A wake up call with a senior exec | Travel Research Online


A wake up call with a senior exec

As a whole, are travel agents complacent? Over the past few months, I have heard a lot of chatter about how it is a bad thing to be “average” and how you need to strive to be “better than that”. I fully agree, but as I look around, I sometimes wonder if that desire and passion is really there for the industry in general. Are we, as an industry of sales professionals, mediocre—at best?  What do clients think? And, perhaps more importantly, what do the suppliers think?

My mother always told me it never hurts to ask, so I made a call to a senior executive with a major travel supplier to chat. I had nothing to lose. After an hour long phone call, I was shocked, surprised, and quite frankly, worried.
We covered a lot of ground; we talked about MLM and Card Mill agencies, the state of the industry, and how effective agents are in selling a particular supplier’s product. If you want to hear some brutal honesty, read on. Otherwise, click your “back” button on the browser.

Path of Least Resistance

Agents will usually take the path of least resistance. For some reason, they are afraid of sales. Perhaps it is the “order taker” mentality, a lack of sales training (versus travel training), or just a fear of sales. But it has been proven time and time again that the agents will operate using the path of least resistance. Sales is tough, and it is very easy to just sell what’s available or handy.

There has always been the question about where our loyalties lay—the people that pay us, or the client. The easy answer is the client—the path of least resistance. However, without the money from the supplier, we are out of business. Of course if the client is set on a particular product, you sell it. But you also need to remember, the client came to you because (for any number of reasons) he did not want to do it on his own—he is looking for help, advice and assistance. There is nothing wrong with identifying the needs of the client and if there is a better fit with a preferred supplier, to sell him on that product and sell it proudly. We discussed price watching. Whose problem is it? Should an agent actively use their time to look for lower prices to effectively reduce their own commission…on a product that the client has already rationalized and determined to be a fair price? If the client finds the lower price, great, make the adjustment and maybe even charge a small fee to do it. But why use your resources to lower your income. When was the last time that Best Buy or Radio Shack called you to let you know that computer you bought a month ago was $100 cheaper and they wanted to give you some money back?

No sophistication

It was mentioned that the industry, in general, lacks sophistication. It was not said in a disparaging way at all. And I tend to agree. Many of the agencies in existence today were sprung from a love of travel and not and MBA from Wharton. I might even go so far to say that most agencies, due to this lack of sophistication, are tossing away thousands upon thousands of dollars each year.  I am quite confident I am guilty of it as well. As a whole, we are horrible at moving market share. Let’s take a look at a few examples. When commissions began to be cut, TWA was a hold out. They just “knew” that their “partners” would support their worldwide routings. Guess again. When up front commissions were finally eliminated, a struggling Frontier Airlines made a bold announcement to the industry—they were keeping commissions at 10% uncapped. Their president felt that by demonstrating their willingness to truly partner with agents, they could grab some market share from their top competitor—America West. To be honest, Frontier was a better product with a newer livery and friendlier employees. After 6 months, commissions were eliminated. Frontier did not see the market share increase they had expected. As a matter of fact, they lost market share! Thank you travel agents!

Our lack of influence is not relegated to the airlines. Back in November of 2007,  Royal Caribbean International made a gutsy move and terminated contracts and refused to do business with card mill, multi level marketing companies such as YTB. This resulted in much praise from everyone in the travel industry (well, except for the ones that were terminated) because it was a solid message that they support legitimate travel professionals and not companies who operate on the fringe—ethically, morally, and legally. While I have not seen any solid numbers, anecdotally it appears that the market shift RCI might have expected, has not materialized.

Client satisfaction

As we were wrapping up, we discussed a study that Carnival Cruise Lines did a few years back at the behest of Bob Dickinson. They queried their second time cruisers who had booked with an agent. They asked them a simple question—“did you purchase this cruise from the same agent you purchased your first cruise?” Can you take a guess at the results? If you have not heard this statistic before, please sit down. 80% of the people that booked their second cruise with an agent did not book it with the agent or agency that sold them the first one! Now of course, there are some shoppers in there; but 80%? As a whole, travel agencies lost 80% of their business to another agency. What does that tell you?

I have maintained that at some point in the not so distant future, we will go to a net environment. Agencies will need to rethink and retool their business models just as they have countless times before. But this time, there will be no reliance on the suppliers for any money—it will all be on the agent or agency.  Keeping that in mind, can you afford to have 80% of your cruisers buy their next cruise from someone else?

While I went into this conversation just looking to chat, I came out with a whole lot of perspective. I am pretty sure that the opinion of this industry executive is not unique. I think we have some work to do to prove our worth. I think the points raised, solidly make the argument to go to a net environment and cut out the middleman and let him fend for himself.

We need to think about the client of course, but we also need to consult and offer what is best for the client and your business. You can have a million happy clients and sleep well at night, but at the end of the day, unless they are making you money, you are going to bed hungry.

What do you think? Valid points? Or full of bunk? Please leave a comment!

  13 thoughts on “A wake up call with a senior exec

  1. Dean Greenhoe says:

    As a former agency employee, then an owner and employer myself, I have to sadly agree with just about every point you discussed, John.

    As a salaried agent I spent too many years working for owners who surrounded me with poorly trained “bodies in chairs.” Of course, even the good performers were rarely well compensated for moving preferred market share so there was little incentive for anyone to do so, let alone work harder at client retention. To many, that just meant more work for the same pay.

    And owners would rarely discuss profit margins or preferred agency revenue bonuses with employees, probably afraid they would want a bigger piece of the pie.

    So I think over the years an industry culture of the front line sales force not caring too much about moving market share or the agency profit margins developed. We have quite a few legacy owners and managers to blame for that.

    I believe that has changed a bit over the past decade with more employers tying agent’s compensation level to a direct commission arrangement, but maybe it’s a case of too little, too late.

    But believe me, once an agent that relies on commissions and fees from travel sales opens up their own shop or just goes out on their own as an IC, the mind-set usually changes dramatically.

    Usually. Now my turn to make a comment that may draw slings and arrows. Even though a large part of the travel sales force relies on direct commission compensation these days, I’m afraid it’s severely diluted by hobbyists and part-timers who do not rely on travel sales for their primary household income. I’ve met quite a few of those folks who are willing to give away the store, even if it’s their own, in an effort to take that path of least resistance you mentioned. It’s certainly not like that with all agents in that position but there are a lot of them out there and their numbers are growing, even byond the MLM element. I’m afraid that inconsistency within our recognized sales force as a whole tends to make our efforts to reward vendors who give us preferential treatment seem ineffective overall.

    I wish I knew the solution to all of it.

  2. Tim Richmond says:

    I do not think the article was harsh enough. You could do a series on this subject. With the proliferation of host agencies and MLM’s, this industry has become a paying hobby for many.

    To often I talk to agents who do not even know of the basic regulations or requirements to even establish a business, let alone have any training in sales, marketing or travel.

    With no barriers to entry for this business, anyone who has arranged a family vacation thinks they are qualified to be an agent. As we have seen with so many host agencies, as long as your sign up fee check does not bounce, your in.

    These hosts can have 1000’s low to medium producing agents, but their aggregate sales add up and suppliers faun all over them just looking at the sales numbers and not truly evaluating the value of those sales.

    Is is starting to change, as we saw with some suppliers and the MLM model, but too many suppliers and agents see any sale as a good sale, so change is truly slow in coming.

    I welcome the day of the net environment. It will once again weed out the hobbyist from the professional.

  3. Jennifer Sammartino says:

    John, you did a great job. I agree completely. Until this industry comes up with some sort of regulation, we will have the hobbyist and the card mills pulling our industry down. I’ve worked too hard and too long to be put in the same category. Do I need to do some internal housekeeping? Sure I do. Thanks John for bringing this to our attention.

  4. Adrienne Coates says:

    I couldn’t agree with you more, John. As an educator in the travel & tourism industry I get discouraged at the lack of interest travel agents have in self-improvement. These are travel agents as they spend little or no time in a consultative relationship with the client, and are still in “clerk” mode. Many who have been in the industry for years or even decades have given up and are just waiting for their business to collapse around them. For those who do pride themsleves in their professionalism and who do make the effort it is a blight on the reputation of the industry as a whole.

  5. I agree with your points, John! Deano’s comments resonante with me as well. When I first got into the industry, I worked for a travel club call center. I had no experience, but I was given on the job training. What little I got helped me get my feet wet, but my CTA and my ACC plus all my other knowledge was something I went out and got for myself. I felt it was important professionally.

    I lack good sales training, and good marketing training. I realize this. I am doing what I can to learn it, but it’s very difficult to learn from books. It’s also very difficult to learn sales tactics that are meant for one business and apply them to travel when there are so many different variables. Marketing is NOT my forte – if I could have someone be my marketer, I would love that! But, alas, that’s not going to happen.

    I am one of those who do travel “part-time” while I have a full time job. I have the full time job to pay the bills and live on while I build up my client base to the point I can leave the full time job and do travel full time. That’s my goal, that’s my dream, and at this point I don’t know if it will ever happen. There are days I look at this industry and see a sinking ship and want to escape, but I can’t because I love it so much.

    Like Tim says, I think the points raised in this article are just the tip of the iceberg. Agents, generally, are a lot of fickle, negative people. There is great resistance to new ways of doing things and new technology, and because the pay options ROYALLY suck, there’s no new blood coming in. I don’t think much can be done until that attitude changes.

  6. As a travel agency owner since 1981, my first thought was to disagree with most of the points
    until I started thinking about the current status of the travel industry. In the Reno Gazette, the business editor had an article on how to save on travel and talked to a financial advisor about it! There are a dozen very experienced agents(30 years plus and still active) in the area but not one comment from them. So there is no respect and that is because, as one of the other writers mentioned, due to part timers and hobbyists. It is not the main income for them like it has been for us. No wonder, we cannot mover market share or even make a difference! We may not like YTB or Carnival’s stance with them but Carnival is getting numbers from them and that is all they care about. Anyone can get into the business so what does my CTC and CTIE really mean?
    I raised a family with this business and have doen quite well for myself but the future, it does not look very rosy and I am glad neither of my children decided to stay in the travel business.
    We have never had a decent and active lobby or association. Do you all notice the ‘Use a Realtor’ ads recently? We allowed the online agencies to create the perception that it is cheaper on the internet. Having said all that, suppliers are not without blame either as they speak from both sides of their mouth most of the time. They want us to sell their product but they have no hesitation plastering their 800 number and/or website on every page of their brochure. We need some internal housekeeping and clean up NOW as it may already be too late for us professional, career travel counselors who work 50-60 hour weeks.

  7. Agent-friendly (for the moment) says:

    Funny, I’ve been thinking of this very issue recently so I’m glad you brought it up. As we struggle in an economic downturn we are now wondering if “going direct to consumers” is not a better alternative to providing a more reliable source of revenue. TWA, Frontier, Royal Caribbean counted on agents to support them in their bold moves only to be left high and dry. I suspect that there are many suppliers who have spent tens of thousands of dollars catering to the travel agent channel still looking for the ROI. In reading the comments above from honest posters who truly lament the state of their chosen profession, I see even bigger changes coming. I think more and more suppliers will have to take the reins of the consumer relationship in order to just stay in business, thus marginalizing the travel agent even further.

  8. Ray Wilson says:

    I have been in the travel industry for 55 years and started my agency , from ‘scratch’ in 1959.
    These suppliers who want to ‘ dump travel agents ‘ are like ‘ Turtles on a fencepost… they didn’t get there on their own… somebody had to help them get where they are ” !!

    Commission sales people are the CHEAPEST sales staff anyone can ever get. When you ‘cheat them’ by pulling out more and more of the ‘sale’ from being commissionable , you are just robbing yourself. Don’t blame agents for ‘chasing the highest commission ‘ … agents are in business for their own profit.. NOT yours, just like YOU , the supplier , try to drive down the prices you pay for your products to increase YOUR profit. If you are bemoaning the 15% commission you pay the agent , maybe you need to start saying ” Thank You ! ” for the 85% you have been HANDED by the travel agent… How much of that is YOUR profit is entirely up to you.

  9. Phyllis Kenton Brown says:

    You have hit a really tender spot. I am a very well trained “salesperson”. I raised my family on commission only jobs. When I retired from an advertising carreer 25 years ago I became a travel agent. Two things I loved sales and travel. The PERFECT JOB ha ha ha ha! I have been denied employment because of my SALES BACKGROUND!

  10. Laura Frazier says:

    John you made many great points.
    I have heard many agents say that we need a marketing campaign much like what realtors have done, to remind people of the value of agents. But many of these same agents are willing to work for free. If you don’t value your services enough to charge for them, how can we expect the public to understand the value of our services either?

  11. Chuck Flagg says:

    “80% of the people that booked their second cruise with an agent did not book it with the agent or agency that sold them the first one! Now of course, there are some shoppers in there; but 80%? As a whole, travel agencies lost 80% of their business to another agency. What does that tell you?”

    I can tell you that I have done some things for people who have booked direct or with an OTA that I would consider marketing to them. I am pretty darn sure they will book with me next time. I don’t think we should go out of our way to steal from each other, but if you are not servicing your client in ways that I (the royal I) do, they probably will not be back.

  12. Patti Maxwell says:

    John: You made some great points. I don’t agree with what your senior executive says at all. Perhaps I wear rose colored glasses…but Ray Wilson’s comments reflect my sentiments exactly. Thank you Ray!

    Patti Maxwell

  13. Charlie Webber says:

    We had a Banner in our office: We love TWA
    When Delta capped commissions, I put in a call to our USAir Rep. to see about getting some drink coupons to help move our Delta flyers to USAir. Before I got a reply USAir and every other airline flying from our home port had joined in on the deal so we were left without a really good choice. TWA went with them if you recall and later switched back.
    AirTran came to town and won us over for a while. They were really fantastic for a while and the last to zero commissions. They are still better to work with than the others but not what they were,
    Northwest pulled our plates over a debit memo from a group an x-agent ticketed. She left out the ticket designator. There wasn’t a difference in the cost, and Northwest got all the $$$ they had coming. I am struggling to pay honest debts and felt others should be paid so, bye-bye Northwest. You didn’t get your $2000 debit memo. You got $86000 revenue from our agency in 2008. You’ll get squat from us from now on! Who’s the looser?
    By the way, how have the airlines done after they quit helping us promote them? Has anyone heard? Of course there’s no connection.
    When one cruise line added a fuel surcharge everybody jumped onboard. When RCL dropped YTB nobody else had the integrity! Our agency is making every effort to move our cruisers to Royal Caribbean, and our next big group is now booked on Celebrity. I like to think Vicky Freed had something to do with their decision. I think it’s not Carnival that loves travel agents, but it’s Vicky! They have my support!
    Where are the consortia? They should drop preferred status of suppliers that support the get rich quick schemes that take advantage of the uninformed, few of whom will get their money back. Everybody should work together. We need a united force. There’s too much “Everyone for himself”.

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