Last week, a client asked me why it was that "travel agents have never unionized."
I didn't wish to go off on this topic, so I served up a rather perfunctory response. But the truth is that some travel agents are best characterized as lambs walking to their own vocational slaughter.
The silence is deafening. A union? Travel agents don't even have the good sense to join ASTA, which is positioned to represent their collective interests.
Travel agents compete and rarely cooperate. Can you find regular agent gatherings to exchange ideas and strategies or to explore ways to guarantee their own survival? Instead, agents tend to operate on the false assumption that they're competing with the agency down the street.
How many consortia meetings are dedicated to bringing together agency owners and consultants to plan "occupying" those suppliers who have turned their backs on the agency distribution model?
I do not oppose the right of a corporation to increase its profits by reducing its costs of distribution. From the first week I entered this industry, I was amazed at the manner in which sellers referred to suppliers as their "partners." When I worked for a supplier, agents always seemed shocked when we acted to maximize profits.
Agency lambs have watched their faith in suppliers erode over time. Now, many seem content to wallow in the inevitability of their own demise. But it is far too early for that conclusion. The lambs need to end their silence and find optimism where it exists.
It might be worthwhile to begin by reading the back page of the Nov. 14 issue of this publication. The article reports on a pointed question that an industry analyst asked Richard Fain, the chairman and CEO of Royal Caribbean Cruises Ltd., at the World Travel Market in London. The question and Fain's answer should be posted in every travel office.
The analyst began by saying he was surprised that "cruise lines rely so heavily on travel agents" and went on to ask why.
I've encountered this question in one form or another for the past two decades. One particular analyst would always recommend that cruise lines eliminate the middleman. He predicted that agents would disappear by 2010. I don't know where this fellow is today, but his company, Bear Stearns, was not too big to fail.
In the meantime, many of my industry friends tell me they are thriving in the current economic environment -- an environment, by the way, in which our core clients have seen some significant increases in the value of their portfolios.
So I was interested to see how Fain would handle this curveball of a question. He hit it out of the park. He began by saying he was surprised that the analyst was surprised, then continued: "The answer is that it is more profitable. If we were to do it ourselves, it would cost more or be less effective or, more likely, both." He noted that commissions paid to sellers of furniture or high-end clothing are "much higher than what we pay travel agents."
So, now we have it on record: We are a relatively cost-efficient channel. Even, it seems assured, more efficient then an in-house operation.
Unfortunately, several major suppliers feel that slowly chipping away at distribution costs should include billing and invoicing. Enter the noncommissionables.
Just yesterday, I booked two cruises that make my point. The first was a Mediterranean cruise for a university professor. Little did he realize the angst generated by his booking one of the top-tier lines.
When the invoice arrived in our office, I noticed that just below the agency name was the name and email address of the cruise line's "reservation contact." This was the guest invoice, not the agent copy.
Another little shoe has dropped. Our clients are now being given the name of an in-house agent to facilitate their requests. I wonder how many of the lambs will silently just accept this and send out these invoices.
My reaction was to send an email to my new "reservation contact" on this booking. I assigned her several tasks and asked her to specify what exact role she was willing to play in this reservation.
Will she, for example, analyze insurance options, assuming she is aware of the medical issues facing guests?
Will she analyze and recommend the best shore excursion options, helping set up private touring arrangements based on clients' needs and interests?
When I spoke to sales about this not-so-subtle attempt to get the guest to work directly with the line, they said that I was the first agent to raise the issue.
My second booking was for a longtime client on a different five-star line. I was due a commission on this booking of $895.72, based on a 14% override. Our production with this line is several hundred thousand dollars annually. But the actual commission listed was $705.32.
The cruise line charged $211 for "tax and government fees." Fair enough. I shouldn't be paid commission on taxes. But another $1,360 was taken off the total as "noncommissionable." So the commission was not paid on the sale, it was paid on a rate significantly lower than the sale. And the cruise line has -- fraudulently, I believe -- signed contracts with us and our consortia that are a myth. Our 14% commission works out to 11%.
But again, I was told that "this issue was settled some time ago." The lambs have been silent. No pushback, no flooding corporate offices with calls, not even very many angry letters.
Now I'm not naive. I know about NCFs, and I have tracked the way they've been creeping up since they were introduced. And you know what? That doesn't really get me upset.
What does upset me is the arrogance of these companies in refusing to offer any accounting for the funds they are intentionally withholding from our earned commission. My accountant wants to know why these funds are withheld from our commission. My attorney wants to know. My staff and I want to know.
So I ask (politely, I assure you) for a breakdown of the $1,360. What is it for? If these are fees charged by local ports, I would like to know the amounts so I can check with the appropriate port authorities in Europe to verify the math.
But of course the answer is, "We don't do that." So, in effect, the cruise line's position is that they can simply subtract any figure they so designate and refuse to pay a commission on the amount without the courtesy or even the business professionalism to offer an explanation of the charges in detail and in writing.
Why is this column about cruise lines and not tour operators? Because tour operators pay commission on the amount of the trip. No games, no drama, no charades. They enjoy a largely ethical relationship with those who sell their products.
In the perfect world, I would ask you to demand a complete breakdown of every cruise booking in which portions of your commission are taken out as NCFs. As supporters and partners of the cruise lines, you are entitled to know why you are not receiving your full due. Good business sense would seem to dictate that you have access to this information.
And why wouldn't that information be shared? It is clearly available to the cruise line's accounting departments. They came up with the figure. Could it be that there are fees hidden in that amount that they do not want us to see?
How much longer will the travel lambs be silent?
Contributing editor Richard Turen owns Churchill and Turen, a vacation-planning firm that has been named to Conde Nast Traveler's list of the World's Top Travel Specialists since the list began. Contact him at [email protected].