This is part two in a series on pay trends by Marilee Crocker.
Low pay has long been a sticking point in the travel agency business, especially on the leisure side. But lately things are looking up.
“Senior or dynamite agents can earn decent money today,” said Jason King, president and CEO of New York-based executive search, staffing, and consulting firm P. Jason King Associates.
In major cities, base pay for agents with 10 to 15 years’ experience can range as high as $55,000 for leisure travel consultants and up to $65,000 for corporate agents, King said. And even in smaller Midwest cities, where pay typically lags that of large metropolitan areas, agencies are starting to pay better. “In mid-America travel agencies are realizing that in order to get the better people they have to be more competitive. A lot of them are relocating people in and paying a better rate, because they want the talent.”
Let’s talk numbers
According to ASTA’s most recent data, compensation for full-time leisure travel agents in 2014 averaged $32,771, including salary, commissions, and bonuses. (For those whose jobs combined managerial and sales responsibilities, average compensation was nearly $10,000 more.)
Motivated leisure agents do better than the average at Ambassador Travel in Evansville, IN, earning in the mid-40s and up. That’s based on an hourly rate plus monthly commission-based bonuses, said president Connie Corbett, CTC.
Corbett agrees with King’s assessment that agents’ compensation outlook is improving. Travel agents are getting smarter, doing things like focusing on niche markets and higher-end travel to maximize their earnings, she said. “Because of that I do see it trending higher.”
While not all of the 30 employees at Ambassador Travel are driven to maximize their earnings, for those who are, the opportunity is there, Corbett said. “If somebody says, ‘I need to earn more,’ we just need to work smarter and apply our efforts in ways that will grow sales exponentially in a quicker way. I really believe we have unlimited opportunities to earn.”
Low base pay
While ASTA found that only 30% of agencies paid a mix of salary and commission, all of the agencies surveyed informally by Travel Market Report pay their agents a base salary plus a share of commissions. Some also offer additional incentives.
It’s not unusual for base pay to be only slightly higher than minimum wage. But agents said that can be deceptive. “It’s low, but the [commission share] percentages are high,” said one owner.
One agency located in a small Eastern city starts newcomers at $15 an hour, then reduces the hourly rate over time to $13 and then $11, while increasing their commission share—from 10% initially up to 30%.
“The idea is that initially you don’t have any clients, so you have to have a living wage. As you stay, your customer base should be growing exponentially. You should be making a lot more money than you could ever make if we stuck with hourly,” the agency owner said.
“People are doing pretty well,” she added. The agency’s top-selling agents earn $45,000 to $50,000 a year, an amount that goes quite far in her area.
On the other side of the country, the owner of a small agency located not far from Silicon Valley said he pays agents $13 to $15 an hour, plus 20% of their revenues when they exceed revenue goals. “A good leisure agent can double her take-home pay,” he said.
His top-selling agent earns just under $50,000 a year, which includes additional compensation pay for management duties.
The owner said his agents are happy with the pay plan, and it’s attractive enough that he was able to hire two experienced agents in the past two years.
Still, for a small agency in a part of the country where median household income is $90,000, keeping good people can be tough when neighboring big businesses pay so much more. “You can get an administrative assistant position in Silicon Valley for double what I can pay. As the job market over there heats up, it becomes more competitive for us to keep good people.”
Within the travel agency industry, intensifying competition for talented frontline agents will continue to place upward pressure on pay, said consultant Robert W. Joselyn. “I think it’s going to go up all the time now,” said Joselyn, president and CEO of the best practices agency group TAMS.
That won’t necessarily translate to a big jump this year. Joselyn predicted that in 2016 base pay for frontline agents will remain relatively flat, increasing just “a little bit.”
For agencies that tie employees’ pay to their revenue performance, total compensation for 2016 is tougher to forecast, since it will depend on sales in an unpredictable economy.
One dynamic that should mean more money in agents’ paychecks going forward will be the heightened expectations of increasingly sophisticated and well-informed customers, Joselyn said.
“People aren’t going to pay for things they can Google or do themselves with relatively little effort. They’re going to pay for people that bring something to the table they can’t get themselves,” Joselyn said. “They’re going to want to work with well-traveled, educated, articulate people who are technologically savvy. And that employee is going to cost more.”
Staffing expert Jason King made a similar point. “The smaller agency needs to revamp itself. They need to make sure they have a staff that can handle current clients and new clients coming in with top levels of customer service.”
That requires hiring highly talented agents. “If you want to hire somebody in the 40s, that means the person is currently earning in the 30s. Is that the level you’re looking for? You’ve got to decide,” King said.