A Travel Advisor Guide to Charging Service Fees

To fee or not to fee, that is the question — and it’s one on the mind of many a travel advisor. Perhaps the perennial conundrum for agents, whether to charge service fees is certainly a personal decision (unless mandated by a host agency). And there’s no consensus, though many advisors — and those who champion them — will shout a resounding “yes, know your worth!” when asked about the topic.

However, over the past few years, advisors have been shying away from charging service fees, according to Travel Weekly’s annual Travel Industry Surveys. (Note: Travel Weekly is owned by Northstar Travel Group, the same parent company as TravelAge West.) According to the survey data, in 2016, service fees accounted for 22% of total agency revenue; in 2018, the number fell to 18%.

The studies note that home-based agents are much less likely to charge service fees, but find that even the largest traditional agencies are moving away from these fees: In 2016, agencies with $10 million or more in sales noted that 40% percent of revenue came from service fees; in 2018, it dropped to 30%. In 2012, agencies with less than $1 million in sales reported that 27% of their revenue was from service fees, while it was just 17% in 2018.

The 2018 Fee Survey from Host Agency Reviews, an independent website connecting home-based agents and host agencies, mostly echoes Travel Weekly’s research. The data shows that 47% of hosted agents charge some type of fee — whether consultation, service or otherwise — while 71% of independent advisors charge fees. Both hosted and independent storefront agents are more likely than hosted or independent home-based advisors to charge service fees.

Host Agency Reviews’ research — which garnered data from more than 800 agents — also found that female hosted advisors are 8% less likely to charge a fee than their male counterparts, whereas female independent agents are 13% more likely to charge a fee than male independent advisors. Overall, advisors with a luxury niche are most likely to charge fees.

So, what kind of fees should you charge, and how much should you ask for — and should you even charge them at all? To glean some insight, we asked some industry experts to deliberate on the service fee debate. It’s our hope that their takes on the matter guide you toward whatever decision is the best for your business.

After all, as Polonius said in Hamlet: “This above all: To thine own self be true.”

The Slings and Arrows of Outrageous Fortune
Before diving into some pros and cons of charging fees, a quick primer: A service fee is a charge for making a transaction such as booking a hotel, a cruise, an airline ticket or a package; it allows an agent to compensate for bookings with low or no commission. A consultation fee, meanwhile, is a charge for an agent’s time and expertise in researching or planning a trip. But these days, the terms are often interchangeable, or morphed into something more far-reaching.

Nolan Burris, a talent development consultant to Signature Travel Network, prefers the term “professional fee,” as he believes it more fully conveys the purpose behind the charge.

“Service fees originated as a commission recovery strategy for airline tickets when the airlines cut, and then eliminated, most commission,” he said. “They mostly were about providing the ‘service’ of booking and issuing airline tickets. Professional fees, however, represent something much more comprehensive than simply making reservations.”

A strong proponent of charging fees, Burris argues that they’re necessary for advisors to remain competitive and relevant. Attempting to compete with online DIY options, OTAs and travel apps is a downward spiral into becoming a commodity, he says. Competing based on service, expertise, advice, connections and protection, however, elevates advisors into a totally different business.

“Not only do professional fees generate a more professional image, but they can actually attract a more service-oriented, loyal clientele not so easily swayed by the online ‘deal of the day,’” Burris said.

But consistency is key, he notes: In his many years of consulting and training on fees, Burris has seen a few key patterns emerge.

“Without a doubt, the biggest threat to fee success is inconsistency,” he said. “Only charging fees on some things, by some advisors and in some cases is a recipe for mistrust and client suspicion. That said, professional fees based on varying service levels — think ‘bronze, silver and gold’ — is a proven strategy.”

Daniela Harrison, a travel consultant and director of marketing for Avenues of the World Travel, says that, for more than 10 years, her agency has charged fees for any services rendered. The $50 per hour fee is a small enough amount that nobody has an issue with it, she says, but it’s still enough to discourage window shoppers. (Larger groups are charged custom fees based on their needs.)

“We explain to clients that fees are in place to cover our time and expertise, and to be able to give them unbiased recommendations tailored to their individual needs without having to worry about commission overrides,” Harrison said.

“We also explain that implementing fees allows us to include services for them that are noncommissionable to us to further enhance their experience.”

Harrison has always worked at an agency that charges fees, so she admits it feels natural to her, but she also notes that when she discusses the topic with advisors who don’t charge them, it feels like a confidence issue: They’re overly worried that they’ll lose clients by charging fees, rather than focusing on customers who have no qualms with fees and who value an advisor’s input.

“We work in this industry because we are passionate about what we do; we pour endless hours, sleepless nights and blood, sweat and tears into the vacations we plan for our clients,” she said. “We take it personally when a client doesn’t love 100% of their trip, even if it was something out of our control. Because we care. Clients who know you care this much also know that what you do for them is priceless — and they will happily pay a fee. Wouldn’t you?”

Take Arms Against a Sea of Troubles
Maybe the question of fees isn’t so much a matter of whether to charge them than it is of why. And the reason isn’t just monetary. In fact, your bottom line is almost beside the point; like Harrison, many argue that charging fees indicates that you value yourself — your time, your energy and your expertise.

“There’s only one situation where I feel travel advisors should not charge for their priceless service: when they do not believe they are worth it,” said Signature’s Burris. “I’ve seen fees work in every conceivable market, clientele, product line, geographic area, big city, small town, etc. The barriers to fee success are almost always internal. Success with fees of any amount relies almost entirely on the ability to articulate your own value.”

Kristen Lowrey Larson knows this struggle well. The independent contractor with Artistico Travel Consultants, an affiliate of Virtuoso agency Coastline Travel, says she was initially uncomfortable with charging fees.

“At first, the idea is mentally challenging because you feel like you’re putting a value on yourself, and it can be uncomfortable to talk about yourself and your value in a dollar amount,” she said.

Lowrey Larson credits the Virtuoso Certified Travel Advisor program with helping her get over that hump: It provided a setting where she and other advisors could discuss at length the value of charging fees and compare travel to other service-based industries, as well as role-play agent-client interactions.

“Once I understood why I was charging a fee and what I was selling — since a service fee isn’t an actual product — it made it easier to separate myself from the fee and make it more about the services I’m providing,” she said.

She communicates this to clients by clearly describing how she works: collaboratively and conversationally, and in whatever way a customer prefers, whether via email, phone or in person. She’ll also convey what specific bookings she can make, and the support she offers before, during and after a trip. Lowrey Larson then lets the client know the fee amount, which she asks for upfront to cover her time spent researching and planning the trip.

“We aren’t charging a fee to be greedy or to pressure a client into booking; on the contrary, we’re ensuring the client knows we have value in this process and that we are working together in good faith,” she said.

About nine years ago, when Jamie Jones joined her family-owned agency, WhirlAway Travel, a Signature member, fees were “all over the place,” she says, and they were never charged prior to work done. Jones changed the fee structure to collect at the time of initial consultation. And as the business has evolved to assist a more affluent clientele, its fees have changed to reflect the service, expertise and detailed planning the agency provides, she says.

“Our fees are now $100 per day of travel, plus any airline ticketing fees per the client’s need,” Jones said. “Fees allow us to do a few things: to take on fewer clients and provide a personalized and seamless travel experience, to provide fair compensation for our time and expertise, and to allow us to truly work for a client to provide the best price and value — even if it means we need to book a noncommissionable experience or work with a travel supplier or hotel that provides more value but less commission than a wholesale partner.”

Jenn Lee, vice president of sales and marketing for Travel Planners International, suggests that advisors who feel uncomfortable charging a fee come up with a template that works best for their personality and consulting style. For example, have clients looking for guidance on a complicated trip fill out a form, then spend 30 minutes on a call with them to discuss, for a flat fee of $150. Or, let clients know your fee ranges from $150 to $500 depending on the breadth of the ask.

But — just as Burris cautions against inconsistency — Lee says that no matter what you come up with, you must decide whether fees will be part of your business model, and ensure you value your expertise in some form.

“The reason most advisors feel uncomfortable is because they don’t believe that they should be charging fees,” she said. “If you want it to be part of your business, that tells me you know your time is worth more than what you are making. So, either charge a fee, or find other ways to build each sale to a higher dollar amount — such as through add-ons, insurance, transportation, etc.”

Perchance to Dream
One advisor who has decided to not charge fees is Jamie Root, a travel consultant with Beach Bum Getaways, an affiliate of Montecito Village Travel, a Virtuoso Agency. When she began in the industry about 12 years ago, she booked mostly budget travel, and she knew clients wouldn’t pay a fee. Now that she’s more established and has loyal clientele, she says, she doesn’t feel it would be right to change that on them.

"At first, the idea of charging fees is mentally challenging because you feel like you’re putting a value on yourself, and it can be uncomfortable to talk about yourself and your value in a dollar amount.”

However, there are some instances where she’ll charge a fee, including a “plan-to-go fee” for new clients.

“Sometimes this will be just $25,” she said. “It isn’t about the amount of the fee upfront; it’s to ensure I’m not wasting my time and spinning my wheels. I only want to work with clients who appreciate my time and effort — sometimes a $25 plan-to-go fee is all it takes.”

Root also says she’ll charge extra when planning an FIT and other complicated or time-intensive itineraries, where a fee on top of the commission is necessary for her to earn a living wage. And, while she might not ask her established clients for any kind of additional fee, Root does believe in the power of them.

“I think that charging reasonable fees can ensure that a travel professional is properly compensated for their time and effort,” she said.

Like Root, Denise Schaefer, a travel consultant with Plaza Travel, notes that when her agency began charging fees, longtime clients were grandfathered in and are mostly not charged additional fees. And she won’t charge fees in certain situations, such as with a repeat client who books a complicated land trip but then also requests a $25,000 cruise that takes Schaefer one phone call to book.

However, Plaza does charge other clients for things such as airline ticket fees, as well as trip design and consultation fees, and Schaefer says she wasn’t initially comfortable with it.

“But once I started charging, it became easier,” she said. “I became more confident and knew my worth. I knew that people who were walk-ins or called in and wanted to book trips, but didn’t want to pay the fee, weren’t the right clients for me.”

When clients who balk at fees drop off, “the bigger stuff starts falling in your lap — and that’s when you realize what your value is, when clients are willing to pay knowing they’re getting expertise and perks they can’t get on their own,” Schaefer adds.

Ultimately, there’s no right answer; whether you decide to charge professional fees is a personal choice. As Hamlet might say, “There is nothing either good or bad but thinking makes it so.” But, as the experts here note, what is of utmost importance is knowing the worth of your precious time, energy and resources, and communicating that value to clients in whatever way works for you.

“To succeed with fees, selling yourself with the same enthusiasm and excitement of the cruise or tour becomes essential,” Burris said. “You are not just a ‘reservation maker’ — you are a professional who works miracles for people every day. It’s time you get paid what you’re worth.”