It’s time for a change | TravelResearchOnline

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It’s time for a change

In tough economic times we hear about a business’s need for change in order to adapt to the economic climate. The travel industry it seems has been in perpetual change for the past fifteen years. As much as this industry has changed, the basic fundamental–compensation for agents, has not. We are still relying on the outdated business model of commission from the suppliers. Some agents do charge service fees or plan to go fees; but the majority are only doing this on airline tickets or inconsistently, at best. We see more “deals” out there from suppliers and this has the net effect of lowering compensation for agents, at times up to 50%.  We are working just as hard, if not harder, yet reaping less for all our work. It is time for a change–a change that will benefit both agents and suppliers.

Commission Elimination

Call it a “Net Environment” if you prefer. I don’t like the word “net,” as it assumes that I am going to mark up a product to sell. We need to get out of the retail mind set and concentrate on  selling of ourselves–our service, value and knowledge.

Here are the advantages:

  • Suppliers – This immediately adds to their bottom line. Travel is a small margin business for both the supplier and travel agent. This would bolster the suppliers’ bottom lines financially. It would eliminate the agencies who rebate and damage the pricing integrity of the supplier. It cuts down on the need for them to discount their product to remain profitable. Suppliers will be better able to identify the specific travel agents selling their product and better able to support them in their marketing efforts.
  • Agents – It would reduce the number of Internet travel agencies. No longer could they compete on volume by rebating back some or all their commission and just charging a small booking fee. It would eliminate most of the network marketing type travel agencies. While travel commissions generally do not make up a large portion of their income, it is one of the carrots dangled to entice people to join. It is how they prove they are offering a business opportunity.  It would eliminate the time consuming process of tracking down commissions from suppliers or not being compensated at all.

A commission-less environment would eliminate the weak agents, those without a specific niche or knowledge will not be able to compete and potentially erode the profession. Those coming into the industry would need to be better trained as both an agent and as an entrepreneur. It is painfully evident that we cannot come up with a way to regulate ourselves, so this would allow the market to do it for us. Most host agencies and consortia as they are configured today would be gone. What would evolve are marketing consortia that agents could join to market and educate the public, supported by agency dues and coop dollars from suppliers.

The question remains: “How do agents get compensated?”  They will be compensated by service fees, an annual retainer, or a combination of both.

The buzz words of the travel industry are “service” and “value.” When airlines eliminated commissions travel agents adopted a service fee based model and consumers paid (and continue to pay) the fees without hesitation. Travel agencies are still a large seller of airline tickets. Consumers value the unbiased service offered by agents. Often I hear the argument that price is king, and clients will not pay the fees. If that were true, then they wouldn’t pay $50.00 to an agent to book an airline ticket. They would go online and book direct with the airline. They pay this fee as there is a value to the service an agent provides.  As long as compensation is tied to the supplier, agents will be serving two masters; their client and the preferred arrangements they have with suppliers. Travel agents will still have an identity crisis–are they a seller or service?  Travel agents will still be order takers or “agents” of the suppliers. If we go to a service fee model then our loyalty is strictly to the client, and compensation will come from those deriving the benefit.  This frees the agent to use any and all resources available to arrange the perfect trip for a client, without concern of compensation.

Often I am alone on this opinion, as travel agents fear change. They long for the good old days when commissions were paid on everything. The market has changed drastically. The industry fights amongst itself against change under the disguise of consumer protection. Yet most times the consumer is unaware or does not care what was going on within the travel industry. Travel agents have very little clout against suppliers, and often end up losing the battle allowing the supplier to impose their will. Instead of constantly using our resources to keep the status quo, let’s use these resources to educate the consumer on our value, service and knowledge. Instead of “working” for the suppliers, let’s work for ourselves and have control over our compensation.

It is time to stop being an “agent” of the supplier and time to be the true travel professional.

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

  7 thoughts on “It’s time for a change

  1. Mike Davies says:

    I have said for the past few years that the cruise lines are going the way of Air and Hotels and if they reduced the number of categories they would be doing away with travel agents.

    I see a net pricing system on the way. The same way a retail store decides how much the should charge for an item. This would do away with 80% of the travel agent communty who are not willing to work on small mark ups.

  2. Laura says:

    While I am a firm believer in selling our services rather than products I have some concerns about this.
    Unfortunately there are already far too many agents that are willing to rebate commissions and give away their work just to make a fast buck. Going net would only increase competition based on price, rather than placing the emphasis on service. You can make a great living as an agent now, charge fees for your services, and be competitive without rebating. I would rather see vendors put a stop sell on the mlms and rebaters than go net.

  3. 60 days ago I began a mandatory fee system for all clients. Anyone contacting my agency pays a fee for my services, whether I book their trip or not. If we, as professionals, do not begin to respect ourselves and demand respect for our time and services, how do we blame consumers for their “beat the travel agent” mentality?

  4. Maya Northen says:

    Since I focus on FITs and often get requests for unique or boutique properties that may not pay a commission, I’ve had a fee structure in place since I started. I also just began charging a research fee that clients pay me whether they book or not. I tell my clients about the structure up front and if they do not like it, they’re not clients I’d want anyways!

  5. When we go to net pricing I see some problems. First customers will then call agency after agency to see who will work for almost nothing. Second, you will always have companies that will sell strictly price – they may stay in business for a short time but another will try and another and another. Companies will never shut down anyone who is selling their product. Once cusomers know about net pricing I believe they more than ever would run everyone directly to the companies to book. Your playing right into vendors hands.

  6. Anonymous says:

    I’m in my mid-20s and I know to go to the internet to look for info. No agent’s knowledge will beat the knowledge of thousands if not millions of past travelers willing to share their advice. In 5 or 10 more years… when ALL people know and are comfortable with researching their trip over the internet, where do you think agents will be if they get their pay only from service fees?

  7. You can get great advice from other travelers. But you can’t get an upgraded room, room at a sold-out hotel, flights rearranged during a blizzard, candlelight dinner on the beach, or helped out during a hurricane from another traveler or online site. I had a client call me from Mexico at 6:30 a.m. this Wednesday morning with food poisoning. Within an hour we had a doctor in his room, and had rescheduled his excursions.You can’t get these services from an online site or from your fellow travelers.

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