Best to Use a Travel Agent
Their evolving role in helping your
The sign advertising 'lowest prices' in the travel
agency window used to carry an implied claim that travel
agencies were the best place to go for a bargain.
Is this still the case? Maybe no longer. But
travel agents can still provide valuable services.
5 of a 5 part series - click for Parts
It was simpler in the 'good old
days' (which were not all that long ago). There was no
charge for using a travel agent, and they usually could book
everything for you, and at the same or sometimes lower cost than
you could book yourself.
What a lot has changed in a few
short years. Travel agents often charge for their
services, and can no longer guarantee you the lowest airfare.
Many times they can't guarantee you the lowest price for hotels
or other bookings, either.
But, approached correctly,
travelers can still benefit from using a travel agent.
Travel Agents are No Longer
Travel agents used to earn
commissions from the products they booked for their clients.
These commissions tended to be about 10%; sometimes they were
less, and sometimes they could range as high as 20% or more.
Sure, sometimes a travel
agent could make a huge amount of money easily (ten
minutes to sell a $10,000 air fare, earning them $1000) but more
commonly, they'd spend hours of time only to have a potential
In theory, the easy money
was balanced by the hard money, meaning that, overall, travel
agents earned a living. It is fair to say that being a
travel agent never has been a great way to make a lot of money.
Since the mid 1990s,
suppliers have been cutting back the commissions they pay travel
agents. Most airlines no longer pay any commission at all,
and in some cases, other suppliers have reduced the commissions
they also pay.
Plainly, if an agent isn't
making money from the supplier, they have to instead charge fees
to their clients, and in doing so, negate one of their previous
major claims to fame - 'there is no charge for using our
These fees are obvious, and
are generally explained up front before you use a travel agent's
But there may also be some
more subtle and obscured other costs of using a travel agent
The Internet Changes all the
Travel used to be sold
through an orderly series of middle men. Travel suppliers
usually sold to wholesalers and tour operators, who in turn sold
to travel agents, who in turn sold to travelers.
With the growth of the
internet, the former marketplace has been completely changed,
because of two main factors :
The internet allows for
The internet makes
it possible for travel suppliers to efficiently and directly
reach their potential customers; variously through their own
website or through websites of internet based travel companies.
In the past, most travel
suppliers had to sell through travel agencies, whether they
really wanted to or not. Although each player in the
distribution system was keen to eliminate the other players as
much as possible, there was simply no other cost-effective way
of reaching travelers.
The ability to now direct
source and direct market
through the internet makes it easier for every participant in
the distribution chain to
cut the other participants out of the
loop, or in some other way edging them out and cutting back on
the commissions they pay.
In its most obvious form,
you'll see hotels (and other travel suppliers) selling their
rooms directly to the public for less than they sell their rooms
to both travel wholesalers and travel retailers (ie travel
The internet allows for real
time price changes
In the 'good old days'
travel retailers would sell from brochures with printed prices.
These prices were set as far as two years in advance, and were
'average' prices assuming average demand for the travel
In reality, at some times,
travel suppliers had high demand and could charge higher prices,
and at other times, travel suppliers had low demand and wanted
to offer discounts to try and stimulate some extra business.
It was generally not easy to
do this with traditional travel selling methods. But with
the internet, prices can change almost instantly to reflect the
daily supply and demand factors.
This of course means that on
occasion, the traditional contract pricing method might result
in lower pricing (but, if that is the case, the chances are the
supplier will just quietly refuse to accept sales at the lower
More common is the situation
where a travel supplier has some inventory that seems likely to
be otherwise unsold, and so they'll quickly come up with some
type of last minute internet only special. These 'internet
direct specials' can often be tremendously good value.
Both internet based
distribution and internet based pricing threaten regular travel
agent channels, and make it harder for travel agents to
consistently offer low (or lowest) prices through their
Travel Agent Rates are No
Longer Always the Lowest
These days, if a travel
agent seeks to make a booking for you in the 'normal' way - for
example, through their computer reservation system, or through a
wholesaler, or using a contract negotiated by their agency
buying group, it is no longer as certain that the rate they get
for you is the best rate out there.
Commission is No Longer a
Constant, but a Variable
Some rates and booking
methods may pay commission, but others don't. For example,
a travel agent could book you an internet special through a
competitor's website, but clearly this wouldn't earn them a
In the past, travelers
expected their travel agent would try and get them a good rate,
and of course they also expected their travel agent would also
earn a commission from the booking.
Now that we are paying
travel agents a fee to do bookings for us, maybe it is time to
re-examine the entire basis of how travel agents make money from
servicing their clients.
Is it right we should pay a
fee to a travel agent and also have them earn a commission from
then making the booking we paid them a fee to arrange?
A New Way to Work with Travel
These changed circumstances lead to a suggested new way
to deal with travel agencies.
Agree with the agent/agency,
up front, that you'll pay them a flat hourly rate for all their
time they spend with you and making your travel arrangements.
This fee should probably be in the $60 - $90/hour range.
You should also agree on how much time your booking will take,
and what would cause this time budget to be varied.
In return, tell them you expect
them to find the lowest rates for you, and anytime they are
booking a commissionable product, you expect them to rebate the
commission back to you.
And tell them you don't care how
or where they book your arrangements (within the bounds of
prudent good sense, of course). They're welcome to use
other/competing sources if that will prove cost effective.
You can even suggest they don't
book any products at all, and simply buy their destination
knowledge and travel planning expertise, having them tell you
where to go, where to stay, what to see and do, and then being
free to spend as much time as you like in making the actual
This completely levels the
playing field. The agency gets an agreed upon fair hourly
rate for their advice, knowledge, and for any actual clerical
and booking services. And they're not penalized by booking
your travel any which way to get you the best deal; neither are
they conflicted by the choice between non-commissionable lower
costs that take more time to arrange compared to commissionable
and easier to book, but higher costing sources of products.
You, on the other hand, are free
to decide how much time you want your travel agent to spend on
doing your booking. If you want them to spend many hours
hunting down the last possible dollar in savings, then they'll
do this, even if it costs you more than the travel savings in
terms of their extra fee.
And if you want them to simply
spend sufficient time to where any more time wouldn't represent
additional net savings to you, then you can have them do this,
too. You end up with the best balance between travel
purchase costs and travel booking costs.
If you're lucky, you'll be an
'easy' client, and everything you want can be quickly booked at
highly commissionable rates. In such a case, your costs
will be very low.
But if - for whatever reason -
your booking takes more time, and your travel items can be
bought at lowest price through non-commissionable sources,
you've fairly paid for the services you've received.
This is Not New
Paying travel agents on an hourly
rate basis, and asking them to give back all their commissions
might seem like a radical suggestion, but travel agencies have
been negotiating these types of contracts with larger corporate
clients for many years.
There's a reason large
corporations negotiate and travel agencies agree to such deals.
It is because both sides see the good sense and fairness of such
You should do the same.
Read more in the rest of this
Part 1 we discuss how travel
agents can help you better than supplier representatives can or
Part 2 we explain that the
airlines' zeroing travel agent commissions isn't just an attempt
to kill off travel agents, but also an attempt to kill off
smaller airlines. Both ways, you're the real loser.
Part 3 we talk about the bad
reputation travel agents generally suffer from, and why some of
it is fair, but much of it is very unfair.
Part 4 we offer some solutions to
the problems the travel agency industry is currently facing.
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8 July 2005, last update
28 Nov 2012
You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.