This year's Travel Industry Survey reveals that home-based agents continue to earn less of their income from service fees than their counterparts at traditional agencies. Still, within the agency community there are varying approaches to charging fees. Travel Weekly contributor Robert Silk talked with Minneapolis-area agents John Brawley, owner of Premier Travel Service, and Lisa Phillips, owner of Simply Travel, about their differing strategies.
John Brawley, Premier Travel Service
Q: According to our survey, on average, home-based agents earn a smaller percentage of their income on fees than traditional agencies do. Why do you think that is?
John Brawley
A: Smaller agencies have more flexibility to waive service fees based on the client's case. Large agencies are stuck to a format where they have to charge service fees. We have more discretion as opposed to just an employee at a large travel agency.
Q: Did you charge fees when you were new to the trade?
A: No, I implemented them over time. When I was first in business I was just trying to get as much work as possible. I didn't want to scare away any leads whatsoever.
Q: How long did you wait before you began charging service fees?
A: I was 100% commission-based for the first two or three years.
Q: What is your policy on service fees now?
A: I don't have a schedule I work with; it's just case by case. If it's something that I know isn't going to pay me much in commissions, I might use a service fee. I also use it as a screening method. Service fees are a way of gauging the interest of the client to proceed. It sort of separates out the shoppers who are just looking to get as much information as possible.
Q: How much is your typical fee?
A: A typical service fee would range from $100 to $250 for FIT planning; it's nonrefundable. I charge a $25 service fee for domestic airline tickets and $50 for international. I'll also charge for something like a driver service I have to arrange. It really comes down to how much work is involved.
Q: What portion of your income comes from service fees as opposed to commissions?
A: It's probably in the 10%-to-15% range.
Q: Do you worry that service fees will cost you clients?
A: No. I have hundreds of clients who understand the value of my service. They also understand that I need to have some sort of incentive, as well.
Lisa Phillips, Simply Travel
Q: On average, home-based agents earn a smaller percentage of their income on fees than traditional agencies. Why is that?
Lisa Phillips
A: I would guess that most home-based agents probably don't do a lot of just air reservations. They probably focus more on tours and packages, whereas corporations do more business destination trips that are just air and hotel -- going to Columbus as opposed to Cancun.
Q: Do you think the fact that there are a lot more home-based start-ups is also a factor?
A: Absolutely, yes. And a lot of home-based agents ...[are] doing it part-time.
Q: How about you? Do you charge fees?
A: I don't charge fees for packages. But I do charge fees for air only, and I do have small corporate clients. But I don't charge fees on packages like honeymoons and weddings.
Q: Why don't you charge fees on packages?
A: I'm already being paid a commission. It isn't necessary to charge an additional fee.
Q: Do you make exceptions if it is a complicated itinerary?
A: If it is a complicated FIT trip to Europe, yes, there would be a fee. It would depend on how complicated the trip was or how expensive.
Q: On what percentage of your leisure package bookings do you charge a fee?
A: Only 5% to 10%. I always try to package with a preferred supplier; I'm with Travel Leaders. Then the commission is usually built into the package. If it is sold to us net, we build in the typical commission.
Q: Why do you choose not to charge more fees?
A: I just feel that we are already being compensated by the supplier. I am not opposed to [service fees]; if the suppliers were to decrease the commission, I would have no problem charging fees. At this time, suppliers are paying commissions of 18%; I think it's fair. There's a lot of controversy among agents about charging fees.
Q: Do you worry you would lose clients if you added fees?
A: If it is a simple trip to Cancun or Riviera Maya, yes. I'm always looking for the best possible value and price for them, and that's why they come back. That's why I've been doing this for a long time.