Rebating, a Blast from the Past?

My recent column, “Rebating, a Blast from the Past?” provoked a lot of feedback from our readers. While some indicated, yes, I was naïve for thinking rebating was a thing of the past, others expressed surprise as well. Yet others, shared experiences they’ve had with other agencies rebating or potential clients clearly looking for a rebate.

And while most of our readers appreciated Virgin Voyages for calling this out, a few felt it was hypocritical to do so, while still letting some of the largest retailers get away with it.

Here we present some of the letters we received.

Like most travel advisors, the thought of rebating has never crossed my mind. I personally don’t know of a single travel advisor who engages in this conduct. That said, it angers me that OTA’s are rebating all of the time, but are never called out my any of the cruise lines. One only has to look at a monthly [redacted] flyer to see the “book with us and receive a $150…” Call it what you want, but this is rebating in pure form and many OTA’s are participating but, due to their volume, are not being called out by any of the cruise lines. I’ll be looking anxiously to see which cruise line removes booking privileges from a [redacted] type OTA, but I don’t expect to ever see it. Calling out travel advisors without taking action against certain OTA’s is hypocritical at best.

Michael R. Murphy, owner/manager
Compass Luxury Travel LLC

John Diorio did a thankless job calling out travel advisors who have no issue poaching other advisors’ clients. And while I was shocked to hear him reference rebating as well, I really shouldn’t have been.

Travel Advisors, especially small business owners, have enough competition in this world that they don’t need clients holding an unrealistic expectation of rebates. Advisors are up against the internet, Do-It-Yourselfers and uninformed “agents” who are only in it for the perks…

Then you have the big box company whose focus is selling you bulk peanut butter and toilet paper. They claim they don’t “rebate” travel commissions but if it looks like a duck, sounds like a duck and walks like a duck, it’s a duck. Instead of a rebate, they offer a store credit that is in an amount rather similar to a commission. Please explain how this is fair practice. Thankfully, the service our agency provides our clients means we are rarely asked if we price match the big box. When we are asked, the standard answer to the client is that “we don’t match them on price and they don’t match us on service”.

Rebating is and always has been around. It will take companies like Virgin Voyages to take a stand and put a stop to it.

Becky Schulze, CTC
Accent Travel Agency, Inc.

Have you never heard of CruiseCompete.com?

That site is set up specifically for agents to bid lower prices for cruises. The only way to do that is to rebate commissions. Plus, agents give 2% to Cruise Compete for providing the service!

They alone process hundreds of sales each and every day, all from agents rebating a portion of their commissions to get the sale.

Rebating and MLM “travel agents” that don’t know what they are doing, give real agents a bad name.

Steve Mencik, MCC
The Vacation Stop

Just read your article and have to agree that I thought rebating was pretty much a non-issue. Not to say that it doesn’t happen but we’re no longer getting asked to price match another agency who is clearly rebating. I’ve been in the business for 32 years and lived through the big rebating phase. As you stated, it’s a no win business plan. Virtually all of our business is repeat and referral. A price shopper is not anyone we want as a client…

I haven’t found any agency branded cruise ducks but if I do, they’ll get trashed. I have seen advisors leave marketing material posted on their cabin doors. I haven’t removed any but I’ve been tempted…

Regarding value add. There’s a fine line between rebating and value add offered by the advisor (not the agency). In either case they are giving some of their commission back. I have reason to believe that one of our top agents practices this with every reservation. His choice, but I’ve been told that one of his amenities might be an iPad for his higher end clients.

I applaud Virgin for taking this very public step and bringing attention to this problem. Those offending advisors may think they’re being clever or creative, but they’re wrong. I would like to see other lines issue similar policy statements.

Tom Kleefisch
Cruise Planners Phoenix

I just had a Silversea cruiser seek me out… The request came through as follows: We have booked through an agent before but we are looking to see if there are further enhancements/discounts to be found with using a different agent…

I wondered if by “enhancement and discounts,” the potential client was using code for REBATE? … Bottom line, I am not sharing my commission, my income with a client or potential client to “keep them.”

Barbara Khan
Journeys by the Book, LLC

I read your article today about rebating commissions. As an agency owner for 20+ years of an agency that was founded in 1973 – I have had to deal with this issue. While word of it had disappeared over the past decade or so – it has still been done behind the scenes… I am a member of many [Facebook] travel agent groups and I see posts on occasion – I attach a screen shot of one to this email…

I don’t know where this person got her training, but if this is how [redacted] trains their “agents”, not only should the agent be restricted from selling from a supplier, but repeated occurrences (or evidence of them training agents in this tactic) the AGENCY should be restricted or banned as well.

I had a conversation with one of my cruise suppliers about this practice (mostly about lower than the cruise line published rates) and found that the only way the agencies like Costco, AAA, and VacationsToGo can offer lower than published rates is because they only provide those rates to “members or subscribers” – they don’t advertise to the General Public (unless they “sign-up”).

Darrin Scheidle, CEO
That Place for Travel

The worst case I had several years ago was with [redacted]. I had clients who booked a cruise with [redacted], per my recommendation because I could not come close to the cut price they were offering. While on the ship, the couple made the decision to do a family cruise (8 additional cabins, which she asked me to book). She did an onboard booking and asked that I be assigned as the agent of record so I would be able to combine them with the upcoming booking as a group and access her booking. They would not make the change, but gave her a form to fill out. She wrote a letter. I wrote a letter and we sent it to [redacted]. Not only did they refused to transfer the booking, they offered them a significant discount to keep the booking where it was…

More recently I have witnessed several “travel advisor” talking to guests on board and passing off their cards or sharing their contact info via phones. Or just talking loudly in groups about they are travel advisors with some XYZ pyramid travel agency and how they are traveling free and wouldn’t you like to be part of it too…

I was really happy to receive John’s email!! It’s hard enough to compete with OTA’s but competing against other advisors is ridiculous. As you said, there is plenty of business for everyone.

Hope Fredrickson
Hope to Go… Dive and Travel

We think more of the rebating goes on with the more expensive cruise lines because the commission is higher and the reward then is higher… There is more going on for sure but most of us don’t have time to follow up and find these instances to report them since we seem to all be very busy. Clients have even brought me invoices from some of these bookings showing the discounted price offered and purchase, which was a reduction in price due to splitting some of the commission.

Just a few things but clearly think there are lots who follow the rules but there are some of the volume operators who are clearly not following the rules but the vendor overlooks them because they are creating so much revenue (or stealing it).

Ike Reynolds, CTC
president/owner, Reynolds Travel

Just want you to know the above agency [redacted] advertises and definitely gives rebates. I lose a lot of business because of this. I cannot even price match their rates, because it would mean losing every bit of my commission. This happens with the upscale cruise lines, such as Oceania and I find it extremely frustrating.

Bonnie Hay
Tzell Travel Group GTC

Community over competition is among the many things that attracted me to travel. Like you, I have zero tolerance for agents who poach, violate the supplier rules so blatantly or rebate. It takes years of hard work to build client & supplier trust and only moments to lose it.

Mike Allard, CTC
Mallard Travel

The practice of rebating has always been around. Some long-time [redacted] members have boasted about receiving at least an 8% commission rebate in the form of a check or onboard credit for at least twenty years.

I’ve been in the business over twenty five years working for a small agency. We have never rebated, though we have been asked if we would. Obviously the volume, cruise-only agencies receive more than a standard 10% commission and are willing to rebate. I’m sure the cruise lines really don’t care where the extra commission earned by travel advisors ends up.

My sister books some of her cruises with an online agency that rebates back commission.

As for the Advisor solicitation tactics, I think this is what cruise lines are really concerned about. Especially when it happens directly onboard the cruise ships.

Anonymous Advisor