Why there’s never been a better time to talk about service fees

Why there’s never been a better time to talk about service fees

TORONTO — It seems like a strange time to be talking about service fees.

But maybe that’s why it’s the perfect time.

The reality – that bookings are few and far between these days – just points to even more pent-up demand for travel and adventure once the world comes out of the COVID-19 pandemic.

And while travel agents have always gone above and beyond for their clients, 2020 and 2021 are different. The level of service, advice and assistance agents have provided for their clientele during the pandemic, now 10 months and counting, is off the charts.

Many, if not most, agents have provided their services for free. Some clients are so grateful, they’ve offered to pay their agents a service fee without even being asked.

Which prompts the question, what are host agencies, chains and consortiums saying to their travel agent members about service fees in these unprecedented times?

Travelweek touched base with more than half a dozen retail groups, asking about everything from the percentage of their agent members currently charging service fees, to why now is an optimal time to introduce service fees, to best-practice fee strategies, to service fee guidelines and support available from their head office.

A new instalment with 2 Q&As each will run every week in Travelweek Daily. At the end of each instalment, including this one, we also check in with a travel agent who has successfully implemented service fees at her agency.

 


 

QUESTION: Do you think the momentum for more agents deciding to bring in fees is still to come, or is it already happening?

Nexion Travel Group – Canada President Mike Foster says the momentum for fees is rapidly picking up pace. “It is unquestionably already happening. Service fee training has been in demand since March 2020. ”

Foster says there’s always been a justification for a travel advisor to implement service fees, “but the pandemic made it obvious that it will be challenging for travel advisors to operate based on hope of profitable transactions when the revenue stream is out of your control.”

Direct Travel’s Senior VP, Leisure Marketing, North America, Stephen Smith, says that even if agents don’t charge fees yet, the pandemic has prompted them to recalibrate their business model to account for the time, expertise, and management of a trip from beginning to end. He adds: “Many conversations are being had about the best methodology to have a multi-faceted approach to accommodate short weekend getaways as well as the more elaborate multi-destination, exotic trips.”

TL Network Canada’s VP Christine James says the push for service fees started happening even before COVID. “However, due the increased demand from consumers recognizing the value of working with a travel advisors, we’ve seen more of them implementing service fees into their agencies,” she says.

Many host agencies, chains and consortiums have been focusing on service fees for the past several years and the pandemic has only spurred on these efforts to provide members with all the resources they need to implement fees. TPI’s President and CEO Zeina Gedeon is a firm believer in service fees, and says TPI’s team has been speaking about service fees for the past couple of years with the intent to have TPI advisors understand the value that they bring to their clients.

If more agents are charging fees now, those numbers will only rise sharply as travel begins to resume.

“Agents are making those decisions about their future business now, but the practice will only grow as the demand for travel resumes,” says Independent by Flight Centre’s GM, Lee Zanello.

TTAND agents have even had customers offering to pay a fee for all their work with the COVID cancellations, says The Travel Agent Next Door’s founder, Flemming Friisdahl.

The timing is right, says TDC GM, Louise Fecteau. On Feb. 4 TDC announced a new fee grid for across its network of agencies, effective March 1. “Personally, I have always advocated the following: a free service is a service that does not have any value. In any field of activity, professionals demand professional fees in return for their expertise,” says Fecteau.

TravelOnly’s VP Retail Sales & Business Development, Ian Elliott, sums it up: “[Agents] should no longer be working for free.”

 


 

QUESTION: What percentage of your member agencies in Canada would you say are currently charging service fees?

In 2019, some 7% of TPI advisors were charging fees, says Gedeon. “Now we’re seeing around 46% of advisors actively charging, and 30% more are being coached by our Regional Managers on ways to implement this into their business. It is a hot topic these days at TPI.”

Some estimates are even higher. TL Network Canada’s James puts the number at 60% – 70%. Looking ahead, Nexion’s Foster says he thinks at least 75% will have a fee schedule of some sort in place for 2021.

Sometimes fee schedules aren’t cut-and-dried. “I would estimate less than 10% are charging distinct and separate service fees. A much larger group of our advisors combine service fees into their mark-up when selling groups so I think there are more advisors adding service fees but it is hard to truly understand what is a service fee vs. commission,” says TravelOnly’s Elliott.

The Travel Agent Next Door’s Friisdahl says TTAND is doing everything it can to support agents who want to charge fees. “We will never mandate fees, however we want the travel agent to be compensated for the work they do. Who does not get paid for doing their job, a lawyer, banker and the list goes on. Everyone does, so why should we not be paid?”

 


Elizabeth Rodgers, Journeys by Elizabeth

IN HER OWN WORDS: A SERVICE FEE SUCCESS STORY

Elizabeth Rodgers

Journeys by Elizabeth

Belleville, ON


BACKGROUND:
 “I have been an agent since 1990, and with The Travel Agent Next Door since June 2016. Currently I do about 80% corporate travel.”


RATIONALE:
 “I have been charging service fees since 2000. The great days of earning huge amounts of uncapped commission were behind us and with the Internet starting to come out we need to reconsider how we were going to survive what was coming.

“One of the best things that has come out of 2020, in my opinion, is that clients are going to see our value in terms of their travel arrangements. Hopefully that feeling will last for many years to come.”

FEE STRUCTURE: “I have a flat fee that I charge, no matter the destination. I only charge on air only bookings. If I am doing just a car and hotel booking for one of my corporate clients I will not charge a fee. I also charge my fee if my clients are changing their flights. That can be time-consuming and create even more paperwork so I feel that is justified.

“For my vacation clients I don’t charge a fee if they are booking a package. I am considering changing that once travel picks up again. For vacation clients I usually quote the price and say that it includes all taxes and my fee. If they question the fee I explain that I work on commission and that I don’t get paid by the airline. Everyone is usually fine with that.”

CLIENT FEEDBACK: “I point out the value to my client in what I am doing. I usually advise them that what I do may seem really easy but that it is actually time-consuming. I also point out the value of me being available to them when they are on the road and they need to change their flights or the flight gets cancelled. It is amazing how them spending even 10 minutes on hold with an airline will suddenly make them appreciate me just a little bit more.”

ADVICE TO FELLOW AGENTS: “My advice would be to not be afraid to take this step. I would send out an email to current clients announcing the decision and providing them with a rate chart. I would put a start date on the fees, so that clients are aware of the change. This is really a perfect time to do that because we are a few months away from clients really starting to book travel again and they are going to have time to get used to the idea. I would also advise other agents that, whenever possible, stick to the fees they want to charge, even if they are afraid that they may lose a client. We are worth every penny!”

A new instalment of Travelweek’s 4-part Service Fee Series runs every week in Travelweek Daily. Click here to read Part 2 featuring travel agent Ashley Doell, a travel consultant with TPI based in Warman, SK.

Kathryn Folliott