To Blindly Go Where Instructed

Let's talk about being blind to reality for a minute. To those in the MLM game, are you getting all the commission your company says you are entitled to receive? Do you know what I am talking about?

I am talking about overrides. They are a staple of profitability for most agencies. My question is does your company have any override agreements with the vendors? I would imagine so since the volume they do as a "host" is significant for sure.

These revenues are not discussed in two (TraverUs and YTB) agreements I have seen, and with that "ommission", I would think that the "agents" are indeed entitled. My guess is that they are NOT distributed at all and just pocketed by the company. A question that needs to be asked of your "host" is why are your overrides not being passed along to the people that earned them? In a traditional host or franchise model, the host or franchise receives the override and then pays the individual agency a percentage according to their agreement. I know one franchise might retain 30% of the override and pass the rest along. But make no mistake, these overrides are significant and they cover all travel types--air, car, hotel, cruise, tour, and yes even non-commissionable air bookings from the GDS.*

I did an informal survey of 142 professional travel agents on overrides and this is what I found out:

• 47% of them receive an override from one or more airline
• 58% of them receive an override on one or more cruise lines
• 40% of them receive an override on one or more tour operators
• 58% of them received overrides between 4% and 8%
• 12% of them reported that their consortium/franchise/host does not share the override

So, let's look at this from a YTB angle. Let's also look at this as if NCFs did not exist and the entire cruise fare is commissionable.

If YTB can sell $150M of Carnival Cruise Lines, they would receive 16% commission on that or $24M. Of that, 60% is doled out to the RTAs or $14.4M.

I am confident that an organization that can sell $150M for Carnival would be the beneficiary of a substantial override. I might venture to say it is as high as 10%, but let's call it 8% to keep within the majority of our survey. That means that YTB is receiving an additional $12M in commission for your hard work. At 60% the RTA should be receiving $7.2M.

Now at 150,000 RTAs, that is only $48 a year additional, but we already know that close to 95% of the RTAs do not sell. So if we take that $7.2M and divide it into the 14K RTAs that DO sell, it seems that that is an additional $515 each! This amounts to almost what the average RTA earns in travel commissions in a year--on one vendor!

So--are you guys getting it? Maybe someone ought to ask that questions because it is NOT addressed in the agreements and it technically IS commission and it is as a result of your efforts.

But on second thought..nah. YTB would never pull the wool over your eyes!

*When I mention air, I am talking about an airline paying an override for market share. All major US carriers and most International ones offer back end overrides ranging from 5% to 10%. Then I talk about non-commissionable airline sales, I am talking GDS segment fees and overrides. When an airline ticket is booked, whoever does the booking will earn somewhere between .25 and $1.00. If they have enough bookings in a period, the bonuses can be significant. I am wondering with the Travelocity agreement if they (Travelocity) are sharing those revenues with YTB since there are so many air bookings.