by Scott Pape - December 3rd 2011
“Calm down” said my better half.
She had a point. I was after all, arguing toe to toe with a Coles robot-checkout-chick – and losing.
“Place your items in the tray”, robot-woman kept saying in her smarmy, thirty-something, synthesised speech.
“They are in the freaking tray!” Defeated, I grabbed my environmentally friendly shopping bags and headed for the exit.
My girlfriend trailed, trying to lift my mood. “Where do you want to go on holidays? Let’s book something today”, she said, pointing at the travel agents on our way out.
“The internet has killed travel agents”, I grumbled as we walked in.
“Well someone forgot to tell them. Have you noticed how many travel agent shops there are?”
Travel agent versus online
Like me, you’re probably starting to think about booking your Christmas holiday – and that probably means jumping online. Me too. I’m a huge fan of DIY (just not at supermarkets). I’ll search for hotels on TripAdvisor.com, and I’m the type of guy who uses Webjet.com.au to see all the flights and then books directly with the airline to bypass their booking fee.
Yet when I finally got to speak to an agent, I quickly realised there are some good reasons why you should consider using one.
Ask any Flight Centre advisor and they’ll tell you their job is about one thing: selling, and in large volumes (because their commissions from the airlines keep getting crunched as more people move online).
Most airlines pay around 5 per cent commission on international bookings (and nothing on domestic fares). Some airlines will also offer the bigger travel agencies further commissions to get them to push their seats.
It’s a similar situation with booking hotel accommodation. Travel agents get around a 10 per cent commission from hotel bookings. And while booking a room online feels like you’re getting a bargain, the fact is that Wotif.com, the online leader, charges exactly the same commission (which is how they make over $50 million in profits a year).
On top of these commissions most agents will charge you a ‘service fee’ that’s dependent on how much work is involved, how annoying you are, and (sometimes) how much the agent thinks they can get away with.
When to use a travel agent
Despite the commissions, there are three reasons you should consider using a travel agent:
First, if you book an overseas fare online, in most cases you’ll be paying the same price as the travel agent – the airline just keeps the commission.
Second, when you travel overseas, having one point of contact if anything goes wrong (Qantas strikes, natural disasters, cancellations) is much better than dealing with the Qantas call centre.
Third, and most important, it’s convenient. If you’re someone who yells at supermarket robots, having an expert arrange your travel can save you time and stress. And most agents have some pull and should be able to get you a better room or a choice of seats, or at the very least give you their expertise on places to see.
That being said, if you’re organised and willing to book well in advance, you can save money by doing it yourself.
The industry insider
I spoke to Bruce Piper, the editor of the travel industry rag Travel Daily, and he said the cheapest way to cut your costs, especially if you’re planning a trip to the US or Europe, is to go in May next year. “There’s a heap of excess inventory, and you can get sale fares at about half the price of what people are paying in the peak season.”
Another cheap and cheerful holiday is cruising. “They’re offering extreme value right now, because they’re sending so many vessels here – and they don’t like sailing empty.” Princess Cruises (a little more upmarket than P&O) is offering deals that work out to be around $100 a day – including all meals, accommodation and entertainment (which caters for the cardigan set, but hey, it’s still cheap).
Just watch out for those ‘package deals’ that offer holidays with flights and accommodation. These can work out to be pretty cheap, but they can be more ‘bogan’ than ‘bargain’ – especially those all-you-can-eat-and-drink Fiji Escapes you see flogged in the weekend papers.
Holiday money saving tips
It’s no secret that agents make their money from upselling offers like travel insurance (which can carry as much as a 50 per cent commission) and travel money cards (about 1% of the balance). So here’s my independent guide to ferreting out the best deals.
Australians are among the biggest spenders overseas (because we’ve yet to go belly-up), which is why travel money is a big business for the banks. RateCity.com.au calculates that we collectively get slugged over $300 million a year in currency conversion and overseas ATM fees.
If you’re not careful you could be whacked a couple of hundred bucks in fees and charges – which are way better spent on sangria – so here are three options to cut down your costs:
Best travel money options
The Citibank Plus transaction account has no fees for overseas ATMs (they can fund it because of their huge global network).
Most of the big four banks offer travel cards that cost $15 to open, allow you to load up with multiple currencies, and have small ATM fees (depending on the country you’re in).
The GE Money 28 Degrees Mastercard has no ATM charges or currency conversions. Just remember that (a) it does charge credit card screw-me rates, and (b) GE Money is overall a horrible company with horrible products, so this may just be a lure to get you in the door.
Travel insurance
And, if you’ve already got travel insurance through your (cough) status credit card, remember that it’s probably worth about as much as you paid for it. Don’t leave home without travel insurance. Choking on a corncob in Kentucky could set you back $60,000, and about the same if you fall off a bike in Bali (after too many Bintangs).
For a couple of hundred bucks, buy your own travel insurance, but focus on the fine print and pay extra attention to unlimited hospital cover, and medical evacuation cover. You can lower the cost by choosing a higher excess and, if you do a bit of travelling throughout the year, consider buying year-round cover (which costs me about $300 a year).
Happy travelling, and steer clear of robots!
Tread Your Own Path!
Photo: http://www.flickr.com/photos/leginmat/3839067979/
Are you looking for 100% INDEPENDENT investing advice and ideas from Scott and the Barefoot Team?
Click here to access our latest share report – free of charge.
Follow @scottpape on Twitter
PDF Barefoot also recommends:
5 comments
I’m a bit curious as to how the advice to use a travel agent differs from the advice not to use a mortgage broker. From what I can see, the advantages pointed out are broadly the same. Is there something pretty obvious that I’m missing here?
Probably the best bit of travel bargain advice is, if you are putting it on CC and cant pay for it in full by the end of the month, dont do it. Your bargain holiday could end up costing you far more than you planned.
For example your bargain airfare if you only make minimum payments will take you over 12 months to pay off and attract up to 24% interest (depending on your card). Its a quick way to turn a cheap under $1000 airfare into a not so cheap $1400 airfare.
If you then add accommodation and spending money on top of your CC purchase…well your “cheap” holiday has just gotten quite expensive.
I agree with Scott about the “free” insurance attached to your credit card. In many cases its not worth it. The exclusions are often scary.
For example, buy your friends and your tickets on your card, you are covered but your friend isnt as they are neither your spouse or your underage offspring. You must pay for the parts of the holiday you wish covered on that card in full, paid a cash deposit for the trip..sorry you are not covered, booked accommodation on a different card, sorry that’s not covered either.
If you have any pre-existing conditions you will likely find it instantly null and void and they tend to exclude travel disruption because of airline rescheduling or strike action (ie the two most likely to occur)
Read the product disclosure carefully and do not assume you are covered. I would recommend buying separate insurance just in case.
In addition, to get this wonderful “free” insurance you have to pay a hefty annual fee and a higher interest rate than basic credit cards that dont offer this “free” service. (I got an offer for a “free” upgrade to platinum on my no frills card this week, annual fees would jump from $85 to $250 and interest rates would go from 11.5% to 17%. Thanks but no thanks. My travel insurance for 3 weeks in the US is less than the increase in the annual fees! )
I have a CBA card with travel insurance and I done the investigating – with the insurance underwritten by Zurich and then compared it to what the travel agent offered. Have a guess which one had the unlimited medical – the Credit Card cover. I take the point of Jane re pre-existing conditions but I think most policies exclude this anyway. I don’t pay anything for the card by negotiation with the bank so it seems a good deal. I also put it to Scott your insider must have been out of the game a while because the difference in price of accomodation for the same hotels i was staying at online vs through the agent was closer to 40%. Agent was Flight Centre of course.
Bit harsh on GE Money & the 28 Degrees card. Sure it’s a credit card but keep a zero balance and you won’t get charged the screw you rates. I’ve had one for 5 or 6 years since it was started by Wizard and it’s the only thing I’ve used for cash access overseas and I’ve never paid a cent in interest. Simply put your card into credit before you leave and monitor the balance online & top up via internet banking as required. Easy. Much better than getting gouged with $5 atm fees plus currency conversion from my own bank.
Online travel insurers like 1Cover and Souther Cross are great for me as I only want the medical and emergency scenarios covered. It can take so long to come up with evidence for, argue and then get claims paid for other things it’s just not worth it (i.e. letters from a Canadian airline confirming that they lost your bag! not going to happen). The ‘essentials’ insurance cost me $84 for 3 weeks in the US.
I also save money by doing carry-on luggage the whole way- $20-$30 extra per bag per flight is a killer when you do 8 internal flights. If you’re disciplined enough to travel lightly then you’ll reap the benefits! (i.e. no baggage claim crunches or risk of having your bag sent to Alaska).
Always have a little ‘just in case’ fund in the unlikely even that any non-refundable fares or bookings have to be changed.