TORONTO — Independent Contractors (ICs) are not new to the travel industry. They’ve been around for decades, in fact. But in recent years, Canada has seen a significant rise in ICs, a phenomenon that experts say are changing the travel industry landscape.

Also known as Independent Travel Advisors/Agents (ITAs), ICs are self-employed travel advisors who work with a host agency on a contractual basis as a facilitator of various services, including marketing, supplier agreements, technology and ticketing. While ITAs are typically home-based, they are considered self-employed.

In 2019, approximately 4,600 individuals identified themselves as ICs to the Government of/Revenue Canada; this number increased to 5,400 in 2023. But the total number of ICs in Canada is likely much higher, says Wendy Paradis, president of ACTA, which refers to ICs as ITAs. Unlike travel agency employees where government reporting is mandatory, there is no mandatory government reporting of ICs. So, using a mix of Statistics Canada data and data provided directly by members, ACTA can only quantify a ‘baseline’ number for them.

“The actual count of ITAs will be much higher than the approximate 5,400 identified in 2023 because many of them are reporting and identifying to the CRA as ITAs only if their income is $30,000 or greater, they voluntarily register for a sales tax account and/or are incorporated,” Paradis tells Travelweek. “But we do know that the number of ITAs has been increasing at a fast pace, especially over the past several years.”

Paradis attributes the growth of ICs to many potential reasons, including the appeal of being self-employed, a lower-barrier route of entry into the travel industry, and an increase in part-time workers in travel.

Christine James, Vice President of TL Network Canada, is also seeing a growing number of ICs; in fact, she says it’s probably growing more than any other segment in the travel industry. Why? The pandemic had a lot to do with it, for one thing.

“Ever since coming out of the pandemic, some of our agencies that didn’t play in the IC field starting hiring Independent Contractors, and then the ones that were already established within the host model starting hiring more. And I think the reason is because of the pandemic, many people lost their jobs and were looking for a new career, or perhaps over the course of the pandemic they started looking for a second career. So, they may be back in their jobs they were doing before the pandemic but they’re now looking for something else to do,” says James.

BECOMING AN IC

The road to becoming an IC is relatively the same as an employed travel advisor. In the regulated provinces of British Columbia, Ontario and Quebec, there is a more structured process to becoming a travel advisor, employee and an IC than the rest of Canada, which includes potential exams. But regardless of where they are in Canada, an IC will need to identify and contract with a host agency. New entrants to the industry are also encouraged to take introductory training courses, whether it’s ACTA’s Travel Agent Essentials program or a program through a host agency or at an accredited college.

A travel agency interested in working with ICs should market to them, says James. Many agencies use social media to recruit them, or rely on word of mouth, or use their existing employee base for referrals. ACTA also provides all new entrants to the industry who have completed ACTA’s Travel Agent Essentials course with a list of ACTA travel agencies and host agencies currently looking for advisor employees or ICs.

PROS & CONS

From the advisor’s perspective, there are many benefits to being an IC.

As a self-employed worker, says Paradis, “an independent travel advisor enjoys complete flexibility in their schedules and the ability to sell whatever products they want, plus they are operating their own business, which allows for potentially unlimited income.”

But the very thing that makes being an IC so appealing – self-employment – can also be considered a major drawback as they typically do not receive benefits from Employment Insurance or a guaranteed income. Plus, they’re often burdened with their own accounting and other legal requirements, as with any other business.

From a host agency’s point of view, working with ICs means providing them with valuable services like marketing and technology solutions, in exchange for an additional potential revenue stream by way of commission splits and potential fees.

But seeing how ICs are not actual employees, possible drawbacks for a host agency can include not being able to direct them and control their schedules, says Paradis.

But if you were to ask James, there are only advantages to working with an IC.

“For the host model, they’re obviously not paying for benefits, which is a huge investment. But also, for an agency that decides to expand into the IC market, it’s nice for traditional full-time employees who have decided they’re at a point in their career where they don’t want to have to come into the office every day, and they want the flexibility of taking a step back. They may still have a really good client base and still want to service, so that’s an advantage,” says James.

TRAINING & SUPPORT

When asked whether ICs are at a disadvantage in terms of training and education compared to employee advisors, James says it all depends on the host agency.

“Host agencies with traditional IC models have a built-in training module, an entire infrastructure for training, and some will even assign mentors. Travel Leaders Network, for example, has a training library with thousands of recorded videos and live training,” she says.

Beyond training, James adds that networking and peer support are just as important, which is why Travel Leaders Network is dedicated to providing likeminded agencies of a particular model with a place to come together.

“We’ve formed what we call alliances, a network within a network,” says James. “One of our alliances is the Host alliance for agency owners, who must have at least 40 ICs to join. We’ll have a one-day session just prior to our annual EDGE Conference for them to network and learn best practices from one another, like writing up contracts for ICs, and talk about the pitfalls, benefits and more.”

THE EVOLUTION

So how is this growing number of ICs changing the travel industry?

“It’s making it less centralized,” says Paradis. “Since they are their own businesses, there is now an explosion of one-person travel businesses in Canada.”

Paradis also notes that going the IC route provides new entrants into the industry with an easier entry-point, and also opens doors for more casual work.

If there are concerns of employee advisors becoming obsolete as a result of ICs, James says that there will always be a place for both.

“There will be more and more host models, it’s exponentially growing. But there will always be a need for traditional brick and mortar agencies, which a lot of our cruise holiday agencies are. A lot of them are family-owned and still have that strong community connection. They want that visible access, a physical office, where clients can come in and have a personal consultation.

“Will there be less of them? It’s no secret that a lot of brick and mortars shut down during the pandemic, but the ones that did survive are still here and are going strong. I don’t think they will become obsolete, even with all these ICs coming up. The host model will continue to grow but not at the expense of these traditional agencies.”

This article appears in the October. 24 2024 edition of Travelweek; click here.