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Travel Agent

Selecting a Host Agency

Back in the early 1980s, Joanie and I owned and operated a Hawaii wholesale tour company that specialized in doing complex FITs for the agency community on the west coast. At the time, most tour operators had converted to automated systems and were popping out documents using dot matrix printers. The documents looked horrible and flexibility went out the window with the introduction of tour operator software. Joanie and I had some innovative ideas and started our tour company (Windansea Vacations) to exploit the opportunities of the time. We had 86 different properties by category and we printed 4-color brochures that were competitive.

The first thing we did was to brand the niche of being the one and only true FIT operator, as we would confirm any category of property, car or ground arrangements. We did our documents the old fashioned way and they were absolutely to die for. But, it was the way we marketed that was controversial. We offered Hawaii oriented FIT agencies our net rates and simply charged them for the services that they used based on the number of ingredients in the bookings. If they just wanted vouchers, it cost X amount. Full documents, Y amount and so on. Agents could sell higher yielding properties and end up earning anywhere from 16% to 21% commission on the sale. They also purchased brochures from us to use as their sales tool. All in all, we were able to polarize the top Hawaii retailers within our market because they could make so much more money.

It was also a winner for us, as by working with the most efficient agencies that really knew Hawaii, our cost of operation was minimal when compared to a normal file from a travel agent that was not familiar with Hawaii. We operated each file as a profit center and used a prepaid trust account to liquidate our files so that the suppliers were paid in advance.

Our competitors hated us. They would say the most outrageous things because they couldn’t figure out how we were dominating the Hawaii FIT market. We required the agency that joined our “tariff” to sign a non-disclosure agreement. It got so bad that one of our competitors went around telling everyone that we were going to go bankrupt. Of course, since we were using a trust account and no other Hawaii operator was, all of the suppliers knew better and would stick up for us.

Fast forward to today. Now there are host agencies that are highly competitive and it seems if anyone tries something new or different that the majority rejects them. In an age of rapid technological evolution, pioneers should be admired, not chastised. So, here is my advice about things to look for when you are considering a host agency.

Relationship: First and foremost, is the relationship that will evolve while working with a host. It doesn’t matter how large or small, established or new, rich or poor, if you can communicate with, understand and enjoy the process, this is a great sign. Having an excellent working relationship with your host is one of the most important factors to consider. I know of small host agencies that have such loyal independents that they would never switch from the host. Friendships evolve and this is what you should seek.

Business Compatibility: If your market is going to be organizing cruise groups for young singles, you shouldn’t hook up with a host that specializes in senior motor coach tours. While this should be very obvious, business compatibility should be your second major concern. Look for the host’s relationship with vendors that you will be using. They should be able to offer expertise, overrides and experience in the markets you are considering.

Financial Stability: Don’t get connected to a host that is not financially sound, no matter what. You must do your due diligence on this topic. If the host is not monetarily viable, you run the risk of losing more than just your clients. It doesn’t matter if the host and you have a great relationship and are compatible, if they are hurting for money, just keep on looking. If you have any doubts whatsoever, ask for a financial statement, references and other information. It is easy to run a background check on them, as well and it might be the best money that you ever spend.

Red Flags: Your caution radar should flare up when any of the following are present. While these may, or may not be “Deal Killers” they cause good reason to investigate very closely.

The Host Agency is Having Financial Problems: The host should let you talk to any of their agents for references. If they do not connect you with them, or only give you one or two selected agents this could be a sign that there might be problems with the host agency. The existence of disputes and conflicts with past agents, slow payment of commissions, or any other operational abnormality should alert you that there might be financial problems. If the company’s statements show them losing money, be very concerned.

The Host Agency Has Recently Been Sold: Rarely is the sale of a host agency to another party a positive thing. Operating a host agency requires years of expertise in the travel industry and when one is sold, it should prompt a very close scrutiny.

The Host Agency is More focused on Recruiting Agents Than Selling Travel: Unless you are interested in making money signing up other people into a recruiting scheme, a concentration on rewarding “agents” to enlist other agents is rarely the sign of a credible seller of travel. Such schemes usually spotlight travel benefits as the main reason for enrolling them. While the pitch sounds good, the reality is that travel agent benefits are few and far between.

The Host Agency Spends More Time Bad-Mouthing Competition Than Selling The Benefits They Offer: It is hard to believe that the once controversial business of being a host agency has fallen into the same orthodox trap that storefront agencies were once in when host networks were first blossoming. If the host you are looking at has nothing good to say about another host agency and it doesn’t make sense to you, check out the other host too. They may have built a better mousetrap. For a list of Tom Ogg Approved host agencies, visit www.HomeBasedTravelAgent.com/Hosts/