Destinations

Opinion: Have travel agent incentive schemes gone too far?

Staff incentives in the form of cash, vouchers and promotions have been a part of the travel industry for years, but recently there seems to be an increase in the number and scale of schemes – to the possible detriment of operators paying reasonable commission levels.

Incentives in the past have provided a welcome bonus income. However, against the backdrop of lower commissions there is a risk incentives are now being abused. They are increasing market share of certain principals at the expense of those paying healthy commissions.

Recently, an operator that pays no commission launched one such scheme, enabling agents to enter a draw to win a car.

The tactics of some operators can make life difficult for agencies, which still rely on commission to pay staff wages, promote their services and pay overheads.

An increasing trend is for incentives to be promoted to staff via e-mail or the trade press. The proliferation of incentives reflects their effectiveness at influencing market share. An added bonus for operators is that the agencies often never claim the incentive due to the manual processes involved – thus they get increased sales at no cost.

Finally, tax inspectors are hot on staff benefits, and agencies should be aware the responsibility for tax and National Insurance on these benefits lies with employers.

In an age of ever-tightening margins, operators should only  promote additional incentives if they already have satisfactory commercial terms in place.

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