By XIE Yixin
More than 100 travel agencies working with Trip.com are facing a tricky dilemma: they either become an agent of the online travel company or leave Trip.com for good.
Since 2015, Trip.com has worked with “agencies” - sometimes simply retailers that use Trip.com to sell tours, stays and tickets while paying the platform a commission. Some sell directly to Trip.com which sells products to customers at a higher price.
in 2020, Trip stopped signing new retailers and decided that all new agencies that must sell directly to the OTA. Now retailers have been given the ultimatum of adapt or go. Often neither is a doable option.
A sure bet for Trip.com
Trip.com insists that the change of model will not harm the interest of agencies, but according to a financial statement provided by an agency, it sold a product to Trip at 2,156 yuan and paid a 4 percent commission to Trip.com, eventually, receiving 2,070 yuan for the product. In the past, the agency could have sold it directly to customers for 2,396 while giving Trip a fixed 11 percent commission. In that case, the agency received 2,132 yuan for each trip.
Trip.com said agencies are welcome to raise their prices but most fear that once the price goes up, no one will buy from them.
Furthermore, retailers used to get their money within seven days. Now due to “accounting concerns,” they have to wait for a month or longer to get the money in their account. Of course, they can pay an extra 10,000 yuan “system service fee” to Trip.com, which cuts commission from 4 percent to 2 percent, and settles accounts within a week.
The agencies that refuse to play ball are facing even more critical problems as Trip.com has stopped accepting their new products, which means they can’t list new tours on the app.
DENG Hai, manager of Tangwan Travel, a small group tourism agency, said Trip issued the ultimatum in May, right before the summer travel season. “My contract with the platform is still valid, so they can’t force me to change,” Deng said. “What Trip.com is doing is definitely breaking our contract.”
The winter that never ends
The game between Trip.com and the agencies is all about control of customers.
Selling to Trip.com means the agency basically gives up communicating with customers. Though the company said agencies can choose between their own customer service teams or the Trip team, but those who stick to their own customer service face harsh supervision from Trip.com. “If you don’t respond quickly and politely enough, you get fined,” said Deng. “But our own team knows our products better.”
Deng blames the bleak market on the pandemic. “We don’t have spare money to lose,” Deng said. “The pandemic has crippled most of us.”
For small agencies, Trip.com is too big a platform to let go of. “We can’t afford to lose the traffic from the big platform, nor can we keep bleeding out to them,” said Deng.
Data from the Ministry of Culture and Tourism showed 1.45 billion people made domestic trips in H1, down by 22 percent compared with last year. General income from tourism was 1.17 trillion yuan, down 28 percent.
In Q1, Trip.com reported net revenue of 4.1 billion yuan, but its tourism business lost a billion yuan. Last year, tourism brought in 1.75 billion yuan of profit.
