More travel agents are now ICs than work as full-time employees

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Independent contractors agreement
Photo Credit: Jon Schulte/Shutterstock

To many travel agents, the benefits of working as an independent contractor (IC), rather than as an employee, are myriad: It's convenient. It's flexible. It allows frequent travel. And, thanks to tech advances, it's possible to work from virtually anywhere.

Those are among the factors that have led to what Travel Institute president Diane Petras called a "dramatic increase" in the number of IC agents in the past decade, as evidenced by the institute's new study, "The Changing Face of Travel Agents," which was released in May.

According to a 2008 study by the institute, 71% of agents a decade ago said they worked primarily as employees. But the new study, conducted last December, revealed that 62% of respondents now say they are working as contractors, up from 29% in 2008.

Petras said the Travel Institute has seen "steady growth in students seeking a career in retail travel since 2012, with 2016 being the most dramatic." That observation is based on sales of new agent-training products as well as enrollments in the institute's Certified Travel Associate (CTA) program.

The Travel Institute's most recent study -- based on an online survey by Schreiner Research Services, to which nearly 2,000 U.S. travel agents responded -- also found a workplace change. The majority of ICs (92%) now work from home, while 22% of employees work from home.

The institute's data is consistent with other industry findings.

Describing IC use as "prevalent and growing" in the travel industry, Erika Richter, ASTA's director of communications, said: "Like many other industries, travel agencies rely heavily on the services of ICs, an arrangement that our members tell us provides substantial benefits for both workers and agencies in situations where a traditional employment relationship is impractical or uneconomical."

ASTA's most recent member surveys found that 75% of respondents use at least one IC. The average agency that uses ICs had 13, compared with 10 full-time employees.

"Compare this with 2006, when the average agency used only four ICs," Richter said.

Travel Weekly's most recent Travel Industry Survey also reveals that a growing number of agents work from home. In 2008, 31% of respondents were home-based. That grew to 55% in 2017.

Within that 55%, 18% said they were home-based employees, while 37% said they were ICs. However, the survey notes that the sample likely overrepresents the number of home-based agents, "because in most cases, only one agent in a retail office is included in this survey."

The Travel Institute's survey also looked at the backgrounds of ICs and found that 47% have worked for fewer than three years in travel, while 46% of employees have more than 20 years' experience (just 18% of ICs had that level of experience).

The institute also found that ICs are more likely than employees to work part time: 36% of ICs work 20 hours per week or less versus 8% of employees, while 46% of employees work more than 40 hours per week versus 22% of ICs.

Petras also pointed to evidence that many ICs came to the travel industry from other fields. According to the institute's study, 60% of ICs are older than 50, and 37% said travel is a new career.

"Those statistics indicate that our industry attracts career-changers, and that certainly contributes to the growth of ICs," Petras said. "When you look at this segment of the market, some are hanging onto their existing jobs while they explore life as an IC, and others have less need for a steady paycheck and place a higher priority on flexible hours, making money at something they love and being their own boss."

In fact, the institute's data suggests that  those are some of the top reasons ICs were attracted to the industry in the first place. In total, 69% said a key factor was the ability to work from home, while 61% cited the ability to "be my own boss." Flexible hours were also popular (58%), as was financial opportunity (44%).

Ann Chamberlin, senior vice president of membership, marketing and strategic partnerships at ASTA, agreed that "convenience, flexibility, frequent travel," and the ability to do business on the road are all factors that ICs look upon favorably. The consolidation of brick-and-mortar agencies is also a factor, but strong customer bases and word-of-mouth recommendations have kept clients coming, effectively replacing walk-ins to brick-and-mortar agencies, she said.

"Like many other industries, travel agencies rely heavily on the services of ICs, an arrangement that our members tell us provides substantial benefits for both workers and agencies in situations where a traditional employment relationship is impractical or uneconomical." -- Erika Richter, ASTA

The increasing prevalence of ICs in the travel industry is part of a national trend in which a growing number of workers are gravitating to contract or part-time work.

"In terms of levels, the vast majority of workers are still standard, full-time, W-2 workers," said Matthew Mitchell, senior research fellow at the Mercatus Center at George Mason University.

However, there has been growth in the number of ICs. Mitchell described it as "a worthwhile trend to note."

"All of this is kind of taking place against the backdrop of a general decline in employment dynamism," Mitchell said. "So, in general, there are fewer new firms being birthed and fewer firms dying."

He said that could be leading to the rise of ICs and part-time workers. The sharing economy, which lends itself to ICs and part-time work, is also likely a factor in the general rise of ICs in the U.S.

As far as whether to use employees or ICs, agency owners face "opportunities and challenges with both," Petras said. ICs come with a cost advantage, but there are legalities involved in working with them. Employees might come at a higher cost (benefits, payroll, etc.), "but you have control over how they work, when they work, and whether they fit your brand."

As far as the legalities of working with ICs, ASTA general counsel Peter Lobasso said it "need not be a risky proposition," though agency owners do need to understand applicable federal and state laws. He recommended that they engage legal counsel with experience in the matter before working with ICs.

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