Going Solo Vs. A Host Agency
by John Dalton

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At the Tour & Cruise Travelworld Conference (March 24-25 in Tampa), I will be conducting a panel of experts who are dedicated to both approaches. We will explore the plusses and minuses of each side, so everyone can have an up-to-date understanding of both views. It is important to understand the changes that are occurring in the industry and how you can position yourself to capitalize on the new trends to increase your client base and earnings.

Trends and change will never end in the travel industry. Here are some of the changes I have witnessed over the years that will demonstrate the power of the independents and their contributions to the industry. Initially, most independents were affiliated with host agencies. The basic concept was perfect. The host agency shared commissions with the independents who could not have negotiated commissions with suppliers. The agency combined the sales of the independents and added it to their own -- and they suddenly found themselves growing their volume at a faster pace than most of their competitors.

The other agencies saw little need for independents and continued to sell in the traditional manner they always had. The independents were the secret weapon that started many mega agencies on their way. Soon, those agencies were attracting the attention of more and more suppliers. They were offered higher commissions while the traditional agencies still collected the standard 10 percent. Of course, the innovative agencies immediately realized they could attract higher producing independent agents if they offered them higher commissions. This move accelerated the agencies' growth but, more importantly, their "clout" with specific suppliers.

Suddenly, there was no longer a level playing field among the agencies. The field was tilted in favor of those agencies working in concert with independents that were responsible for a big percentage of the agencies' growth and profits. The owners of those agencies were not quick to share their secrets for success with their peers when attending vendor seminars and association meetings such as OSSN, ARTA, etc. They also did not reveal their marketing practices to their suppliers. In short, the independents were unknown except to the managements of the agencies working with them while, at the same time, they were the ones most responsible for the growth.

A short time later, another group of people saw another opportunity to stimulate growth in our industry. They understood that the smaller agencies did not have the sales volume with most suppliers and were at a competitive disadvantage. Of course, they also were not aware of the independents' positive impact on the agency business -- but they knew the marketplace had been divided into two agency groups: Those earning a standard 10 percent commission and the elite enjoying much higher compensation.

Their solution to level the playing field was to create consortiums. Their approach to suppliers would work if they could combine the volume of all of the "little guys" and provide commissions higher than 10 percent; then, the agency playing field would be level again.

The suppliers saw an opportunity to reduce their marketing costs by focusing on the higher producing agencies and no longer having their reps calling on the non-producers. That would become the job of the consortiums. They also could reallocate a portion of the savings to provide the smaller agencies with the same commission levels as they were paying to the larger agencies. They then rewarded the consortiums additional compensation for the production of all the smaller agencies. Suddenly, the agency playing field was level again, as most agencies could sell many suppliers and earn more than the traditional 10 percent commission. This allowed the smaller agencies to be able to offer higher compensation to independent agents and, as they became partners, many of the smaller agencies grew dramatically. The independent agents were again a critical group that was expanding the sales of the travel industry.

A short time later, some agencies began to move away from being full-service agencies and started to focus on the business travelers. New groups were created such as Woodside and Hickory. They designed programs to attract corporate travel. Hotel discounts, seat assignments, boarding passes, credit card float programs, reports, and many other innovations were started in concert with their suppliers.

The major change was the way corporate travel was booked. The global distribution systems (GDSs) supplied new procedures that reduced the booking time and provided the callers with much more efficiency when booking with the agencies. These innovations provided a new direction for a few agencies. They saw an opportunity to provide their programs for their clients that was unique. Instead of having the business travelers call their agency or a call center, they placed agents on the premises of their corporate accounts. This brought service to a new level, as the accounts could obtain their tickets immediately without having them delivered or mailed.

But the best aspect for the clients was the fact they could visit the agents on site and give them their requests or other information face to face. This created a fabulous rapport with the agents and the clients. Soon, several of the on-site agents decided that their home life was more important than being a travel agent. They wanted to spend more time -- at home -- with their families. They notified their agencies they would be leaving and felt their career in travel was over. The agencies began to seek replacements and notified the accounts. And then came the shocker.

The accounts were not interested in staying with the agency without their favorite agents. The agencies looked for a solution and thought they had come up with one. They offered to place a GDS and a telephone in the agents' homes and offered them the same salary. The independents immediately realized that they -- and not the agencies -- were the reason the accounts were using the agency and asked for raises. The agencies refused.

A few weeks after leaving their agencies, the agents received calls from the accounts they once served. They were asked to continue handling their accounts even if they did it from home. The agents called other corporate agencies and asked if they were interested in some rather "large" corporate accounts. Of course the responses were all the same - yes. Then the agents told the agencies how the accounts would be served. They said they would work out of their homes and instead of being employees of the agencies they wanted to be independent agents and dictated their compensation terms to the agency owners.

The result was a new group of independent agents working exclusively with corporations. But more significant than that was the fact that independents started to obtain referrals from their corporate accounts that led them to new corporations. Thus, the need for independent agents expanded once again as another group of travel agency owners and managers understood their value.

Over the years, and through all of these changes, suppliers had not recognized the value of the independent agents. As far as they were concerned, they were an unknown quantity. But in one cruise meeting, the lines were discussing Cruise Lines International Association (CLIA) membership for independent agents. It was a heated discussion until one cruise executive pointed out that he felt some of the independent agents produced more revenue than most brick and mortar agencies. He cited one who produced over $2 million for his cruise line alone. By the time he was finished, CLIA understood one of the best-kept revenue producing secrets in the travel industry --- independent agents - and offered them membership in the organization.

I had been involved with CLIA for years doing the sales and marketing video training tapes they distributed to all CLIA agencies and being in on the ground floor of their accreditation program. I can honestly say the best move the organization ever made was to embrace the independents and recognize them as equals of the full-service agencies. The cruise lines became the second group -- after the travel agencies -- to realize the potential business they were missing and committed to help the independents.

How has it worked out for the cruise lines? The results of new surveys reveal that the business mix of the independents showed that 50 percent of their sales were cruises! Tours represented 23 percent while all of their other sales combined were only 27 percent. This again demonstrates the power the independents have in our industry when they are supported and given a chance to do their thing! Years ago, it never entered suppliers' minds to work closely with independents. Today, suppliers attend functions to seek out independents and can't wait to meet the folks who contribute a significant portion of their business.

During the panel discussion I will be hosting -- Going Solo Versus Host Agency -- we will discuss a new trend that is surfacing. A large percentage of solo independents are working with other independent agencies and splitting commissions. This new direction again is expanding the influence of the independents in the market place. When suppliers understand this new migration, they will be evaluating their sales territories to contact solo independents more frequently as they see an increase in their sales. Many other trends and facts will be disclosed to demonstrate why it pays to go solo or with a host agency.

So, join me and my colleagues in Tampa March 24-25 at the Tour & Cruise Travelworld Conference. We are there to provide you with sales and marketing concepts to help you expand your client base and earn more dollars. The suppliers will be there in droves. They are there to support you as never before. Meet them face to face and discuss the ways they can help you and you can help them. Mingle with other professional independents and share and exchange money-making ideas. The atmosphere will be electric and the agenda packed with money-making ideas!