority of travelers in the “old days” trusted Big Daddy, and it worked beautifully. I expect we’ll some day return to that model. But to recover that gilded age of travel, each and everyone of us travelers is going to have to contribute to the act of rebuilding trust with our vendors: transparency and bidding in the beginning; or a trusted, forged relationship from the start. You can’t have it both ways.