TORONTO — For years many agents have been hesitant to charge service fees, but if there was ever a watershed moment for travel retailers to switch gears and implement fees, it’s post-COVID-19, say the host agency, chain and consortium execs we spoke to for this series.
This week, in Part 2 of Travelweek’s Service Fee Series, we ask: Why have agents not charged service fees in the past? And, why is now an optimal time for a travel agent to tell clients she / he is introducing fees?
We also check in with a travel agent who has successfully implemented service fees at her agency. In this edition, that’s Ashley Doell, a travel consultant with TPI based in Warman, SK.
QUESTION: Why have agents not charged service fees in the past?
The quick answer is, of course, fear. Fear of seeing clients walk out the door. Fear of losing bookings to the agency across town. Fear of the unknown.
“Some advisors may have been hesitant as they feared they would appear non-competitive and potentially lose a booking,” says TL Network Canada VP Christine James.
The funny thing is, as charging service fees becomes the new-normal post-COVID, agents who don’t charge fees might risk losing customers. “The agents that ARE charging fees, traditionally have a lineup out their door because the consumers see value in what they do. Agents have to project the value or the customers may not see it,” says TTAND founder Flemming Friisdahl.
On top of fear, there’s also lack of confidence. But especially with everything agents have accomplished these past 10 months and counting, that is rapidly changing. “Many feel that they may not be worth a fee,” says Nexion Travel Group – Canada’s President, Mike Foster. But “with more advisors starting to charge fees, and the increase in confidence that they are indeed worth it, so many are not only open to the idea, but building on it.”
Anyone who’s considering charging fees may be surprised by their clients’ reactions. “Agents who focus on price as their main competitive edge would be reluctant to charge fees. The agents who have realized that they bring more to the table than just price and who are able to communicate that value to their clients have seldom had issues charging fees,” says Independent by Flight Centre’s General Manager, Lee Zanello.
Direct Travel’s Senior VP, Leisure Marketing, North America, Stephen Smith, says the change in attitudes towards service fees follows the evolution of the retail travel industry itself – i.e. what agents sell, and how they sell it. “The business model has evolved over many years where selling airline tickets was more prevalent than the heart of what we do today, which is creating tailor-made vacations,” says Smith. “However, many travel advisors did not evolve their financial model with it. We don’t blame them. It can be scary to make changes to how you work. But, we believe fees actually empower the advisor to create a better buying experience and value proposition for the client.”
And Nexion’s Foster says he sees more willingness to charge fees among new agents coming in to the industry. “One observation from someone who has been in the industry for 40+ years is that we veterans have to unlearn old habits and ways of doing business, but the new generation of advisors don’t have that history and seem far more comfortable with using fees to reach their goals,” he says.
QUESTION: Why is now an optimal time to introduce service fees?
In a word, COVID. Agents have always been an invaluable resource for their clients. But the past 10+ months has shown the world just how indispensable travel agents really are.
“COVID brought forth an entirely new level of customer care in the refund process, managing cancellations, even helping clients return home wherever in the world they were when the lockdown started and borders closed,” says Direct Travel’s Smith.
And the importance of having an agent on-side was clear not just for planning travel, “but also in being there when things don’t go as planned,” says IFC’s Zanello.
Adds Nexion Travel Group – Canada’s Foster: “The unprecedented disruptions on our industry seem to me to be a line between the ‘old’ way and the ‘new’ way to sell travel. The traveller has never had greater appreciation for the value of an advisor, and neither have our supplier partners.”
It’s not just implementing fees, but explaining the rationale behind it. “If travel agents would feel comfortable telling their customer why they charge a fee, then many more customers would better understand why they are charged,” says TTAND’s Friisdahl.
Many host agencies and consortiums we spoke to for this series said they’re prioritizing service fee support for their members in 2021. “We were working on developing [service fee] training before the pandemic even started,” says TDC’s General Manager, Louise Fecteau. “Although we temporarily put this project on hold, the last few weeks have allowed us to put the finishing touches to it. A brand-new training course dedicated to professional fees will be launched in the coming weeks and we know that our franchisees are very much looking forward to it.”
TPI is also developing more agent support for service fees in 2021. TPI President and CEO Zeina Gedeon says it’s important to charge service fees even if there’s commission too. “Commissions compensate you for the transaction, whereas a fee compensates you for your knowledge, research and expertise,” she says.
And any agent who’s still in doubt just has to think about the past 10 months, says TravelOnly’s VP Sales & Retail Development, Ian Elliott. “We all know advisors that literally were working 24 hours a day trying to get clients home [in the early days of the pandemic]. I don’t know if the general public truly understood or appreciated how much non-billable time was put into each and every file, however, I hope that travel advisors will use COVID as a reminder of why working with a travel advisor is so important.”
Now is the time, adds Elliott. “It has been a long time coming but this pandemic should be the platform advisors use to justify why.”
IN HER OWN WORDS: A SERVICE FEE SUCCESS STORY
BACKGROUND: “I’ve been a home-based agent for 6 years, 4.5 of those being full time. I started off with a different host agency at the start and made the move to TPI in March 2019. I decided to fully commit to charging service fees in May 2020, and took some time to plan it all out before going ‘public’ to my clients in September. Myself (like so many others) have been very slow with new bookings over the past 10 months, so I’ve only had a few opportunities to charge my fees between September – January, but so far it’s been going very well and I’ve managed to generate some extra income on the few bookings I’ve had.”
RATIONALE: “Once reality set in that I would be without work for months (or years), and some of the first new bookings I would have once travel resumes would be Future Travel Vouchers that held no commission, I knew I had to re-structure my business. It needed to be done in a way that could be profitable and mutually beneficial for both myself and my clients. I asked myself the tough question of “Are you comfortable working for free anymore?” and the answer was a hard “No!”. I knew I needed to change. Over the past 6 years the most frustrating part of this job has always been the vast amount of time that’s put into qualifying clients, quoting, answering questions, and then having them either not book or book elsewhere. I decided that if a client didn’t see my value after the role I took in March 2020 then they would never appreciate me- and I wouldn’t need to have them as clients any more.”
FEE STRUCTURE: “I decided to start small so I could ease my clients into this new structure, and possibly adjust the fee structure later on if needed. My rationale was that starting somewhere was better than nowhere. I looked at the travel products that I sold the most, and created fee amounts that I would be happy to be paid on each product, even if I never earned any commission on the sale. COVID-19 shifted my thinking that commissions should be thought of as ‘bonuses’ and not the bread and butter of my sales mix. Income should not happen by chance.
“I set it up in such a way that I would always be earning money for any work done. I wouldn’t have to work for free again. I allowed some flexibility by not attaching an exact fee to “custom” itineraries – so if something was seemingly going to take more time I could put it under that category and charge more than the other standard rates.”
CLIENT FEEDBACK: “I did some market research through polls after launching the details publicly and there was overwhelming support (94% fully supported it). Afterwards, I had one person message me to let me know that if/when they do travel these fees might push them to book on their own. I had a look at their file and I had quoted trips 7+ times over the course of 5 years, with only one quote converting into a booking, and very low commission. The fees were seemingly doing their job – eliminating clients that I tended to do the most work for, and get paid the least! The clients that were my best clients to deal with (and also top commission earners) went out of their way to message me saying how great they think my fee structure is, and that I’m worth every penny.
“With everyone having so many more travel related questions than ever before, I am SO grateful I made the change when I did. I’ve already saved myself a lot of time, because the fee forces the client to think about if they are actually serious about traveling or not. They look at me like a professional offering them a very valuable service – and not like someone that they can use for free quotes and advice at their leisure.”
ADVICE FOR FELLOW AGENTS: “I understand how scary it can be to make ANY change – let alone a business change during a time that we have next to no business. But the time will come that this ‘pause’ will come to an end, and there will be more pent-up demand than ever before. When you think ahead to that time – do you really want to spend any of your time working for free on travel credits, or answering questions for people who have no intent to travel yet? How can you make the best use of your time, and work on client’s files that value you the most, and are serious about booking? How can you be the most profitable and give the best service to your top clients? I personally believe that the answer to all of these things is through professional fees. There was a time that many agents didn’t charge a fee and stuck to ‘industry norms’ – but I strongly believe that time has passed, and fees need to be the new normal going forward.”
A new instalment of Travelweek’s 4-part Service Fee Series runs every week in Travelweek Daily. Click here to read Part 1 featuring travel agent Elizabeth Rodgers from Journeys by Elizabeth in Belleville, ON.