Taking the Plunge: A Travel Agent’s Guide to Charging Fees
Travel agents charging fees is slowly becoming the norm. Preliminary data from HAR's 2021 Travel Agent Survey indicates that 68% of travel agents did not charge fees in 2020. As we take stock COVID's industry impact, the value of a travel advisor's service is more apparent than ever.
While a travel advisor's commissions make up the lion's share of travel agent income for 99.9% of advisors, this revenue stream does not compensate advisors for the extra supports they offer travelers in the planning, booking, and traveling process—the time you invest in researching and qualifying suppliers to put them on the right cruise, the hours you spend on the phone securing letters of credit and making cancellations, and the extra support you offer clients when issues crop up during their trip. (This is just the tip of the iceberg.)
And it’s not just the travel industry that’s noticing the increased need for travel advisors. The Boston Globe, Consumer Reports, Wall Street Journal, and Barron's all recently published pieces about the importance of travel advisors.
Hence, we think that charging a fee should be an industry norm. This article is here to support you, dear agent, to at least consider charging a fee. My dream fantasy for the industry? To see the majority of advisors reporting they charge fees in our next annual survey.
This article includes what one might call a treasure trove of info on charging fees:
⭐️ HAR Article Highlights: ⭐️
- Video of our webinar, The Evolving Landscape of Fee Trends during COVID
- Advice from over 150 travel professionals on charging fees
- A pep talk on service fees, and when you should definitely charge them.
- Still not sold? This may encourage you to warm up to service fees.
- An overview of different service fee types (and which structures might be best for new agents)
- Recommendations for Fee Processing Systems
The Evolving Landscape of Fee Trends
Where did all that great data on the video above come from? Over 150 agents weighed in, offering advice on verbiage they use with clients when they address fees, a confidence booster for those who are hesitant to charge, and how they transitioned into charging fees (if they didn't charge from the get-go). It's (almost a literal) ton of info! Here it is, uncut:
Phew! That's a lot to consider! Here's the rest of HAR's pep talk (and practical advice), below!
The Pep Talk
When you seek medical care, you don’t go to a doctor and tell them that you’re just going to pay for the labs and prescriptions. No. You pay your doctor oodles of money because they’re trusted professionals who went to school for a long time to gain the skills to (hopefully) successfully diagnose your symptoms and steer you toward recovery.
Learn from Molly Williams, CEO of The Optimists Travel. Through the pandemic, she realized the value of her time and the importance of charging fees. Listen to her recent podcast here!
Here's another great story of an advisor who used his previous experience in pricing at WestJet to start his own agency where he charges—and no, this is not a typo— CAD 60-$500 per ticket. Listen to the podcast to get yourself revved up!
Travel agents are professionals too . . . professionals who deserve to get paid for the time, knowledge, expertise, and research that goes into booking a great trip for a client. After all, you’ve invested in your professional development with conferences, FAM trips, training, and more.
Because of this, travel agents save their clients hours upon hours of their own researching, planning, and booking (seriously, it’s borderline obscene how much time people spend planning vacations). And you don’t do it with the wave of your magic wand or the click of a single button. You’re able to do this because you’ve worked really, really hard at it.
It can be difficult to earn a sustainable income on commissions alone.
While commissions are fine and dandy (and likely the bread and butter of a travel agent’s income), it can be difficult to earn a sustainable income on commissions alone. It’s the nature of the beast.
Unfortunately, the travel industry doesn’t default to compensating travel agents for the added value they provide beyond the logistics of booking (except for maybe corporate travel, where charging a service fee is par for the course). Charging a service fee, among travel agents we surveyed, was the exception—not the norm.
But my whole goal with this article is to encourage travel agents to normalize charging a service fee or consultation fee, and at the end of the day, it’s the travel agents’ responsibility to advocate for the value of their time, research, and expertise to normalize service fees in the eyes of travelers.
I’ll be honest: I’m not a motivational speaker. Far from it. But I do understand how difficult it can be to ask for money. It’s not my M.O. Maybe it’s not yours, either. But do you remember Ron Tidwell from Jerry Macguire? He took no issue asking for money, and I just want to take a moment for you to gain some motivation from him:
Should I Charge a Fee?
Some agents choose not to charge fees, and of course, this is okay. For some agents, charging no fees is a part of their marketing platform––a way to sell themselves to clients. Others just don’t feel like it or don’t feel comfortable charging fees. For others, they express that the commissions they receive provide ample enough income and just don’t need to charge them.
But here’s four instances where I tend to feel really strongly about charging a fee:
- When booking air-only travel: Leisure agents can take cues from their corporate agent counterparts and go ahead and charge a fee for air-ticketing. Booking air-only isn't often a huge moneymaker for leisure agents. But it takes time (and sometimes causes headaches.) If a client isn’t willing to pay a ticketing fee for an air-only booking, then maybe they’re not the client for you.
- Non or Low-Commissionable Bookings: If you’re booking leisure air travel, independent hotels, or smaller vendors that don’t provide a commission, this is another instance where it’s a really good idea to charge a fee.
- Booking Non-Commissionable Ancillaries or Add-Ons: Travel agent Ria Maratheftis from The Travel Nook said this better than I ever could, “If we provide personalized ‘concierge’ services such as in-depth itinerary planning with non-commissionable components, i.e. (sporting events, concerts, theatre tickets, Disney dining reservations, ride Fastpasses, wedding planning, etc.) then we will typically charge a $100 per person blanket fee to expedite the research, ticketing, shipping & ongoing maintenance.” (Want a trick to book your Disney extras? Check out our Disney Early Reservation Date Calculator!)
- Booking FITs (or anything customized): Booking FITs are time-intensive and customized for your client. By nature, it takes more time to create and book FIT itineraries, and you should be compensated for that time.
This just scrapes the surface, and of course, we’ll get into other reasons to charge fees. But if you're making any kind of non or low-commissionable bookings (or components), I highly suggest charging a fee.
Travel Agent Fee Myths Demystified
Advisors who are hesitant to charge fees are typically concerned about attracting or retaining clients or feel they don't have enough knowledge to charge fees. So let me play the role of Jerry McGuire’s Ron Tidwell in why you might still want to charge fees, despite these reservations!
1. Worried About Attracting New Clients:
I understand this. Some respondents to our survey mentioned they live in a small town with other travel agents and that charging a fee would essentially be a death sentence.
But charging a fee—especially for trips that take research, support, and planning or are low or non-commissionable will not only scare away tire-kickers but also support you in creating a loyal customer base that values the added value you bring to their trip. What you don’t want to attract is this kind of client:
2. I Don’t Have Enough Experience to Charge Fees:
Just because you don’t have much experience, doesn’t mean you don’t put a ton of legwork into creating and planning a trip. A new travel agent might spend hours planning a trip, but still, make it look effortless. Their process might be a closer mirror to the consumer process, with more extensive research and time taken to make sure everything is done well. But just because you don’t have much experience, doesn’t mean your time still isn’t valuable. If you fall into this category, here are a few things to consider:
- Do not charge an hourly fee: If you’re a brand-newbie, charging an hourly fee won’t make sense. Instead, consider a (combination of) per-person fee, flat fee, and/or service fees for booking air-only and low or non-commissionable bookings.
- Apply the fee to their booking: If you are lacking confidence, tell your client that you’ll apply the fee to their vacation package/ trip once it’s booked and confirmed that they will book through you. You could do this just for the client’s first trip, or for all trips if you’re still worried about charging a fee.
3. Afraid I Might Lose Clients:
A happy and loyal client will recognize the added value you provide for them. And while attrition might be a part of implementing a fee for the first time, it’s likely that you keep and attract clients who will recognize the value of your services.
4. I just don’t know enough about fees to charge them:
Rest assured, once you get to the end of this article, this will not apply to you any longer. If you're not sure how much to charge, take some advice from Steph Lee who chats through a few steps to take to determine how much to charge. Take a look!
5. My Seller of Travel State Regulations Does Not Allow It:
In most states with Seller of Travel regulations (in fact, many agents from FL or CA reported charging fees in our survey), you need an SOT license. According to travel lawyer Mark Pestonk, the "issue is whether an IC, who otherwise qualifies for an exemption under a seller of travel law, will lose his or her exempt status merely by charging a fee to clients."
It’s worth noting that hosted agents can still charge fees so long as they are processing those fees through their host agency (that has SOT). You can read more on Seller of Travel Laws here. Check with your host agency specifically about how this can work. Plus, we'll dig into more of Mark's insights on charging fees in a Seller of Travel state soon!
6. My Host Agency Doesn’t Allow Service Fees:
As an independently contracted agent, you have the choice of whether or not to charge fees. Even if a host agency doesn’t have the capacity to process service fees, there are still ways to charge them. If charging a fee is important to you, this might play a big factor for you in choosing (or even switching) host agencies.
Different Types of Fees (Which One Is Right for You?)
We break down fees into two categories:
1. Service Fees:
Service fee charges are pre-booking charges for air-ticketing or a segment of a trip (car, rail, hotel, etc.). The service fees don’t include a charge for research or planning a trip, it’s a charge for the logistics of booking. Different service fee charges can include:
- Air ticketing, domestic
- Air ticketing, international
- Tour package
- Air-inclusive package
- Accommodation Only
- Frequent Flyer
- Car Only
- Ancillary Services
- FIT Segments
- Shore Excursions
- Special Coupons
Service fees are pretty much a given among corporate agents, but much less common among leisure agents.
2. Consultation Fees
Unlike service fees which is a flat transaction charge for booking a trip segment, consultation fees are a charge for your time spent researching, planning, booking a trip for a client as well as your time spent supporting a client during their travel. Consultation fees are becoming more popular among leisure agents and for good reason—it takes a lot of time to plan and book a trip!
Consultation fees are a good idea if you’re doing any kind of customized or non-commissionable booking, and creating a fee structure for consultation fees is more of an art than a science. Different consultation fee structures include:
- Flat Fee: A flat fee is the most popular consultation fee charge by a large margin. It’s one standard/blanket fee upfront that covers the research and planning of the entire trip, regardless of how many people or days the trip is. A flat fee may function as an “initiation” for a client to render your services in planning a vacation.
- Hourly Fee: A charge per hour spent researching, planning, and/or booking a trip. This is probably not a great model if you’re a newbie since trip planning may take you a lot longer.
- Per Transaction Fee: This is where I contradict myself in saying that consultation fees aren’t necessarily a transaction fee. But these fees are popular among booking FITs and will be a consultation charge that’s broken down by segment (for example, a $50 per air ticket or a $25 for rail, etc.). This helps agents get “reimbursed” according to the complexity of a trip (rather than an overall flat fee).
- Per Person: This is also self-explanatory, and is a great tool if you’re booking groups. Some agents will also charge a per person per day of travel fee.
Still Not Sold? These Two Fee Structures May Help You Warm-Up to the Idea
Look, I'm shameless. If you're still not sold on charging fees, then please allow me one last opportunity to try and tip the scale toward charging.
Here are two fee structures that are particularly good for the faint of heart.
- Plan-to-go Fee: A plan-to-go fee is essentially where you charge an initial consultation fee for someone to render your services, but then apply it to their booking if they end up booking the trip through you. This gives you peace of mind that even if someone is just coming by to kick the tires on a trip, that you'll be compensated. A plan-to-go fee can be designed like any of the consultation fee structures above (flat fee, per person, etc.). In this case,
- This is a new one to me, brought to you by travel advisor extraordinaire DeJuan Shorter. He charges a consultation fee to his clients, but only for the first trip, they book with his agency. He chats on it in the video below:
So stinking smart.
Resources for Processing Service Fees
1. ARC Pay
ARC provides a service fee processing system for travel agents. They charge a 3.5% processing fee for charges of $20 or more or $.70 for transactions less than $20. Their subscription costs $25.99 quarterly but is only charged when the account is active.
If you're charging for FIT travel (not just service fees or consultation fees) ARC's program will likely be the best bet for you, since non-travel specific processing systems like Pay Pal, Square, and Quickbooks (listed below) may not process transactions when travel is being sold (in the CC processing world, travel is a high-risk product).
2. Through Your Host Agency
If you don’t have GDS access (what the heck is the GDS?), your host can run service fees through their system. Each host agency will have a different process for this, so you’ll want to check with them. Typically, your current commission split with your host will also apply to service fees.
If your host does not have GDS, they may not be willing to process your fees, and you’ll need to find your own process system. Which bring me to . . . .
3. PayPal, Square, and QuickBooks, etc.
Here's a rundown of some of the costs:
- Quickbooks: 2.9% for swiped transactions or 3.4% for manually entered transactions plus a $.25 per transaction fee. If you're rolling in $7,500+ per month in service fees, you'll need to dish out a monthly fee.
- PayPal: 2.9% plus $.30 per transaction.
- Square: 2.75% for swiped transaction or 3.5% + $.15 for manually entered transactions.
The tricky thing with conventional processing systems like PayPal, Square, and QuickBooks is that sometimes travel industry professionals can be considered high risk, and certain processing systems won’t take the risk of covering you. (*Cough* — HAR may or may not have some personal experience with that!). However, so long as you’re not using the same processing system to sell travel, you should be able to frame your fees as “consultation fees.”
This process may not work if you operate in or are selling to a client that resides in a state with Seller of Travel requirements AND if you’re using your host’s SOT number. If this is the case, then you want to ask your host about processing your fees (more on this subject to come very soon!!!).
More Fee Info! ('Cause You Can't, You Won't, and You Don't Stop)
Because I simply cannot stop myself, here some more info on service fees we have on the site:
- Three Travel Agents Get Creative with Fee Structures: There are a ton of creative ideas in this article, but these three travel agents have particularly unconventional fee structures. They're too clever not to check out.
- How Seller of Travel Laws Impact Service Fees: This is is amazing because a.) it has some expert info from Mark Pestronk on charging service fees in states with Seller of Travel Laws and b.)Jamie Jones, COO of WhirlAway Travel (from above) shared insights with HAR to create a customizable template for agents to make their own service agreement to share with their clients.
- HAR's Fee Report Archive: If travel agency fee data could take steroids, this is what it would like . . . an entire archive of reports dedicated to illuminating travel agent fees. It's great to take a peek if you'd like to do a little competitive intelligence on charging fees.
How about you? Do you have recommendations for service processing systems? Will you share insights on how you developed your own service fee structure? Let us know in the comment section below!
[Editor's note: This article was originally published in Jan. 2018 and was updated on the date listed.]