Hosted Travel Agent Service Fee Report, 2017
This is the 1st of 3 articles in our 2018 Service Fee Report Series. You can read the rest here:
- "Taking the Plunge: A Travel Agent's Guide to Charging Fees"
- "How Seller of Travel Laws Impact Service Fees [+Free Service Fee Template]"
Last year we thought we try a wild experiment to gather some data on travel agent service fees, and we’re excited to continue the tradition of gathering and publishing this kind of info. So, once again, we interrupted your travel agency programming to ask you fill out our survey and HOLY SMOKES did you respond!
We received 720+ entries for our survey—that is 140+ respondents than last year? We’re pretty dang happy about that. And you know what? We couldn’t have done it without you, beloved travel agents. So thank you for participating.
So we’ll look at the Service Fee trends for 2017 and see how they’ve changed from last year. We also have a few other goodies.
If you’re looking for some service fee basic info, this will be the article to help you brush up on your service fee savvy. It covers:
- Info on whether or not to charge service fees
- 2016 service fee trends
- What to consider when developing a service fee structure
Here’s a few new things we’ll cover in this article:
- Difference between service fee and consultation fees
- 2017 Service Fee Overview
- An infographic on 2017 service fee trends
- Revealing the lucky winner of our 2017 Service Fee Survey Drawing!
And here's a sign of things to come (because heck, why not?!):
- Profile of how 3 travel agents created their service fee structure (including how to pitch a service fee)
- A Client Service Agreement template (because, heck why not?)
Did that pique your interest? I hope so.
Why are we so obsessed with service fees?
Hopefully it’s apparent by our site, but we’re pretty big fans of travel agents. In short, we want agents to value the work they do. Agents well know the frustrations of tire-kicking clients who will use them for research and planning info, then ghost on them and book their trip through an OTA (or what have you).
Agents can save travelers hours upon hours of time researching, planning and booking a vacation. This probably comes as no surprise to you. Also unsurprising is that this doesn’t happen with the click of a magical travel agent button that produces the perfect vacation at a great value. No. It takes years of experience. It takes hours and day of their own research and FAM trips. It takes hard skills learning how to navigate the travel agent portals, working with vendors, staying on top of the latest industry news and resources.
I know, I know—I’m preaching to the choir. But this is my long way of saying that I believe your time is valuable. And I believe that when you so much work into planning a vacation for a client, that a commission is nice, but that it rarely reflects the extent of the work that you do to make your vacation (or business travel) magic happen.
What is the difference between service fees and consultation fees?
Sometimes, people will use the words “service fees” and “consultation fees” interchangeably. But for our purposes, we individuate between the two fee categories.
Service Fees: We consider a service fee a charge for making a transaction, whether it’s booking an airline ticket, rail, car, hotel, package or cruise. Service fees can help compensate for bookings with low (or no) commissions, so the travel agent can provide a service to clients and still be compensated for their time. The most popular service fees apply to airline ticketing, which historically provide zero to very low commissions for the average leisure agent who isn’t exactly booking a high volume of air-only travel. Usually service fees are a flat fee per transaction (i.e. $50 per domestic flight booked), but there’s other ways to do it too.
Consultation Fees: A Consultation Fee is a fee charged for help researching or planning a trip—using your travel agent expertise in different specialties and destinations. It can be the difference between a customer coming to you and saying, “I want to go to a Riu resort in Playa del Carmen in April” and “I want to go to a resort somewhere warm over spring break, can you can plan that trip for me?” The consultation fee compensates an agent for the time it takes to learn the preferences of their client, research and plan a great trip. They’re pretty popular for agents who book FITs, groups, shore excursions, etc.
Who took this survey?
So oodles of travel agents took this survey, but who are they? Here’s a breakdown:
- 95.5% were hosted agents
- Average years of experience: 6.3
- 81.1% were leisure agents (vs. corporate agents or both leisure and corporate agent)
- 97.7% were home based
- 100% wanted to enter our host/franchise/consortia drawing credit (obviously!).
This was about what we expected. Are you part of the 4.5% who are either independent or with a franchise? Are you one of the 18.8% who are a corporate or a corporate and leisure agent? Or do you affiliate with the 2.3% who are storefront agents? Well if you’re feeling a little under-represented by our data, go tell your other franchise agents and independent agent friends! We want to hear from you too.
The crib notes: Service fees in 2017
The results are in, tallied and adorned with graphic bells and whistles. This is where the drumroll happens, and I can barely contain myself. I present to you, a little taste from HAR’s data buffet:
1. In 2017, 33% of responding agents reported they charge some kind of fee.
These fees include service fees and/or consultation fees. This is a steep decline from our 2016 survey, where 43% of responding agents reported charging a fee. Though I’m not really a data whisperer, this bungee jumping drop in numbers might be for a few reasons:
- In our 2017 survey, 39% of respondents had a year or less of experience. Last year, only 24% of responding agents had a year or less of experience. Since newer agents are typically less likely to charge fees, this may also account, in part, for the decrease in overall fees charged.
- This survey was dominated by leisure travel agents. Since air-ticketing is the most common service fee to charge, the drop in those reporting service fees may also be due to the fact that leisure agents are less likely to book air-only travel.
This brings me to some more big picture data:
2. Fewer agents charged service fees in 2017 This may seem obvious due to the info given above since the overall percentage of agents who reported charging a fee dropped approximately 10% from last year. But, there's a silver lining, which brings me to number three . . .
3. More agents charged consultation fees in 2017 A higher percentage of agents reported charging consultation fees in 2017 than last year. This is great news, and could be due to the fact that a consultation fee structure is geared more toward the leisure agent. We hope this trend will continue into the future!
4. Air ticketing was the most common service charge in 2017.
Air ticketing (not packages with air included) remains the most common reason to charge a service fee. In fact, respondents were more than 37% likely to charge a domestic air-ticketing fee than the most popular non-air ticketing category (FIT).
5. More agents charged consultation fees in 2017
In 2017, the rate at which agents reported charging a consultation fee increased over 5%, with a “flat fee” registering as the most common consultation fee structure. Agents also reported charging more for consultation fees in 2017. The mode (most commonly fee charged) for flat fees increased from $50 in 2016 to $250 in 2017—a significant increase.
6. Why agents chose not to charge fees
There are several reasons agents do not charge service fees ranging from fear of losing clients, feeling too inexperienced and just feeling that’s it’s not right to charge a fee. In 2017, the most popular reason to abstain from charging a fee was that the agent might not be able to attract new clients.
Again, this is just a small tasting menu from our data. The kind of numbers you can drop at your New Year’s Eve party to impress your friends. But don’t worry, I elaborate below on all issues listed above!
Who charged service fees in 2017?
We took a look at who filled out the survey, but now we’ll take into account some more big picture data regarding what kind of agents charged a fee in 2017. Of Agents Who Reported Charging a Fee (Service Fee, Consultation Fee or Both):
- Average years of experience of agents who reported charging a fee: 7.8
- Percentage of Leisure Agents that reported charging a fee: 31.4%
- Percentage of agents sell both leisure and corporate travel that reported charging a fee: 39.7%
What about corporate agents? We didn’t get enough data from corporate agents to offer a reliable statistic for this. But according to the 2016 ASTA Service Fee Report (where 61% of responding agents reported selling corporate travel), 76% of travel agents reported charging a fee.
How much do hosted agents charge for different services?
There’s a whole lot of things a travel agent can charge a service fee for. Below, we provide a graph that breaks down the services our responding travel agents charged fees for including the range they charge and the mode. It also includes the percentage of agents who reported charging fees for that service (among those who reported charging a service fee—not all responding agents).
In the data below, we eliminated outliers that appeared to be errors (i.e. a $1,500 service fee for a domestic ticket, but heck — if you’re able to get that kind of service fee, more power to you!)
1. Air-Ticketing Fees:
Air-ticketing fees were the most popular service fee charge among all agents—with domestic flights registering above international flights in terms of service charge. But that category is further broken down into other air-ticketing services as well. On the leisure side, this makes a whole lot sense since there's little to no commissions to be made from ticketing air-only travel.
This article on GDS, outlines the challenges for agents to ticket air-only travel and provides a list of alternatives for those who want the capacity to book air without GDS.
2. Non-Air Fees:
Charging non-air fees was reported at a much lower rate than air-ticketing fees. Below is breakdown of non-air ticketing services that agents charged fees for in 2017. The data is ranked by frequency of charging the fee and includes only the data from agents who reported charging a service fee.
What kind of consultation fees do agents charge & how much per fee structure?
13.5% of all responding agents reported charging a consultation fee. This has increased from last year’s reporting at 9.4%. Trending similarly to last year, flat fees remained the most popular consultation fee structure. This is followed in popularity by person fee, per transaction fee, “other” fee structure, and hourly fee.
The data below includes only those who reported charging a consultation fee:
Some examples of "other" fees included, "depends on complexity" and "itinerary fees."
When it comes to corporate only agents, we didn’t have enough data to offer any great info on fees. But according to the 2016 ASTA Service Fee Report, “corporate-focused agencies tend to charge a flat fee for booking different travel segments (e.g. air, rail, hotel, rental car) or a percentage of overall transactions over a set period of time depending on their agreements with prospective clients.”
Charging by volume of sales/ transactions is one way that corporate agents diverge from their leisure peers—though other models (per transaction fees, flat fees, etc.) can apply to both leisure and corporate agents).
Experience vs. likelihood to charge service fee
In 2017, the direct relationship between more experience and charging service fees was less consistent than it was in 2016.
Agents who reported having 11-20 years of experience most frequently reporting that they charge a fee.
- Less than one year experience: 29.4%
- One year experience: 22.8%
- 2-5 years experience: 33%
- 6-10: 30.8%
- 11-20: 46.4%
- 21+: 43%
Niche vs. likelihood to charge a fee
Below, the graphic illustrates what travel niches were most likely to report charging a fee. We included more niche options in our survey this year than we did last year, which may account for some of the shuffling among the rankings.
The data below includes only those who reported charging some kind of fee. It’s important to note that many respondents reported selling multiple travel niches. The percentage of each niche includes agents who sell that particular niche and reported charging a fee.
Here’s the breakdown.
This trend differed from last year, where the highest responding category was “Corporate,” followed closely by “River Cruises” in 2016. This year, MICE and Wellness travel took the reins, registering as the top two niches that reported charging a fee.
* It's important to note that niches indicated with an asterisk are those which had a small sample size in respect to our overall participation. MICE, Corporate, and Medical Tourism all had <25 respondents who reported selling that niche.
** For other, the most popular listed niches were Disney and All-Inclusive.
Regional air-ticketing fees, domestic & international
I consider air-ticketing fees the equivalent to the price of milk in a grocery store—it’s a popular item that can set the standard for how much agents may charge in general. Below is a map that shows how air-ticketing fees vary according to region. It offers a gauge on regional service fees in general:
The Pacific Northwest reported the highest baseline of fee charges for both domestic and international ticketing, whereas last year New England reported the highest baseline of fees in both categories.
But the general trend among all regions is to charge a $25 fee for domestic air ticketing and a $50 fee for international air. (See entire infographic for more details on amount charged per region).
Why agents forego charging fees.
The vast majority of agents, 66.8% reported they charge no fees. When asked “What are some of your reservations about charging a service fee or consultation fee?” the top four replies were:
- Might not be able to attract new clients: 44.0%
- I don’t have enough experience to charge fees: 31.9%
- I might lose current clients: 30.6%
- I just don’t know about about [fees]: 23.9%
Agents also had a fill-in option for this question. Some of the other reasons mentioned included:
- Seller of Travel Laws laws
- Don’t want to compete against internet/other agencies (read about what travel agents offer that Expedia can't)
- Don’t like fees/need them/or want to charge them
- Happy with commission levels and/or don’t need fees (read more on commissions here)
- No fees are a part of their business model—clients are already paying.
- Don’t feel right charging fees
The grand finale:
More of visual learner? Yeah, I understand. Here's all that great data rendered into a single infographic for your viewing pleasure!
Want to make sure your voice is heard on our next survey? Sign up for a reminder! You'll also receive our newsletter (issued every full moon!). The newsletter is free, awesome, infrequent, and chock-full of great info.
We have a few other articles that chat up on service fees that you might want to take a look at here:
- 2016 Service Fee Survey: Our service data from last year, which includes a broad overview of what the heck service fees even are.
- Travel Agent Chatter, Russian Connections: Russian Connections agency owner, Andrey Zakharenko, requires his agents to charge service fees. Hear what he has to say about the value of an agent’s time.
- A GDS Primer: What is the GDS and Which Travel Agents Need It?: Air-ticketing is the numero uno service fee charge. This article offers an overview of the Global Distribution System (GDS), which agents really benefit from using it and why an agent may want to forego it altogether.
Soon, we’ll be publishing a second installment that digs deeper into Service Fees. We’ll profile a few agents who charge service fees, discuss why they implemented fees and how they structure them, and how they process service fee payments. We’ll also include a sample of a service fee disclosure document because we like nice things.
Our lucky winner and sincere thanks!
I know, it can sound too good to be true. But we're not kidding around with our host/franchise/consortia credit! Our winner of the drawing for the 2017 Service Fee Survey was . . . Teddous Rosemore, owner of Ted's Cruise and Travel Service! He's an independent agent through Outside Agents. When I emailed him about his prize, he said, "What a great Christmas gift. This is a great way to promote my business during 2018."
Sincere thanks to Teddous and for the other 720+ readers who completed our survey! But our survey wouldn't have much traction without the support of host agencies either! The host agencies below helped us promote our survey by reaching out to their ICs and we couldn't have gotten such great data without them:
- Gateway Travel
- Gifted Travel Network
- Groupit Travel
- KHM Travel Group
- Oasis Travel Network
- Outside Agents
- Travel Planner's International
- Travel Quest
This is where I drop you off. Service fees can be a divisive issue and, I’m curious about what your take is. To charge or not to charge, that is the question. Comment below if you charge fees, how long you were in the industry before implementing a fee, or how you decided what to charge! Don’t charge? Let us know that too! We want to pick your brain.