A Sticky Issue: ICs Who Have Multiple Hosts

Should travel agents who are independent contractors affiliate with more than one host agency, or should they develop an exclusive relationship with just one host?

It’s a question being raised more frequently these days, given the growing numbers of independent agents (ICs) and host agencies.

Travel Market Report spoke with executives on the host side of the equation to get their take on the choices facing ICs, as well as the implications for host agencies.

Legit reasons
As independent contractors, ICs are free agents and therefore at liberty to choose one or multiple hosts. “These are ICs and it’s their prerogative,” said Jackie Friedman, president of the host agency Nexion.

“There could be a lot of legitimate reasons why an IC may do this, and the fact that they have a choice is a good thing,” she added.

ICs might opt for multiple hosts for a number of reasons, Friedman said, including: to go after higher commission rates; to take advantage of the different benefits offered by different hosts, or because of hosts’ different preferred supplier relationships through their memberships in agency consortia.

Host agency business models may also be a factor. “One host may be focused on helping ICs grow their own client base, while another will provide them with leads to help them supplement their business over and above what they’ve developed themselves,” she said.

Inefficient
While ICs are free to affiliate with multiple hosts, doing so isn’t necessarily in the agents’ best interests, in the view of Friedman and other host executives.

Working with multiple hosts “can drive confusion” for independent agents, Friedman said. “If you have any profitability in earnings, you could lose those because there’s a cost in terms of efficiency.”

Jennifer Cochrane, executive vice president and COO of the new host agency Gifted Travel Network (GTN) agreed that for ICs a downside of having multiple hosts is inefficiency in operations.

“Unless there’s a really good financial incentive, it’s not the cleanest way to operate their business. They’ll have to have 1099s [federal tax forms] from multiple sources and a lot of other things to keep track of.”

Shortsighted
GTN’s Vanessa McGovern, executive vice president of development and strategic partnerships, called the decision to affiliate with several hosts shortsighted.

“If you look at the big picture, it’s a matter of investing time and resources and focusing on one specific strategy. If you have a lot of mixed messages, how can you create a strategy for your business?”

Agents who are “just chasing the money” also could be losing out on other beneficial aspects of a host relationship, she said. “Sometimes it’s worth more than 2% [added] commission.”

Weakens relationships
The relationship between IC and host is another critical factor to consider before affiliating with more than one host.

“A lot of agents are diluting their power and relationship with their host, and it’s an extremely important relationship,” said Stephanie Lee, founder of Host Agency Reviews.

“They’re not looking at the big picture,” she added. “I’m a big fan of building relationships.”

Heart of the matter
Relationships should be at the heart of the host-IC arrangement, agreed Jennifer Wilson-Buttigieg, co-president of Valerie Wilson Travel (VWT).

The New York-based agency works with 175 independent contractors, with its first IC relationship dating back to 1986. The agency also has 210 staff members in 16 offices.

“It’s the IC-VWT partnership that usually gets more accomplished. Our success rate is high when we act collaboratively,” said Wilson-Buttigieg.

“You have to create an incredibly strong relationship, and that relationship is multilevel. Yes, it’s about commissions, but it’s also about the weight of our VWT brand,” she added.
 
Wilson-Buttigeig said communication is key to her agency’s relationship with its ICs, whom it calls “associates.” For those associates “being able to access all of us, not just our programs,” is vital, she said.

The agency’s top executives host conference calls three times a year with its independents to discuss the ICs’ concerns and issues. “We consider our ICs clients,” said Wilson-Buttigeig.

Supplier matters
Of course a central part of any IC-host arrangement are supplier relationships.

VWT, a Virtuoso agency, has a variety of preferred suppliers that ICs can’t get “as a one-off,” said Wilson-Buttigeig.

“We want to make sure that ICs support that business, so we can have the right marketing plan and the right tools in place,” she said.

The IC-host partnership is really based on a three-way relationship – the IC, the host and supplier partners, said Wilson-Buttigeig.

Implications for hosts
For host agencies and the consortia to which they belong, it’s problematic when ICs have relationships with multiple hosts, as it dilutes volume and negotiating power with suppliers.

Suppliers expect sales growth as a result of their agreements with consortia and hosts, Nexion’s Friedman pointed out.

And that holds implications for the IC-host relationship.

“If ICs accept marketing support from a supplier, provided by a host either directly or through a consortium, they need to be aware that they should book that supplier through the host,” Friedman said.

“The marketing was funded by the supplier and success will be judged by the success of that campaign through the host or consortium,” she added.

“What suppliers don’t want to see is an agent affiliated with a host for the sole purpose of getting more commission.”

Friedman agreed with Wilson-Buttigeig that the ideal IC-host relationship is based in a three-way relationship. “When we’re happy, the agent is happy, and the suppliers are happy.”

Respecting the choice
At the end of the day, no one can require ICs to be exclusive.

“The Pollyanna in me loves it when all the stars are aligned – when ICs affiliate with us for the right reasons and become truly successful and feel that loyalty,” Friedman said.

“But if an IC believes that [choosing multiple hosts] is the right thing for their business, then we need to support that decision,” she said.

“Good or bad, if they [ICs] do it for the right reasons, it’s their right.”

Next time: An IC with multiple hosts shares her perspective.