Stop Whinging about Commission Cuts By Adrian Caruso Guest Comment | TRAVEL WEEKLY | Friday 10 November 2006

I write in reference to 'Hit to agents' back pocket' in the October 27 issue.

It's time for agents to stop whinging about commission cuts and change the way they do things if they want to survive. I know for a fact that travel agents in Australia are in for more commission cuts from land-based operators and even more airlines soon. Just take a look at what happened in the travel market in the US, UK and even our closest neighbour New Zealand many years ago. They have all been operating with zero commissions from land-based operators for over 10 years. So, it is going to happen here. It's just a matter of when. The recent cuts by Trafalgar Tours, Insight Vacations and Globus are just a few of the land-based suppliers to cut commissions. There are rumours that hotels (who already offer better deals direct to consumers and agents over the Internet at zero commissions to agents in most cases) are next. Car rental companies will soon follow and cut commissions.

Therefore travel agents have to start changing the way they market themselves, position themselves differently in the market (focusing on a niche is the most profitable strategy) and present their clients' trip pricing differently (as a total cost - never itemised). We at TA Fastrack have for quite some time recommended travel agents we provide our travel agents business coaching program to, to encourage their travel consultants to net everything down and mark up 14-15 per cent according to what target yield you wish to make (I feel travel agents need to be achieving a 14-15 per cent yield to be successful). By doing this, consultants will find it much easier (and save lots of time) than working out how much commission they are making on each component of a client's trip. This is because each component pays different commissions.

We strongly recommend that travel agents use this method of netting the whole trip down to what they have to pa the suppliers and mark up accordingly. This will always ensure that the agent makes their target yield on each booking, and it avoids confusion.

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