When it comes to charging service fees, there has never been a one-size-fits-all approach that works for every travel agency. But now, the COVID-19 pandemic has made many advisors rethink their strategy — and more fees appear to be in the future for many of them.
A recent survey of independent travel advisors affiliated with host agency Travel Experts, for example, showed that more agencies are adding new fees to their business model.
"More advisors are changing their fee structure to an annual subscription basis, where their clients pay one fee up front and get most, if not all, consultation and booking services for free," Sharon Fake, director of operations at Travel Experts, said of the survey. "The annual subscriptions range from $1,000 to $5,000."
Fees are especially crucial in today’s challenging environment, according to Karen Magee, senior vice president of advisor and partner engagement at the Global Travel Collection.
“Service fees are an incredibly valuable way to add to your bottom line as a travel advisor and, now more than ever, clients are willing to pay for your time, expertise, relationships and support,” she said. “Especially in today’s world, where bookings are requiring an even more extensive amount of time and an even wider breadth of expertise, it’s important that you’re compensated for those valuable assets.”
Service fees are an incredibly valuable way to add to your bottom line as a travel advisor and, now more than ever, clients are willing to pay for your time, expertise, relationships and support.
Even agencies that charged for services before the pandemic have found reasons to reconsider their approach.
"I have always had fees, but the problem was that I was very inconsistent,” said Holly Lombardo, a travel advisor at Holly Travel, a Travel Experts agency in Atlanta. “COVID-19 forced me to reevaluate my value and gave me the resolve to come up with a more uniform rate for my time and expertise.”
Travelers shouldn’t be surprised to find fees attached to a wider variety of services, according to Andrew Williams, managing director of Houston-based Travel At Will, an affiliate of Ovation Travel Group.
“Now, you see more advisors charging fees on travel design and itinerary creation,” he said. “Designing a trip can be time consuming, and with the pandemic, those work hours were wasted by many because clients weren't able to see those trips to fruition. Charging an upfront fee for creating a trip proposal ensures that advisors are at least compensated for their time spent creating a trip, regardless of cancellations.”
How to Determine Fees
“Once you’ve decided to charge fees, only you can evaluate what fees are appropriate, based on your clients and the experience that you have to offer in return,” said Global Travel Collection’s Magee. “As a first step, we usually suggest a few exercises that allow you to clearly articulate the value you provide for your fee structure, giving you the confidence to talk to current and prospective clients.”
Magee predicts that even more agencies will adopt new fees.
“I think we’ll see many advisors moving toward a retainer fee structure,” she said. “The value they’re able to offer clients is clear, the payment structure is simple, and it allows them to offer a full suite of services and benefits to their clients without feeling like they’re nickel and diming their clients. For clients who don’t travel frequently enough to justify retainer fees, you’ll definitely see an increase in the implementation of change fees to accommodate the time spent on reservation adjustments and cancellations, [and] an increase in consulting/trip planning fees to account not just for building of the itinerary, but for the navigation of the ever-changing COVID-19 guidelines and testing requirements.”
I think we’ll see many advisors moving toward a retainer fee structure. The value they’re able to offer clients is clear, the payment structure is simple, and it allows them to offer a full suite of services and benefits … without feeling like they’re nickel and diming their clients.
Explaining Fees to Clients
It’s understandable that some advisors may feel uncomfortable introducing new fees to longstanding clients. But the right approach should help ensure a positive response, according to Stacy Small, founder and CEO of Elite Travel International, a Travel Experts agency in Maui, Hawaii
"The best way to help clients better understand the necessity of fees is to be fully 100% honest and transparent with them about how our business model works,” she said. “For many years, I waived my trip-planning fee for repeat clients booking high-level, high-profit trips. After last year, it’s become obvious that this model led to losing a full year of expected income on bookings I didn’t charge fees to plan. At the end of the day, we want to work with the clients who do understand the need to charge for our time."
At the end of the day, we want to work with the clients who do understand the need to charge for our time.
Renee Taylor, an advisor at Renee Taylor Travel, a Travel Experts affiliate in Searcy, Ark., agreed about the need for transparency.
"I have been telling my clients that COVID-19 has dictated changes in many areas, and for the travel industry, there are so many changes in protocol, policies and cancellation coverage that the advisor has to research, that a fee is necessary,” she said. “Almost everyone has been in total agreement, and many have stated that they always wondered why we weren’t charging for our services in the first place."
Indeed, today’s fees should reflect that travel advisors now must spend time on a variety of tasks that simply weren’t necessary in the past, according to Lori Zuckerman, executive corporate and luxury travel advisor at Tzell Travel Group, a division of Luxury Travel Collection.
The industry has to recognize [our] worth and value. The advisor is a professional, and should be viewed as such.
“In this COVID-19 world, we have taken service to a whole new level by recommending travel insurance and places to get COVID-19 tests; arranging tests with the hotels; and ensuring all protocols are met before, during and after travel,” she said. “We have guided our clients in this new world of travel, and we dedicate hours of our time to ensuring the travelers have what they need. The industry has to recognize [our] worth and value. The advisor is a professional, and should be viewed as such.”
