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Preferred Supplier

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What is a preferred supplier?

A preferred supplier is a company that has an agreement with another company to provide it with both goods and services. These types of partnerships are very common in the travel industry, where there is the potential for symbiotic and mutually-beneficial relationships.

An agency may provide a lot of guests to a hotel chain, for example, in exchange for more competitive prices that will give that agency an advantage.

How formal is the agreement between a preferred supplier and its partner?

The formality of these partnerships can vary from one company to the next. It is not uncommon for these partnerships to be nothing more than informal agreements between two companies that often work together.

On the other end of the spectrum, however, some companies may draw up contracts and decide to work together in this way. These contracts might demand that a particular percentage of customers are sent from one company to the other.

Why do companies enter into these partnerships?

These can often be truly symbiotic relationships where both parties stand to benefit. Let’s imagine a hotel and a travel agency decide to work together: in return for guests and its status as a preferred supplier, a hotel might offer a travel agency preferential pricing to help it attract customers more easily.

This type of dynamic underpins each of these relationships, particularly in the travel industry where this type of business is very common.

What type of companies do travel agencies work with?

Preferred suppliers can take on many appearances depending on the needs and priorities of the agency. Preferred supplier lists are often broken into a category system that resembles this:

  • Tour operators
  • Rail operators
  • Car rental agencies
  • Airlines
  • Hotels
  • Cruise lines
  • Travel insurance agencies

Related Questions

How does the traveler benefit from preferred supplier partnerships?

Strong preferred supplier relationships can result in competitive pricing for the traveler, as well as a higher level of customer service. This is because preferred suppliers will want to leave a good impression and demonstrate their quality to travel agencies in a bid to secure repeat business.