Avoya Travel Incents Agents To Form LLCs And Obtain E&O Insurance

Following through on an announcement made 18 months ago, host agency Avoya Travel is providing sales leads only to member agents who operate as limited liability companies (LLC) and have their own errors and omissions (E&O) insurance.

While Van Anderson, co-president and co-founder at Avoya, would provide only limited details, he said that independent agencies (IAs) can remain in the network without establishing an LLC or their own insurance—but they cannot participate in the Live Leads program.

Avoya has spent the past 18 months educating member agents about the initiative, Anderson said, so many agents have already established their LLC and purchased their own insurance. Some agents have chosen to find their own professional services to meet Avoya’s new “Integrity and Professionalism” standards.

“A lot of IAs are married to CPAs and attorneys,” Anderson said. “We had one IA who was relatively new who said they wouldn’t do it until they spoke to their attorney. They called the next day and said that their attorney said, ‘Avoya is correct. You’re at risk with the way your business is structured; you have a home that is paid off, and you’re putting it at risk.’ ”

Avoya believes the requirement is helping member agents reaffirm their commitment to running a true travel agency business. “Travel is not a place for hobbyists,” Anderson said. “Our data show us that IAs who are organized as an LLC and have their own E&O insurance are more successful. They sell more travel and they experience fewer customer service issues.”

Avoya’s Live Leads software, which was patented a little over a year ago, distributes leads based on sales performance. Anderson said an agent’s overall performance score incorporates factors like sales closing ratio, repeat sales, referrals and Net Promoter Score.

Move also clarifies relationships for IRS and Labor Department
By incenting agents to form an LLC and obtain their own insurance, Avoya and its agents also are clarifying their relationship and compliance with Internal Revenue Service (IRS) and Department of Labor (DoL) rules and regulations about when an agent is independent.

The IRS looks at how much control a travel agency has over an independent contractor (IC), while DoL examines these and other factors, including how much risk an IC takes when affiliating with a host agency.

Avoya embarked on its program in 2011, well before the IRS and DoL began more closely scrutinizing independent, self-employed travel agents working in host networks. “We were focused on how this program could improve our business and our agents’ business. But at this point, it clarifies the relationship as well,” Anderson agreed.

Anderson has received calls from other agencies and networks, and has had conversations with some of his peers, since the program went into effect. “We’re hoping to raise the bar for all of us,” he said. “We should all be working toward raising the perception that being a travel agent is truly a profession.”

Travel Market Report reached out for comments from Nexion and Travel Planners International, but did not receive a reply by press time.