Fees are the Key to More Money in Your Pocket – Part 1

Fees are not a new thing in the travel industry. That’s how travel advisors were paid from the beginning of the industry. In the 1960s and 1970s commissions were introduced as a way to thank travel agents for their bookings. Looking back, it is easy for me to say that travel agents should have kept the fees instead of abandoning them when their commission came along. But that’s not the decision they made. Instead, travel agents decided to give the consumer a break and work for “free”.

Fast forward to 2020 and 52% of hosted travel agents charge some sort of fee to their clients (according to Host Agency Reviews’ most recent fee survey). We are slowly moving back to where we were in the early 20th century. That’s a great thing!

Today I’m digging deeper into this topic of fees, specifically looking at:

  • Why fees matter
  • Who should charge fees?
  • How much should you charge and how do you collect it?
  • When and how do you present the fee to the client?

Because this is a lot of material to cover, I’m dividing this up into two parts. Today I’ll tackle the Why and Who, and save How and When for next week.

Why Fees Matter

Professional fees are important to travel advisors for several reasons. Most significantly, they

  • Stabilize your cash flow
  • Diversify your income
  • Eliminate “tire kickers”
  • Are a statement of your professionalism

I think the last point is the most important. If you are working with a service professional, you expect to pay a fee. You pay accountants, lawyers, realtors, interior designers, and all sorts of other professionals for the service they provide. Travel advisors are no different.

If you don’t charge the client a fee you are working for “free”, and someone who works for free can never be taken as seriously as someone who charges for their time and expertise. That’s the way American capitalism works. In America we generally think of things that cost more as being better. If you are amazing at what you do, you should get paid for it. And who pays for it? The person who benefits from the service. In the case of a travel advisor that’s the client.

Let’s be really practical for a moment too. If you had a great January and February and made 40 bookings for travel later in the year, you were probably looking at a very healthy commission outlook for the year. Then COVID-19 arrived and many agents are looking at zero commission for the year. You did a tremendous amount of work for nothing. That’s not right.

You put all your eggs in one basket (commission) and now you are suffering for it. That is why diversifying your income is incredibly important in any business. In the travel industry, fees are the best way to diversify.

There is another benefit to fees: it eliminates time wasters and tire kickers. Those people who just want to ask a lot of questions and never book anything. In my first job in travel I worked in an agency based in a mall (yes, it was as bad as it sounds). We had a lot of husbands who stopped by to chat about travel while waiting for their wives. The majority never booked anything. They just wanted to chat. If we had charged a fee, they would have never paid it. And that would have been a great thing because it would have freed up our time to work with clients that appreciated our services.

Who Should Charge Fees 

This is where the distinction between travel “agent” and travel “advisor” comes in. The role has evolved over time. Until the late 1990s the only way to “book” travel was direct with the provider or to go to an agent. There was no Expedia, Orbitz, or hotel booking platforms. Cruise lines didn’t have websites. So many agents considered themselves “booking” agents. You told them what you wanted, and they booked it.

Of course, all along there were agents who do a more consultative approach. They would help you understand your options and create amazing vacation experiences. These were the exception, not the rule.

Fast forward to today and the travel professional who is seeing their business grow is the one who is providing that consultative experience. They are guiding, advising, and utilizing their expertise and connections to help clients craft a vacation experience that meets their needs.

To some “crafting” vacations sounds like something only luxury travel advisors do. That’s not the case at all. If your specialty is family travel and you are booking primarily cruise and all-inclusive Caribbean resorts, you are probably still providing a service. Helping clients find the right fit for them. Adding on the other components to the trip and giving them more guidance than they ever would have expected on how to have an amazing vacation. Think about how much time and stress you are saving them!

The bottom line is this: the greater the service, the greater the fee. If you more of an order-taker and just “make” booking, you are on the lower end of the fee scale.

This leads us to talking about how fees are structured, how to present them to the client, and how to collect them. That’s what we will tackle in part 2.