Home Based Travel Agent Basics: Mini-Course - Part 2

Home based travel agent mini-course: Part 2: The Home-Based Travel Agent revolution Begins.

The "traditional" travel agency was a place where people came to place orders. That began to change in the 90s due to a number of related trends:

SMART MARKETING

Some clever fellow decided he could make money marketing the "romance" and "mystique" of being a travel agent, or more specifically the travel benefits that (in theory) came with the mere fact of identifying yourself as a travel agent.

This notion was copied and very quickly there were any number of travel agencies working a high-powered and sophisticated twist on the old bird-dog system.

"Be one of our outside independent agents," the pitch went, "and refer business to our inside agents. In return, we'll give you a small commission and, best of all, a photo ID card that proves you're a travel agent and that you can use to get all sorts of discounts and other goodies."

This marketing approach has met with varying degrees of  success on its own terms. What is less in doubt is the fact that it has been extremely controversial within the travel agent community and vigorous efforts have been made to put an end to it, thus far to no avail.

Although this may change in the future, the current situation appears to be that, while what these travel agencies are doing (and they have to be
bonded, accredited travel agencies to do this!) may anger other travel agents, it is not illegal. These agencies call themselves referral agencies; their critics call them card mills. Whatever terminology you prefer, they seem to here to stay.

THE RISE OF THE PERSONAL COMPUTER

Employees of travel agencies were for a long while the most computer-savvy people to be found outside academia or large corporations. When personal computers started popping up everywhere, just about anyone could do what travel agents did if they had the right software.

IMPROVED COMMUNICATIONS

It's hard to imagine now how recent and revolutionary the introduction of the fax machine was. In retrospect, it had a profound effect on the travel distribution system with its ability to transmit bookings quickly and accurately.

Now, the Internet is replacing the fax as a means to quickly send and receive data.

COMMISSION CAPS AND CUTS

Then the airlines started cutting travel agents' commission rates and limiting the amount of commissions they paid at those rates. Airline tickets had never been something that travel agents got rich on, but they were steady and those first and business class tickets paid very healthy
commissions. Now the airlines were dropping agents' pay below their costs. In other words, many agents were actually losing money on every airline ticket they wrote.

Today, most airlines pay zero commissions on base fares.

However, many agencies do receive some commission income based on volume.

A lot of agents started asking themselves some hard-hitting questions. "Why am I carrying all this expensive overhead just to please the airlines when the airlines are driving me out of business?"

A lot of smaller agencies closed, some to go out of business forever but many to reopen as home-based agencies, freed from the heavy financial burdens of a storefront agency and also free to spurn the airlines that had spurned them, free to concentrate on selling higher-priced, higher-margin products.

Many agents who took this route saw a dramatic increase in their take-home pay.

As we enter a new millennium, these intertwining forces have combined to create a true revolution in how travel products are distributed. If the twentieth century was the century of the travel agent, the twenty-first will be the century of the home-based travel agent.

Home-based travel agencies are opening up at an ever-increasing rate, while the number of storefront agencies has been declining every year. The home-based agent can be a seasoned storefront veteran or a newcomer, but both are in the same boat. They are entering a brave new world of travel marketing that is very different from the traditional storefront model. To succeed in this new environment requires new strategies and new skills.

In part 3 of this mini-course, we will take a closer look at this "new" home-based travel agent.

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