Commissions
When a customer approaches a travel agency
to schedule and book travel, she expects to get excellent travel prices with
little or no planning and preparation. The travel agency accepts the customer's
business and begins researching travel rates and booking appropriate offers.
For each offer booked with partner airlines, cruise lines and rental car
agencies, the agency providing the service offers a commission to the agent in
exchange for the customer's business. At the height of travel competition,
these commissions reach as high as 30 percent of the rate paid by the customer,
or $30 on a $100 fare. Poor economic conditions can largely restrict the commissions
to a flat 10 percent, however, and reduce the amount of profit received by the
travel agency.
Rebates
Some larger travel agencies that agree to
work exclusively with certain travel partners also receive income in the form
of travel rebates. When a customer books travel though the agency--and the
agency, in turn, books the fare with the travel provider--the agency charges
the customer the lowest travel fare available at the time of booking. If the
rate should drop later, however, the airline forwards a rebate to the travel
agency--which may or may not be passed on to the end user. If the agency agrees
to pass on the rebate savings, the customer receives a rebate check from the
agency itself; if the agency doesn't pass along the savings, it pockets the
rebate as additional profit.
Fees
Though most agencies continue to work
entirely off travel commissions, economic conditions can force some agencies to
charge customers for their services. Marked as "booking" or
"convenience" fees, these fees are designed to compensate the travel
agent for the time spent researching and booking travel.
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