Host agencies are wooing agents with new perks but beware because “you don’t know what you don’t know”

Host agencies woo agents with new perks but “you don’t know what you don’t know”

This story originally ran in the May 24th, 2018 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.

TORONTO — Home-based agents are in high demand and competing host agencies are upping the ante as they woo new members, and that has more than a few agents asking themselves, should I make a switch?

It could be from bricks-and-mortar to home-based, or from one home-based host to another, but either way travel agents looking to switch allegiances have the upper hand these days as host agencies vie for good agents and strong membership numbers.

For any agent on the hunt for a new host agency, there’s a checklist of must-asks that includes commission structure, contracts and non-competes, and client ownership, three of the biggest sticking points.

After that agents will want to check out the host’s fee structure and renewal process. Then there are tiers and tracking reports, preferred suppliers and referral programs. And last but certainly not least, training and marketing support.

And then, to switch or not to switch?

For any agent contemplating one of the biggest moves of their career, Flemming Friisdahl, founder of The Travel Agent Next Door, says take your time, don’t be in a hurry to move and remember, buyer beware.

“You really want to be sure you take time to fully understand what the key players have to offer. This may sound funny, but you don’t know what you don’t know. You may not know what questions to ask. Having an in-depth call with the head/owner of the business and have the program fully explained to you is important.”

Is the host agency’s marketing Canadian-based? Or out of the U.S.? (“Not what I feel an agent in Thunder Bay would want”). And make sure you fully understand the programs, he says, adding “it is not easy to move a second time.”

Is all the switching between host agencies good or bad for the industry? TPI CEO Zeina Gedeon says “competition is always good but the bad part, with social media, there is a lot of pontification that is all smoke with no essence, advisors need to know what is real and what is [not].”

Flight Centre Independent’s General Manager, Lee Zanello, says the biggest challenge is when agents want to stay with their initial host to collect unpaid commissions from clients yet to travel, but then new bookings come in “and it becomes harder and harder to break away”.

In response FCI is “embracing non-exclusivity”. For agents who are looking to transition to FCI, says Zanello, “we are happy for them to remain with their existing agency while their previous bookings get resolved and at the same time get set up to transact with FCI.”

Then, when the time is right and on the agent’s schedule, they eventually transition to putting all their new bookings through FCI and dissolve their previous partnership once all the loose ends are tied up.  “We know this is a fairly progressive position to take, but it is what is best for our new agents and their clients,” says Zanello.

FCI’s goal is 1,000 agents by 2023, with an average of 12 – 15 new members coming in each month, with the current total at 272 across Canada. While it has a mix of agents – either completely new to the business, new to home-based (eg. storefront agents), or agents coming from another hosts – “the clear leader is the agent currently in an agency environment looking to go the independent route.”

Zanello says a lot of the conversations he has with agents contemplating a switch focus on their fear of the unknown. “It’s a scary step for many,” he says. “For agents who have built a loyal client base in their business and who have put years into building their own brand and repeat and referral network, there is a lot to gain financially by going independent as well as earning the right to enjoy more flexibility in their lifestyles.”

But beware the rarely-discussed – but increasingly common – side-deals, he adds. They’re a potential pitfall. “If a host agency is offering a special deal for an agent to sign on that is not something they advertise publicly, somewhere along the line another agent is paying for that deal.”

What might seem flattering at first – that feeling of being sought after – is actually indicative of an agency whose motivations are not for the well-being of all of their agents, “an agency who puts some individuals ahead of others.”

That’s not saying there isn’t room to better reward agents who have a bigger book of business, says Zanello. “But I think there is a lot to be said about the transparency around how those deals are made.”

At FCI’s recent Annual Cross-Canada Meetup in Toronto, new initiatives included a new fee model, moving from a standardized monthly fee to a model that allows agents to choose their own fee and level of support that fits their business needs. FCI is also launching a bookable website for non-GDS agents, in mid-June.

Meanwhile The Travel Agent Next Door made headlines recently with the launch of its Partner Incentive Program, with a $25,000 cheque presented to agents at the host agency’s recent annual conference. The profit sharing initiative was the latest perk from a host agency that has built itself up in a crowded field after just four years.

This is the first payout of many years to come, says Friisdahl. To qualify agents/agencies had to have earned 70% of their commission on preferred and approved suppliers, but there were no minimum sales requirements. “We paid this because we are profitable and any company in travel that is making money should be exceptionally proud,” said Friisdahl.

The next goal for The Travel Agent Next Door?  Upgraded IT and making IT easy for members. “We want our business partners to be able to work faster, and make more money, putting in less effort. So our goal is to have a larger IT department so we can make that happen.”

In 2016 The Travel Agent Next Door came out with a campaign for small agencies who might have thought their only forward options were closing or merging. Friisdahl offers a look at a small agency who made this particular switch. “This agency did a bit more than $1.5 million and of the total $147,000 commission earned the agency retained 97%. So we only made 3% of the at-source commission. We did earn a back end, and the agency would never have gotten that back end on their own sales. However, they did not have any of the expenses they had before like TICO, IATA, ACTA, CLIA, Errors and Omissions, marketing, website and booking engines cost, print marketing, e-marketing, accounting system costs and the list goes on.”

TPI had a higher than usual call and email volume after it put out a new promotion for Travel Agent Day, still ongoing for the month of May, which waives its monthly fees for the first six months, a $600 value, for agents looking to join the TPI network.

To assist in the transition of an agent’s business, TPI recently implemented a salary draw to ensure all new-to-TPI advisors don’t miss out on income. “We are continuously striving to make our advisors life easier, and ensure that we all work as a team to strengthen our advisors’ business. At the end of the day it is all about our advisors,” says Gedeon.

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