Coronavirus crisis underscores value of travel agency service fees

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Coronavirus crisis underscores value of travel agency service fees
Photo Credit: Rei Imagine/Shutterstock.com

The number of travel advisors who charge clients a fee for their services hovers somewhere around 50%, based on several industry surveys. But as a direct result of the coronavirus crisis, that number is expected to rise.

When leisure travel essentially came to a grinding halt in March, many travel advisors found themselves canceling and rebooking clients’ plans, doing twice the work -- or more, as reopening dates have been pushed back -- for a single commission. And that commission will be paid only once the client has traveled.

At the same time, agents who have charged fees for years are training their peers on the practice, encouraging them to value their work enough to charge for it, just like other professionals. They are also reevaluating their own fee structures.

Agency consultant Robert Joselyn, president and CEO of the Joselyn Consulting Group, has been advocating for agencies to charge fees since 1984, well before airline commission cuts and 9/11 spurred many to start the practice. Of late, he said, there has been “a vast recommitment to fees” among agencies and consortia.

“It really came home this time as people did all the work booking all of this travel,” he said. “And those who did not charge fees for the planning and so on, they’re doing all of this work unraveling it, getting beat up by their clients  --  ‘Have you got our money?’ and stuff like that  --  [and realizing they’re] doing twice as much work.

“If they didn’t have consulting fees to start with, if they didn’t have booking fees and, for God’s sake, if they didn’t have cancellation fees and sell insurance to cover it, they’ve done twice the work for nothing.”

According to a 2018 Phocuswright study, 47% of agencies charged service fees, and 20% planned to do so within the next year. Host Agency Reviews’ 2020 Hosted Travel Agent Fee Report found that 52% of host agency affiliates charge fees. 

Stephanie Lee, founder of HostAgencyReviews.com, said some advisors might feel reluctant to start charging fees if the economy worsens in the coming months. In that case, advisors might find themselves fighting for clients just to survive. 

But Lee, like Joselyn, said she believes the coronavirus crisis has renewed interest in fees.

“I don’t have a crystal ball on this, but I feel like the pandemic has stressed to agencies the importance of their time and being compensated for it,” Lee said. “And, really, the only way you can for sure be compensated is if you’re charging some sort of a fee for the transaction or for the consultation.”

Charging fees has become more common in recent years. Lee said in 2016, 10% of hosted advisors charged consultation fees, versus 26% today. In 2016, 43% of hosted advisors reported charging service fees, compared with 52% today.

Joselyn said fees will be a big part of the way agencies do business in a post-coronavirus world. Agencies get paid by suppliers for the work they do for them, he said.

“I’ve never heard a supplier saying, ‘Well, we need to make sure that we pay an agency enough commission to cover the cost of services they give away to their customers,’” he said. 

A number of advisors who are experienced in charging fees are working to train peers on the topic, including Ralph Iantosca, owner of Iantosca Travel in Irving, Texas, who recently created a four-hour curriculum on implementing a fee structure, which he said drew interest.

Iantosca charges clients $250 an hour for his travel-planning services. That financial commitment makes clients feel more engaged, he said, and makes him appear more professional.

Jamie Jones, COO of WhirlAway Travel in West Chester, Pa., has also been educating advisors on charging fees. And after spending much of the pandemic talking with her top clients about her own agency’s fee structure, she’s in the process of changing it. While nothing is solid yet, she is considering annual or monthly retainers or hourly charges.

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