Looking Back with Travel Market Report, Part Three: Commissions

The recent history of commissions has been a sad one.

Suppliers have been chipping away at travel agent commission levels—and in many cases at the entire concept—for years now. Many have also encouraged clients to book with them directly.

To say that all of this has been a problem for travel agents is an understatement. Commission issues lie at the heart of agents’ business.

Travel Market Report has given extensive—and aggressive–coverage to commissions throughout its five-year history. That has included new developments, reaction stories and analyses on both the issues and the ways agents have dealt with them—from selling higher-yield products to transitioning to fee-based business models.

The following is a look back at Travel Market Report’s leading stories on commissions during the past five years—along with ASTA, ACTA and our advisory board members’ views on this critical subject.

“Many agents have stopped giving away their expertise for free and are charging a service fee. As for agents and owners alike, you can’t spend two hours offering top notch consulting services to a potential client, and then have them go and book that trip on their own. So I would say that agents have gotten smarter about marketing themselves and explaining their value.”—Zane Kerby, president and CEO, ASTA

“More agencies and agents are moving home, specializing and charging service fees [instead of relying on commissions]. [They’re] also making less money selling mass market cruises and shifting focus to land-based vacations, destination weddings, FIT’s, groups, and charging service fees.”—Marlys Aballi, owner, Connection to Cruise

“Taxes, fees and NCFs continue to grow, commissions continue to shrink and the challenges are explaining the added fees to the consumer that are non-commissionable.”—David McCaig, president, ACTA

“The erosion of commissions, particularly the contemporary mass-market lines [is an issue]. It is not possible to sell certain lines and make a profit. Constant price reductions are taking up too much time and really amount to do-overs. When one is doing the same work over and over on the same booking, commission is lost as well as the time that could be spent on customer relations and marketing.”—Colleen Gillette, owner, New Paltz Travel

2010
Vicki Freed to Agents: Grow Your Business, and NCFs Won’t Matter
Cruise lines are often less than transparent about why certain portions of the cruise fare are non-commissionable. A cruise line exec lays out the cruise industry’s justifications for its policies.

2011
Rebating on Cruise Sales: Where Do You Stand
When clients shop for the lowest possible cruise fare, or cruise lines reduce commissions based on post-booking changes, life becomes more difficult for travel agents.

2012
Indie Agents Shift Away From Cruise as Biz Model Evolves
Independent agents said they were moving away from selling cruises due to low commissions and the sheer volume of product available.

2013
NCFs Remain Obstacle to Profitability
World Travel Holdings’ Brad Tolkin shared some information on cruise line non-commissionable fares, showing that NCFs represented 28% of a cruise’s selling price in 2012.

Agents Angered by Sandals’ New Limits on ‘Soon Come Back’ Bookings
Sometimes, a supplier’s less obvious policy change can have a major effect on agents. Sandals cut agent commissions on on-site bookings—and agents reacted.

2014
Selling Cruises, Does It Still Pay?
Travel agents and executives said increased NCFs and low cruise fares are making it harder than ever to turn a profit selling cruises alone. They suggested focusing on vacations that provide higher commissions.

Agents Finding Alternatives to Cruises To Compensate for NCFs
An ASTA white paper finds that cruise lines clearly use NCF’s to reduce agent commissions. Agents, in turn, are compensating by increasing their sale of alternative products.