It seems to be a magical word for our brains: cheap. A bottom price for a service or product works like a magnet for over 95% of us consumers. No matter what industry, getting a bargain works wonderful for your dopamine level â€“ the neurotransmitter that makes you happy. The fact that it sometimes (often?) has disastrous consequences for producers does not seem to bother most. Enough examples in the clothing industry and obviously also in the industry that is my and your daily business: the travel industry. The past 3 years saw 16 airlines in Europe alone cease trading because airline tickets are sold at ridiculously low prices. Quite funny really that Dutch consumer organisations and umbrella travel organisation â€˜ANVR’ (similar to the ABTA in the UK) want to protect passengers against the bankruptcy of airlines by levying 0.25 euro cents per flight into a special fund. But these same passengers that they want to protect are the cause of so many airlines going bust because they are the ones booking the cheap airfares!
To exist one needs a profit
In the Benelux, in Europe and possibly in the country where you are living one is beginning to slowly understand that airline tickets are often too cheap from a purely economic and business viewpoint. Airline companies need a decent turnover and profit in order to safeguard their very existence. In my student yearsâ€™ Marketing Course I was taught the very simple rule that in order to be successful and remain in business, profitability is an essential pillar.
Holidays are too cheap
This bring me to the price of holidays. Whilst I cannot speak for your market, holiday prices in our market the Benelux are quite often mind-boggling low. Price is still one of the main PR and marketing tools implemented by companies but hey guys, there is a bottom line. Holidays are here often advertised at ridiculously low prices, so low that I am often wondering whether anyone in the chain – be it the transport company, tour operator, travel agent, hotelier or whoever else is involved in the booking – can make any money out of the offer. Resulting in only big players being able to sustain themselves in the long run because ultra thin profit margins means high volume bookings, we are already seeing multinationals buying up their competitors in an unprecedented period of consolidation, leaving the small players gasping for air and survival.
Where oh where did it go wrong that in our perception the exorbitant price of one litre of petrol (in Holland this now sells at about one euro and 64 cents per liter) is more or less accepted, whereas asking a fair price for holiday we consumers stand up in arms and proclaim it to be expensive. The battle taking place in the travel industry has been caused by the travel industry itself in offering dirt cheap holidays. In my country Holland there are daily headline articles on it being about time that we start paying a fair price for a litre of milk, a pair of jeans and a piece of meat. I advocate it is about time that fair trade pricing must also apply to the tourism industry.
Another industry where â€˜the lowest priceâ€™ is becoming a headache issue, is Travel PR. Over that past years we have been approached and participated in tenders and pitches where it is clearly stipulated that the lowest offer will win the pitch. Any idea how it feels to be financially squeezed out after 33 yearsâ€™ experience in travel Public Relations. Quality comes at a price. Full stop. You cannot drive a Lexus car for the price of a Renault Twingo. Dear travel industry, if you are looking for a free ride, it is maybe best to give us a skip. We donâ€™t mind competing with a small number of other PR agencies, but we also donâ€™t mind getting a fair and reasonable price and compensation for high quality PR services. No one wins a price war, our colleague PR agencies in the Benelux are often undercutting each other to such an extent that the PR fee is becoming preposterous for the services rendered.
Quality is a virtue. Quality is choice. Yours.