Hosted Travel Agent Service Fees Rundown, 2016 [+Infographic]
When it comes to a travel agent service fees, it was tough for us to find current information—especially info specific to hosted agents! Our questions kept multiplying like gremlins in water, spawning other questions like, How many agents charge service fees? What do they charge for and how much? How do hosted agents compare with ‘industry standard?’ So on and so forth.
It probably won’t surprise you when I tell you that Google didn’t come up with many answers to these questions—until now, anyway :). So Steph and I decide to take matters into our own hands and get our own data. All the following data is from a survey that was distributed to hosted agents via host agencies listed on our site. And boy oh boy . . . we couldn’t have been happier with the results!
So if you’ve found yourself wondering if your travel agency should charge service fees, you are definitely in the right place. 500+ hosted travel agents weighed in on service fees, and this is what they had to say.
To Charge or Not to Charge. That Is the Question.
In part, the growing trend of service fees was a response to declining airline commissions in the nineties when the public gained the capability to more easily book their own tickets (hellooooo internet!). While many agencies had to close up shop, one way thriving agencies adapted was to charge a service fee (especially corporate agencies).
But when it comes to whether or not to charge travel agent service fees, there is no one answer. Some agents live by service fees, and others refuse to charge them (more on that later). Of the hosted agents we surveyed, 43% of travel agents charge some kind of travel agent service fee(s).
This number falls waaay short of ASTA's results from their most recent 2012 Service Fee Report.” ASTA's findings indicated that travel agents service fees increased steadily from 64% in the late nineties until it peaked at 97% in the mid 2000s, then slowly decreased to 85% in 2012.
We have an article that goes to great lengths to break down how travel agents make money—and travel agent service fees are just a piece of that pie (the other major piece of the pie being commissions). The ASTA report warns agents against depending too heavily on either one of those income streams for fear that suppliers choose to cut costs by cutting commissions.
But one of the glories of owning your own agency is you get to decide what works best for you. So while we can’t tell you one way or another (sigh, it’s never cut and dry), we CAN walk you through some number-crunching to help you figure out if service fees may or may not make sense for your agency and see how your agency compares to your hosted travel agent peers.
How Much Do Hosted Agents Charge for Different Services?
As selling travel continues to change and evolve, so does the complexity of travel agent service fees. One of the glories of owning your own agency is you get to decide what works best for you. Here's a general overview of services hosted travel agents charge fees for, the range in cost and the most common fees assigned to different services:
This is big picture data. Of course, the fee structures depends on a whole lot of factors such as experience, region agency is located, agent's niche, etc (like I said, gremlins). There is no "typical" when it comes to service fees. Hosted travel agents run the gamut from charging zilch to charging many combinations of fees for ticketing domestic and/or international, FITs, researching/consultation, hotel or car-only booking and every iteration in between. Sometimes agents waive fees for preferred or repeat clients, and sometimes they put the fee toward the trip for any client who books with them in the end (ahem, reducing the chance of tire-kickers).
Travel Agent Service Fees: A Story in Data
We're up to our elbows in data, so we're going to take the info a step further and look service fees according to region, niche, and years of experience in the industry. For each category, we'll include range (highest and lowest answer) and the mode (the amount most frequently charged by agents).
1. What do agents charge for domestic and international ticketing? It's important to note that, for air ticketing data, we are only including agents who reported they charge a service fee(s) in the results.
Both domestic and international air services had the same range ($10-$250). One thing to note is that the agent that reported the maximum $250 (for both categories) explained that the fee is a base rate charge, so the $250 may include just air, or air plus other bookings.
If that number were eliminated, the maximum fee for air in both categories would be $150. The most frequently charged rate for domestic was $25 and the most frequently charged fee for international was $50.
2. How do agents charge in relationship to their experience level?
In every category of experience, agents are more likely to charge for air versus non-air service fee charges. It's probably not much of a surprise that agents with the most years of experience are more likely to charge travel agent service fees, and agents with less than a year in the field are least likely to charge fees (and by a wide margin at that). But beyond that, there is no consistent trend between years of experience and the likelihood of charging fees.
3. How much do different types of travel agents charge?
The likelihood an agent will charge a service fee also depends on their area of specialty. Below shows the percentage of agents that charge a travel agent service fee(s) according to their niche:
It's important to consider here that many agents report multiple areas of focus, which impact the findings here. (For example, where 267 agents reported specializing in leisure travel, only 100 agents specialized only in leisure). But our data doesn't different differentiate between agents who report a single specialty and those who report multiple. All things considered, "Corporate" agents are most likely to report charging a service fee, whereas "Ocean Cruise" and "Leisure" agents were least likely to charge a fee.
4. A look at airline service fees by regionThe likelihood of charging travel agent service fees and their ensuring rates also depend on where the travel agency is located. Below we have a map that illustrates range of service rates for airline service fees (only) in relationship to an agency's location 1 For this chart, we only considered air ticketing service fees, since those were the most commonly-reported fees.
New England had the highest percentage of agent reporting they charge a service fee (69%), whereas respondents from Appalachia were least likely to charge a fee at 33%. The mode (most commonly charged fee) for domestic air was $25 for all regions 2.
The modes for international air ranged between $15 (in Appalachia) to a high of $50 (the calculated mode for five different regions).
Hosted Agents and Consultation Fees
Consultation fees are essentially fees charged that have nothing to do with the actual booking itself. Consultation fees can include itinerary-building, research, talking clients through their decision making—you name it. Within this category of fees, there is tremendous flexibility in terms of charging and agents can tailor consultation fees according to what makes the most sense for their business model.
At only 9.5%, far fewer hosted agents reported charging a consultation fee compared to air and non-air service fees:
Flat fees were the most commonly-reported consultation fee, with a range from $20-$350. The most common flat fee charge among hosted agents was $50-$100:
Though flat fees were the most common variety of consultation fees, the survey also asked regarding per person fees, hourly fees and transaction fees:
What Agents Have to Say About NOT Charging Service Fees
It’s not for everyone. When asked, “What is your hesitation in charging a service fee,” there are a few common threads that emerged. In my own words:
- Commissions provide enough income
- Agents don’t feel comfortable asking clients for service fees (especially loyal clients)
- Fear that clients will book on their own or go with a different agency
- Don’t want the hassle of the logistics of charging travel agent service fees
- Not enough experience in the industry to justify charging service fees/ still a newer agency
- Trying to stay competitive with the internet
- Sensitivity to local clientele and local competition
- Accepting a fee is challenging in terms of logistics (can't accept credit card payments, billing complications etc.)
- Not enough information to feel confident in charging a fee
- State regulations restrict charging travel agent service fees
Some respondents who stated they don't charge service fees reported that they'll make an exception if they a plan a trip and the client ends up not booking with them. Others expressed that they're interested in exploring charging a fee, or stated they may consider charging a fee under special circumstances.
Things to Consider When/If Developing a Travel Agent Service Fee Structure:
- What tasks/bookings do you do in the day to day that are not compensated through other channels such as commissions? How time intensive are these tasks?
- Remember your value as an agent: Did you forget why travel agents are a godsend? If you don't want to take HAR's word for it, publications like Forbes and USA Today are happy to remind you as well. It's important to learn how to communicate your value to your clients. I recently had a travel agent book an important and costly flight even though I had ultimately researched the ticket myself. It was amazing to have someone else track flight details and changes, to find the best value for the flight/car package, and to put the tickets on hold for a day so I could iron out a few scheduling details without risk of losing the great fare. Did I mention I could pay in installments? I would do it again in a heartbeat. My only regret is that I decided to research and book lodging on my own. I can say goodbye to precious hours of my spare time getting vacuumed into the internet black hole.
- Are you confident in charging? How much is your time and experience worth to you? Seasoned travel agent Andrey Zakharenko mentioned in an audio interview with HAR agents must feel confident in charging their travel agent service fees. If you’re not confident it’s worth it, then it’s likely the client won’t feel confident in paying that fee. The lesson here? Be confident in the value you bring to the table!
The Grand Finale
What about you and your agency? When it comes to service fees do you love 'em, hate 'em, curious about them? Don't be shy! Let us know in the comments below!!!