What is the home-based travel revolution?
The twentieth century saw the rise of the travel agent. Middlemen (which is what travel agents are, in effect) became necessary for a number of reasons. Travel is a very complex product — a whole series of products, in effect.
In the early days, at least, the companies that provided the products were far more adept at providing than at selling. Their customers were also very widely distributed geographically. These and other factors created an opportunity for entrepreneurs who agreed to represent the products of many different travel suppliers to a local market in exchange for a commission on the sale. That commission was traditionally ten percent, although as in all selling situations top producers were rewarded with higher commissions, called “overrides” in the travel business.
The system of distributing travel products through a network of travel agencies took hold and travel agencies themselves came to look very much alike, sharing a great many common features. They were storefront, retail businesses, located in commercial districts of town, open during normal retail business hours. In short, they were very much like the clothing shops, boutiques, grocery stores, bookstores, and other retailers with whom they shared the block. This picture is what I call the “traditional” travel agency.
The traditional travel agency looks the way it does for many reasons, but several concern us here. Mostly they have to do with the airlines.
Before the age of “ticketless travel,” airline tickets were written (then printed) on blank paper called “ticket stock.” In its blank form this paper is like a blank, but valid, check. Anyone who has it can write a ticket to anywhere for any value. Hence the term, “write your own ticket.”
Ticket stock is extremely valuable (it still exists!) and since it is entrusted to travel agencies the airlines had a very valid reason to ensure that their ticket stock was safe. So they developed a set of rules that would tend to ensure that they could trust the travel agents who were selling their tickets. These rules included things like:
A business location in a commercial district. In other words, the travel agency had to look and act like a “store.”
A system of bonding, to assure the airline that the travel agency owner was solvent and respectable and, therefore, not likely to be tempted to do anything fishy with the airline’s precious ticket stock.
Another factor determining the look and feel of the traditional travel agency is the computer. Travel agencies were one of the first businesses to be extensively computerized. The complex and expensive computerized reservations systems (CRS) that made ticketing easy encouraged even more centralization and “professionalism” in the travel agent industry.
In other words, if you wanted to be a travel agent you had to open a storefront agency with its high overhead and complex computer systems. This took a lot of money. Of course, you could also get trained to operate a CRS and go to work in a storefront agency, and many agency owners started out just this way.
This pattern, in turn, created another distinguishing characteristic of the traditional travel agency: it was a place to which would-be travelers came to talk to agents sitting at a desk operating a CRS. Most travel agents became “order takers.”
Of course, there were always exceptions to this general rule. Many travel agencies employed “outside agents” to hustle up business. These outside agents were, in effect, free ranging inside agents who returned to the agency and their CRSs to generate the airline tickets and other bookings they had made outside.
Some agencies used “bird dogs” as they are called, people who sent customers into the agency location where inside agents would cater to their needs. Bird dogs performed a valuable service and were compensated with a small percentage of any commissions that resulted from their referrals. This was very much akin to the “finder’s fees” paid in other industries. Nonetheless, these were exceptions that proved the rule: most travel agents were reactive order takers tied to their desks and the CRSs that sat on them.
All this began to change in the 90s thanks to a number of intertwining 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.
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.
The Home-Based Travel Agent Resource Center and my home study course are dedicated to providing home-based agents of all levels of experience with the knowledge and tools they need to make their home-based travel marketing business the resounding success it deserves to be.
If you are ready to order our home study course and launch a successful home-based travel agent career, CLICK HERE.