Q – I am in the process of talking with two or three travel agents in our part of Florida. They each have business cards showing the name of an agency but I am getting the impression that they really work independently. When I asked about it they said they were IC’s. Should I be concerned in any way? I must say that your profession seems rather vague about who works for whom and how they are compensated. Would you agree?
A – Yes. Travel professionals are lousy communicators when it comes to explaining ourselves to the general public. Many bright consumers cannot explain the compensation model when they use a travel agent. Many, perhaps most, believe that they are paying more to use an agent’s services. Let’s try to summarize a few responses to your question:
- Most travel is no longer booked by brick and mortar travel agents working out of a business office. Currently, an estimated 71% of travel agents are technically independent contractors – not employees.
- They are usually affiliated with a travel firm and increasingly with a Host Agency. The Host provides office back-up, financial reporting and a variety of other services. But the owner of the agency cannot dictate what an IC does.
- The travel industry, for the most part, operates very much like the real estate industry. Individuals do their own marketing and go after their own clients. But the “House” provides certain basic services so they can maximize their “sell time”.
- Currently, IC’s split commission with their affiliated agency. The normal split these days is 80-20. IC’s are free to form their own business identity with their own corporate name.
- It is perfectly OK to interview a potential travel advisor. Ask tough questions and make certain you have a clear understanding of their personal insurance coverage. Do they carry, for instance, errors and omission coverage?
- Pricing is confusing because the industry wants it to be. If you are a five-star hotel owner are you really going to contact ten different online travel agencies and give them each a different price? Do you really believe that any cruise line would risk alienating all of the travel agents nationally that sell its products by giving someone in India working a 1-800 call center better prices? It just doesn’t happen. Cruises and tours must have fixed pricing nationally so passengers don’t feel slighted when they socialize on tour or aboard their ship.
- Cruise pricing tends to change every 90 days or so based on marketing trends and computer-generated algorithms connected to current occupancy rates. On the other hand, escorted tour pricing is generally fixed as changing rates could cause major problems for the group tour guide.
We hope this brief summary is helpful. Your basic assumption is correct – the travel internet is dominated by misleading, price-centered, deal and discount features that, in truth, are always available to anyone.
