Tauck Sets New Marketing Policy

New marketing policy aimed at preventing travel agents from advertising discounted prices.

By: Lisa Jennings

Tauck World Discovery last week launched a new marketing policy aimed at preventing travel agents from advertising the company’s tours at a discounted price.

The move was hailed by some as an attempt to control pricing at a time when deep discounts offered by both online and traditional agencies are undercutting business.

But the policy has generated controversy, with some saying it may raise red flags of price manipulation, and others saying that while it is legal it is likely to impact traditional agencies more than online giants like Expedia.

Tauck’s policy, which goes into effect Jan. 1, establishes that no travel agent or agency will be allowed to advertise or promote Tauck products in print or on the Internet at less than published prices.

Peter Tauck, president of Tauck Holdings, said the policy was launched because of concern that the increase in advertised discounts is “eroding the reputation of our business and causing confusion in the marketplace.”

Agents who violate the policy will no longer be eligible for overrides, which can range up to 15 percent, said Robin Tauck, the company’s president.

Phil Crosby, Tauck’s chief financial officer, said, “We’re not going to tell anybody how much they can or can’t discount.

“We’re just trying to level the playing field,” he said. “It’s not going after any particular modem of travel agents, it’s all travel agents.”

Some tour operators ask agents to sign an agreement not to discount if they use the suppliers logo or trademark.

Travel attorney Alexander Anolik said Tauck’s policy “raises red flags as to price manipulation, but it is not per se.

“If it’s only for the approval of printed media, they can probably do it,” he added.

But Paul Ruden, general counsel for the American Society of Travel Agents, said suppliers may control pricing when retailers are selling a product they don’t own.

For online agencies like Expedia, which may purchase an interest in tours sold under the merchant model, suppliers would not have a say in limiting discounts.

“But the problem in saying you may not discount is enforcing it,” said Ruden. The response among agencies offering discounted Tauck tours varied.

Charles Oppenheim, owner of H.C. Travel in New York, which offers Tauck tours at a 10 percent discount, said he does not believe Tauck’s policy will be legal and said he has no plans to change his ways. In fact, he said, “We’re going to go deeper.”

But Sue Lobo, director of marketing for Atlas Travel in Florida, said she supports the plan as long as it only addresses the advertisement of discounts. Atlas typically offers $50 to $100 off Tauck tours, which makes it difficult to compete with agencies offering 10 percent off.

“Some of these discounters have gotten so aggressive, it makes it difficult for smaller agencies to stay in business,” said Lobo.