Travel Agents – Are You Being Ripped Off?

Right up there with real estate agents and used car sales people, travel agents are subject to much suspicion when it comes to sales tactics and prices. But are you really being sized up and ripped off every time you walk into an agency or book a holiday?

The answer is yes, you will be sized up and yes, given half the chance many agents will overcharge, some by as much as they can get away with.

With the great resources available on the net most travellers will not walk into an agency until they feel they have a good handle on their destination and current prices. Yet no matter how savvy you are it’s still worth knowing how agents work before you decide to use one.

There are two aspects to the way agents work in Australia that affect the service you are given. The first is the way agents are paid. Second is the pushing of particular agency ‘preferred’ products like tours (with high commission levels) onto the customer without disclosing this conflict of interest.

No real newsflash here: agents are paid on commission. But people might not realise that base pay rates are so low, agents need every dollar they can squeeze out of you. The pay structure generally works like this:

* The agent is paid a base amount, which is a paltry sum at best. The base amount is fairly consistent amongst the major agencies, and will go up slightly the longer the agent stays in the job.

* Extra income is based on commission paid against the revenue agents bring in. Different levels of revenue are made from every product they sell, from very little (say a hotel transfer) to up to 50% revenue for travel insurance. ‘Preferred products’ such as tours or flights will have higher levels of revenue.

* Of this total revenue, agents are paid a monthly percentage, usually on a sliding scale (the more the agents bring in the higher the percentage they get). This pay scale will depend on the agency and some are more generous than others. Without this commission the base amount is barely enough to live on (we are talking burger flipping rates).

* There is massive pressure on agents to hit monthly revenue targets (aside from actually making a living), and thus the job has a very high turnover rate (1-2 years is a fair stint as a travel agent or even store manager).

* But what about the perks? Agents fly all the time right? In short there is no particular savings on flights at present. Some agencies are better than others but the perks of the job are almost non-existent compared to how it used to be. Agents are not always travelling and when they do it’s not as cheap as people think. For that you need a job, or your dad or mum needs a job, with Qantas.

* Some companies overseas pay differently so the focus is on customer service rather than sales. We are not so lucky.

The fact that the job is commission based seems to be missed by many customers who think agents are free to give advice all day as that’s what they get paid for. The reality is that they make very little unless they actually sell you something; it’s a sales job pure and simple.

This pressure on agents can lead to some very dubious practice.

So what could be loosely defined as a situation where somebody is being ripped off? There’s a big difference between paying extra for the agents time and them overcharging you by hundreds, or even thousands, on your holiday.

Standard booking fees at most agencies are $50.00 – $100.00, depending on the product being sold (less for domestic travel). These fees can be waived at some agencies rather than losing a sale if you are price matching or bargaining hard with the agent.

These fees are not a huge price to pay for what might be hours of the agents time (and remember the agent only gets a small percentage of that fee – most goes to the agency), but if you are paying any more than the standard fees, you are paying too much.

The most likely chance you have of being ripped off is if you have failed to shop around, and get caught up in the agent’s enthusiastic sales tactics (always beware the most upbeat and enthusiastic agent).

Agents will size up how much you know about your destination, the current price of flights and accommodation before quoting you a price. If you tell the agent “it’s my first time away” your chances of paying way too much increase dramatically.

Travelling to an out of the way destination might fall into this category as well, or when navigating the maze of round the world tickets. While it’s easy enough to book RTW trips on the net many people still stick with an agent, and leave themselves vulnerable to overcharging in the process.

Also, and unfortunately so, times of grief or any urgent need to get yourself on a flight are also seen by many agents as a time to cash in on vulnerable customers.

In terms of flights, agents will usually have minimum or net rates that they are free to add whatever extra they can get away with. This is where you can be overcharged if you haven’t shopped around. There is only a minimum, not a standard or maximum price for flights.

Consider as well that some agents are better than others at finding cheap flights. A high quote might just be a lack of knowledge of the destination/airlines. Many agents will have spent less than a year in the job and it can take time to learn how to get the better deals for customers, especially on out of the way routes. Another reason to check online first.

Yet another area in which to be careful is with refunds. It is not uncommon for some angents to overcharge you to cancel flights or tours. This can be done simply by the agent changing the terms of the agreement between you and the agency when you first pay a deposit or in full (as you have no direct contact with the airline). So what might have been a $350.00 cancellation fee on flights can be easily be turned into a non refundable ticket without the knowledge of the airline or tour company. Importantly this is not a standard practice (some agancies have measures in place to stop this) but it does happen. Be really careful and check elsewhere before you commit to a non refundable airfare!

The second and perhaps most dodgy aspect of travel agency practice is the pushing of preferred products onto customers.

This is not technically a rip off, but if you’re after unbiased product advice steer clear of most travel agents. The major agencies will have certain tour companies and even airlines from which they will get higher commissions (which can be double that of other tour companies they might sell).

So you’re booking a tour in South America and want some advice on a tour company? Chances are you will be pushed into using the agencies preferred supplier as they make more money out of you that way. As yet there is no legal requirement for agencies to declare this conflict of interest. Just look around the shelves of the major agencies and it will be clear from the uniform brochures who their preferred suppliers are.

This is not to say these companies are not a decent choice, just be aware any advice is not without considerable bias. You need to make sure the tour company suits your needs and don’t rely solely on an agent’s advice on this (contact the company direct if you have any queries).

This conflict of interest can be applied to many products they sell. The major agencies will have preferred hotels and car hire companies. For almost every product travel agent dirty tricks, travel agent rip offs, travel advice, travel tips there will be a preference they give you that makes them more money. Agents will themselves often have little goals in mind when selling you a holiday.

There are always incentives from different travel companies for agents to sell their product. The incentive might be ‘sell five tours get one free’ or something similar. This is another reason agents can give you highly biased advice.

Smaller more independent agencies are more likely to give you unbiased advice as they may not have the same deals with tour operators as the major players.

If you are unsure about the charges attached to any products, simply ask what exactly you are being charged for as agents should disclose any booking fees involved (sometimes these fees can be hidden). If you are suspicious don’t fall for any pressure tactics, just walk away and check another agency or online before you book (there’s always another agency close enough).

So the bottom line really is just to make yourself as aware as possible of current pricing before you see an agent. You can still get great deals through a good agent (booking online is not always cheaper) and there is no need to be ripped off if you are savvy about your planning. Advice from a good agent on your destination can be invaluable, just take product advice with a grain of salt.

I left the job in part due to the pressure to overcharge and BS on which company customers should travel with. Most people get into the job because they love to travel, but may end up finding, like I did, that the job is not worth the stress.

If you liked this article check out my travel site Aussie Travel Advice. It’s a free and independent site with over 140 pages of travel advice and links, as well as our travel blog. It’s written by a former travel agent, doctor and journalist and contains the best travel tips for Australians going overseas.

This entry was posted in Uncategorized. Bookmark the permalink.