Based on the title of this column you may be thinking that I will extol the virtues of extraordinary customer service and how to give your clients what they want or more. I completely agree with those virtues, but this column will take on a much different topic. The title above is actually a song title from a very funny musical, “Dirty Rotten Scoundrels”. The play is about ‘con men’ that con each other and then get conned themselves. So, the song is basically about the well-established rules of the con game – always give them (the victims) what they want and keep up the facade until it is time to disappear.
So, what does all of this have to do with selling travel? I am afraid that based on the recent news of host agencies going bankrupt – everything. The concept of buyer beware is as true in the musical as it is in our business. So, with that in mind, I thought I would share some thoughts on how to protect yourself.
1. Don’t throw the baby out with the bathwater.
A somewhat graphic way of saying that when one business entity goes bankrupt, this does not mean all of the others are headed the same direction. As an example, there have been many con men posing as bankers or financial planners but that does not mean that all…hmmm…maybe that is a really bad analogy in today’s world! The point is that there are many excellent host agencies who have structures and operations significantly different from on another, so there is no conclusion that can or should be drawn about the business model itself.
2. If it sounds too good to be true…
You know this adage, but somehow it seems worth repeating. Retaining 90-100% of your commissions with little or no fees, as well as promises of extraordinary service, support and technology simply does not add up. Sure, it sounds good to you, but if you cannot understand how your host makes money, then they probably aren’t! There are two of the biggest come-ons in our industry that show up about every five years and have almost a one hundred percent failure rate. The first one is:
Don’t focus on selling travel, focus on recruiting other people to sell travel under you and you will be a zillionaire.
While the recent bankrupt host did not use this approach, I put it here as it continues to amaze me that thousands of people get suckered into these programs. By the way, this is not to say multilevel marketing in and of itself is bad. There are fabulous companies that operate legitimate and successful businesses with this model. However, in almost all cases they have one, if not all, of three factors that make them successful which are:
- A unique product that cannot be purchased anywhere else and therefore has an ability to have a 100-1000% price mark-up ability.
- A requirement that representatives sell a significant amount of the product themselves or they cannot reap the rewards from sales made by others.
- An established brand or system that is unique and valuable in and of itself.
Before you join any business (but especially in travel) make sure you are comfortable with one or all of these features. The second biggest come-on is:
We will give you stock in the company that will be worth gazillions as soon as we conquer the world.
Once again, I have seen this so many times that I could have wallpapered my living room with the worthless paper I would have if I had taken up all of the offers. Each one offering “stock in the next big travel innovation!”
The summary here is real easy. If any host claims to have the shortcut to wealth without hard work and actually requiring you to sell travel – run!
3. But everybody is doing it…
It didn’t work when you were a teenager; so don’t fall for it now. Most major failures don’t happen to companies that have grown steadily over a period of time. If they explode in growth, they tend to explode in failure. If there seems to be a feeding frenzy of activity, it should cause you to dig even deeper into your research and not just follow the crowd. I sat on two panels at trade shows with the president of a recently bankrupted host agency. It was fascinating when at the first panel he said that they had over 5,000 agents working with them and two weeks later at a different event he said they have 2,500 agents. This was not an issue of misquoting, but the fact that big numbers are great for building hype, but when the sales of the host are divided by the number of agents, it is a presented a pretty bad picture. In other words, in our business it is all about what each individual produces, not just amassing crowds.
4. Who’s in charge here?
In every industry, great companies have leaders with integrity and vision. Now, back to the Dirty Rotten Scoundrels analogy. Most con men can sound sincere and paint a very beautiful picture, but as those scoundrels show us – you must beware! The answer here is once again: research. In today’s world, while it is scary, it is also fabulous that with one search you can find out all kinds of information about anyone. A quick search on the leader of a recently bankrupt host would have shown that he was involved before with one of the biggest travel retailing failures in the last ten years. Past mistakes are certainly not an indication of future results, but the amazing thing is how few agents even took the time to find this information. But every business is built on more than one person, so if there is a revolving door of management, it should raise red flags.
5. But if the suppliers work with them…
We are in a unique industry that has a blessing and a curse of ease of entry. Almost anyone can set up a business and work with most suppliers immediately. Then with some success they can get their commissions raised and general kudos for sales excellence. It is very rare when a supplier actually reviews the business model of a retailer and decides if they want to continue to work with them. (Royal Caribbean, Perrillo Tours, Azamara, NCL and Celebrity are to be commended for determining through the very steps outlined here, I surmise, that there are certain agencies that they simply do not want to do business with – Bravo!) The risk in a host agency going south is not as severe for the suppliers as it is for the agents. Suppliers get paid in advance and provide their product based on that payment. The independent agent’s income is dependent upon the host however, and as we have now seen, without doing your due diligence, the consequences are frightening. Our suppliers are fabulous partners and supporters, but they are in a different business than you. Look at things from a retail perspective and do your research to answer the questions that specifically affect your business.
The intent of this column is not to make those agents who were with a bankrupt or unstable host feel guilty or add more pain to their situation. Instead, I hope to provide guidelines that agents can use to make sure they have protected themselves. I truly hope that all of the agents who have been affected by a bankrupt or fly by night host are made whole and find the perfect business partnership in the future. However, I also hope I can keep history from repeating itself. I am not inferring any one entity or person is a Dirty Rotten Scoundrel or a conman but only use the analogy to make the point that all business decisions are very important to you and require extensive due diligence. This is a fabulous business with extraordinary opportunities so I hope you make the right choices to take full advantage of them!
Scott Koepf, CTC, MCC is President of the National Association of Career Travel Agents (NACTA). NACTA is the travel industry’s leading national trade association representing independent, entrepreneurial and home based travel professionals and traditional travel agencies that provide services and support to such professionals. Established in 1986, NACTA’s mission is to represent the interests of independent travel entrepreneurs and to promote professionalism through training, networking and support services. NACTA is an affiliate of ASTA, the American Society of Travel Agents, the world’s largest travel trade association. Please visit www.nacta.com or call 1-877-226-2282 for more information.