Rebating is a hot topic among travel professionals. There are those that don’t rebate any portion of their commission, and there are those that will rebate a portion of (or all) of their commission in order to win a sale. The purpose of this article is not to debate whether or not we should be rebating any portion of our commissions to clients in order to win a sale. Instead, I want to address the confusion about what actually is rebating.
To use the insurance industry’s definition of rebating:
It is returning a portion of the premium or the agent’s/broker’s commission on the premium to the insured or other inducements to place business with a specific insurer.
Returning a portion of your commission to a client to induce them into booking with you = rebating. Note, to a client, but not to another travel agent.
Recently I heard about a travel agent contacting another agent about some group space they were holding on a cruise. Agent “A” had three cabins he wanted to book into the group space (either because the pricing couldn’t be matched, or for the amenities offered). One of the three rooms was for him, and the other two rooms were for clients / friends of his. He asked Agent “B” (holder of the group space) about a commission split for the three cabins he was bringing to the group. Agent B’s response was no, because he does not practice in rebating.
This is not the first I’ve heard of this. Some agents think that a commission split is rebating, when it is not. Cruise lines do not treat a commission split between travel agents as rebating. If so, independent contractors would never get paid. In fact, there are several host agencies that offer 100% commission to independent contractors for their personal and family travel (versus their normal 80% cut). The host agencies that I’m aware of do have productivity requirements (meaning you can’t just book your personal and family travel with them to get the full commission, and never book anything else).
I often do group cruises, and one of my marketing channels is to pay commission to other travel agents that book business into my groups (whether it’s their own personal room or for their clients). They help me fill staterooms that may not otherwise be filled. They help me earn tour conductor credits that I might not otherwise earn. And I do require that they act in the capacity of travel agents, servicing their own clients.
Another marketing channel that I sometimes employ with groups is the referral fee. For passengers that book into my groups, but are not travel agents themselves, I will pay a flat fee (maybe $50 per stateroom) for each stateroom that they refer AND that sails with the group. Again, this is not a rebate as defined by the cruise lines. I do not offer them commission splits because they are not travel agents and will not service this bookings as such. If all they are doing is telling someone to book into the group, they get a modest flat referral fee.
Rebating, as viewed by our industry, boils down to “book with me and I’ll give you X from my commission.” Of course agents and agencies that rebate do not say that verbatim. It is more along the lines of “book with us and we’ll give you XYZ (free gratuities, onboard credit, etc.).” Of course most clients are unaware that the offer is coming out of the agent/agency’s commission.
So next time a travel agent approaches you about booking into your group cruise space, don’t shut them down immediately because you don’t rebate. I suggest having a dialog and being open to a commission split discussion.
Susan Schaefer is the owner of Ships ‘N’ Trips Travel (www.shipsntripstravel.com) located in Tennessee, and specializes in leisure travel with a focus on group travel and charity fundraisers. Through their division Kick Butt Vacations (www.kickbuttvacations.com) she focuses on travel for 18 to 23 year olds. Susan can be reached by email at email@example.com or by phone at (888) 221-1209.