Ask an Advisor: Why Would a Client Pay My Fee Instead of Going Somewhere Else?by Daniel McCarthy /
This is the first of TMR's new Ask an Advisor series, a regular column where a team of travel advisors tackles questions from others in the industry. All questions from this series have been submitted by TMR readers and vetted by the TMR editorial team. The first question comes from an anonymous reader who is still on the fence about charging service fees. The question, and the answers from the panel, are below:
Dear Ask an Advisor,
I have been in the business for over two decades. I’ve been fortunate enough to build a strong, loyal client base that has allowed me not only to succeed through some of the roughest times in our industry but also to thrive. I truly love what I do and take pride in being able to shift how I do business to stay current with what’s happening in the industry. However, I’ve not always been successful.
One of the biggest industry changes over the past three years or so has been the adoption of travel agency fees. I’ve never charged fees - I’ve survived on revenue from supplier commissions since I started. But with more and more agents charging fees, I’ve felt pressure to start doing it to stay current with my colleagues in the industry.
My question is, why would someone pay my fee when they can go to 20 other agents in my area who are not charging a fee? And should I feel bad for not charging fees when so many others in the industry are doing so and encouraging the practice so heavily?
Richard “Rick" Carlson, Cruise Planners
Your question is not new, as agents have debated this topic for as long as I can remember in my 22 years of experience. You depend on compensation for the work you put into creating a vacation proposal, and there is nothing worse than presenting a proposal after hours of work to have the client go "dark" and not respond to emails or phone calls, only to find out later that they booked with someone else or, even worse, took your plan and booked themselves.
Now, this does not happen often to me, especially with repeat customers, but when it does, it stings! I think that with COVID and the number of cancellations that occurred, only to lose commission, it makes us look at the topic again. (Thank you to the major cruise lines that protected commission for cruises that were canceled during COVID).
The choice to charge fees for planning is an individual choice, and you should not be pressured to charge fees because others do. In fact, not charging fees sets you apart from others. Our business model, from the day we started with Cruise Planners, is that we do not charge fees. We never will. Yes, there are times that we are disappointed that a booking did not occur after hours of work, but I also look at the number of referrals we get because we provide excellent service and do not charge fees. These far outweigh the reservations we have lost.
I understand that large groups or destination weddings can be a different situation, so you may want to include information on cancellation in your group contract.
In thinking about fees, there are several points you need to consider and can articulate to new and repeat customers. Some questions that come to mind are: Will you only charge fees for new clients? Is it a fee for planning services, and the fee is refunded when they book the proposed vacation? Do you charge a fee for consultation at the beginning, or do you give a free one-hour consultation to start?
It appears that you have built a solid business without charging fees in the past. We are in a relationship business, and it is hard to say if charging a fee would make people go to an agent that does not charge fees. But if you have a strong relationship, you would anticipate that clients would still come to you and be less likely to cancel or not accept your vacation proposal.
A proud agent of Cruise Planners now for 23 years. Member of the Millionaires Club and recipient of numerous awards for sales achievement, Richard "Rick" Carlson always have has believed in helping others and offering insight and suggestions for improvement so others can build their business.
Kyle Stewart, Director, Scott & Thomas Travel Personalized
Your long history in this industry is laudable, and I am sure that's why your clients have chosen to stay with you through the good times and the bad. The way we approach service fees is really in two different fashions: 1) mandatory for all business bookings, and 2) works as a mini-deposit toward a future trip if they book.
For business bookings, there are just too many changes, and businesses don't want to be nickel and dimed. When COVID hit, and we were spending hours on the phone with the airlines making changes for seemingly every trip, we calculated that our agents were making less than $2/hour for some reservations. We came up with a complicated fee structure that we thought would be helpful for our clients, where some changes were less expensive than others - they overwhelmingly did not like the complex model. They were much happier to stay with us with a simplified $50 per booking fee, knowing that we would take care of absolutely anything that needs to be handled for that trip.
For leisure clients shopping around, we want them to be invested as we are. We don't want to be one of the 3-4 agencies they are shopping; we want to be their travel agency and present them with 3-4 options with us.
Part of your question really roots in two things: Do you want to compete with everybody, and do you add value to your client's experience? We have chosen we do not want to compete with everyone.
We don't chase that business, and you shouldn't either. If you're competing on cost, you have a customer who sees your product as a commodity. You're Burger King, another agency is McDonald's, someone else is Wendy's, and while there may be some preference, it's whoever is closest to you. Customers pay more for Five Guys because it's better, and customers who don't need better don't visit Five Guys.
The reality of charging a Planning Fee is that it's almost never really charged because the client either walks (they are looking for price and don't value our time, experience, or service) or it's applied to a selected booking. Either way, the Planning Fee is a net positive for us because it moves clients who aren't serious to waste someone else's time, and for those who stay, we can impress and win them for life because they are invested.
Kyle Stewart holds several roles within the travel, miles, and points world. He is a Partnership Manager for BoardingArea.com (and the Freddie Awards), a writer at LiveAndLetsFly.com, and a freelance writer for several publications. He is also Director of Scott & Thomas Travel Personalized.
Annie Jones, Owner & Luxury Travel Advisor, Telos Travel
I think what makes our industry so exciting is that everyone runs their business a little differently and can be successful in so many different ways. If you are finding success running your business without charging service fees and finding joy in what you do each day, then that's great! Don't feel guilty about having a successful business, especially when you've found a model that works well for you. But there are big reasons why so many advisors are charging fees, and as we saw with the pandemic, commission alone won't always be a reliable source of income.
As an advisor, you are providing a professional service with your time and expertise. Charging a fee to your client demonstrates that you are dedicated to providing them with personalized service to fit their needs, even if that means booking an experience or hotel that offers less or no commission at all. If you're struggling with the decision of charging a fee, I encourage you to write down all the different ways that you bring value to your clients. When you remove the items that make you a commission, I think you'll still have a pretty hefty list. You deserve to be compensated for all the time, effort, and value you bring!
You mentioned that you've been in the business for over two decades and have a strong, loyal client base. If your clients value the service you provide and their relationship with you, they won't want to go find someone else to work with. That's a lot of effort for them! If presented appropriately, most will be glad to compensate and transition with you. There are so many different ways to build fees into your business. You don't need to start charging them a planning fee outright on new trips if that's something you're not comfortable with. Maybe give returning clients a discounted rate, or only charge for more time-consuming concierge-type services and booking air. If you don't want to charge returning clients at all, maybe start with fees for new incoming clients only! There is no wrong answer, and don't be afraid to change things around if you find it's not working (even if that means removing fees altogether!). The most important thing is that you are communicating your value to your clients in a way that works best for you.
Annie Jones created Telos Travel in 2021 to share her deep passion for sustainable luxury adventure travel with clients. Telos is an affiliate of Avenue Two Travel, is based in the Greater Philadelphia Area and works with clients and partners all over the world.