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
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
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.