To rebate, or not to rebate, that is the question.
When you are a small travel agency selling the same products as giant online players and warehouse clubs, there’s always a temptation to compete on price by giving part of your commission back to the customer. That kind of rebating is officially prohibited by most of the major cruise lines and many resort companies. But, of course, there are many ways around the rules, and many who try to circumvent them.
Whether it’s allowed or not, though, travel agents talking to Travel Market Report agreed that rebating is a slippery slope.
“If a client finds a lower price with an online travel agency, I may price-match it with my supplier, depending on how much the difference is. But I do not rebate,” said Pam Smith, owner of Beach Vacations and Beyond in Tulsa, Oklahoma.
“If you lead with price, you make it only about price; that’s why discounting is the route to all evils when you are a professional travel advisor with knowledge, which is the cornerstone of your business,” agreed Endless Travel owner Teri Hurley in Georgetown, Texas. “Unless you have the volume of an OTA (online travel agency), you’ll soon find yourself out of business.”
“No rebating, price matching or discounting for my agency,” agreed Laurie Poffenberger, owner of TravelLuxuryVacations in Round Rock, Texas. “Most luxury travelers are not worried about a few hundred bucks. They want to feel special with massages, bottles of wine, roses on the bed, upgrades and other perks, and to know that a warm, caring human has carefully planned their vacation.”
Michael Schellhase, owner of Travel Haus of St. Louis, noted that sharing your commission with clients is like saying you are being overpaid. “Your clients are coming to you for those services and knowledge that you have spent hours on via travels, taking webinars or attending conferences. These all cost the agent money and time ... why give it away? I support Sandals and Viking Cruise Lines because of their no-discount policies. We need more suppliers to follow them.”
And yet, the lure to give the client something back remains. Some suppliers do allow some type of rebating. According to Travel Market Report’s Ocean and Cruise Report Cards for Travel Agents, there are a number of suppliers who give agents the opportunity to rebate.
New agents may be tempted to discount to build a book of business. And even established agents often offer gifts to their best customers, though all agree that is not the same thing as rebating.
“I do rebate where the supplier allows it,” acknowledged Kevin Vance at TowPath Travel. “An astonishing 80 percent of clients book with a different travel agent for each trip. If giving a $100 savings on a $10,000 booking gives me the opportunity to show my stuff and prove my value, then I think that is money well spent. Once I book them, once I have saved their vacation from ruin, I have established that relationship. And maybe I no longer need to offer anything.”
Indeed, said Dreams Vacation owner Christy Newsom Scannell, “the beauty of owning my business is being able to make these decisions on a case-by-case basis. For example, just yesterday I had to pass on three Royal Caribbean cabins because an OTA was offering prepaid gratuities and onboard credits that, had I matched, would have reduced my commission to a number I'm not comfortable with. However, I have matched offers on higher-dollar bookings. I've found that clients can want my service AND the best price. But I do wish cruise lines would reduce the gift/rebate rule from 10 percent to 5 percent to honor those of us trying to actually make a living at this business and who partner with them to create product loyalty instead of just churning and burning to willy-nilly fill ships (like the OTAs and Costco types).”
“My agency does not rebate, but we have an exclusive 'value added perk' for Amtrak Guest Rewards members who book a cruise with us, where we award them points. In the end, we do pay for those points out of our commission, but since this is only available to AGR members, it's a small but loyal subset of our clientele,” said Cathy Udovch at the Travelstore in Irvine, California.
In the end, though, said Sarah McKimmie, there’s something about refusing to argue over commissions that just feels right.
“I used to work for an agency that said a dollar in our pocket is better than letting them go to the competitor and would discount to no end,” she said. “I am now with an agency where we charge fees and don’t discount. I feel so much more valued and have clientele who appreciate what we do. If I lose a client to an OTA, that’s fine. They can keep them!”