Travel agents, hotels, airlines - costs and fees

[Deleted member 18121]

Hi all

Following a discussion here at work, if anyone is in the know I'm interested as a thorough google search and I'm none the wiser:

When I book a package holiday I pay for e.g. £2500 to First choice for 2 weeks all inclusive in spain. Of that money how much goes to the airline, the travel agent, the hotel, in taxes etc etc

Is there a "normal" % split on this kind of things?

 

[Dibby]

Surely it depends on what holiday you book?

Spain with a 5* hotel, will likely have more on hotel and less on flights than a self-catering motel in the US.

I imagine there is likely a roughly fixed margin travel agents make, but even that is likely to be variable depending on if it's a last minute deal to offload, or a sale etc...

Is there something more specific behind the question?

 

[Deleted member 18121]

Surely it depends on what holiday you book?

Spain with a 5* hotel, will likely have more on hotel and less on flights than a self-catering motel in the US.

I imagine there is likely a roughly fixed margin travel agents make, but even that is likely to be variable depending on if it's a last minute deal to offload, or a sale etc...

Is there something more specific behind the question?

Just a discussion at work about package holidays, I guess more aimed at the classic European breaks. Trying to work out how much a hotel makes or if it's the travel companies who are taking it in

Purely out of interest

 

[Hobbit]

Why not just price up each part of a trip separately. Even if it adds up to more than the cost of a package holiday it will at least give you a ratio of costs.

 

[Tashyboy]

Without complicating things Adam, when you say book a holiday. How are you actually booking it. If you go to a travel agent the price will be more, and can be considerably more than if you book it yourself online. In essence have a look in a travel agents. Look at a couple of holidays. Don't commit. If said Holiday is £2,500 at travel agents. I would be gobsmacked if you could not do it yourself online with the same company for £2,250. That is a 10% saving. So the percentages you are after kinda go out of the window.

 

[Rooter]

Why not just price up each part of a trip separately. Even if it adds up to more than the cost of a package holiday it will at least give you a ratio of costs.

The flights may be the tricky bit to work out, as typically the bigger holiday chains will have their own charter flights, so comparing that to market available flights will skew the numbers. Plus the holiday co will block book a large portion of the hotels etc.

I would estimate the actual travel agent is making at least 25% margin,

 

[Deleted member 18121]

That's the interesting part for me, how profitable is it to own a hotel in mainland Spain.... So of my theoretical £2.5k does the hotelier make as much as £1500 over 2 weeks or are agents greedier than that for selling their hotel.

Not a very fun thread I know, but I'm intrigued.

 

[Dibby]

That's the interesting part for me, how profitable is it to own a hotel in mainland Spain.... So of my theoretical £2.5k does the hotelier make as much as £1500 over 2 weeks or are agents greedier than that for selling their hotel.

Not a very fun thread I know, but I'm intrigued.

This is where it gets a lot more complicated - how much does it cost to operate that hotel room?

You can work out roughly how much the hotel will make by looking at how much they sell individual rooms for, and assuming the agents get a discount on this. However the agents will commit to a block of rooms no matter what, so if they don't sell them all, the hotel can potentially sell the rooms again, and even if they don't they are taking some money without having to provide the service.

Is someone at your work planning to buy a hotel in Spain?

 

[Deleted member 18121]

Is someone at your work planning to buy a hotel in Spain?

From what I've been told, yes. Which got me and the boys talking about how much you really could make from being a hotelier.... I know its a bit of a case of how long is a piece of string, but it opened up so many questions.

Also just for some figures.....for the last 6 years I've gone to the same hotel in spain with my Mrs and son. We go all inclusive for 2 weeks, middle of july, with flights, transfers etc all in and pay around £2.5k. If you try and book the hotel room directly without flights etc it is between EUR 3,400 and EUR 3,800 for the same dates.

 

[patricks148]

i can't give you any split, but its no coincidence that several airline charter companies have gone bust in the last couple of years, even the one operation out of my airport went under, they were doing a fair few holidays out of Inverness to Jersey, Sicily and Geneva over the summer and were full each time,. but airline costs spiralled they lost money and went under, one out of Dundee went the same way a couple of years ago

 

[Deleted member 18121]

i can't give you any split, but its no coincidence that several airline charter companies have gone bust in the last couple of years, even the one operation out of my airport went under, they were doing a fair few holidays out of Inverness to Jersey, Sicily and Geneva over the summer and were full each time,. but airline costs spiralled they lost money and went under, one out of Dundee went the same way a couple of years ago

Not an uncommon story these days I guess. I wonder what the "true" cost of a flight per person is.

 

[patricks148]

Not an uncommon story these days I guess. I wonder what the "true" cost of a flight per person is.

would depend on where you are flying from and too, popular destinations (airports) are obviously more expensive

 

[User62651]

Have used Villaplus a couple of times, when you book with them they offer a price with or without flights, you can therefore see the amount they want for flights and it seems very high relative to what you could book with a holiday charter airline yourself. They use TUI or one of their associate airlines (we had a Canadian airline plane last year going Leeds to Palma).
Seems in that instance the Tour Operator (Villa plus) is marking up massively but maybe there are other factors. Still took the package with flights

 

[Coffey]

I tried to book a holiday through a local company here. The advisor asked if she wanted them to book the flights or we could book them ourselves. She said they charge the same amount but add on the insurance fee which does make them more expensive. Not sure if they get some sort of % commission off the airline though but she didn't seem too fussed on who booked it so it looked like there was no money in it for them.

 

[Deleted member 1740]

That's the interesting part for me, how profitable is it to own a hotel in mainland Spain.... So of my theoretical £2.5k does the hotelier make as much as £1500 over 2 weeks or are agents greedier than that for selling their hotel.

Not a very fun thread I know, but I'm intrigued.

The likes of Thomas Cook, Thomson et al pay for x amount of rooms at y price per hotel for each season so its upto them to sell the rooms otherwise they lose money if they're sat empty. In years gone by the cheaper holidays on teletext used to be the rooms/hotels or empty seats on chartered flights they never sold.

 

[Duckster]

The likes of Thomas Cook, Thomson et al pay for x amount of rooms at y price per hotel for each season so its upto them to sell the rooms otherwise they lose money if they're sat empty. In years gone by the cheaper holidays on teletext used to be the rooms/hotels or empty seats on chartered flights they never sold.

Used to work for Airtours / My Travel supporting the call centre's (Accrington, Manchester, Newcastle). Whilst I wasn't involved in the accountancy side with head office as to how much holiday's go for and what % goes where I can definitely state that when you went on teletext looking at one of the pages (which might have say 80 different sub-pages on it). Every single one of those sub pages, even though it looked like different companies etc... would feed you through to one of our operators. It was something daft like about 2000 different phone numbers you could ring and get through to the same person.

What I do know is that the first thing that they try to manage is the bums on seats on the aircraft. They need those as full as can be. Rooms in the hotels are secondary.

One of the main issues for Airtours was that they bought a load of hotels, rather than just taking the rooms. I'm guessing the thinking was that they'd be making all the profit on the holidays then without having to pay anyone else. However, this meant they had to fill those hotels (you wouldn't get Thomas Cook / JMC etc... taking rooms and giving money to a competitor - see the TUI Sensatori nowadays). Not saying that why the company went a bit Pete Tong and eventually got taken over by Thomas Cook, but it didn't help.

 

[emelda]

As for me, I prefer booking tickets and hotels on my own. Agencies usually cooperate with hotels and thus you pay more than you could've paid if you traveled on your own. You can find cheap flights on skyscanner and then find a decent hotel for a decent price. For example, last year I got cheap tickets (it was sheer luck like it usually happens with skyscanner) and found this agency offering Calpe rental apartments and got a hotel room in 100 meters from the beach. I paid €400, and it's €100 cheaper than I'd pay if I used the agency's services.

 

[Blakey]

The likes of Thomas Cook, Thomson et al pay for x amount of rooms at y price per hotel for each season so its upto them to sell the rooms otherwise they lose money if they're sat empty. In years gone by the cheaper holidays on teletext used to be the rooms/hotels or empty seats on chartered flights they never sold.

This is what i assumed happened, i expect some hotels they will purchase all the rooms from mid March to October, and then they can call them 'Exclusive'.

 

[Hobbit]

Just booked 2 nights at a spa hotel down near Malaga. €81 for the 2 nights. There's deals to be had if you book independently.

 

[Marshy77]

That's the interesting part for me, how profitable is it to own a hotel in mainland Spain.... So of my theoretical £2.5k does the hotelier make as much as £1500 over 2 weeks or are agents greedier than that for selling their hotel.

Not a very fun thread I know, but I'm intrigued.

Go on sites like onthebeach/booking/trivago to see if the hotel is on there, look the dates of the holidays and see. I doubt the hotel is making a lot.

When we go to Tenerife in Oct we book through onthebeach and a 4 night stay in the apartments we stay in costs around about £100 for 4 nights self catering. The drinks around the pool aren't cheap but not extortinate and I guess they will try make the extra back on drinks and food.