Charlie Funk
My last column ("Qualified, certified, licensed and trained", July 14) looked at a matter of concern to many travel professionals: the growing number of people offering themselves up as "travel agents" with few or no qualifications.
I suggested there ought to be a way to certify or license travel professionals, much as doctors, lawyers, even manicurists are. I argued that a set of standards should be promulgated and adopted by anyone who purports to be a travel professional, and that actual knowledge of those standards be demonstrated in a certification process. I also proposed that travel suppliers support such a process by not allowing uncredentialed agents to sell their products.
I received a substantial number of comments, some of which forced me to go back and reread what I had written to be sure I hadn't misspoken or that something hadn't been changed in the editing process.
A frequent response was along the lines of "I disagree with the whole idea. We don't need more government interference in our business with licensing and regulation." In fact, the column had suggested that these matters should be addressed by the industry as a whole to avoid government involvement, a situation similar to that of the travel insurance industry.
Many suggested that suppliers would never adopt such a policy, because it would damage sales of their products and services if they were to shut off the thousands of agents who do business as a hobby or for the travel benefits but who nevertheless sell a few thousand dollars' worth of product each year. Indeed, some might argue that having thousands of small channels would be better than having a single channel selling the same total amount because losing one, even 100, of these small agents would be minimal and probably would be made up for by the entry of 100 new sellers.
Some mentioned it was likely that many of these smaller agents didn't have the local business licenses, insurance or a multitude of other things that larger agencies had to have. Some suggested -- tongue in cheek, I trust -- that they might just start turning in these "suspects" to local authorities to ensure compliance with local laws and codes. That seems a bit harsh, but I can understand the underlying sentiment.
Perhaps the most interesting responses, though, dealt with the amount agents are paid on many vacation packages, with cruise commissions mentioned often as being insufficient. Indeed, suppliers have commented it would be better if overall retail industry compensation were higher. Most comments in that vein pointed out that the high-volume/low-dollar bookings required to make a sufficient profit didn't allow a lot of time for an agent to act as a consultant. Bookings that often produce substantially less than a $100 commission don't offer the agent much leeway to act as more than a payment processor. It is likely that only the large online travel agencies with significant consumer-facing Internet presence and direct-booking capabilities can consistently make a profit on low-priced vacations.
As a result, many agencies and agents who have focused on niche travel and higher-end travel have been less affected by low commissions. They have built reputations as experts on a relatively limited number of travel types or destinations, setting themselves up as go-to sources of information. Their reasoning is that a website won't know about private guides in Paris or the restaurant on one of the seven hills in Rome that makes for a perfect midday lunch stop. A website doesn't help with problems the way a live, trained counselor does and should.
Suppliers know that the average value of a retail booking is about triple that of a direct booking. Average trip lengths are also longer when booked by an agent. Agents are also often the go-to source for that trip of a lifetime.
In short, suppliers actively support and encourage agents to be more specialized and bring more knowledge and value to the sale, so commissions are higher and agents find the model to be profitable.
Ocean cruise lines and budget land packagers tend to be front of mind when low-margin sales are discussed, although some cruise lines have taken steps to improve profitability in response to agent input. Of note:
- MSC pays 25% commission on Caribbean cruises and 5% on anything clients book prior to the cruise through the agent.
- Celebrity recently made the noncommissionable portion of fares commissionable for a month.
- Norwegian recently introduced an all-inclusive add-on package that is commissionable to the agent at the same rate as the base cruise.
Time will tell if these initiatives had a positive effect or drove bookings better than the onboard amenity offers that many cruise lines now have in place.
Some years ago, Sherrie and I chose to focus on two distinct types of clients.
The first are people so wealthy that using their time to do research on the Internet, even if it saved $200 to $300 on a $10,000 vacation, isn't worth it. Some fraction of this group also sees this activity as beneath them. And that's good! We want prospects/clients to feel so strongly that their time is more valuable than ours that they let us take care of the entire planning process.
The second are clients who, when they spend $10,000 on a vacation, are putting so much of their money at risk that they don't dare do anything to mess it up.
This two-pronged focus tripled our average booking value in six years, and often the commission we make per booking is much greater today.
Travel Weekly's Consumer Trends 2014 issue gives even greater credence to the wisdom of becoming an expert in a niche. Travelers using an agent because they felt the agent was an expert were in the overwhelming majority in every age category, topping out at 78% for those over 55. Those same travelers overwhelmingly use travel review websites in conjunction with or preparatory to working with a travel agent.
Many agents have shifted greater emphasis to land-based, escorted tours and all-inclusive resort sales. The same study showed that half of all such bookings are made directly with a supplier. Escorted tours booked through an agent dropped substantially as "big box" retailers stepped up efforts to offset huge drops in all-inclusive sales. At the same time, cruises booked directly with the provider as well as cruises booked through a travel agent dropped slightly.
So what does all this mean to the travel retailer? Building a reputation as an expert is vital, and focusing on higher-dollar travel is central to profitability.
It isn't enough to have accomplished this for your agency. Every time a traveler has a bad experience with a poorly trained, uninformed agent or is defrauded by an agent, it tarnishes the entire travel retailer community.
It might be that certification or some sort of industry accreditation as a prerequisite to sell any type of travel isn't necessary and that those who aren't proficient and knowledgeable will fall by the wayside as the industry continues to evolve. But I am still of the opinion that agents would all be better served if there existed high standards that all retailers had to meet, so that the travel-buying public wouldn't need to worry about whether the agent they were working with was reliable.
Charlie and Sherrie Funk own Just Cruisin' Plus in Brentwood, Tenn., and have provided agent and agency-owner training throughout North America on every facet of travel agency operations. They were named to the Cruise Lines International Association Hall of Fame in 2012.