Travel is a billion dollar a year industry and this is resulting in rise in the number of travel agents you may run into around town. Since most are now home-based (to keep overhead expenses down and remain competitive with large discounters like Groupon and Cosco) it makes it harder than ever to determine who is running a legitment agency and who is trying to rope you into a pyramid scheme (ahem, sorry... multi-level marketing program). As a relatively new agent, I'll admit that I fell for the scam the first couple of times I met one of these "agents." After some confusion and research, I'll admit I became a little angry at the idea that an already struggling-to-come-back industry could potentially suffer from the unscrupulous marketing techniques of some industry pirates.
To be clear, I do not believe that those individuals selling travel under one of these companies are unscrupulous. I do, however, believe they are naive (sorry, but they are). I would like to think that in this information age that people would know better. Yet we never seem to learn and we continue to get duped by too-good-to-be-true deals. The unscrupulous ones are the organizational leaders who are intelligent and savvy enough to know that they are peddling false promises and taking people for their hard-earned money.
At this point I'll resist the temptation to name names and just let you figure out who they are for yourselves after I explain the general set up. This more out a fear of being sued than anything else (an unfortunate reality nowadays). As I mentioned before, I first started running into these agents at a local, monthly networking event. Having just purchased my travel agency franchise and done a fair amount of due diligence prior to deciding which brand to buy into, I was surprised to encounter not just one or two, but three agents working for a travel agency with which I was not familiar. I was really taken aback the following day when one of them called me up and proceeded to give me the third degree about my business, asking several questions that were not appropriate to discuss with potential competitors (such as royalty fee amounts, purchase pricing, commission percentages and the like). Even more unprofessional, she seemed genuinely agitated when I refused to give her the answers she sought.
I mentioned this to the event organizer, who graciously apologized even though she clearly is not responsible for the actions of attendees. It was eventually forgotten about until a few months later when I ran into another agent at the same event who mentioned in passing that he was "recruited" by the agent with whom I had the negative call. The word choice struck me as odd at the time, but again I brushed it off as I got the impression that he was more of a hobbyist agent and not really posing any significant competition. Then, one of my wife's coworkers started blasting Facebook with celebratory pictures of her as having completed her travel agent training and looking forward to her first travel party where she hoped to bring on-board some more agents. Again, odd. What new agent has the wherewithal to hire and train new agents while still learning the ropes his/herself and getting their business up and running?
More recently and again at the same networking event, I met four very young agents from yet another unknown agency. The conversations I had with them left me so confused as to how or why they were selling travel. Aside from the fact they looked like they were barely out of high school, they seemed to have no travel experience. One even went as far as to ask if Mount Rushmore was in Washington after I told her I took my family there last summer. Really!?
Perhaps the most suspicious, and the usually the biggest tell-tale sign of a scam, is secrecy around their business. All four agents described their business differently. Vaguely, but differently. It was like pulling teeth to get a straight answer. The most I got from one of them is that it was a "club" just like Sam's or Cosco.
Now I really had to investigate this, if for no other reason than to know my competition. That's when I discovered that both of these lesser-known agencies were lesser-known because they weren't really travel agencies. They were multi-level marketing programs (MLMs) similar to Mary Kay and Amway. Like those organizations, agents are able to sell products (in this case vacations) and can make a little bit of money doing so. However, you don't really start making money until you bring a team of people under you, who in turn bring a team of people under them and so on and so forth. Each team member pays a monthly membership fee, the amount of which (along with the size of your team) is what more than anything determines your agent level (not the amount of commissionable sales you make as an agent, which is the industry standard).
Agents are highly encouraged to recruit their friends, family and coworkers into the organization because most of their income comes from membership dues not travel commissions. These dues are analogous to the excessive inventory that agents are required to purchase in other MLMs. Members are usually allowed to earn points for time and money spent in the organization, which can be applied toward travel discounts under some stringent rules that, more likely than not, lead to more points being lost than redeemed (consequently leading to additional income for the agency). Agents are tempted to buy into this program under the typical MLM promise of pulling in hundreds of thousands of dollars per month with something as seemingly simple as having a specified number of affiliates working under you in the various levels.
One only has to work through the math to realize that number would be practically impossible for everyone to reach in a competitive market and the only people who are really making money in the agency are the owners and other staff in the highest echelons. As a legitimate agent - who owns a fully licensed and insured corporate entity which operates under a similarly licensed host agency that has won industry awards, enjoys exclusive partnership agreements with major cruise lines and land tour operators, and invests in the success of its agents through ongoing professional development geared toward product knowledge and not recruitment (all of which are the true test of legitimacy, not whether commissions are paid by airlines as one Internet source stated) - it infuriates me to no end to think that these other agencies are trying to lure unsuspecting travelers into their pyramid schemes (lets call a spade a spade here). Those travelers will inevitably learn the sad truth of their decisions and then be turned off all travel agencies forever... even the REAL ones. That's unfortunate because we really do provide a service to our clients in planning their perfect vacations, be it a boxed tour/cruise or completely customized adventure.
As a travel consultant, I feel a responsibility to assist all travelers in making the right decisions for themselves, regardless of whether or not they're my clients. That is why I wrote this and why I will gladly chat with anyone who calls me with questions about my agency or an agency they are questioning. No secrets here.
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