In the past few weeks, news broke of two separate commission cuts from suppliers: Marriott will reduce the commission paid on group bookings from 10% to 7% next month, and Delta reduced front-end commissions on international flights for U.S. agencies.
Opinions are varied and the verdict is still out on whether others will follow suit, but it's a possibility that many are considering. The situation is also forcing agents to assess how they will deal with lost revenue.
Nolan Burris, founder of Future Proof Travel Solutions, believes charging clients a professional fee is a clear road to financially surviving these and other potential cuts.
Burris wasn't surprised at the news from Marriott and Delta.
"Disappointed? Yes, but I was definitely not surprised," he said. "Since the airline commission cuts and caps that started in the late 1990s, it's become clear that travel agency commission was no longer the untouchable program it used to be. Perhaps my only surprise today is that we haven't seen it from other sectors and suppliers."
Burris' company was named after the idea of protecting agency revenue in the face of supplier decisions that could have negative ramifications.
"I suppose it was a 'lightbulb' moment when I realized how much agencies relied on the whims of third-party shareholders for their well-being," he said. "Those being hurt by the recent moves are the latest examples of the need to become more independent."
For years, Burris has studied fees and educated agents about their implementation. He shared some do's and don'ts last week.
First, he said, it's important to separate fees from the travel sold and think of them as professional fees. For many, it's a mental leap, but one worth making.
"As the masters of fees will tell you, fees are not for making bookings. Few clients will see the value in you processing transactions for them," he said. "Fees are for professional expertise, research, advice, support, leveraging relationships with suppliers and, especially, being a client's advocate should something go wrong."
The name of a fee is also important, according to Burris. To him, "service fee" feels too transactional; calling it a "professional fee," on the other hand, has been met with success in agencies.
He also suggested creating fees that are "packaged," perhaps at gold, silver and bronze levels, depending on the amount of consulting offered. The highest tier could, for instance, include restaurant research and reservations and concierge-level services.
"As for introducing fees, I usually do not recommend just flipping a switch and moving to fees for everything all at once," Burris said. "I do see that as the ultimate goal."
Most agencies that now make more revenue from fees than commission (in some cases, they make significantly more from fees) started with an optional fee program, Burris said.
Those agencies first introduced fees for "VIP-level service," so they could test fee-charging before rolling out a larger fee structure.
Once a fee structure is in place, whatever form it may take, Burris said it can provide a long-term solution for agency revenue that is not dependent on third-party decisions.
"In the 25 years I've been speaking and training on fees," Burris said, "the comment I hear the most is, 'I wish I'd done this sooner.'"