Should travel agents charge fees?

Cassidy, Frances (2000) Should travel agents charge fees? In: 11th Australian Tourism and Hospitality Research Conference (CAUTHE 2001): Capitalising on Research, 7-10 Feb 2001, Canberra, Austalia.

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Abstract

Travel agents currently do not charge their clients for the services they perform. Rather their income is derived from commissions paid by principals ranging from wholesalers to airlines and hotels. However, this might change as airlines in particular, are attempting to reduce distribution costs by reducing commissions paid to travel agents.
In recent months Air New Zealand subsidiary Freedom Air have ceased paying commissions entirely, while United Airlines recently announced a reduction of 2% in commissions paid to travel agents effective 01 July 1999 (Read 1999; Brill 1999). Jetset Tours has developed a system to track all hotel and car commissions. According to Jetset's General Manager Corporate Travel, Alan Diamond, they once relied on principals to send them a cheque. Unfortunately, this cheque did not always materialise and so they decided to develop a computer software to track this commission (McMahon 1999).
What if hotels, wholesalers, car companies, travel insurance companies and cruise companies, who currently pay a minimum of 10% commission to retail agents decided to reduce their commissions? How would the retail travel agents make up for this reduction in revenue. How would the retail travel agent stop the spiralling decline in commissions or payment of commissions?
The unrelenting drive by airlines in particular, to reduce cost structures appears to be targeting the commissions previously paid to travel agents. If this continues travel agents face the start choice of seeing profits fall or introducing fees for bookings. This paper will outline current structures of commissions, comment on current changes and examine the options for retail travel agents in the future in relation to commissions.


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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Faculty / Department / School: Historic - Faculty of Business - Department of Marketing and Tourism
Date Deposited: 27 Aug 2013 02:20
Last Modified: 27 Aug 2013 02:20
Uncontrolled Keywords: travel agents; commissions; travel industry
Fields of Research : 15 Commerce, Management, Tourism and Services > 1506 Tourism > 150699 Tourism not elsewhere classified
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150314 Small Business Management
14 Economics > 1402 Applied Economics > 140216 Tourism Economics
Socio-Economic Objective: B Economic Development > 90 Commercial Services and Tourism > 9003 Tourism > 900301 Economic Issues in Tourism
URI: http://eprints.usq.edu.au/id/eprint/6976

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