Virtuoso: Embracing All-Inclusive Pricing


Matthew Upchurch: New model gives members complete access.


Virtuoso has decided that bundling is best. The luxury travel network, after careful analysis and member feedback, has turned to an all-inclusive pricing structure—a move that Virtuoso CEO Matthew Upchurch says will result in a “fully engaged network.”

Rather than offering à la carte pricing for components of membership, Virtuoso has packaged the assets that it believes will make agencies more successful with their clients and better positioned for market success.

The annual investment, which is billed monthly, covers all membership charges, including annual membership fees, branch fees, marketing charges, Travel Mart registration costs, training and license fees for Virtuoso Composer. As an agency’s network production increases, their annual network investment percentage decreases. Yet increased production increases the amount of products and services an agency receives, effectively lowering the cost for these services as a percentage of production.

Upchurch believes the new pricing simplifies the Virtuoso member relationship. “Now there is one and only one thing to worry about,” Upchurch says. “How do we grow sales and yields? This model allows them to have access to all of what Virtuoso does.”

The new agreement was driven by a year-long analysis Virtuoso conducted, which showed member agencies that fully took advantage of Virtuoso resources were much more successful than others that didn’t. Consider
marketing: A review of 18,000 Virtuoso client households revealed that those receiving a campaign, including publications, direct mail and e-marketing, resulted in an 80 percent higher transaction value than ones that weren’t.

Moreover, Upchurch says the new model will help stave off online competition from such biggies as Google, whose acquisition of ITA Software in July gives them a firm stance in the travel space. “The formula for success is much more complex,” Upchurch says. “When we say integrated, now it’s in order to get to the next level and maximize potential. The industry is polarizing: What is the role of the advisor vis-à-vis competition with the likes of Google and Apple? The point of the new model is to align us financially with members and increase their sales and yields. It sends a message that the road to success is not one-off, rather, you integrate multiple things in a strategy where results couldn’t be achieved by one thing alone.”

The all-inclusive nature of the agreement also helps agencies budget for their network participation and focus on maximum utilization of products and services. Notable is that members’ investment is set as a decreasing percentage of preferred supplier production. “Preferred supplier production is rewarded in the form of 100 percent participation in bonus overrides and in year-over-year growth credits for members,” says Kristi Jones, Virtuoso’s president, adding that members, on average, receive a minimum return of $9 for every $1 invested in the network.

Virtuoso says the majority of its members will be minimally or not affected by the new investment arrangement, but all members will receive direct assistance from the group’s regional sales and inside sales teams in reviewing the model.

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