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How Best to Use a Travel Agent

Their evolving role in helping your travel planning

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.

Part 5 of a 5 part series - click for Parts  One  Two  Three  Four  Five



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.  Here's how.

Travel Agents are No Longer Free

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 traveler cancel.

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 service'.

These fees are obvious, and are generally explained up front before you use a travel agent's service.

But there may also be some more subtle and obscured other costs of using a travel agent today.

The Internet Changes all the Rules

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 disintermediation

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 agencies).

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 products.

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 contract rate).

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 traditional sources.

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 commission.

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 Agencies

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 bookings yourself.

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 arrangements.

You should do the same.

Read more in the rest of this series

In Part 1 we discuss how travel agents can help you better than supplier representatives can or will.

In 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.

In 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.

In Part 4 we offer some solutions to the problems the travel agency industry is currently facing.

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Originally published 8 July 2005, last update 30 May 2021

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.

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