Travel Agency Industry Service Fee Practices
Part of the American Society of Travel Agents’ (ASTA) wide-ranging benchmark reporting program, the Service Fee report, seeks to discover current service fee practices in the travel agency industry in addition to travel agents’ other revenue sources such as consultation fees, travel insurance, mark-ups and others. It is truly a balancing act for travel agencies and agents to maximize revenues by obtaining commissions from industry supplier partners and charging clients various fees, without overly relying on commissions or alienating prospective customers. The industry as a whole continues the effort of introducing the concept of fee-based professional travel advice to the general public.
Charging Service Fees
Among ASTA agency members, three quarters (76%) indicated that they charged service fees in 2016. It appears that the downward trend continues after the peak in the mid-2000’s with more than 90% of ASTA agency members charging service fees. The possible reasons can be two-fold: some leisure agencies are shifting away from booking air directly while others are exploring additional revenue sources such as consultation fees.
In terms of charging service fees it is worth noting that corporate-focused agencies tend to charge a flat fee for booking different travel segments (e.g. air, rail, hotel, rental car). Or agencies charge a percentage of overall transactions over a set period of time; depending on agreements with perspective clients. On the other hand, leisure-focused agencies tend to charge service fees on trip planning (FIT), tour packages, cruises and groups.
Planned Changes in Service Fees
When asked about planned changes in service fees, only one in four (25%) responding agencies planned to make changes in 2016. For those agencies planning to make changes, six in ten (60%) cited increased fees due to increased costs. A majority of agencies (55%) added more fees for different services. finally, the smallest number of agencies (48%) increased prices because the market could bear higher fees.
Getting a sense of how the travel agencies are performing in our ever-changing industry is an example of the critical business intelligence and business development insights ASTA’s research program provides.
Take a look at what ASTA has to offer, ranging from labor issues to GDS usage to financial benchmarking, at ASTA.org/Publications. And don’t forget that ASTA membership includes preferential pricing for these reports, and in some cases complimentary access. Support your national trade association and join ASTA today!
Kevin serves as Director of Research and Industry Affairs at ASTA since 2015. He is responsible for supporting the development and execution of ASTA’s wide-ranging government and industry affairs and research agenda for the travel agency industry and the broader travel and tourism industry as well as association issues generally. He also assists in monitoring industry issues and trends that affect travel agency businesses and in representing association members to suppliers and other industry groups through ASTA’s Research Family program and the information from ASTA’s benchmarking series reports.
Kevin brings to ASTA over 20 years of professional experience with over 12 years in the travel and tourism industry, including at the U.S. Travel Association and Choice Hotels International, where he frequently shared research insights and information at conferences and seminars with his expertise in managing quantitative and qualitative research studies, projects and programs.
Kevin earned his M.B.A. from the George Washington University and is a certified Project Management Professional (PMP).