Countering Cuts: Showgoers Cite Fees, Packages

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If you listened long enough to the many conversations that took place at the TravelAge Trade Show in New Orleans, you would have noticed that two topics kept popping up: commission cuts and service fees.

According to an informal TravelAge poll at the show, most agencies are adjusting to the realities of reduced commissions in two ways: by charging service fees and by increasing the number of cruises and tour packages they sell.

For some agencies, service fees have worked wonders. "We're making more money with service fees than we ever did with commissions," said Kari Thomas of Will Travel in Churchville, Pa. Her agency charges $10 per transaction for corporate travelers and requires a $150 deposit for foreign independent tour travelers, which is credited toward the cost of the trip. "We've had some grumblings, but most people pay it anyway."

Even agencies that haven't been badly burned by commission cuts are now charging fees. Deborah Stein of All Around Travel in Wilmington, Del., said her agency hasn't felt the worst of the airlines' cuts because it sells mostly packages. "We don't do a lot of tickets," she said. "We never did. We're 95% leisure, so it didn't affect us the same way." Still, All Around Travel began charging fees for a few services about six months ago. "For example, we charge service fees for tickets we have to hand-write," she said, adding that client response has been favorable. "People seem to understand how hard we work."

Linda Lee, owner of Mesquite Travel in Mesquite, Texas, implemented service fees in October 1997 after a collective decision by competing agencies in her area. "Actually, we had sort of a community meeting and we've all agreed to [charge service fees]. When you're a close-knit city of 100,000 and you've got four or five agencies, you've got to go in that direction."

Cynthia P. Swain of Acadian Travel in Baton Rouge, La., said client response has been fairly reasonable, but not perfect, since her agency implemented fees in November. "It's been pretty good. We've lost a few people who say they'll buy directly, but I think they'll come back when they realize they won't get the same level of service." Besides, she added, "it's pretty standard in Baton Rouge. I think most agencies are charging."

For some agencies, service fees are not easy to implement. Central Travel in Jefferson City, Mo., which is owned by a local bank and relies on government and corporate accounts for about 70% of its business, has found it difficult to charge fees - and that's affected the agency's growth strategy. "We are looking to maintain corporate accounts," said travel coordinator Cindy Whaley, "but we are really moving toward cruises and groups." She said her agency hoped to increase cruise and tour sales this year.

Indeed, many agencies are now aiming to build their cruise and group sales. That's because fees often aren't enough to help an agency cope with decreased commissions. "I don't think [the fees] made up for the commissions lost," Lee of Mesquite Travel said, "because there are [smaller] fees than commissions. Our agency is gearing more toward cruises. We are doing more direct mail."

All Around Travel's Stein agreed that cruises and tours are the path to profitability for agents. "Use the tour operators. They are your friends," she advised. "What they're doing is being most helpful and pursuing our business in a positive way, and letting us know that we're important to them, and that means a whole lot. Use the tour operators, consolidators; use the airlines that are still friendly to you, that still pay the 10%."

"The airlines are trying to cut us off from commissions, and that means we'll be selling more tour packages," said Leemoi Bekey of Cervetto's Avanti Travel in San Rafael, Calif. Margaret Cervetto, the agency's owner, added in a later interview that commission cuts have affected her agency terribly.

"We get probably 10 to 12 calls a day from people asking if we charge service fees," Cervetto said. Her answer, for now, is no.

But that will change in April, when Cervetto's agency implements new service fees. "We do have a charge already for cancellations or changes," she noted. "These will be new fees." She said the fees will vary by type of transaction, and will be similar to those of other agencies in her area.

Cervetto is expecting a negative response from clients once the fees are in place. But, she said, fees are something that travelers will have to accept. "It's like any other business. It's like a doctor. We're doctors of travel, and we have a fee."

This article was adapted from TravelAge magazine.

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