The following story first appeared on Escape.com.au.
Where is your money and when will it come back? Escape.com.au’s Dilvin Yasa takes a look at the supply chain behind our holiday bookings.
Superheroes, as the saying goes, don’t always wear capes. Mine wears a white shirt and a nametag which reads Alex Ozanne. While he is officially known as a Flight Centre travel agent, throughout the years he has been booking holidays for my young family, he has also played the role of confidante, mate, childcare worker, and let’s face it, saint.
“I’m an empathetic person; I treat everyone’s holiday like it’s my own and I ride the emotional rollercoaster with them,” he says when pressed on why he has a loyal following of repeat customers. “Even with all the stress travel agents are facing at the moment, I’ve had very few experiences of negativity. That probably makes me fortunate.”
The negativity Ozanne touches on is the 46 billion-dollar elephant* in the room. Since the outbreak of COVID-19, tourism operators and agents have born the brunt of community backlash as the travel industry battles to navigate its way through uncharted waters teeming with stories of delayed refunds and credit notes.
One wonders how much sensationalism could have been avoided with a clear look at just how a travel agent operates?
THE TRUTH ABOUT TRAVEL AGENTS
The travel sector is no stranger to destination-based crises, but this, a global pandemic, is the first to put the entire industry into reverse mode, explains James Kavanagh, Managing Director Australia of Flight Centre Travel Group. “Many people don’t understand the supply chain, the flow of money into overseas markets or our role as the intermediary between the suppliers and the customers but the industry as a whole was not built for the reverse mode situation we’ve been put in.”
Travel agents earn a salary, but it’s important to note that almost all of the money paid each booking goes to the supplier less a small commission (usually between five to seven per cent) for travel agents which is predominantly paid after travel happens. “Up to 80 per cent of our leisure travel market is international so with the exception of Australian companies, the money – we’re talking $16 billion each year in airlines and $10 billion elsewhere – goes out of the country,” says Australian Federation of Travel Agents chair Tom Manwaring. “Recalling it back into Australia is no simple matter. Rates must be converted, taxes paid, cheques sent by various suppliers such as cruise lines banked and initial commissions paid to the travel agents recalled.”
Add a complicated, multi-destination itinerary, suppliers with varying refund policies (some refund, some send credit while others refuse outright) and it’s a process that can take agents four to six months to get to the finish line. “We don’t benefit financially for refunds claims,” adds Ozanne. “If I’m delaying a claim it’s because I’m still fighting to get a better outcome for my customer.”
With few new bookings to speak of, travel agents aren’t only making less money, they’re working harder than ever to do the right thing by their customers, says Kavanagh. “Our consultants are reversing bookings made months ago, and the commission from that booking is also being reserved. As an organisation, we don’t ask for the commission to be repaid by the consultant, but when the end supplier recalls it, we are required to pay it back which has an obvious impact on the company’s bottom line.”
THE BENEFITS OF USING A TRAVEL AGENT
In a pre-COVID world, a feature on the benefits of booking your next holiday through a travel agent might have looked a little different – even if the same rules apply today. “They’re price-competitive because they have significant buying power which means they can pass curated packages, deals and great products to their customers,” explains Manwaring. It could be negotiating exclusive packages unavailable elsewhere or a range of exclusions to provide value-adds, whether it be guaranteed room upgrades, free meals or additional activities and experiences thrown in, free of charge.
You might have seen paragraphs on the advantages of an agent’s expertise in a particular country or region, insider knowledge of a certain hotel or activity or the assurance that comes with having someone listen to your needs and desires carefully before deftly putting together your perfect itinerary.
It’s precisely this human touch where agents have come into their own in 2020, says Kavanagh. “Things can go wrong when you’re travelling at any time, from flight cancellations to illness and while the pandemic has caused many headaches from an operational level, it’s also highlighted the importance of booking leisure travel through an agent,” he says. “In the case of COVID, those who booked through trip through a reputable agent are far more likely to get their money back because of the relationship that exists between agent and travel provider. We also check our providers for financial solvency which minimises the risk for customers, we work around the clock to get travellers home safety, checking in on them daily and keeping them updated on quarantine matters, travel restrictions and visa requirements.”
THE FUTURE OF TRAVEL AGENTS
Once travel resumes, how will we be booking our holidays? Kavanagh is keen to reassure customers that Flight Centre has enough liquidity to survive and continue looking after their customers. Manwaring says that while there will be a reduction in the number of bricks and mortar agencies operating, agents themselves will become increasingly mobile, meeting their customers in cafes and parks. It’s a way of working Ozanne has already put in practice. “I’ll meet outside of work hours at a place and time convenient to my customers,” he says.
In the meantime, patience while waiting for refunds is key (nationally, agents are currently working on securing and refunding July bookings with Manwaring predicting the industry will be caught up by Christmas), as is continuing to book with travel agents moving forward. “We’ve got to support Australian jobs,” says Kavanagh. “The last thing we want is for these to go overseas and the industry to be decimated at a time when people need agents more than ever.”
*In 2018-19, Australians spent over $46 billion on international travel (the largest import sector of the Australian economy. 70% of all travel taken by Australians is booked through a travel agent.