Three questions to ask when your travel margin is falling

Margin pressure is one of the clearest signals that the commercial engine needs attention. However, it is rarely enough to simply ask for better rates or push for more volume. Leaders need a structured way to understand what is driving the change and where to intervene.

Question 1. Has our mix changed more than we realise

Often the first driver of margin pressure is a shift in mix, not a sudden drop in performance. For example, more bookings may be coming from lower margin channels, different destinations or a different type of customer than before.

• Have we seen a change in the mix of channels or partners compared with last year.
• Are particular destinations or product types growing faster than others, and do they carry different margins.
• Has our customer profile shifted in ways we have not fully recognised.

Question 2. Is our pricing and contracting logic still fit for purpose

Commercial models that worked well in the past can slip out of alignment as conditions change. What looked like a sensible commission or mark up structure a few seasons ago may no longer reflect current costs, competition or product.

• When did we last review our pricing bands, commissions and mark up logic in a structured way.
• Do our commercial terms still make sense given the product we are selling and the value we offer.
• Are we rewarding partners that genuinely support our strategy, or are we locked into legacy arrangements.

Question 3. Do we have a single view of the commercial engine

Margin problems are often treated in isolation by different teams. Supply looks at buying, sales looks at rates and discounts, finance watches results. Without a shared view of the commercial engine, each team pulls a different lever and overall impact is limited.

• Can we clearly explain how strategy, supply, product, pricing, distribution and sales fit together in our business.
• Do we review these elements together when we discuss margin, or only in separate meetings.
• Is there a clear owner for the commercial engine as a whole, not just for individual parts.

Once these questions have been answered honestly, it becomes easier to see whether you need a focused project, an ongoing partnership or fractional leadership support to address the underlying issues. Margin is a signal, not the full story. The commercial engine explains the rest.