Travel Reference
In-Depth Information
Agency agreements
extra staff training, enhanced sales incentives, more
promotion, etc. These arrangements are usually based
on an agency achieving high sales volumes over an
agreed period of time.
All of the business conducted by travel agents on
behalf of principals - tour operators, airlines, coach
companies, etc. - is strictly controlled by individual
agency agreements. These are contracts that set out
the obligations of each party to the agreement, the
terms of the agreement and payment details. The
most common agency agreement is that between
a travel agent and a tour operator, where the agent
undertakes to sell the tour operator's holidays in return
for a commission on sales. Other agreements may be
made with coach operators, holiday centres, hotel
groups, ferry companies, rail companies, National
Express, car hire fi rms and a range of other travel and
tourism companies. Such agreements are generally on
a non-exclusive basis, i.e. many other travel agents will
be selling the same products. It is only in the case of
very specialised products that an agent may enter into
an exclusive arrangement with an operator, although
exclusive agreements in a particular geographical area
are not uncommon.
Commission levels
Commission is the payment that a travel agent receives
from a principal for selling that company's products and
services. Commission levels vary enormously between
companies and different holiday products. Average
commission rates are in the region of:
•
Package holidays 10%
•
Airline tickets
0 - 9%
•
Ferry bookings
9%
•
Travellers' cheques 1%
•
Travel insurance
25% - 40%
•
Coach holidays 10%
•
Cruises
9% - 15%
These fi gures should only be taken as a rough guide,
since commission levels fl uctuate daily in response to
competitor activity.
Preferred agents
Tour operators and other principals sometimes give
travel agencies a 'preferred' status, meaning that
the agency is offered the highest commission levels,
