SAN FRANCISCO - Several major operators quietly implemented a
two-tiered commission system, paying overrides for packages booked
through computerized reservations systems and paying a flat
commission for telephone bookings. TransGlobal Vacations of
Minneapolis began paying 10% on telephone bookings and 14% on
automated bookings, effective Jan. 5. The program is directed at
agents in the upper Midwest and was initiated in response to
similar programs implemented by regional competitors, the firm
said. Marc Friedman, vice president of TransGlobal, said automated
bookings jumped from about 15% in 1997 to 50% the first two weeks
in January with the commission change. He said he was pleased with
the usage as it may enable the company to reduce costs by hiring
fewer seasonal reservations agents. "We've invested several million
dollars in technology, and we want agents to use it," he said. MLT
Vacations and sister company Northwest World Vacations, also in
Minneapolis, have similar commission programs in place. A company
spokeswoman said the formulas vary, depending on agency sales
volume, with telephone sales counting in override rates for
high-producing agencies. Under the arrangement, she said, agencies
typically receive two to three percentage points in higher
commissions when they book through their CRSs. Milwaukee-based The
Mark Travel Corp. - which operates Funjet, United Vacations USAir
Vacations and Vacations by Sheraton - inaugurated a similar
commission policy, with formulas depending on agency sales volume,
the market and brand. "It's very much our plan to encourage agents
to use electronic distribution," said David Wade, executive vice
president. "It's good for the agent and for the tour operator."
About 40% of The Mark Travel Corp.'s bookings come through CRSs,
and the company hopes to boost it much higher, he said. Lower
operating costs are the advantages to the tour operator, but Wade
said agents also can lower their costs through automated bookings.
"There's no wait on hold and the information is in front of you, so
you can sell all the options," he said. "It's a better tool for
availability and pricing." Christopher Dane, general manager of
Fort Lauderdale, Fla.- based Certified Vacations' Delta Vacations
unit, said his company is considering such a plan. "The phone is a
very expensive transaction process," he said. "You're better off
paying higher commission because it lowers the cost of
distribution." Dane said the cost for Delta Vacations in handling a
CRS booking is half that of a telephone transaction. An ASTA
spokesman said the Society had no objection to the two-tired
commission structure as long as the higher commissions are
available to all agents and the packages continue to be available
by telephone and the CRSs. "These tour operators are basically
saying, 'Help me reduce my costs, and I'll pass on the savings to
you,' " he said.