3 Travel Agents Get Creative with Fee Structures
In 2018, only 8% of hosted agents and 11% of independent (non-hosted) travel agents reported charging consultation fees. Yet, as specializing becomes increasingly important for travel agents to set themselves apart from booking online, so does creating a fee structure that complements your specialty and resonates with the kind of clients you attract (or hope to attract).
I chatted with a couple of agents who went the extra mile in terms of creating a travel agent fee structure, and their unique approach may surprise you and inspire your own!
⭐️ HAR Article Highlights: ⭐️
- [Video] The Evolving Landscape of Travel Agent Fees During COVID
- Fee Structure Brainstorming Worksheet
- Tiffany Layne's "Private Client" membership fee model
- Madeline Jhawar's tiered fee structure + coaching services
- Will Medina's free initial consultation fee structure
Brainstorming Worksheet: Agency Fee Structures
Before you dive headfirst into the worksheet, take a quick look at Steph's video on how to decide what fees to charge:
Hopefully, that kickstarted your brain a little bit (Steph is really good at that!) As you read this, you'll probably be teeming with ideas to create or update your own fee structure. Download our brainstorm worksheet below. It's an exercise that will help you walk through a few things to consider when creating your own fee structure, considering factors like your region, your current income, your experience, your value-adds, and your clientele! All you need is a printer and a pen!
The worksheet includes exclusive data on consultation fees that will pique your interest! So as creativity strikes while you read, take note!
3 Creative Travel Agent Fee Structures
Fee structures, like any aspect of starting a business, can grow and evolve as you gain more experience in the industry. As your business begins to establish roots, it may become more clear to you what kind of fee structure will work best for you. But it's always helpful to have a few examples from experienced agents!
To get you started, I want to provide you with a little trailer for this article. In conversation with HAR, travel advisor DeJuan Shorter discusses why he only fees to clients for the first trip booked with them. Check it out!
Want more? Of course! That's why you're here! I chatted with a few agents who are really thinking outside the box with fee structures, and here’s what they had to say:
1. Tiffany Layne of LaVon Travel: Membership Model
I was struck by Tiffany’s fee model because I’d never heard of her approach before—the membership model. Tiffany has a background working for a luxury lifestyle company and is accustomed to clients who expect white-glove service.
I chatted with Tiffany (while she was packing for a huge FAM trip to Thailand no less!) and she shared some great insights about developing her fee structure. Here are snippets from the transcription below!
Tiffany’s Background (and inspiration for her fee structure):
Manhattan-based Tiffany Layne comes from a background in luxury and has a concierge element to her travel consultation services.
Her membership model shares a likeness to luxury travel agencies like Fischer Travel for the über rich (with a $100k joiner fee and 25k annual fee and was featured in a recent article about how to buy an island) and the more accessible Indagare Travel Agency with a $1,175 top tier annual fee (according to their site).
“I used to work for a company called Quintessentially. It was a membership-based lifestyle company. People are just used to . . . getting what they want without all these [extra charges]—they just want to know that they paid and just get the service.
“They just want to know that they paid and just get the service.”
I figured, okay. Well, that’s really how I work anyway. I had three different levels, but it just got too confusing to define the level of service I give. Because at the end of the day, I still give the same level of service regardless.
My design is to be more of a partner vs. ‘just come to me when you’re going on vacation’ . . . You go to your lawyer when you have a question or you go to your tax accountant when you have a tax question. They charge you for every time you talk to them, or you have your lawyer on retainer and are calling them whenever you want.
So that’s my philosophy because I want to attract not just the, ‘I’m going on a holiday traveler,’ but the frequent, regular travel. I have a concierge aspect to my business so it covers that as well. It covers, ‘can you get me tickets to, you know, the Golden Globes.”
Tiffany’s fee philosophy:
Her approach to fees allows Tiffany to manage her time and workflow, targeting a certain frequent-travel luxury client demographic so she can work more closely with fewer clients:
“My theory is not to overwork myself. It’s to have the right amount of quality clients that pay an annual fee that I can deliver the most personalized service to. I don’t need thousands of clients to do that.
"My theory is not to overwork myself. "
I need the right set of the right amount of clients that travel in a certain style and pay this amount of membership to cover my services as a professional and that’s it.”
How Tiffany attracts clients to her membership model:
”Someone could come to me when they have a trip to plan. I’ll explain to them that I have a single trip design fee; ‘As new clients, I will plan your initial trip for a single trip planning fee.’
Then I let them know that—after their initial itinerary is done and they’re ready to go and everything—if they would like to join as a private client, the fee that they paid will be applied to the annual membership. So it’s not like they’re paying double, but they also have to decide if they want to be a private client within a certain amount of time.”
On the growing pains of a fee structure:
Working in the luxury industry and having a clear vision of the type of client she wants to attract, Tiffany implemented her fee structure from the ground up. But that didn’t necessarily spare her from some of the hesitations that many travel advisors face when it comes to charging fees:
“A lot of my growing pains when it came to fees was really fear like I think that most people have. ‘Oh well they can go find someone else that doesn’t charge fees.’ My thing is, yeah they can, but you have to remember your own personal value and time and your worth and not be afraid to lose a potential client.
"At the end of the day, you want to create a sticky client."
At the end of the day, you want to create a sticky client. Someone who comes back. And my fee structure does that. It’s kind of like a gym membership. You pay for it. You may not use it, but when you do think of going to the gym, you’re going to think of the place you already paid for.”
Tiffany’s Fee Structure:
“My minimum—and this is for whoever, it doesn’t even matter who you are—is $2,500 a year. Which is really nothing. $525 is my [one-time] trip planning fee. So say someone came to me and they plan four trips a year, right there you’re already at $2,000. My highest [annual membership fee] right now is $6,000 a year.”
Tools and Software Tiffany Uses
“I have two right now. I use PayPal and I also use Wave. Wave is actually a full small business cloud-based accounting software. But you can also invoice through it which is great.
I have a CRM system that I use independent of my host called VacationCRM that allows me to track everything I do as my own business and I have a virtual assistant that puts all that crap in there because that’s not what my focus is [laughs].”
2. Madeline Jhawar of Italy Beyond the Obvious: Tiered Fee & Coaching Services
To call Madeline a destination specialist is a massive understatement. Madeline lived in Italy for five years and found herself making recommendations and creating Italy itineraries for friends. Her knowledge and services were already in high demand when she opened her doors.
Unlike Tiffany, Madeline doesn’t necessarily attract “sticky” clients since she exclusively books a single destination. So her creative fee model is centered around offering outstanding custom itineraries (she never uses the same itinerary twice) that inspire clients to send referrals her way.
I learned about Madeline’s tiered fee structure and coaching services through Travel Agent Chatter. When I learned that Madeline earns 80% of her income from fees, I just had to pick her brain. Madeline loves chatting on fees and answered (a long list) of questions over email.
Why She Decided to Charge Fees:
According to Madeline, “When I started Italy Beyond the Obvious, I looked into becoming a travel agent and the whole industry just didn't make sense to me. It seemed like I'd just be selling other people's products, but I already knew the local farmhouses, the local guides, the fun activities, and I didn't need tour operators . . . I started by telling potential clients that I'd create trips for them in the same way I created them for myself. I decided to charge fees because I needed to get paid for my time and I didn't understand how commissions worked.
After I did understand how commissions worked, I didn't really agree with that approach. I mean, I wanted to recommend the best places for my clients, I didn't want to be limited to only recommend places that would pay me commissions.
The way I determined how much my fees should be was that I asked myself, ‘How much do I need to charge for this to be worth my time?’ I started there, and then when I got too much demand, I increased fees.”
"Until about 5 years ago, I received 100% of my income from fees"
Having made all her own connections with smaller vendors and boutique suppliers, Madeline’s travel agent income started in reverse order compared to the “standard” travel agent. She first earned income exclusively from fees, then added in commissions 5 years ago:
“Until about 5 years ago I received 100% of my income from fees. It was only when people told me I was leaving money on the table that I looked into getting a host agency.
I currently only get commissions from hotels. Or, I should say, all commissions I receive are from hotels. And this is just because when I do book hotels that offer commissions, I now have an IATA number I can give them. I used to just tell them I had no way of accepting commissions (although many of them will just wire the commissions to my bank account with no IATA)”
Services Madeline Provides (Beyond Planning & Booking):
Madeline provides detailed trip planning and recommendations for her clients at two different service tiers: Gold and Platinum. In addition to consultation, booking, activity, and restaurant recommendations, the Platinum level also includes on-trip support (i.e. changing itineraries at the last minute), providing multiple daily itinerary options, and maps/ historical information on sites.
Other revenue streams for Madeline beyond planning and booking include coaching and teaching an online course. Madeline shared her revenue breakdown for 2018:
- Coaching: 8%
- Commissions: 10%
- Gold Planning: 38%
- Platinum Planning 39%
- Online Course: 5%
Regarding the services Madeline provides she stated, “As you can see, I don't make much from the coaching service. And it is incredibly time-intensive. I initially created this service for people that just needed recommendations and then could take care of all the bookings themselves . . . But, as the years have passed, the processes around the Gold and Platinum planning are super streamlined and efficient, and Coaching is very hands-on and time-consuming and is also the lowest price.
So in 2018, I increased the Coaching price to compensate, and as a result, I had fewer coaching clients—which was probably a good thing, because it allowed me to spend more time on the Gold and Platinum clients.”
Processing Systems and Tools Madeline Uses for Fees:
Here’s Madeline’s go-tos for credit card payments:
- Paypal: “I use Paypal and I don't like anything about it, other than it's convenient for clients :-)”
- Freshbooks: has a “Paypal-like ‘Pay Now’ button on their invoices.”
However, Madeline prefers to be paid by check via snail mail: “These online payment options are convenient for clients, but a big chunk of my expenses are in the ‘bank fees’ category because of it—I believe the charge is about 3% for each of these. So, I always request a check via snail mail from my clients but of course, if they want to pay with a credit card, they can. I do want to make it easy for them to pay me :-)”
On Communicating her fees to Clients:
Madeline’s fees are extremely transparent, outlined on her site along with a detailed Q&A. This clarity helps clients understand exactly the value she brings to the table, and what she is charging for.
The level of detail and transparency also helps Madeline know her clients are on the same page when they approach her. If clients aren’t interested in fees, then it saves Madeline’s time of needing to explain her fee structure to them.
"The key is to understand the value you are bringing."
When it comes to having confidence in charging fees, Madeline said, “You just need to understand the value you bring to the client, and of course you should charge for it . . . I create personalized recommendations based on destination expertise. Fees are separate, so that I know I get paid. The rest of the costs of the trip are based on the client's budget.
“Clients like this transparency and they also like actively discussing the budget with me so that they can prioritize where to spend their dollars. They may choose to splurge in one city and compensate somewhere else.
“Also charging fees means I can spend time on things for clients that do not earn commissions, such as:
- Putting together custom shopping recommendations in Florence
- Including route instructions for a hiking trail
- Including a map for a bike ride, I think the client will love
- Spending time to recommend and book restaurants I think the client will love
- Creating "what to eat" food checklists
- Putting together the logistics of a day in the Tuscan countryside, including when to leave, how long the drives are, where to park, how long to spend in towns, etc.
“You have to tell the client that you need to spend more time on A, B, C, and that you will create the personalized recommendations, but these take time, and you need to charge them.
“I don't worry that I am unable to attract clients, actually I have the opposite problem. I have more demand than I can handle, and I am going to hire another person soon, because we hit capacity for 2019 in the middle of January (!)”
3. Will Medina of Destination Weddings Expert: Free Initial Consultation
When Will Medina chatted with Steph on Travel Agent Chatter, I was inspired by how organized his fee process was among clients. He is a loud and proud Type-A travel agent who breaks the stereotype of the stiff-necked type-A administrator with his easy-going attitude (if you need proof, you only need to see him in his full merman glory).
As a part of his model, Will offers a free one-hour consultation before he gives his bridal and groomal (yep, I just made up a word) clients a quote. I chatted with Will over the phone about his fee model and how he makes giving out free advice profitable for his agency:
On Will’s Free Consultation
Will is strategic about his free consultations. When I asked about his process he said, “One is to explain the process of the all-inclusive wedding and all that so they understand. Number two, to answer their questions. There is nothing that’s off the table. They can ask whatever they want, even if it’s a specific hotel they have in mind. They can ask whatever they want during that hour. The third one—that is the final five minutes, and I tell them when we start talking—the final five minutes is for me to explain and show them my process and the tools that I use.”
How does Will manage to make these free consultations profitable?
- Automation/ Time management: Will uses Acuity for scheduling his consultations. This way, Will can set the days and times he wants to dedicate toward free consultations adjusting it to his availability and demand.
- Qualifying Clients: Will uses an in-depth intake form/ questionnaire so he can have a firm understanding of their needs before they speak on the phone. Will asks logistical questions for info such as dates, destination, budget for the wedding and per guest, departure point, etc. This way, he enters the conversation with a lot of knowledge and is better able to show his expertise, tailoring the conversation to the client’s needs and expectations.
"I show up to the consultation and give them 300% whether I get the vibe or not. I’m there to give them information, remove the overwhelming feel . . . and then after that, the ball is in their court."
Over time, Will has honed this part of the sales process and can get a good sense of whether or not a client will be interested in the first few minutes. Will said, “I show up to the consultation and give them 300% whether I get the vibe or not. I’m there to give them information, remove the overwhelming feel—which is what I promise them when they schedule the call—and then after that, the ball is in their court.”
How Will Decided to Implement a Fee
Will decided to implement a fee when one of his first-ever wedding groups ended up canceling last-minute:
“The main reason why I started charging a fee at the time is because I had a wedding that was a destination wedding, one of the very first ones that was happening in St. Thomas. And this bride needed a lot of hand-holding . . . well, about a month and a half before the wedding, [the best man] had a really bad accident and they literally decided to cancel the wedding . . . It was a really small wedding—like 10 people . . .10 or 12 people. There was not a contract or anything, so when they canceled they were within the penalty so basically, Funjet got the money and Will got zero. Right? Then I was like, forget it. I’m never going to get burned again and so I decided to implement the fee.”
Will’s Fee Structure
Charged a single flat fee to all clients regardless of wedding size, destination, or how much support the clients require. His clients pay him his fee in a single installment, and then he begins his work with them.
"I also realized that brides already had to make a lot of decisions as it relates to hotel, and the weighted packages at the hotels. So me giving them weighed packages as well to choose was getting in the way of them hiring me faster."
Will chatted with me about how he simplified his fee structure since brides were already overwhelmed with choices:
“I kind of just like disappeared my packages. I also realized that brides already had to make a lot of decisions as it relates to hotels and the weighted packages at the hotels. So me giving them weighed packages as well to choose was getting in the way of them hiring me faster.”
On Raising His Fees Over Time
Will charged $250 he first implemented a fee six years ago. Now, Will’s fee has increased over 3X his initial fee to keep up with demand. Will’s current fee is more than twice what he considers to be the industry standard.
Increasing his fee has helped Will qualify his clients, finding brides who understand and appreciate his value. Additionally, raising his fee has helped stabilize his income and workflow. He chatted on how his growing confidence and experience impacted his growing fee structure:
“I’ve raised the fee over time . . . a little bit at a time—just like testing the waters to keep up with the demand. I was getting too busy. So I kept raising the fee.
"I want to get the [clients] that are okay paying my fee because they know how much I’m going to help them."
Confidence is half of the game with the fee, let me tell you. You know, at the end of the day when I think about it, the last two times I’ve raised my fee, I have not changed a damn thing. I put a lot of time into this. I want to get the [clients] that are okay paying my fee because they know how much I’m going to help them . . . It serves as a qualifier but it also a great way to supplement your income so you can pay for better tools so you don’t have to wait until after your commission to get that.“
Curious to learn more from Will? He facilitates a 15-week travel agent workshop, which includes more information on establishing a fee.
Still Looking for More?
Okay, you got me. I'll give you a freebie. But we're going to throw you for a loop and have you digest it in a different format. Let me introduce you to Lary Neron, a travel advisor who charges between $50-CAD 500 for ticketing air. The crazy thing is, all he sells is air. That means 85% of his income comes from fees! Take a listen and get ready to be energized:
In Closing & Thank You!
If you came here looking for some inspiration on ways to structure your fees, hopefully, this article has sated your curiosity! Do you have a creative approach to a fee structure you’d like to share? Please comment below!