Travel agents love numbers–commission percentage, commission dollars, marketing expense, budget, inexpensive, cheap, luxury, you name it! But, there is one number that is the holy grail of all numbers for most travel agents–sales.
We hold this number in the highest esteem. It is often used as a measurement of our success. Some agents or agencies are even able to use it in their marketing. YTB, one of the largest MLM agencies was ranked number 26 on the Travel Weekly Power list just because of their “sales.” As much as we like to hold this number in such high regard, it really is one of the least important numbers to agents. That is not to say it does not have its place, but it is not as significant as we have made it.
What are sales? Sales are booking we have made with suppliers and clients have completed their travel. Often sales misidentified as revenue. Sales are revenue, but not for travel agents, but revenue for suppliers. An agent’s revenue is generated by the commission we receive from these sales. Remember when reporting sales, we also include tax and other non-commissionable items, so that is even a questionable figure for a supplier, as some of that money is just passed on to government agencies and is really not even revenue to them.
Here are a couple of examples:
This year, in a down economy I had sales of over $59,000 for January and February. Not a bad couple of months even in a down economy. My revenue from the sales – zero. This was all non-commissionable airline sales. So while I can say I had good sales for two months that number does nothing for my bottom line. Now I do charge service fees, but I do not include those in sales figures,as they are revenue to me. My actual revenue was about $2,400 in service fees.
Another time, I sold ten Alaskan cruises, which included round-trip airfare, cruise, a pre-night hotel, train transfer and travel protection–all supplied by the cruise line. Total sale per cruise was $4,100 or $41,000 total. My revenue was $187 per cruise or $1870 total.
Lastly, I found a great price on fly-drive package to Hawaii. Knowing I had a lot of clients who were timeshare fans, I started dialing. I was able to book 20 fly-drive packages. Total sale per package was $1,033 or $20,660 total. My revenue was $215 per booking or $4,230.
Look at these numbers. In a year to year comparison my sales numbers clearly indicate a down year by almost 50%. Everyone should feel sorry for me. Right? No! I am jumping for joy. My revenue is up over 100% and my passenger count is also up 100%. More passengers lead to more satisfied clients who may tell others what a great agent I am. And then, I would have a potential pool for more referrals.
If I were on the Travel Weekly Power List in 2007 and they called for the 2008 numbers, I would have to report a 50% drop in sales and likely be excluded from the listing. I would not make the list because my sales are down, yet the factor that keeps me in business is up over 100%! I am happy, but for some reason, that number is insignificant to them. All they can just report is that agents’ sales are down.
Where sales are important is with our relationship with the suppliers. This is the measuring stick they use to determine our commission percentage, any marketing or coop dollars we may receive and the level of support we will get from the supplier. While sales are important, evaluate what you are selling and is it generating a profit for you. Look at the revenue it drives to your bottom line and not that of the supplier.