Why the Modern Travel Agency Needs to Charge Fees

In an age when additional travel fees and costly ancillaries have become commonplace, travel agencies have found that travelers are willing to pay fees for the services agents provide.

ASTA’s 2015 Service Fee survey found that 81 percent of members charge a service fee, down from 85 percent in 2012, reflecting a downward trend over the last 15 years. Fees have increased, however, since 2009, reflecting the discounting that went on during the last economic crisis as agents were desperate to retain clients.

The survey also indicates that 45 percent add a non-refundable consultation fee for tours, groups or cruises which is applied to the total cost of the trip if the client follows through with their booking at the end of the process. If the client bails, the agent keeps the fee to pay for their time, essentially.

Agency experts say the normalization of fees by airlines, hotels, and cruise lines has helped inure consumers to the reality of paying extra for improved service and value-adds.

“The airlines have made it easier by getting people used to added fees,” said Dr. Robert Joselyn, president of Joselyn Consulting Group and TAMS, a travel agency management group. “It’s easier for an agent to show value, and [fees are] a requirement now because we see a bit of an assault on yield.”

When Joselyn looks at the financials of his group’s members, he notes that fees are absolutely crucial to the financial health of the agencies.

The erosion of compensation by commissions, along with the ease of consumers booking their own booking simple trips, means that a smaller pool of clients are using agents to book trips of increasing complexity.

“The easy sales continue to go away, because they tend to be commodity packages to Caribbean and more of that stuff is going online,” said Joselyn. “What’s happening is the business mix on the vacation side on average is maybe more complicated and time-consuming than ever before, so agents need the fees.”

A big problem is that potential clients for these complicated trips are looking for expertise, but aren’t willing to pay into a structure that accommodates the retention and training of such skilled agents.

“The long term trend is that agents have a consumer who wants great advice and experience on something they can’t Google, but they want to talk to somebody who is an $80,000 per year employee where $35,000 and $40,000 is common,” said Joselyn. “They want to deal with a more sophisticated advisor. When you say that your agents have more training and education, you have to know where the training money is going to come from. It’s not going to be from commission anymore.”

From the perspective of a travel agent consortium, charging fees is often positioned as a representation of the added value that travel agents provide to consumers through free upgrades and other perks.

“Our agents’ clients recognize that price does not equal value,” said John Lovell, president of Travel Leaders Franchise Group and Vacation.com. “Our agents provide immense added value on everything from hotels to cruises. That means for the same price as what you might find online for a hotel room, our agents’ clients can get room upgrades, early check-ins and late check-outs, complimentary breakfasts and free Wi-Fi or parking – and sometimes they can offer it at an even lower price. You simply can’t get that online… Thus, the overall value – that might include a nominal service fee – more than pays for itself.”