ASTA's 2016 Independent Agents Report: What Can We Learn?

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Host agencies get high marks from those National Association of Career Travel Agents (NACTA) members who are hosted, according to ASTA's 2016 Independent Agents Report.

The report, based on second half 2015 survey data from NACTA, ASTA's sister association, explores trends in the independent agent (IC) space. It found that 62 percent of NACTA members who are also host agency members are very satisfied with their arrangement.

"That tells me that they are satisfied with the [host's] commission split, its portfolio of suppliers and its reputation," said Ann Chamberlin, president of NACTA and senior vice president of operations for ASTA. According to the survey, those were the top three factors in ICs' decision to join a host agency.

The report also found that commission splits have been "pretty stable" in recent years, said Chamberlin, with agents keeping more commission with the exception of 2012.

The split was 77 percent for the agent, 23 percent for the host in 2012; 75 percent and 25 percent in 2013; 72 percent and 28 percent in 2014, and 76 percent and 24 percent in 2015.

Chamberlin added that while the majority of NACTA members are hosted, 43 percent of those who are not are considering joining a host agency, according to the report.

Non-hosted ICs said their reasons for not joining a host included a desire to have direct relationships with suppliers, have control of their business, and have flexibility. However, the prospect of netting higher commissions and having support for taking care of their clients are two benefits that would entice them to join a host or a franchise organization.

When it comes to services the host provides, "I would have thought that the technology and marketing support would be a higher factor in choosing a host agency," said Chamberlin. But the report found that training and education outweighed tech and marketing.

That means that NACTA respondents "have a stable book of clients" with whom they have personal relationships, according to Chamberlin. Tech and marketing services, then, aren't that important. NACTA members, she said, have an average of 16 years of experience as agents.

NACTA's total membership is about 1,800, which includes about 105 suppliers and host agencies. Of its agent members, 45 percent are hosted, 38 percent are fully independent (meaning they are not host agency members), 11 percent are franchisees, and 6 percent are travel agency employees who joined the association to take advantage of its benefits including training and education.

Chamberlin said she's also observed two new phenomena regarding IC business models:

• ICs, who don't want to be hosted or hand off a client to another agent, are contracting with other ICs who will make sure their clients are taken care of if, for example, they travel a lot.

• ICs actually employing other ICs.

(For tax purposes, the contractors receive 1099s versus the employees who receive W2s.)

"There are all kinds of business models out there," said Chamberlin.

Overall, NACTA members' business is healthy with six in ten respondents reporting increased sales and revenues in 2015 compared to 2014.

While it's hard to pin down definitive figures on the total number of U.S. travel agents, the estimates by the Bureau of Labor Statistics and the Census Bureau can also be confusing as these entities aren't always comparing apples to apples.

The Bureau of Labor Statistics estimates 74,100 travel agents in the U.S. in 2014, including 60,620 who were front-line agents. That figure is lower than the Census Bureau's estimate of 100,295 travel agency employees including travel agents. However, the Census Bureau doesn't break down job functions or indicate whether agents are home-based or not.

Meanwhile, an estimate from a few years ago from industry research firm Phocuswright sets the number of home-based agents at 40,280 with that total equally split between home-based agents who are either agency affiliated or employees and those who are fully independent.

The data is, indeed, "scattered," said Chamberlin, but "This is the best data we have and when you think of the customer, they don't care where an agent works. They just want the best specialist.

"The data allows me to profile the IC market to suppliers and hosts; they are hungry for data," she added.

Suppliers' recognition of the importance of the IC segment is rising, Chamberlin said.

"Supplier BDMs (business development managers) are getting more creative on how they're finding and approaching ICs" because, unlike agency staff, they can't simply visit agencies on sales calls.

"We have more suppliers involved with NACTA as a result," she said.

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