“All travel agents make their remuneration to some degree from suppliers paying commissions back to the agent.”
However, the Australian Federation of Travel Agents CEO Jayson Westbury said the travel agency business is different to financial services.
Mr Westbury said commissions for travel agents operated in the same way a margin did for a retailer. A shoe retailer did not have to disclose what margin they made on every pair of shoes sold and thus a travel agent shouldn’t have to either.
He also said travel agents, unlike financial services, did not charge trailing commissions.
The NSW government passed an amendment to its fair trading legislation in October 2018 that would “require suppliers of goods and services and their intermediaries to disclose to consumers the existence of commissions and referral fees”.
In a submission to the government in regards to this change, Mr Westbury advocated for an exclusion of travel agents from the amendment.
Virtuoso’s Mr Londregan said the travel agent industry should jump the gun and examine itself.
“We really want to get ahead of this issue and not get caught by it.”
He said he had been particularly thinking about the issue because the banking royal commission had caused him to rethink financial advice he had received and whether it was provided impartially or to someone’s benefit he wasn’t aware of.
Mr Londregan said in the long run, it paid dividends to put clients above commissions because if you did there was a higher percentage chance you would receive repeat patronage.
“Whilst you may not optimise an individual transaction, you’re actually optimising the long-term value of that client,” he said. In the case of Virtuoso in Australia, 90 per cent of business is repeat referral.
It was becoming more common for travel agents to charge an upfront fee according to Mr Londregan, which he thought was a good development. He said it was easier for travel agents to be impartial if they were charging for their time and using that fee for their income rather than commissions.