Guaranteed revenue deals do not work, argues Matt Cheevers

I read with interest about the spat between Expedia and Ryanair over the contract for the provision of hotels on the Ryanair website.

Memories came flooding back of numerous conversations I have had with “big brands” and “partnering” with them to provide travel content.

Now I should use the term “partnering” quite carefully here.

The conversations have always started off in a very positive manner.

The potential partner talking openly about shared risk and win-win solutions for all.

All of which still give me that warm fluffy feeling inside.

The second meetings always seem to be very different when the bombshell of tenancy payments and guarantee revenues is dropped into conversation.

This is the time to politely shuffle some papers, start packing up your biros and make a quick exit.

In my experience “partnerships” based on guaranteed revenues don’t work.

The ISP’s in the early days were famous for these and they have now been followed by many other companies like Ryanair who wish to grow their product offering.

Every single deal of this type seems to end in early termination or with the product provider cursing the day they signed the deal.

The only way to make a relationship like this work is to have shared risk and reward.

Make both parties work hard to drive the volume and give the product the exposure that it needs. 

The other big problem in this area over the past few years is that there have always been new market entrants who are keen to buy exposure.

Now we seem to have a market that is consolidating, so my only hope that common sense will prevail.

Then again common sense doesn’t seem to be that rife in our industry at the moment.

Matt Cheevers is managing director of Teletext Holidays

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