For Ala. Agency, 15% to 20% Fees Are Part of a Successful Makeover

Like many travel agencies, Alabama World Travel began charging clients for air bookings soon after the airlines axed commissions. That was back in the 1990s, but it wasn’t until six years ago that the Montgomery, Ala., agency made fees an integral part of its business strategy and began charging for all its services.

The move was part of a top-to-bottom makeover for the 44-year-old storefront agency. “We decided to narrow our focus and not be everything to everybody,” said sales manager Amy Daniel, CTA.

In an effort to differentiate itself, the agency repositioned itself as a luxury specialist that provides custom trip planning, utilizing a limited network of vendors through its then-new affiliation with Virtuoso.

The move to fees
At that same time, Alabama World Travel introduced comprehensive service fees, calculated as a percentage of the client’s total trip cost –– 15% on average, but ranging as high as 20% for research-intensive trips.

“We went to fees because our service level and attention to detail are very high,” Daniel told Travel Market Report.

Today, fees account for 18% of revenues at Alabama World Travel, where four fulltime travel consultants, including Daniel, sell a total of $4 million in leisure travel annually.

For Daniel, who has been a travel agent for 18 years, the strategic change, including the introduction of fees, had a profound effect. “It absolutely totally reshaped my view of myself and the industry.”

We asked Daniel to tell us more about the agency’s approach.

Getting started with clients: “My initial contact with the client is a consultation. My goal is to get a great understanding of what they want to accomplish and to connect with them on a personal level. It’s important to build that trust, so people trust my advice and respect what I do.”

Discussing fees: “After, I explain what I’m going to do for them –– the research, at what point they can expect to receive the initial proposal (etc.) –– I tell them, ‘This will include my services, and the average is 15% of the trip cost.’

“I do go into detail about what I’m going to do. I need them to understand the hours that go into it, the work to get all the components that this customized vacation requires. Once they see that initial proposal they understand.”

The proposal: “We create proposals with lots of details and pictures. They see options for accommodations and certain customized private tours. Sometimes proposals include multiple options, and they can pick and choose. In the proposal, I list everything, including: ‘professional services of Alabama World Travel.’”

Case in point: “I had clients who wanted to go to Switzerland, because that’s where her husband’s family is from. We arranged for a genealogy expert to take them through the villages where his parents and grandparents grew up. When we craft those types of experiences, everything’s private. My clients don’t wait in line.

“The trip, for six adults, cost around $35,000. My fee was about 18% [$6,300].”

Highest fee ever? “Probably $10,000 for leisure. There was an occasion when I did a big corporate group –– that was $25,000.”

Changing client perceptions: “People have come to view us as travel advisors –– someone they come to for real advice and recommendations and resources and connections.

“People now view us as professionals. We work by appointment now, and people know that. It’s very rare that someone just drops in. That was part of the shift.”

Bottom Line: “I think our move in this direction, with the fees and with narrowing our focus, has ensured our success and our survival.”