Gloomy agent compensation trend has some rays of light

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While the compensation picture for travel agents is certainly not bright, it might not be quite as bleak as a recent survey of members by ASTA seemed to suggest.

ASTA, which collected its data from a representative sample of members in late 2007, said it found that the average compensation for a new frontline agent was $20,133, while the average salary and commission package for all counselors, regardless of tenure, was $28,785.

If only corporate agencies are considered, ASTA said, the average starting compensation rate is $24,739 and the overall average income is $38,767.

The data suggest that corporate agents start with compensation that is 22.9% above the average across all agency types, but the gap grows still wider with time, producing an overall average that is 34.7% higher for corporate agents.

For agents who have managerial and sales responsibilities, ASTA’s survey found an average compensation of $38,648.

ASTA said the research was the first in a planned series of surveys meant to assist member agencies in benchmarking their compensation, benefits and hiring practices and in identifying trends in these areas.

The numbers are bleak, most obviously for the committed travel agent but also for owners who may see no way to beat the averages and attract good new talent. However, supplementary data suggest that the results should not be taken as the final word on what an agency can or should be paying travel counselors.

For one thing, research conducted by Harris Interactive for Travel Weekly in previous years consistently showed that travel agents and managers made more money if they worked for larger agencies. The most recent of such studies is 5 years old and not structured in a way that allows apples-to-apples comparisons with ASTA’s report, but the Harris findings are strongly suggestive.

Respondents to ASTA’s compensation study averaged $4.4 million in annual volume, but that figure “was skewed by some larger firms,” said Melissa Teates, ASTA’s research director. The median was $1.5 million, a number Teates said was “more realistic” for understanding the results.

Home-based businesses were part of the mix, too, though one-person operations accounted for less than 10% of respondents.

Consultancy surprised by averages

Bruce Tepper, vice president of Joselyn Tepper & Associates, expressed surprise that ASTA’s averages came in so low, saying that his consultancy was seeing a broader mix of agents and income, ranging from aggressive newcomers who take performance-based pay plans and do well to older agents who accept poor compensation because they have other sources of income and don’t want to change a comfortable work life that, for some, still has glamour.

Tepper said there was not a lot that agencies, especially small ones, could do to add income-producing product except by essentially creating their own products: for example, transitioning to a consultant-adviser model to earn higher fees or packaging and marking up travel products.

Dick Knodt, the former president of Vacation.com, said agencies could increase productivity only so much, after which they hit a ceiling on the amount of income a generalist agency can earn and apply to salaries. For agency owners, specialization and groups are productive answers, he said.

As for why poorly paid consultants stick around, Knodt said, “Once [travel] is in your blood, it’s tough to stop.” Besides, he said, “some may not have high-paying alternatives.”

Tepper and Knodt looked at averages and the challenges for smaller businesses. But when Robert Joselyn, president of Joselyn Tepper & Associates, examined a different, admittedly atypical set of agencies with widely varied sizes and locations, he found a vastly different and much brighter picture.

Joselyn operates Travel Agency Management Solutions (TAMS), a firm that specializes in financial benchmarking for agencies. Its 132 North America-based agency members submit financial and operating data on a quarterly basis. In turn, they receive a comprehensive analysis and comparison of their data within peer groups of no more than 20 noncompetitive agencies and against the TAMS numbers as a whole. Each peer group meets for quarterly, in-depth reviews of these financials.

Across the TAMS membership, which ranges from agencies grossing $2.5 million to some at $150 million, there are “lots of frontline agents earning $40,000, $50,000, $60,000, $70,000, $80,000,” Joselyn said. He attributes this to his assertion that TAMS agencies are among the trade’s better businesspeople.

“They are numbers-oriented and they incentivize correctly,” Joselyn said.

The bottom line, Joselyn said, is that “in well-run agencies, there is the opportunity to make very good pay.”

Joselyn acknowledged that compensation tends to be better at larger agencies because they have “better deals with suppliers, more targeted marketing and better technology for efficiencies.” Plus, they do a better job of collecting sufficient service fees, he said.

But overall, there have been “no dramatic hikes in agency revenue over the last few years, and agencies can’t give raises unless there is better revenue coming in the door,” Joselyn said.

Joselyn said he believes that TAMS compensation is better than industry averages even among the smallest members because member agencies are willing to charge service fees for selling commissionable products such as cruises and tours.

ASTA research

As to other parts of ASTA’s research report, the survey revealed that the portion of agents compensated on a commission-only basis had risen from 10.7% of agents in 2004 to 18.4% in late 2007. It also found that the portion compensated with a mix of salary and commissions had increased only slightly, from 37.3% to 38.3%.

Corporate agencies were unlikely to compensate staff on a commission-only basis, the survey found. ASTA reported that compensation for counselors varied depending on where the agencies were located. It looked at six regions and found a variation of 15.5% between the lowest and highest averages -- the Southwest and Mid-Atlantic States, respectively.

ASTA said that after repeating this research, it will begin including trend data in future reports.

ASTA provided the full report free to its Premium members and a two-page summary to other members. It is selling the full report to agent members for $350; the price for Allied members is $550. It is $750 for all other buyers.

In addition, ASTA established an interactive tool “to help the whole industry, not just ASTA members” with hiring issues, said Teates.

It also offers to all a free document in its research section, addressing the issues facing the industry in its attempts to attract newcomers.

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