Travel agent Tim Richmond has developed a “retainer” business model that he employs with his clients, and has recently been training other travel agents in his methodology.
As travel agents, we often look to other industries for their practices and techniques trying to come up with a compensation model that will make us profitable. The latest thought is to add service fees or as some would call them plan to go fees to all bookings.
I am a strong advocate of charging a fee, not for my service, but for my consultation. There is a lot of fear out there about charging fees. One of our industry partners has embraced the fee model and I fear travel agents are traveling down that same path.
Our mystery partner: The AIRLINES
At one time, when you bought an airline ticket, included in that price was a seat reservation, the services of a reservation agent, free checked luggage, a meal, maybe a movie and even on international flights, a cocktail. At one time travel agents sold travel and promoted that their service was free. The cost for their service was included in the price of the vacation. Many agents still work this way.
Airlines started out by charging fees for reservations made using one of their reservation agents. Travel agents started charging fees for making an airline reservation. Airlines started charging a fee or copayment to book your frequent flier miles or to use them for an upgrade. Agents charge fees to book frequent flier miles or process upgrades for their clients.
With the down economy and high fixed costs, airlines started going bankrupt and merged with stronger partners or quit flying at all. Travel agencies started merging with other agencies, closed completely or closed their retail location and went homebased.
This article is provided free to the travel agent community by:
Airlines now are charging fees for checking luggage, seat assignments, meals, movies, a cocktail on the flight, pillows and blankets. Travel agencies are starting to add fees for arranging tours, cruises, independent vacations and for any product they are selling to the client. They are even calling them “service fees”. Fees meant to cover their time for research and their knowledge of the product / destination.
Ask anyone who flies now and most will say it is a horrible experience. Mention the additional fees they have to pay for something that was always included in the price in the past and you are bound to hear words not fit for publication. Now, the travel agent wants to charge a “service fee” or plan to go fee even before the client has decided what they want to buy. After years and years of your service being free, is it any wonder clients balk at paying you more? Travel agents are selling the same hotel room, car or other vacation that the client can find it on their own from other sources. Some of these sources even sell this same product for less. In my opinion, as long as travel agents continue down this road, soon they will be spoken about like the airlines, with words not fit for publication. Or client will continue to find alternate source for buying the product.
I am all for charging fees. I am just opposed to charging service fees. Service should be given freely, generously and with a smile. The time for your consultation and research, before during and after the trip, your relationship with the client, your relationship with suppliers and your knowledge are what you should charge for a fee. Those are the items that are unique to you.
For me, that meant I would “rebate” back the commission I earned a selling a product, or I use my relationship with the supplier to negotiate a net rate or lastly if I cannot find it for less than the client has through some other source, then I will book through that source as long as I can verify the legitimacy of that source.
Now comes the question, how to determine what the fee should be? Should I have a menu of fees, X amount for a cruise, Y amount for a tour, Z amount for hotel / car reservations, etc? Or should it be an hourly fee? I could not see either of these working, as it still felt like I would be nickel and dime the client each time. Travel is a diverse product. My client may take a long vacation once a year, but then do smaller trips throughout the year. By charging a fee for these smaller trips (which were very low in commission), clients just found it easier book them on their own. Or if the client books a high-end cruise and highly commissionable vacation, do you lower your fee since the commission would be high?
Hourly fees don’t work, as some clients are experienced travelers and do not need much of my time, but still have come to expect all the information I provide them. They are just used to this information and know how to use it or they may be familiar with the destination and do not have as many questions. Other times, even the smallest vacation can be time consuming filled with questions, so the hourly fees could add up. I want my clients to always feel they can spend as much time with me as they want, so instead I charge an annual fee or “retainer”.
At the beginning of the year, they pay me this retainer; there are no other fees to arrange any travel for them for that year. This can be a large family vacation to just booking at campsite. As mentioned above, price is not an issue, as I will use whatever resource gets my client the best price. This builds more loyalty, as the client knows I will handle any of their travel needs, not just those with commission or those that I normally would have charged a service fee. This retainer is usually less than the fees they paid me when I used a fee per booking / airline ticket.
This business model does not work for the once every three-year traveler. I recommend someone that travels at least 3 to 4 times per year and at least one of those a large vacation. I was tired of being the sales, marketing, service and distribution channel for suppliers and then not even earning enough money for doing it for them. I choose to sell and market myself. The income I derive from that is solely determined by me, not the supplier and it is compensation for my time, knowledge, relationship and consultation.