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The trichotomy of travel

When a travel professional meets a potential client or is out marketing, you will always hear two buzzwords–service and value. When you take this same travel professional and put them with a supplier, the buzzword changes–sell. Is it any wonder we have an identity crisis? Are we sellers of travel or are we a service? Many of us do not like to be called travel “agents” any longer, as it stirs up the argument that we work for the supplier. We prefer the terms travel professional, travel counselor or travel consultant; as we tend to see ourselves as professionals helping arrange the perfect vacation for our client, utilizing our exemplary service and knowledge.

Ask any agent who still sells airline tickets; every one of them will tell you they charge fees for that service. Ask them exactly what that service is and you’ll hear, finding the best flights, arranging preferred seating, managing frequent flier numbers, watching for schedule changes, protecting the client in case of a cancellation or delay—you have heard them all. These are all great examples of service. But the question is, didn’t we provide the exact same service before we charged a fee? Of course, but back then we were paid a commission from the airlines. The service we provided was not a service to the airline, but to the client; yet in the same transaction we sold tickets and we were compensated for selling them.

I book a lot of Foreign Independent Travel trips (FITs), and most agents that arrange these types of trips charge a fee. Some of the suppliers we utilize may still pay us a commission, but we charge an additional fee for our time, service and expertise in putting the whole trip together for the client. It can be a time consuming process and our time, service and knowledge has value.  But when we book a packaged tour or cruise many do not charge a fee! Why? These types of trips can be just as time consuming, we typically will add something to the experience, and offer our expertise and advice. Why not charge a fee?  Let me offer a few examples.

The FIT

I recently arranged an FIT to England, Italy and Germany for a regular client. She gave me her “must do” list, gave me her credit card and said to do it. I told her I have a $200 fee that is not refundable or applicable to the booking. She paid it, walked out the door and I did not hear from her again until it was time to pick up her documents. She picked up her documents two days before she traveled. When she returned she came in my office, gave me a $200 tip and told me the trip was fabulous.  I budgeted 8 hours at $25.00 an hour for this trip. My actual time invested was only about 4 hours,. By any standard, this was a profitable trip for me and a wonderful experience for my client.

The Newbie

A new client needed a simple trip to Honolulu. Having never dealt with each other, the client had a ton of questions (you know the type). I probably spent 15 hours talking to them about this trip. My compensation from the supplier is at the top of the commission ladder, but since this was a budget package, I will only make about $200.00. This is not even close to how I value my time on an hourly rate. Based on my investment of time and service I should be making at least $375.00. I couldn’t charge them for all my time, as some of it was spent qualifying them. Once I had the trip arranged, should I be entitled to fees for other services I provided? At what point does the compensation I receive from the supplier not meet the value and service I add to the client? Is the supplier benefiting from my service or is the client? It’s not so clear is it?

Travel professionals like to compare themselves to other professionals such as attorneys or accountants. They feel their time and expertise should be paid equivalently at say $100, $200 or even $300 an hour. If you look at the statistics for pay in the industry, an average agent makes about $30,000 a year. This is approximately $14.50 an hour. On the high end, an agent might pull in $50,000 a year. If a supplier or even the agent themselves do not value your worth; how do you explain it to your customers?

If we are compensated 100% by the supplier, are we more inclined to upsell to receive the larger commission check? Do we try and steer clients to suppliers with whom we have a preferred relationship? When a supplier is no longer preferred, but the client remains loyal to that supplier, do we continue to sell that supplier for less compensation, or move them to one of your new preferred suppliers?   If you move them to the preferred supplier are you providing a service to that client or are you selling them?

We are a hybrid retail/service industry. As retailers we have no control over the product we sell. We can’t control the inventory, the price, the distribution or our own compensation. Suppliers try to entice us to sell their product. They dangle higher commissions, coop dollars, reduced rate travel, bonus dollars, free nights and FAM trips to sweeten the pot. While most agents feel they are entitled to sell a product at a profit, here is a wake up call for you–suppliers are not here to make sure travel agencies are profitable. They exist to make sure their own business is profitible.  The only way agents can effectively affect any change from a supplier is to sell more or less of their product.The end game (hopefully) is that the supplier realizes the value and will reward you accordingly.  So as a retailer, your loyalty almost has to be to the supplier.

As a service industry our loyalty has to be to the client. When our sole compensation is from the supplier and not the consumer it can be hard to be loyal to the client. This goes a long way to explaining the lack of client loyalty that many agents cite. We have become so good at selling and being compensated for selling, the client views us a retailer and not a service. We talk about service all the time. We tout its value to anyone who will listen, yet when it comes time to be paid for that service and value, we tuck our tails and run away. While we may think that we offer service and value (and many of us do), the final arbiter is the client. Did your client perceive the value of your service? According to a recent study by Nolan Burris, in 2006, 15% of agents’ clients said they were getting advice, but in 2007, that share slid to 13%, and, in 2008, it fell below 10%. Do you hear that? 90% of our clients don’t value our service!

We are in tough economic times.  We talk a good talk about value, saving  time, expertise and all that but we don’t walk the walk. All too often (and all too easily) we shift into retailer mode, as any sale is better than no sale. When we sell on price, someone else will be selling it for the same price or less—you can take that to the bank. If we are focusing on value and service, we will build a loyal clientele.  Right now, our industry is divided into three camps–retailers, service oriented agents and a mix of both. Our message will always be confusing to the consumer as long as we remain separated; and I can’t blame them.

Tim Richmond is a 20 year veteran of the industry and owner of Craig’s Travel in Southern California. The agency is affiliated with Nexion and TSI and specializes in customized vacation planning. The agency is 100% leisure. Email: tim@craigstravel.com Website:  www.craigstravel.com

  4 thoughts on “The trichotomy of travel

  1. Carol says:

    Clients are really in a position to use the knowledge of our experienced agents while they play agents booking their own travel online, my pet peeve is how to stop this. Its so obvious when they repeatedly come in after a vacation that we serviced them with abundance of knowledge and they did their own booking somewhere online. If they have a issue they are still bold enough to complain to us as well.

  2. Barbara says:

    Tim,
    You hit ALL the nails on the head. These are issues that have rattled around in my head for a long time but I never connected the dots in such a succinct way. I’m still not sure how to handle these issues at my single owner/operater agency but I’ll certainly be more congnizant of them when dealing with, particularly new clients in the future. I do not charge fees except for the few air-only bookings I do but have decided to start charging a non-refundable, (if cancelled) fee for groups after having had one-too-many fall apart due to a group member believing they could “handle it better, cheaper, etc.usually using their travel club membership. Thanks again for the insight, good food for thought and hopefully action.

  3. George says:

    Tim
    Thank you for documenting the issues that we all “think” about regularly in our travel businesses! Similar issues prevail here across the Pacific in Australia. But with a strong self identity, self-esteem and confidence in one’s abilities together with personal interest in the client’s needs, these issues are easily overcome. The client then feels at ease with someone that feels at ease with himself/herself initially and is attracted to you. The fact that we sell travel is irrelavant (we could be simply selling sacks of potatoes!). People are attracted to self-confident and self-loving personalities. Therein lies the secret to a larger number of clients. Your Attitude. Have a quiet think about it!

  4. Ann, CTC says:

    George is correct. If you exude confidence in yourself and your judgement (even if you’re a puddle of Jello on the inside), the client will have confidence in you. That will translate into a willingness to pay your fees – as L’Oreal says, “I’m worth it!”

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