What is the average TA discounted rate?
Jun 22nd, 2006, 09:46 AM
#1
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What is the average TA discounted rate?
I know this various but what is the range of the discount a travel agent puts on the rack rate of a camp? If a camp is $800 a night rack rate, what is the range of discount a TA might offer a client? Thanks.
Jun 22nd, 2006, 03:39 PM
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I believe that after an agent has paid the rent and salaries, their own liability insurances, the credit card charges and the myriad other office expenses that the small commission they earn is probably all but depleted.
Typically an agent will earn a 10% commission for booking your trip. This margin does not leave much over to offer back to you. If you are being enticed to book through an agent because they can sell the property for you at less than rack, be careful....This might not pan out to be the "steal deal" of the year.
Now if you are talking to a wholesaler, then the percentage will be greater and because you aren't buying through retail the wholesaler should be making an additional 10% as this would be the margin they pay an agent. So you might have some wiggle room to negotiate a portion of that.
Sorry if thid offends some of the professionals on the board
Typically an agent will earn a 10% commission for booking your trip. This margin does not leave much over to offer back to you. If you are being enticed to book through an agent because they can sell the property for you at less than rack, be careful....This might not pan out to be the "steal deal" of the year.
Now if you are talking to a wholesaler, then the percentage will be greater and because you aren't buying through retail the wholesaler should be making an additional 10% as this would be the margin they pay an agent. So you might have some wiggle room to negotiate a portion of that.
Sorry if thid offends some of the professionals on the board
Jun 22nd, 2006, 05:03 PM
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What if you're working directly with a tour operator and not an agent? Does the tour operator pay a net rate (as opposed to getting a commission) to the camp and how much of a discount would that net rate typically represent off of rack rates or is it highly variable? Thanks for anyone willing to respond.
Jun 22nd, 2006, 06:06 PM
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No offense taken. A travel agent earns peanuts, as indicated, after everything is paid from that 10% commission.
Typically, your average commission is 10% of the cost of the trip, but may vary with the amount of business they do with a particular company, in some cases. If you book directly with a tour company, and bypass a travel agent, assuming the tour company works with the public, as a general rule, you are not paying any less than you would if you went through a travel agent. As suggested, you can always try to negotiate, and compare, but it is often difficult to compare apples to apples. Tour companies negotiate their rates based on many different variables, and it would be difficult to say how much it is marked up, whether it's 10% or more.
There are some companies which offer net rates, it is true, and then the 10% or more commission, depending on many factors, is added by the travel agency, but usually this is an FIT (Independent travel) where the itinerary is being built especially for the client. Some agencies also charge a supplement for building customized itineraries, as do some tour companies.
You'd be surprised at how little a travel agent makes off of an expensive safari. Remember, like most other sales positions, the commission is split between the office and the agent who sells the trip, unless the agent is salaried.
I know many people think by cutting out the travel agent, they will save money. That is typically NOT the case, but exceptions do apply, naturally.
Typically, your average commission is 10% of the cost of the trip, but may vary with the amount of business they do with a particular company, in some cases. If you book directly with a tour company, and bypass a travel agent, assuming the tour company works with the public, as a general rule, you are not paying any less than you would if you went through a travel agent. As suggested, you can always try to negotiate, and compare, but it is often difficult to compare apples to apples. Tour companies negotiate their rates based on many different variables, and it would be difficult to say how much it is marked up, whether it's 10% or more.
There are some companies which offer net rates, it is true, and then the 10% or more commission, depending on many factors, is added by the travel agency, but usually this is an FIT (Independent travel) where the itinerary is being built especially for the client. Some agencies also charge a supplement for building customized itineraries, as do some tour companies.
You'd be surprised at how little a travel agent makes off of an expensive safari. Remember, like most other sales positions, the commission is split between the office and the agent who sells the trip, unless the agent is salaried.
I know many people think by cutting out the travel agent, they will save money. That is typically NOT the case, but exceptions do apply, naturally.
Jun 22nd, 2006, 08:31 PM
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Kmac and mkonzo, thank you for weighing in. We are fans of travel agents, having hired experts for various trips on different continents. We respect them and treat them well with gifts and referrals and we don't book insubstantial trips. And for our first trip to Africa we paid the 5% credit card fee ourselves. So we're not looking for a steal, but we also are used to being offered less than rack rates for Africa.
In addition to the costs of being a travel agent, let's not forget some perks of discounted travel and perhaps even tax deductions. If the agent is working alone then he is not splitting the earnings. Still, I appreciate what you're saying about the amount being small compared to the cost of the entire safari.
Kmac, if I understand you, are you saying that companies that charge the client less than rack rate then turn around and charge a 10% commission to the client? Are you suggesting that no reputable TA for Africa offers less than rack rates when doing a customized itinerary, without charging it back to the client in some form?
So I'm still asking - obviously the range is less than 10% but what is the normal range to be looking for by an African TA, say one working alone, for a discount off rack rates? 1%? 3%?
My question arose because Grumeti River Camp was quoted as $750 pppn for 07. That's a big jump from $630 pppn rack rate, high season. As I questioned that, I began to wonder what discounted rate I could factor in.
In addition to the costs of being a travel agent, let's not forget some perks of discounted travel and perhaps even tax deductions. If the agent is working alone then he is not splitting the earnings. Still, I appreciate what you're saying about the amount being small compared to the cost of the entire safari.
Kmac, if I understand you, are you saying that companies that charge the client less than rack rate then turn around and charge a 10% commission to the client? Are you suggesting that no reputable TA for Africa offers less than rack rates when doing a customized itinerary, without charging it back to the client in some form?
So I'm still asking - obviously the range is less than 10% but what is the normal range to be looking for by an African TA, say one working alone, for a discount off rack rates? 1%? 3%?
My question arose because Grumeti River Camp was quoted as $750 pppn for 07. That's a big jump from $630 pppn rack rate, high season. As I questioned that, I began to wonder what discounted rate I could factor in.
Jun 22nd, 2006, 08:46 PM
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Just to clarify, I was referring to a ground operator, not an overseas tour company. Many of these operators don't have "tours" but rather work on a custom basis with each client. Just curious as to the rates they would pay to a camp (not the commission rate between an operator and a travel agent).
Jun 23rd, 2006, 08:51 AM
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I have no idea what the TA commission rate is, but this is what Rocco wrote some months ago in reply to pricing a safari. I'm pretty sure that this was before he became a travel agent. Again, I have no idea if this was accurate, but it is interesting:
Author: Roccco ([email protected])
Date: 07/06/2005, 10:54 pm
Okay, allow me to dissect the pricing (I love dissecting Micato and A&K because they are always Sooooo Overpriced, but that will obviously not be the case here)
3 nights Singita
$1,100 pp (no single supplement) x 3 nights = $9,900
2 nights Madikwe Safari Lodge
$375 pp (no single supplement here either) x 2 nights = $2,250
Overalnd transfer to Gabarone, then onto Maun
$500 pp? = $1,500
3 nights at Mombo Main Camp
$1,200 pppn x 3 nights = $10,800
2 Nights Jao
$850 pppn x 2 nights = $5,100
2 Nights Kings Pool
$850 pppn x 2 nights = $5,100
Botswana light air transfers = $1,000 total
Well, I am slightly over $35,000 without my return transfer back to Joburg, so you obviously did better than rack rates, which believe it or not is not an easy thing to do!
It is my understanding that Botswana is THIRTY PERCENT commissionable, while South Africa is TWENTY PERCENT commissionable, so by giving back about 7.5% on the commission, this is how your agent was able to accomplish this.
________________________________________
Author: Roccco ([email protected])
Date: 07/06/2005, 10:58 pm
(By giving back 7.5% commission, I meant that he/she is likely taking a 25% cut on their commission). Even so, let's say that of the $33,000, that about $30,000 is subject to an average of a 25% commission (South Africa is 20% while Botswana is 30%).
The commission then on $30,000 would be $7,500, so by taking a 1/4th cut, you save nearly $2,000 while the agent still has a nice commission of just over $5,000. Not bad and well deserved by an agent that helps put together a flawless trip. Win win situation.
________________________________________
Author: Roccco ([email protected])
Date: 07/06/2005, 10:54 pm
Okay, allow me to dissect the pricing (I love dissecting Micato and A&K because they are always Sooooo Overpriced, but that will obviously not be the case here)
3 nights Singita
$1,100 pp (no single supplement) x 3 nights = $9,900
2 nights Madikwe Safari Lodge
$375 pp (no single supplement here either) x 2 nights = $2,250
Overalnd transfer to Gabarone, then onto Maun
$500 pp? = $1,500
3 nights at Mombo Main Camp
$1,200 pppn x 3 nights = $10,800
2 Nights Jao
$850 pppn x 2 nights = $5,100
2 Nights Kings Pool
$850 pppn x 2 nights = $5,100
Botswana light air transfers = $1,000 total
Well, I am slightly over $35,000 without my return transfer back to Joburg, so you obviously did better than rack rates, which believe it or not is not an easy thing to do!
It is my understanding that Botswana is THIRTY PERCENT commissionable, while South Africa is TWENTY PERCENT commissionable, so by giving back about 7.5% on the commission, this is how your agent was able to accomplish this.
________________________________________
Author: Roccco ([email protected])
Date: 07/06/2005, 10:58 pm
(By giving back 7.5% commission, I meant that he/she is likely taking a 25% cut on their commission). Even so, let's say that of the $33,000, that about $30,000 is subject to an average of a 25% commission (South Africa is 20% while Botswana is 30%).
The commission then on $30,000 would be $7,500, so by taking a 1/4th cut, you save nearly $2,000 while the agent still has a nice commission of just over $5,000. Not bad and well deserved by an agent that helps put together a flawless trip. Win win situation.
________________________________________
Jun 23rd, 2006, 12:49 PM
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brandywine,
I had as much authority to speak on the matter then, as any safarigoer has to speak on the matter today.
There are really no set commissions. Some operators may enjoy a 10% commission while others enjoy a 30% commission. Some operators who have a 30% commission but a huge overhead, may profit less than an operator earning half the commission. Some operators who are newer may enjoy very competitive commissions allowing them to compete with the most established companies. There are just so many variables to it all.
The most important thing I would tell safarigoers is to work with an agent who gives you his or her undivided attention and tries to provide you with exactly what you are looking for, rather than trying to steer you to the properties that suit him/her most. For those without a strong idea of what you want, go with an operator whose judgment you trust and, again, who is not necessarily pushing you to a single safari operator but gives you a couple different options.
When I was a regular safarigoer, the thing I hated most after contacting an agent was getting the famous autoreply message, thanking me for contacting them and that they would get back to me within 3 days. No, no, no. Go with an operator who jumps all over things for you and shows as much passion for your safari as he/she would for his/her own.
Anyway, there is no simple black & white to commissions. Really, go with an operator who treats you with a sense of priority and who provides you with what you are asking for and you will be happy. Chances are, they will even be able to do it at prices that are competitive with the least personable operators out there.
I had as much authority to speak on the matter then, as any safarigoer has to speak on the matter today.
There are really no set commissions. Some operators may enjoy a 10% commission while others enjoy a 30% commission. Some operators who have a 30% commission but a huge overhead, may profit less than an operator earning half the commission. Some operators who are newer may enjoy very competitive commissions allowing them to compete with the most established companies. There are just so many variables to it all.
The most important thing I would tell safarigoers is to work with an agent who gives you his or her undivided attention and tries to provide you with exactly what you are looking for, rather than trying to steer you to the properties that suit him/her most. For those without a strong idea of what you want, go with an operator whose judgment you trust and, again, who is not necessarily pushing you to a single safari operator but gives you a couple different options.
When I was a regular safarigoer, the thing I hated most after contacting an agent was getting the famous autoreply message, thanking me for contacting them and that they would get back to me within 3 days. No, no, no. Go with an operator who jumps all over things for you and shows as much passion for your safari as he/she would for his/her own.
Anyway, there is no simple black & white to commissions. Really, go with an operator who treats you with a sense of priority and who provides you with what you are asking for and you will be happy. Chances are, they will even be able to do it at prices that are competitive with the least personable operators out there.
Jun 23rd, 2006, 07:23 PM
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Rocco,
I agree with your first statement, I wasn't questioning your right to address the issue, then or now.
It sounds like you are saying that the commission rates are highly variable (but not just strictly 10% as mentioned above). I assume that just like other businesses, sometimes prices and commissions depend on the economic climate that year, etc.
I'm not sure that an agent charging the very most (or for that matter another charging the very least) is necessarily a reflection of the service you will receive. Some agents (just like people in other businesses) are just more responsive or more interested in helping and offering ideas, getting back with you in a timely matter,etc. - in other words, just better at their job. I think we are actually lucky in planning trips to Africa in that there are a number of small agents out there really interested and knowledgable about Africa and providing good service.
I agree with your first statement, I wasn't questioning your right to address the issue, then or now.
It sounds like you are saying that the commission rates are highly variable (but not just strictly 10% as mentioned above). I assume that just like other businesses, sometimes prices and commissions depend on the economic climate that year, etc.
I'm not sure that an agent charging the very most (or for that matter another charging the very least) is necessarily a reflection of the service you will receive. Some agents (just like people in other businesses) are just more responsive or more interested in helping and offering ideas, getting back with you in a timely matter,etc. - in other words, just better at their job. I think we are actually lucky in planning trips to Africa in that there are a number of small agents out there really interested and knowledgable about Africa and providing good service.
Jun 23rd, 2006, 10:52 PM
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An example of the variation that Rocco is describing is if an agent sends a certain amount of business to a company they often move to a higher commission. A make believe example: once an agent has booked $25,000 with X-Africa camps the agents commission changes from 10% to 20%.
This is why you have to watch out for agents really pushing one company -- they often have quite a financial incentive to do so.
This is why you have to watch out for agents really pushing one company -- they often have quite a financial incentive to do so.
Jun 23rd, 2006, 11:01 PM
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OK, so going by what pred just described above......do certain agents have the ability to provide lower rates to customers to increase their overall volume? This would enable them to move up the commission bracket, pass on some to their clients.......up their business!!!
Hari
Hari
Jun 24th, 2006, 12:01 AM
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I really appreciate Rocco answering this so frankly. This is exactly the type of question he would have been asking before he became and agent and I think it reflect well on him that it's still something he's prepared to discuss.
Thanks!
Thanks!
Jun 24th, 2006, 12:27 AM
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Lots of responses to your questions. Just to respond to your specific question. You misunderstood me....when I spoke about how much a wholesaler charges, I was referring to wholesalers dealing ONLY with travel agents. Those are negotiated rates with the agency and the wholesaler. I can't speak to what they charge clients directly IF they deal with clients directly.
I can say that Tanzania rates have gone up considerably in the last two years, Ngorongoro Crater Lodge was close to 500 at the end of 2004, and for 2006, I understand it went up to almost 800 per night. Park Fees doubled.
So I don't know what kind of discount could be offered to you, or if it could. Africa doesn't discount the way other destinations do. If I called for rates and they told me 800 pp per night, it would be very difficult to sell it for less. The only way it would be less is if the commission structure was high enough to effect a discount, so it's difficult to say what % that could be, ....Also consider if booking for one night vs three or four, the rates could be different and putting together a full package for 7 or 10 nights could also net a little more of a discount.
Rocco broke it down nicely....and he's right about A&K and Micato. I like that. Nicely said
I can say that Tanzania rates have gone up considerably in the last two years, Ngorongoro Crater Lodge was close to 500 at the end of 2004, and for 2006, I understand it went up to almost 800 per night. Park Fees doubled.
So I don't know what kind of discount could be offered to you, or if it could. Africa doesn't discount the way other destinations do. If I called for rates and they told me 800 pp per night, it would be very difficult to sell it for less. The only way it would be less is if the commission structure was high enough to effect a discount, so it's difficult to say what % that could be, ....Also consider if booking for one night vs three or four, the rates could be different and putting together a full package for 7 or 10 nights could also net a little more of a discount.
Rocco broke it down nicely....and he's right about A&K and Micato. I like that. Nicely said
Jun 24th, 2006, 01:05 AM
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kmactravel,
Ngorongoro Crater Lodge is still available for as low as $320 per person per night in 2006 low season, a 56% discount from high season pricing.
I was at Ngorongoro Crater Lodge at the beginning of March (high season pricing) and I cannot imagine that it would not be just as nice four weeks later and at a savings of $410 per person per night sharing...enough to pay for the international air from Los Angeles to Kiliminjaro (JRO), for example.
For the budget conscious traveler, I would advise to always enquire about the different seasons as the savings are often quite dramatic. Personally, if I see someone who is traveling within only a coule weeks of a less expensive season, I will make it a point of informing her/him of this information.
Ngorongoro Crater Lodge is still available for as low as $320 per person per night in 2006 low season, a 56% discount from high season pricing.
I was at Ngorongoro Crater Lodge at the beginning of March (high season pricing) and I cannot imagine that it would not be just as nice four weeks later and at a savings of $410 per person per night sharing...enough to pay for the international air from Los Angeles to Kiliminjaro (JRO), for example.
For the budget conscious traveler, I would advise to always enquire about the different seasons as the savings are often quite dramatic. Personally, if I see someone who is traveling within only a coule weeks of a less expensive season, I will make it a point of informing her/him of this information.
