The Destructive Practice Of Rebating
Richard EarlsTravel Research Online

Travel agents sometimes find themselves trapped between two masters, the client and the supplier. Earning a fee from the first and a commission from the second, many agents are haunted by a feeling somewhere in the back of their mind that they are “double dipping”. Indeed, this schizophrenic posture can sometimes create an appearance of impropriety in the minds of ill-informed journalists and consumers who view the travel agency system as antiquated and unnecessary given the information available to anyone who can type an itinerary into an online booking form. Information, of course, is a far cry from being able to make an educated and professional assessment of the information, but that’s another issue.

Travel industry guru Nolan Burris has a good answer that might just assuage your troubled conscience, should you have any problems sleeping with the issue of fees and commissions weighing on your mind. Nolan indicates that the client fee is what you earn for your services to clients and the commission is what you earn for your services to tour operators. After all, when you book with a tour operator or a cruise line, they are relieved of many of the logistical issues that are inherent in dealing with a consumer from advertising to the sales process to filling out forms and other data entry tasks. Better yet, the cruise line pays you only when a sale is made. I think Nolan’s analysis is right on the money.

Agents sometimes seem to be of two minds regarding a related issue: rebating.

Recent cruise line announcements regarding more stringently enforced “no-rebating” policies seem to me to be a good move in the right direction, largely benefiting traditional travel agents. Here and there, however, I’m seeing a few travel agents complaining that the new policies are infringements on their own business model and that the rebates that they provided to clients were an edge that they are unwilling to readily relinquish. After all says one such agent directly to point “How do I now compete and stand out from the crowd?”

Let me count the ways.

Actually, let me just suggest that anyone concerned that the no-rebating policies might limit their tactical array read the first 412 articles of The 365 Guide.

The recent no-rebating policies of the major cruise lines are excellent developments to be loudly applauded. The hordes of rebate hungry consumers on forums like Cruise Critic will have to find their next meal elsewhere. The cruise segment will be well served by the price integrity that the policies should engender and will be a step in training the public to begin appreciating travel product for its quality and not merely its price.

It will behoove other segments of the travel industry to follow lead. True, a few suppliers in the all-inclusive world have had a no-rebating policy for some time. The benefits are clear – consumers respect the authenticity and the integrity of companies that sell on the merits of their product rather than on discounts. In an industry that suffers far too many macro- and micro- economic free falls due to issues over which they have no control, discounting is a particularly destructive practice. Over the long-haul it trains the consumer poorly and it erodes the long term margins in an industry that lives on too meager a diet in the best of times.

Travel agents – communicate to your suppliers how much you appreciate the no-rebating policies of the cruise lines and your desire to see other industry segments follow their lead. The companies that rebate, who advertise “cheap” , are eroding everybody’s margins, your own included.

Richard Earls is the Publisher of Travel Research Online, an online travel industry resource dedicated to enhancing the professional lives of travel agents.


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