In Praise of Travel Agents

A few years ago I got into trouble with our travel agent subscribers by offering the opinion that some of their colleagues were more commission than client oriented.

Recommending one vendor because that supplier pays a higher commission than one whose product better suits the client or worse yet, is cheaper is about as ethically bankrupt as it gets. It is, however, a common travel industry practice. In his dissertation Airlines and Travel Agents: An Uneasy Partnership, air transport consultant, Ron Kuhlmann, points to a 1995 travel industry survey which showed 60% of agencies have "override" agreements with suppliers—meaning they get a higher commission when they book that supplier—and that 66% of such agreements "affected bookings." "Overrides," according to the U.S. Inspector General, "transform the role of travel agencies from a neutral seller of airline tickets to a direct distribution agent for a particular airline."

Another industry problem has been a large number of inept agents. The proliferation of poorly-trained, part-timers in the travel business solely for discounts or to make a commission on their relative's trips, has made it tough on the truly top-notch, knowledgeable professionals.

However, since the airline industry pulled the commission rug out from under the travel agency business a few years ago, thousands of marginal agents have departed the field, leaving a higher percentage of travel pros who understand that, in the long run, when the client is happy, commissions follow.

Many travelers are unaware of just what travel agents are up against these days. Small, local shops are an endangered species, doomed by airline commission policies and the Internet. According to Kuhlmann, a 1999 Merrill Lynch study revealed the following costs for America West to issue a ticket: traditional travel agency $23, Internet agency $20, own telephone reservations $13, own website $6. Any doubt about where all this is heading?

For an air ticket to Europe, airlines pay a commission of 5%. So you buy a couple of tickets at $1,500 and your agent gets $75 per ticket or a total of $150; not bad, you think, for maybe half an hours work. Ah, but there are a couple of caveats; the maximum commission is $50 (business class, first class, doesn't matter), and the agent undoubtedly has to split the commission with the owner of the agency.

The picture is really bleak during off-peak travel times. Let's say you want a couple of those winter airfare specials at $400 each. The agency's commission in this case is $40, of which the agent gets maybe $20. Of course, someone has to do the paperwork, print the tickets, and ship them out, probably the agent. If your booking requires a couple of phone calls and a little back and forth, both the agency and the agent have lost money.

Perhaps, you reason, they'll make it up booking your hotel rooms. That's possible, provided you book big hotels that are in the CRS (computer reservation service) such as Sheraton or Steigenberger, but very doubtful if you ask an agent to book small, family-run properties in Europe. Many of the latter don't pay commissions at all or simply say they will and then don't. The agent doesn't have the time to run down that past due $8 commission from a one-night $100 hotel booking in the German countryside; he or she is too busy trying to find somebody a low airfare.

Car rental commissions range from 10% to 20% of the basic rental rate (they get nothing on drop charges, taxes, extra drivers, etc.) while rail tickets and passes pay from 8% to 12% (nothing for reservations which take as much of the agents time as issuing passes). Remember, your agent, unless you're dealing with the owner, only gets a portion of these commissions.

If you find a travel agent that can lucidly explain the advantages of the various European rail passes, knows something about how car rentals work in Europe, can recommend good, small hotels, and generally knows something about European travel, you have a valuable resource. Don't expect that person to help plan your European vacation and make all the bookings for $50 to $100 in commissions. Hotel reservations alone can take a couple of hours. The back and forth fax and email process is a time eater.

About 15% of our subscribers are in the travel business. They use Gemütlichkeit to make recommendations to their clients traveling to the Germanic countries. Most have experience traveling in Europe and some have taken the time and expense to become specially certified by the various European tourist offices. This sort of agent is very different from one who knows only what's in the Sabre or Apollo computer reservation services. This is an agent who has knowledge. An agent who, for example, can tell you which European airports have trains running from the airport to the downtown, or who won't let you charge a 16-day rental car contract to a credit card that only provides collision and theft coverage on contracts of 15 days or fewer. This is also an agent who will save you money.

Many of you no doubt do your own trip planning and research, turning to an agent only when it's time to actually purchase needed travel products, such as air and rail tickets. Those who want their travel agent to be more than a ticket seller are going to have to pay over and above the commission structure. Many agencies already charge a service fee on airline tickets and agents with specialized knowledge now ask for consulting fees. The days of good, free advice as an implicit part of the travel agent-client relationship are over. -RHB

March 2001