The Week in Focus: CATO detects an enemy within

The Week in Focus: CATO detects an enemy within
By admin

The Council of Australian Tour Operators pre-Christmas knees-up is an enjoyable occasion. Indeed, most of CATO’S meetings tend to be jovial. Yes, serious issues are tabled and discussed and concerns on industry matters are raised, but it also retains a club-style atmosphere where it’s members relax and banter.

Corporate it is not, and neither would you expect or want it to be with such a collection of independent wholesalers in its ranks.

At least that’s my observation.

But there could be added spice to its festive gathering on December 5.

CATO exists, in large part, to promote the expertise and knowledge of wholesalers and to provide a sounding board for members.

They share a common goal of trying to convince travel agents and consumers that it’s far better to use their services than it is to book direct with suppliers on the web.

Being overlooked by both the trade and public is surely the greatest threat facing the sector, and CATO members are united in promoting the product they have developed and nurtured, some over many years.

So what happens when one of its own – and a former CATO chairman no less – launches a venture of the very kind CATO is fighting to combat?

Simon Hills, owner and managing director of Icon Holidays, this week publicly unveiled Maestro Travel, an invitation-only operation for travel agents that will provide nett rates for retailers direct from suppliers overseas.

Launched in collaboration with John Morely, former chief executive of Kirra Holidays, the business will do what CATO members fear the most – cut them out of the loop. The agent members of Maestro will, essentially, become quasi-wholesalers.

Hills is well within his rights to do as he pleases. He is an independent businessman running a wholesaler in testing times and is free to expand or diversify his company as he sees fit.

Yet it is also quite understandable that some CATO members are aggrieved at what they now perceive as having an enemy within. 

How can CATO fight for the common good when one of its previously most vocal proponents has launched what can only be described as a competitor to wholesalers? Certainly there was enough consternation at CATO’s recent Brisbane meeting for chairman Rod Eather to email Hills and for general manager Peter Baily to pick up the phone. 
Hills, who will know that Maestro will put noses out of joint, insisted he remains “fervently committed to wholesaling”, to which his colleagues in CATO will reply, and not without some justification, that he’s got a funny way of showing it.

The suggestion in Maestro’s prospectus that wholesalers mark up by up to 35% was of particular aggravation.
But Hills, and Morley for that matter, could defend their venture by arguing that a King Canute-style approach of trying to hold back the tide will only have one inevitable outcome. Agents and consumers are already sourcing product direct from overseas suppliers and they’re not about to stop any time soon. Those businesses which do not diversify and adapt to current trends and booking habits will face a very sticky future.

Hills, not one to shy away from debate, says he will attend the CATO Christmas bash next month at which some interesting and robust conversations should ensue. But he shouldn’t expect to leave the party with too many Christmas cards in his briefcase.

Finally, we have some meaningful debate surrounding the reform of consumer financial protection and travel agent licensing.

And as previously suggested in this column, there are concerns within the industry that a world without the Travel Compensation Fund may not quite be so great after all. And certainly not for agents if Carnival Australia carries out its threat to bypass retailer and start selling direct to the public.

You can understand the cruise line’s stance. Without a process to examine the financial stability of travel agents and with no TCF to refund consumers, the risk shifts to the operator to honour the booking in the event of a failure.

Whether Carnival or any other operator would honour that booking if no money was forthcoming from the failed agent remains to be seen. Probably not is my guess.

But either way, the industry could face a consumer backlash, and that includes agents if a wholesaler goes under.

The TCF was right when it said in its own submission that a consumer may well hold the agent responsible when a wholesaler goes under and their money has vanished into black hole.

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