Agencies That Push Some Products

Ever had the feeling that your travel agent was trying extra hard to promote a certain airline?

It’s called “directional selling,” and it could be part of a growing trend.

What happens is that certain travel agencies work with a limited number of suppliers such as airlines, cruise lines, car-rental companies, hotel chains and tour operators who provide them with extra commissions called “overrides” to sell their wares.

Some preferred suppliers are increasingly pressuring agencies to push their products. At least one preferred supplier, an airline, has threatened the possibility of “underrides,” or less than the standard commission, if agencies fail to meet anticipated sales quotas.

The trend, as the head of one large agency chain put it, is to “minimize product and maximize profits” to give preferred suppliers more of a market share and member agencies more commissions. Agencies are being given a message that they have to choose and support preferred suppliers to be successful in today’s marketplace.

Internal Incentives

Accordingly, some travel agencies offer internal incentives to their staffs to sell more of the products of preferred suppliers. And some suppliers have had their representatives pretend to be regular customers, rewarding agents who try to sell their company’s products with substantial prizes and cash.

Where does all this leave the consumer, who traditionally expects a travel agent to sell all products objectively?

For starters, most travelers are unaware of such relationships between suppliers and agencies.

In some cases, agents are forbidden to tell their customers that the agency stands to make more money by selling certain companies. Some agents will disclose such relationships, if asked, but few will volunteer the information. Disclosure is not the name of this game.

If an agency is a member of a marketing group, it’s quite likely to have its own group of preferred suppliers. Agents who are members of cooperatives, consortiums or other chains might put a logo sticker on their doors or premises, or cite it on business cards, letterhead, ticket folders and travel documentation holders. Labels might be put on brochures.

A cluster of agency names beneath a supplier’s ad often indicates a preferred supplier relationship with those agencies.

Some agencies will only show--or show more prominently--the brochures of preferred suppliers. They may choose not to display the sales literature of companies competing against their preferred suppliers.

Potential Advantages

Despite not being privy to such intra-industry relationships (much more true of leisure than business travelers), there are potential advantages to the consumer. Some agencies may get good deals from suppliers and possibly pass along some of the price benefits to their clients.

For example, agencies working as a group can buy or block out cabins with a cruise line and offer staterooms at a lower rate than other agencies. Such an agency-composed marketing group might also have a contract with an airline that allows it to sell that carrier’s flights at less than the going fares.

“We can get better space as a group than an individual agency could,” says Jackie McDevitt-Hoerger, executive director of Glendale-based Leisure Tours.

“And then we can pass price benefits on to our clients. For example, our clients can possibly save anywhere from $500 to $1,500 per person over regular cruise rates.”

A similar perspective came from Guy Taylor, executive director of Santa Ana-based Leading Travel Associates, a joint-marketing organization with 37 travel agency members in Orange County.

“There’s strength in numbers, which enables us to strike a better deal with suppliers,” Taylor says. “We can block space with cruise lines and offer discounts ranging from 10% to 50% off regular rates.”

In addition, agencies having such relationships with preferred suppliers may have a better chance of coming up with hard-to-get space and reservations. Enjoying more clout with suppliers can also help agents obtain speedier and more successful settlements of any problems their clients have with suppliers before, during or after their travels.

“For instance,” Taylor says, “one of our agencies had a single lady whose cruisereservation really got messed up. She was put in a cabin that was for people working on a concession basis such as entertainers, photographers and gift shop personnel. Moreover, she was told she couldn’t eat in the regular dining room.

“She got to eat in the dining room, but because the ship was full, she had to keep the same cabin. The woman sent a letter of complaint after the cruise, but the agency that booked her got the runaround from the line. But when we approached the cruise line as a group, the response was immediate and the woman got a full refund as well as a free cruise.”

Another advantage of agency consortiums, especially considering that some suppliers have gone out of business in recent years, is that there is presumably some extra measure of reassurance in a supplier’s stability by being part of an agency group.

Doing Research

“We do real research on our suppliers to make sure they’re stable and that our clients don’t have unpleasant surprises,” Taylor said.

While agency groups try to avoid having competing suppliers within their domains, there are crossover situations on occasion.

“We try to avoid overlapping, but it can happen, especially with cruise lines in the Caribbean,” Taylor said. “But these lines tend to havedifferent personalities and appeal to different segments of the market.”

Though some agencies obviously have an incentive to sell the wares of preferred suppliers, how hard they push these products can vary greatly.

Some observers believe such agency-supplier relationships may turn into outright dealerships.

Today, most consumers still expect agents to sell all products from the various suppliers in the industry. But remember: Not all products are necessarily equal in the agent’s eyes.