Washington-State Agency Generates 40% of Gross Income From Fees

Another in Travel Market Report’s ongoing Fees-Ability series looking at agencies’ customer service fees. In this issue we feature:

Jean Gilliland
Owner and founder
Jean’s House of Travel, Inc., Port Townsend, Wash.
Business profile: One storefront location; one fulltime agent-owner and two part-time agents; 90% leisure; annual revenue: $1.5 million to $2 million. Agency founded in 1987; Vacation.com member.

When did you start charging fees and why?
Initially we didn’t charge for anything because the airlines were paying commissions. We began charging fees in January 1999. Initially it was $20 per ticket, with a max on a reservation. We’re charging for our service. Delayed airlines, cancelled flights, many things can impact a person’s travel; we’re there to fix those, and there are no additional fees attached to that. We always have to look at our bottom line. We can’t do things for free, not if we want to pay salaries and rent.

For what services do you charge fees?
For air tickets, it’s a transaction fee. For domestic, it’s $30 per ticket, with a cap on the reservation of $100. International tickets are $50 to $100, depending on the work involved. If people make a voluntary change, we have a reissue fee of $25.

We also use wholesalers and consolidators; if they pay us commission, we don’t charge the client. We do a lot of cruise and tours, and there are no fees. If someone is booking a very inexpensive cruise, where we’re making only $30 on the booking, then we will charge a reduced air transaction fee, maybe $25.

The only other charges we have are consulting fees. For organizing independent travel, especially if people want to book an extensive hotel itinerary, with small hotels that do not pay commission, that would be $50 an hour.

What percentage of revenue comes from fees?
I would say 40% [of gross income]. I am comfortable with that.

Do you ever waive your fees?
Rarely. If there’s been a problem in our booking, then we will waive the fee because it was our responsibility. I can only think of three times in the last 10 years, maybe not even that.

Do you ever encounter resistance to fees, and how do you overcome it?
We do. In explaining what we provide for those fees, the services attached – schedule changes, updates, problems with misconnects, problems they have along the way; it covers all that. With the airlines, some change schedules every two weeks. Frequently, we have to reissue tickets prior to travel so the electronic ticket matches the current reservation; it’s time-consuming. Our service is valuable, and we are worth it.

When we first put them in place, we had more objections. [Now], people are used to the idea that we have to generate some income. Those people who travel the most are the happiest to pay us, because they know we are there for them.

What is the most difficult thing for you in charging fees?
At this point it’s pretty easy to manage and to justify. There’s not really any problems, as long as it is explained upfront, especially to new clients. People who are new to town, that’s one of their first questions: ‘What are your fees?’

When did you last raise your fees?
It’s been about five years. It seems to be at a comfortable spot.

How has assessing service fees impacted you and your business?
One reason I’ve been doing this business so long is that it’s always changing. We always have to be flexible and update. So changing our formatting for income was just another thing on the list.
 
Does an agent’s geographic location, client mix or market niche determine whether s/he will be able to charge fees?
I don’t think so anymore. Our world is pretty small.

What advice do you have for agents about introducing fees?
You can’t afford to do things without charging fees. How they determine it depends on their overhead and income needs and how efficient they are in generating the booking.

When I instated fees, all our regular clients received a letter from us, explaining what’s happening, what the fee structure is and what’s involved in that, and what we’re providing and have always provided, but no longer can do gratuitously. Personal contact one on one is always best. Additionally, post something in the office explaining the fee structure.