Home-based agents: the end of bricks and mortar?

coverStyBy Louise Wallace

Love it or loathe it, the internet has rattled the travel industry. Bricks and mortar agencies which were king for decades are feeling the pinch of online booking portals, and agents are reconsidering their options as consumer trends change. Home based agencies are one of the key beneficiaries, and they’re smashing the paradigm of traditional shopfront agencies.

Certainly, traditional agencies still have a place in the industry and there’s a shining future for travel agents in providing a tailored service for travellers, but times are changing and home based agencies are challenging the status quo.

Who’s who

The home-based model is a relative newcomer to Australia compared to the likes of the UK and the US which have had their foot in the door for several decades, but we’re catching on fast and home-based groups are now eyeing off the competition as more players enter the market. It’s good news for agents, bringing with it more options and attractive propositions for agents. But the finer details are hard to come by, and finding the right fit is the biggest challenge for agents thinking of making the switch.

Two players currently dominate the playing field in Australia; Mobile Travel Agents (MTA) and TravelManagers, each with several hundred agents on their books. Travel Counsellors comes in a close third with 120 Aussie consultants, but there are some lesser known groups that are receiving high acclaim from travel consultants across the country. Independent network, itravel, has welcomed more than 50 agents over the past seven years, Travel Partners is hot on its heels, and newcomer Cruise Holidays and its home-based offshoot Your Travel Centre is predicting “solid” growth since launching in January last year.

Like any travel business, bigger doesn’t necessarily mean better – but there are fundamental differences between networks that affect what agents put in their back pocket. The most obvious is the commission split, with the 90/10 split offered by Travel Partners, iTravel and TravelManagers as good as it gets for home-based agents. Cruise Holidays isn’t far behind with an 80/20 offer, followed by 70/30 from MTA and a commission split of 60/40 from Travel Counsellors.

But there are other costs to take into account, with varying joining fees and administration fees enough to sway any consultant from signing on the dotted line. For instance, joining fees lead in as high as $5000 for Cruise Holidays and Your Travel Centre which includes industry training and equipment costs, while others such as Travel Partners and iTravel have no up front costs, leaving it up to agents to cover the basics on their own. Ongoing monthly fees also vary across the board, with MTA waving fees for outstanding sales performance and others charging monthly fees of up to $350.

It’s also worth noting that some agencies such as MTA, Cruise Holidays and Travel Counsellors cover professional indemnity insurance while others such as TravelManagers, Travel Partners and itravel request that agents pay for their own insurance which costs around $300 per year including tax.

The big players

Like any job hunt, the earning potential is only part of the parcel. Certainly, working for a large company comes with benefits such as round the clock IT support, business coaching and more buying power from suppliers, but even the major players have their point of difference.

For instance, Travel Counsellors is very selective of who joins the ranks, only recruiting full timers who are “aligned” with the company’s profile. Unlike its competitors, all mobile agents operate a franchise rather than signing up to a fixed term contract, allowing them to build a business that can be sold as a tangible asset down the track. The company also provides all e-marketing, completes all invoicing, supplies one-on-one business coaching and provides all equipment so agents can focus on forging “stronger relationships with clients”. It also follows up with all invoices and does all of the back office work, so while the 70/30 commission split may seem less lucrative on paper, it makes up for the hassle.

But marking a major side step from its competitors, the group touts its independence from preferred suppliers as a unique selling point. Unlike other home-based networks, the company – which follows in the footsteps of its UK-based head office – operates more like a wholesaler, and encourages agents to deal directly with suppliers rather than leaning on competitive rates from preferred contracts. Consultants can also control margins they charge clients and add service charges when they feel it’s appropriate.

“We don’t believe in preferred selling, we believe in selling the right thing to customers,” Travel Counsellors general manager Tracy Parkinson told travelBulletin. “Our system cuts out the middle man, allowing consultants to make higher margins and deliver competitive rates to customers.”

TravelManagers, meanwhile, is less selective of who comes on board and takes on agents who have at least three years of experience in addition to business references – without having to undergo personality checks.  The group also caters for part timers, provided that consultants commit to a minimum of $130,000 in annual sales. Much like Travel Counsellors, the company offers round the clock IT support, business coaching and ongoing training, but agents are given more choice when it comes to the bottom line, with the option of choosing a lower commission split with reduced administration fees.

Training is a key focus for the group, with all agents subject to induction training followed by flight and accommodation courses and ongoing training covering product updates, professional development and ticketing tips. There is a strong focus on selling preferreds and meeting “productivity requirements”, but achievements are commended with exclusive famils and an annual awards dinner which celebrates a range of criteria.

In a recent move, TravelManagers now provides consumer protection via an audited client trust account, but TravelManagers chairman Barry Mayo flagged the group’s “unique community and culture” as its point of difference: “At TravelManagers you work for yourself, not by yourself, and supporting each other is something we are very proud of.”

Topping off the list of major players in Australia, MTA has been in the game longer than its competitors and has refined its offering over the past two decades. Much like the other heavyweights, it provides comprehensive IT support, training and in-house ticketing, but it also has an extensive head office and support team which accounts for the 70/30 commission split.

travelBulletin was unable to pin down the owners to discuss the finer details of the company, but the MTA website claims to provide regular e-marketing and a personalised 1300 number for client support. Agents take charge of their own database, but one of the perks that’s unique to MTA is that someone else will manage your clients if you want to take a break from the daily grind. There are also no KPIs and no pressure to sell preferreds, giving agents more freedom to call the shots.

The up & comers

Larger companies tick all the right boxes if you need tech support or a leg up in the marketing department, but if you’re after independence and flexibility, a smaller group may be a better fit.

Independent group itravel, for instance, is ideally suited to experienced agents with an existing database who want to be left to their own devices. The level of support is not as extensive as the bigger players, but that’s offset by no joining costs and modest ongoing fees. As itravel director Steve Labroski puts it, “our consultants do whatever they want and we don’t get in the way of their business plans”. Agents are left to issue tickets, organise e-net payments, hit their own targets and manage their database, while itravel provides them with a “strong brand and credible name”. Agents still receive monthly face-to-face training, workshops and supplier training, but the business direction is left entirely in the hands of the consultant.

Interestingly, the group does not advertise for new consultants, instead setting its sights on organic growth. “We don’t want mass, it’s not who we are. We are all about providing personal service and flexibility for our agents so they can have the freedom to see how far they can push their business,” Labroski told travelBulletin.

The strategy is a far cry from the approach of Cruise Holidays and Your Travel Centre which are targeting rookie agents to expand their network. Owned by parent company Cruise Holidays – which consists of home based, affiliates and fully branded stores – Your Travel Centre is new to the scene, launching in August this year. Cruise Holidays isn’t far behind, launching in Australia in January last year – but both brands have the added benefit of leveraging off the success of affiliate Cruise Holidays in the US which has dominated the playing field in North America for more than 30 years.

Marking a somewhat controversial move in Australia, both groups have a strong focus on complete novices with “little or no” industry experience. It does come at a cost, with all new entrants required to pay a $5000 joining fee which pays for a Certificate III in travel which is completed online over 12 months. Experienced agents can come on board for a $695 joining fee which excludes the Cert III, and anyone with two years of experience can “walk straight in the door”.

For cruise buffs, Cruise Holidays has the added benefit of allowing agents to specialise in their field, but independence is the stand out feature for both networks, with agents able to promote their own brand rather than having to operate under the name of the parent company. Agents also receive a standalone website that is updated on their behalf, all the email marketing is done for them, and they receive ongoing support from BDMs – with all support driven towards promoting the agent’s individual brand.

“Rather than being bound by the host agency’s brand, agents can operate in their own right and build their own name under the auspices of ATAS and our credentials,” managing director Les Farrar told travelBulletin. “Our focus is providing a gateway for people to enter the industry and giving them the freedom to build their own business with our support.”

Meanwhile, Travel Partners has its sights on the other end of the spectrum, targeting “entrepreneurial” agents who want to work full time and have a target turnover of at least $1m per year. The group – which is made up of remote agents and affiliate companies – also has more focus on SME accounts and corporates which are more “lucrative” than leisure travel. All agents benefit from preferred deals and advanced IT systems, but sales targets are front of mind for the group and only experienced agents who are driven by sales are taken on board.

Making the call

The home-based model has come a long way in recent years and as well as the options canvassed here new agency groups such as Savenio are also throwing their hat in the ring to attract top consultants as demand continues to rise. It’s a positive for the industry, with new competition bringing with it more options, more lucrative commission splits and more flexibility. But at the end of the day, there is no ‘one size fits all’ approach and it all comes down to preference.

Home based networks are the first to admit that remote consulting isn’t for everyone but they’re adamant that it’s a more rewarding career path that allows consultants to call the shots and focus on selling without the pressures of a traditional agency. Obviously it comes down to the individual consultant but before you make the call, take a moment to find the right fit.