How much of a travel agent commission is too much?
Ten percent? Twenty? How about 100 percent?
That’s no academic question. Every month, it seems, several indignant readers contact me because a hotel accidentally showed them the net rate it was paid by a large travel agency like Expedia, Orbitz or Travelocity. They want their money back.
The response from the online agencies is: If you care to book several thousand rooms at a time, we’re sure the hotel would offer you the same price.
But what if it’s not a bulk purchase?
That’s what happened to Andrew Solow when he bought train tickets from Moscow to Vologda through a travel agent in San Francisco.
After traveling to Russia, I learned that my travel agent charged me $676 for train tickets that only cost $338.
When I confronted her with the evidence of the overcharge, she claimed that there were three different commissions that I had been charged and she refused to refund the overcharge. The $338 “commission” was not previously disclosed.
How can I get my money back?
I suggested that he write a brief, polite letter to the agent, requesting a refund. It turns out he had already done that, and that the agent had ignored him. So I wrote to the agent, and she finally responded.
I am very sorry I couldn’t answer your letter earlier, I was very busy working with a group from Russia.
In response to your letter from August 4, I hereby inform you that unfortunately we cannot satisfy your refund request. We stated very clearly our conditions: “All sales are final and nonrefundable.”
On my part, I must tell you that we are using different types of services and products from wholesale companies in Russia that we are dealing with, including our Moscow office for making arrangements for our clients, and not getting any commission from them.
The price given to our clients has to cover our expenses to buy these services as well as our Moscow office expenses and certainly make some profit. These components are the base of the final cost of the booking.
By signing your invoice and paying in full for the services booked by you you agreed to the amount stated. This is the way all retail business function and therefore we don’t see any reason to change it.
We appreciate your understanding and and thank you for your business.
In other words, we had to pay someone else for the tickets, and they charged us a fee, which we had to pass along to you. But the agent had initially claimed she was only taking a 10 percent commission. Does that third party really account for the other 90 percent? If so, maybe I should quit writing about travel and start selling Russian train tickets.
When is a travel agent commission too much? It isn’t unusual for an agent to take a 15 percent commission on a cruise, and with overrides, a tour operator can pay 20 percent or more. No one begrudges a travel agent for accepting these bonuses. It’s how business is done.
If the market will sustain a 100 percent commission, I might even go along with that. But lying to a client about your commission and then telling him “tough luck” when he finds out you billed him twice the cost of a ticket — that’s not a gray area. That’s just wrong.
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{ 38 comments… read them below or add one }
Maybe the train rider should have looked around at his other options before agreeing to purchase the tickets from the travel agent.
Chris,
I disagree with you here. If you found out what it actually cost GM to make your Caddie should you get a refund on the difference between what you paid and what it cost? No.
Ultimately this gentleman agreed to the price. If he thought it was bad at the time of purchase he should of looked elsewhere before buying. Since the agent has a Moscow office, it sounds like there’s a lot more to this than just a ticket purchase. It quite possible that overhead for the entire trip is spread across all the components and not just the single purchase.
This agent put time and effort into the booking. She offer him a price for some arrangements that he accepted. Later finding out what it costs doesn’t change that transaction. The time to complain about price is before the trip not after (the only exception to this is when promised events do not occur).
John
The European railroads themselves are conspirators in this type of higher pricing for North Americans…..the low ticket prices offered on the SNCF France website do not allow for booking with a North American credit card billing address….which is fulfilled via Rail Europe, a SNCF subsidiary, for a higher rate although no additional services are being provided, a train ticket being a train ticket.
I had the same thing happen to me from Rail Europe. I had purchased some rail tickets within France a few years ago. At the time I did not know about direct bookings via the French web sites. I wound up paying about 50% the face value of the tickets. I wrote to Rail Europe and questioned the high costs. They tried to explain it as booking fees etc. I then asked why I paid more for the tickets and a booking fee when they had separate line items for booking fees and shipping. The refused a refund but gave me a $25 voucher to use on another trip. I used the voucher the following year later on a trip within the Netherlands. I did, however, find the actual cost of the ticket. When the tried to charge me more, I referred them to the http://www.ns.nl site. They eventually did charge face value plus fees.
Consolidators do this all the time. Agents have access to fares not available to the public, so the price is what the market will bear.
Why is it that travel seems to have this transparency requirement that no other industry has? Do you demand that Walmart not make what you feel they should?
The fact that the agent charged 100 percent commission isn’t the issue; the fact that she LIED about what she was charging is. Then, to add insult to injury, when she got caught in her scam, said “Too bad.” There’s a big difference between 10 percent and 100 percent. It’s agents like this who give the whole industry a bad name. If I was this agent’s customer, I’d make sure everyone I knew — and everyone they knew — heard about it.
To make thing even worse for the US audience – The favorable travel passes on Amtrak in the US are ONLY for non US residents . . .
Elliott –
At SmallShipCruises.com the experts we work with charge nothing for cruise bookings — their commisisins are paid by the cruise company.
If your readers ae being charged a ‘commission’ or other fee by a travel agency for booking cruises I suggest they go elsewhere or come to us. We never ever charge a fee and often because of working with experts can get a passenger a lower fare than if they booked directly with the cruiseline.
Shirley Linde, Editor
http://www.SmallShipCruises.com
I am not sure why the commission amount ever came up in the initial part of the reservation process. What an agency makes per item sold isn’t a customer’s business. If a customer of any business doesn’t like a price, they have two options; make the purchase or take their business elsewhere.
As a person living in San Francisco who uses travel agents upon occasion, I would love to know the name of this agency.
I agree with several comments made before. The question isn’t really commission amount but whether agent was forthright when asked. As far as commissions go, most of us try hard to be equitable — all the while wondering, as noted earlier, why is it the public expects travel counselors to say what their margin is without expecting the same of the grocery store, liquor store, refrigerator sales person or restaurant, etc.?
Chris,
I would want to know whether the agent had any credentials? I hold IATAN, CLIA, ASTA, RESULTS memberships and appointmnets. I charge between 30.00 and XXX.00 per transaction. I never charge any more than the normal fare, but there are times that the client finds 1000.00 and I have 500.00. That allows me to make any commission that I like. Only an idiot would disclose the commission or percentage up front. If I had made a claim of only 10% and charged 100%, then my client should file a complaint with ASTA. If you are dealing with an independent off of the street, or your neighbor that paid 500.00 to call themselves an agent, then you deserve nothing for stupidity. BUT, a certified agency had responsabilities to the client but in service and finacially and action can be taken against them.
If you agree on a price, then it is your fault if you are overcharged – not the agent.
For example, just because retail department stores don’t call their “profit” or “markup” a “commission” doesn’t mean that they aren’t jacking up the price over 100% – that’s why they can offer 75% off the price.
If you purchase something from a retail store and it clearly states that it is non-refundable, then what are you going to do – write a letter to the store demanding your money back? I think not – leave the agent alone – it’s your fault for not looking around – not his/hers – especially with the internet.
It is confusing to use the term “commission” when you are really speaking about “mark-up”. Commissions are paid by the supplier while mark-up is profit added by the retailer to cover costs and make a profit. Many products are sold net with a fee or mark-up to pay for services rendered.
Fees and mark-up need to reflect the expertise and work involved and are not related to the value of the product. A $50 child’s Amtrak ticket may take more time and work than a business class airfare. A $40 fee or mark-up may appear too much for the one and not enough for the other.
I hate to agree with the agent but unfortunately it is a buyers responsibility to shop around before purchasing any tickets.
When you go to the movie theater and order a large popcorn you may pay $5-7 but in actuality it cost just over $0.10 for the movie theater to make this popcorn.
While I do not condone about misleading customers I am very aware of the Russian train the person is considering. When you enter countries such as Russia and China don’t expect to pay face value (or anything even close) for travel within these countries. There are often strict policies that these products can only be purchased at the ticket offices where the train is departing. In this case from Moscow.
So unless your local travel agent has an office in Moscow you are going to be left without a ticket. There are very few reliable companies who offer these tickets and because of supply and demand will charge exorbitant fees for your tickets.
And for those of those who think you can just buy the tickets upon arrival in Russia it is time to think again. First off these tickets sell weeks in advance and sometimes it is required to purchase them months in advance. In addition when you apply for your Russian visa you need to tell the Embassy where you will be in Russia and must provide proof of this. Russia is not known for bending rules when it comes to visas.
In short make sure you agree with the price you are paying. If you think it is fair than why would you worry about the commission.
Having traveled to Russia in the not so distant past, I discovered that many times I was charged more because I was an American than my Russian friends. For example, to get into some of the museums I would be charged 10 times as much as my Russian friends and likewise I was charged more to take the train from Moscow to St. Petersburg. My point here is that the price he was quoted in Russia may or may not have been a price that he, as an American would ultimately have paid.
If he purchased his ticket from a travel agency and their commission (paid by the vendor for acting as an agent for the vendor, not the purchaser) was 100%, so what. That is supposed to be between the vendor and the retailer. Do you how much commission a real estate agent gets when he or she sells a home for a client? If a client feels like he got a good deal at the time of purchase, what difference does it make if the travel agent made 1% or 1000%. If the price was good/fair at the time purchase and the goods were delivered as promised, so what. I would suggest that Mr. Solow try to purchase his Russian train ticket in the USA without using a travel agent and see how much it ends up costing him, both in terms of time and money.
I have worked in commission based sales for years and I never disclose how much commission I make on any deals that I do for the simple reason it’s not anyone’s business but mine.
I do think that the agent/agency was wrong for revealing that it was commission and for not responding faster but I don’t think that Mr. Solow is entitled to any refund.
A Few Points From the Complaining Party
RUSSIAN TRAIN TICKET PRICES NOT AVAILABLE Via INTERNET or TELEPHONE
Short of traveling to Russia and going to a train station in person, there is no way to accurately determine the cost of a Russian train ticket in advance.
Our Travel agent, Anna Rayak at RUSSART TRAVEL SERVICE, told us that she usually charged about 10% commission. But, that it could be higher on ticket bookings in foreign countries like Russia. But, she never told us that the commission and markup could be as high as 100%, the amount we were charged in this case. That’s $676 dollars for $338 worth of train tickets.
Though I agree that I could have checked with other travel agents about the price of the train tickets before purchasing them, there are not that many Russian/English bilingual travel agents around. And, I was perfectly willing to pay some commission and markup. In fact, I am only trying to recover $200 of the $338 commission and markup that I was charged.
I was also charged a $105 transfer fee to get from the airport to the train station. This was money well spent.
OUR TRAIN TRIP
We had originally planned to fly. But, even though we started planning this trip three months in advance, for some reason, Rayak was unable to obtain plane tickets.
We bought similar train tickets about 3 years ago for less than half the price. But, when we questioned our travel agent – Anna Rayak – prior to our July 2008 visit, Rayak told us that prices had gone up a lot since 2005. Rayak did NOT disclose that the reason for most of the price increase was commission and markup.
EXTREMELY STINKY TRAIN RIDE
Because of the increased cost due to the 100% commission and markup, we were unable to afford a private sleeping compartment and had to share with two other people. On one leg of our train trip, one of those other passengers had not bathed for at least a month and was so stinky that the train compartment smelled horrible even when he wasn’t in it. Fortunately, the train conductor took pity on us and moved us to another sleeping compartment.
HOTEL RESERVATION PROBLEM
Rayak also wasted a lot of our time trying to convince us to stay in a particular hotel which we did not want because it did not receive favorable reviews. She then told us that it was impossible to get written confirmation of our reservation at the hotel that we chose. But, with a couple of phone calls, we got written confirmation of our hotel reservation via Email.
Rayak also failed to provide us with directions to the hotel we chose. And, we wasted two hours finding it. Rayak charged us a $100 booking fee for this service, ostensibly because she could not figure out a way to get a commission from the hotel we chose.
THE TRAVEL AGENT IS:
Russart Travel Service
Aka: Russart Art & C. S., Inc.
CA Seller of Travel #: 1018019
License Holder: Izabella Gribanowski
291 Geary St., Ste. 511 San Francisco 94102
Tel: 415-781-6655 Email: russart@pacbell.net
Anna Rayak, Agent
All the folks who keep going on about department store prices and wal-mart prices are comparing apples and Buicks.
In a retail store, a price for an item is posted. Different stores may have different costs to acquire and sell the same item, and the market may demand the same price be charged. In other cases, different stores may be able to charge different prices for the same thing, even if underlying costs are the same. That’s one thing. The consumer doesn’t know the wholesale price of a box of croutons, whether it’s sold at Wal-mart, Whole Foods, or the corner grocery, because he can’t buy that box wholesale.
However, travel agents are re-selling things which ARE available, at retail, directly to the consumer. They have a publicly posted retail price. So a consumer is paying the travel agent for his expertise and knowledge (isn’t that what they’re always telling us?) at finding the best deal for the consumer, and for that, the travel agent charges a fee. (In some areas, like cruises, the travel vendors still pay a commission to the agent, and no fee may be involved, but that’s increasingly not the case for hotel, air, and other travel vendors.)
It appears this travel agent told the customer his fee would be 10% over the cost of the tickets. However, it also appears that the agent let the customer assume it was 10% over the ACTUAL cost of the tickets, not the RETAIL price.
A travel agent may be able to acquire the items cheaper than retail, by buying in bulk or through other discounting arrangements, and (as in this case) substantially increase her profits.
Although this is legal, presumably, I think it’s ethically wrong: one of the reasons you go to a travel agent in the first place is for help in finding the best price. If the agent is going to develop a fee schedule based on retail prices, and keep any discounts obtained on top of that, then the agent is adding no value to the transaction other than a mild sort of convenience, and 10% of retail (or 100% of discounted price) is a high price to pay for that convenience.
BIASED TRAVEL AGENT POSTS
I just noticed that most of the people posting who don’t think I am entitled to a refund are either Travel Agents or people who derive their income from commission sales and markup. Do the words Intentional Misrepresentation and Fraud ring a bell???
FYI: Disclosure of Real Estate commissions is required by law in CA and most other US jurisdictions. Real Estate commission is always specified in the listing agreement.
Since Russian train tickets aren’t priced in US dollars how does the passenger know how much his agent had to pay to secure the tickets for him? Could he have, in fact, secured his own train reservations? Could he have insured that he wouldn’t have to share a compartment with a stinky person?
I think he needs to get over it – he needed her expertise to secure the reservations and now wants a refund because she made too much money. Gimmeabreak!
MISSING the POINT
I know the price of the train tickets because while I was in Russia and after a business associate tod me I had been ripped off, I obtained a certified information report from an agent at a Russian Train Station. That report specifies the actual cost of the subject train tickets.
If I had known about the 100% commission or markup in advance, I would have had a family member or business associate in Russia purchase the tickets for me; and I would have gotten a private compartment for the same price.
MISSING THE POINT
I know the actual cost of the train tickets because I obtained a certified price report from the Russian Train Bureau while I was in Russia – only available in person for a fee.
If I had known that there was a 100% commission or markup, I would have had a family member or business associate purchase the train tickets for me. And, I would have had a private cabin instead of smelly neighbors for the same price.
In IT there is the “Stupid User Error”, this is a “Stupid Customer Error”.
Stupid is as Stupid Does
Waaaaaaaa.
Cry baby.
Why shouldn’t the travel agent be entitled to a commission of 100%? They did the work, it’s not like the guy didn’t get his ticket. His complaint isn’t that the tickets were wrong, or there was some other problem with the tickets. His complaint is that he feels the agent earned too much commission.
Last I heard, this was America, and this was a capitalist country. The agent is entitled to their profit. Would you go to a department store and complain that they’re selling you a shirt that cost them $2 for $75?
Do some comparison shopping next time around. Better yet, you set up the relationships with cooperating agents in Russia, handle the billing, payment, fulfillment, and distribution of the tickets yourself and pay $0 in commissions.
By the way, travel agents are not real estate agents, so regulations for real estate agents don’t apply.
Hey Andrew, I have a question for you. When you shop for other things, and I don’t care if it’s a house or a tv or a sweater or a cheeseburger, do you chose the retailer based on their profit margin, or based on who you feel provides the best value?
It seems to me that you were perfectly happy with the price you paid… happy enough that you didn’t bother to shop around. Now you’re bitter because you think you could have gotten a better deal. The idea that the fault lies with your travel agent is laughable.
And FWIW, I wouldn’t be the least bit surprised to find out that Andrew HAD shopped around, and this was the best deal he could find. It’s not like this was a Southwest Airlines flight that a monkey could book on their website, I suspect any agent would have charged a considerable fee for this one. And as Andrew himself said, “there are not that many Russian/English bilingual travel agents around.”
Yes, with my vast experience of one visit to Russia, I encountered exactly this problem. Enquiry and research established that even if I went in person to the railway station I would probably end up buying a ticket from an agent with a large surcharge – the simple idea of “buying a ticket” hasn’t arrived there yet.
One good aspect though. The agent sold me entry to Russia – the arrangements for entry are only slightly harder than the arrangements for entry to America (and that reflects very badly on America). Since the airline lost my luggage, she was extraordinarily helpful in sorting that out, obtaining a result which frankly I could not have achieved. I guess that was worth her huge commission.
Ultimately I think that both Russia and America need to sort themselves out before the British will return to regular travel.
While I think that bait-and-switch should never be rewarded, I do agree, Andrew, that you paid for the tickets, and ostensibly read the fine print (or maybe you signed your name to it -without- reading it, in which case, it’s still your fault.) Every single last one of us have paid a stupid tax in our lives because we didn’t read the fine print, shop around, or otherwise pay attention. Consider it lesson learned.
Oh, also: TITLING SECTIONS OF YOUR POSTS LIKE THIS (especially things like “MISSING THE POINT”) every time you post doesn’t exactly make you seem levelheaded – actually, it makes you seem a touch snarky, and therefore, it’s a bit harder to be sympathetic…
Andrew, you have stated that a surcharge is added to a ticket purchase in Russia. Your agent obtained the ticket through proper channels and each time a fee was added. Your agent did not get a 100% commission.
You also stated that you could have had a family member in Russia obtain the ticket for you, but you didn’t. You paid a service fee for having the ticket in hand ahead of time.
We can change the oil in our car, but most of us don’t and we pay someone a hefty fee to do it for us. Ever price a oil change. The cost is all over the board! Many of us don’t paint our own home and hire professionals to do the job. They add on a fee for purchasing the paint that you can go get yourself for less, but don’t. Contractors always add a fee to supplies they purchase, which usually start at 15%.
You have given out the agent’s name in anger and from all you have written here, it appears to be sour grapes on your part. You owe her an apology.
What does everyone feel is a “FAIR” markup for a travel business in terms of a percentage? 10%, 20%, 50% 100%, 0%?
Taking into account all expenses must be paid from that markup–overhead..salary…currency conversion…bank fees..postage..benefits..etc.
MISSING THE POINT
The point here is that when Russart Travel Service told me that the reason the train tickets cost more than double the price I paid three years ago because prices had gone up, they were intentionally concealing the real reason for the price increase — the 100% markup//commission that they added to the ticket price.
As I previously posted, short of making a personal visit to a Russian Train Station, it is impossible to determine the price of Russian Train Tickets. I relied on a dishonest travel agent who is licensed and bonded. The only reason I haven’t already filed a small claims court action or a complaint with the CA Dept. of Justice is that confronting Russart with the truth in public is a more fitting punishment.
THE TRAVEL AGENT IS:
Russart Travel Service
Aka: Russart Art & C. S., Inc.
CA Seller of Travel #: 1018019
License Holder: Izabella Gribanowski
291 Geary St., Ste. 511 San Francisco 94102
Tel: 415-781-6655 Email: russart@pacbell.net
Anna Rayak, Agent
NO YOU”RE MISSING THE POINT
As someone else said … You paid a stupid tax for not shopping your trip around. You didn’t like the service they provided.
Fine. Get over it.
You haven’t filed a claim because the court would laugh at you. You have filed a complaint because they’d through it out (at least in most states CA is about a inane and stupid as it comes so they might look at it)
You agreed to a price for an item. The item was delivered.
I haven’t seen you provide a single argument that your ticket wasn’t provided so you got what you paid for at the rate you agreed to pay for it.
Let me guess the last time you bought a car you got mad because you found out that you could have bought it cheaper somewhere else after the fact.
You lack of homework is not the agents fault.
And to answer your question, I neither work on commision nor am I a travel agent. I just realize that you agreed to a bad business deal.
Get over it and move on with your life
Andrew said, “…there are not that many Russian/English bilingual travel agents around.”
There’s the reason your tickets cost you what they cost you. Since you paid for them, they were worth at least that much to you.
I fully support the free exchange of ideas on this blog, but allow me to appeal for a civil discourse. Name-calling is not productive. Please consider toning down your rhetoric a little.
Prior posters have suggested that this commission is legal, but maybe not–at least it might be a basis for a civil lawsuit. If the contract between the travel agent and consumer stated that the commission was a certain percentage and the agent charged a higher percentage, that could be a breach of contract. The civil discovery process would allow the wronged customer to see how much the Russian agent charged the American agent, and determine the actual commission. Obviously, the value here isn’t enough to justify a lawsuit, but it’s not at all clear that this commission was “legal.”
as long as a travel agent arranges your trip and makes it cheaper than you would get it if you organized it yourself, any commission is ok. imho
i had a almost similat incident with a travel agent at unique travel in delray beach florida ; i wanted to go on globus tour to turkey; shhhhhhhe charged me a 35.00 fee for making transportation accomadations which were horrible:miami to paris to amsterdam to istanbul; luckily the flights were smooth and arrived on time; however had globus cancelled the trip i was out of luck ; they were non refundable; she told me to bring 87.00 for the visa ; it was 35.00 ; she also informed to only bring about 100.00 dollars in cash; well in turkey very few establisments even the bazzar in istabul honor them. i spent a fortune in cab fees trying to find a atm machine . very misinformed agent . the agency is a rather exclusive one dealing in a believe vista luxury toures; also when i went into the agency, a sign read no booking fee if purchased on a tour ; fter several call the president of the agency did refund my money; so much for uninformed travel agents even from a so called prestige one.
whether these commissions are legal or not, or whether this agent is in the legal right or not isnt the issue, the fact is people choose to use an agent when they are looking to have a seemless and good trip. personally i think the commission is outragous, and i think that in any other business the costomer would be responsible for doing the homework, but for alot of poeple where travel is somewhat i new language to them, they hire these agents to do the homework for them because they dont know what is involved in making a seemless trip. i think that morally and ethically this travel agent was in the wrong. Fortunatly for us however, many travel agents do not opperate this way and prefere a good name to a good profit.
See that is why travel agents are a dying breed.
Get rich quick agents give the honest ones a bad name and people will just turn to the internet for all their travel services. There you can shop every aspect of the trip from the shuttle to the airport to the seat class on your return flight. Then you go over to the bigbox services (Expedia, Travelocity, etc) and compare the price for the same thing.
No the “oldtimers” will not be able to do this. They are not that internet savvy but gen-xers and beyond will one day wonder why people ever went to someone who can rip them a new one and then HAVE THE AUDACITY TO POST ON A BLOG HOW IT IS OK TO MAKE A 100% MARKUP. I wouldn’t even have asked for the money back. Just do not patronize them anymore.
You will not get your money back but you will not use them in the future. You probably will not use a travel agent again, period!