Nichole Lawrence, CTIE
Introduction
In business, you are the leader and strategic planner for everything in your organization. As an entrepreneur, you decide what it takes to be a prosperous, thriving business. When it comes to commission, the commission rate and amount are decided by the supplier. Commissions are an excellent incentive to book travel with a particular supplier, but it’s insufficient to yield profitability. Certainly, you can consider the commission when deciding your fees, but your income cannot be solely based on a commission determined by a supplier. You are in the driver’s seat when it comes to decisions about your business. According to Investopedia, “An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards.” The entrepreneur is the innovator, source of new ideas, goods, services, and business/or procedures. You have to decide to create revenue for your services and all the processes and procedures to support them.
As an entrepreneur and business owner, your goal is likely to be profitable and have a thriving business. The travel advisor, business owner, spends an abundance of time researching, planning, and booking itineraries. And even though they receive commissions from suppliers, some travel elements have low or no commission, like museums and concert tickets. In the end, the value for time spent creating the itinerary is significantly greater than the supplier paid commissions.
Mindset
Many travel advisors feel fear when thinking about charging a service fee. Before you can establish and implement a service fee, you have to address your fears and feelings about the matter. The most common fears of implementing fees include losing business, not having enough experience, embarrassment or judgment, and unworthiness.
Whether you are brand new or an established travel advisor, the fear of losing existing or prospective clients is real. You may think if I tell prospective people about my fee, they will not want to pay the fee nor conduct business with me. Brand new advisors may think they don’t have enough experience to charge a fee. However, the client is not paying for your experience; they are paying for your expertise, hard work planning their travels, and your knowledge which can be acquired through supplier relationships. Some advisors think that the prospective travelers will judge the advisor as ridiculous or wrong because they charge a fee. Other advisors may not believe they are worthy of receiving a fee for services. They feel like they are begging for money. No matter which fears you may relate to, fears are just thoughts and feelings, and you have control over thoughts and, therefore, feelings.
The best way to address your fear is to identify them, confront them by speaking the truth about the matter, have a pre-written and memorized script for talking about service fees, and practicing the script until you feel confident; some call this fake it until you make it.
Why a Service Fee?
Why are you charging a fee? Because you are providing a service, you invest time, energy, expertise, and partner relationships into creating the prospective client’s desired travel itinerary. Your services are of great value, and others want that value. You are not an extension of your preferred suppliers marketing or sales department. You are a separate business entity providing services to prospective travelers for a profit.
According to Sandra Mclemore, with Travel Marketing and Media, you need to charge a fee or increase your fee if any of the following apply:
- You are easily frustrated or tired when your clients make changes or have a lot of requests.
- You lost all your revenue during 9/11, a destination disaster, or pandemic
- You have price shoppers and DIY (do-it-yourself) clients
You spend lots of time and energy researching travel and planning itineraries, and you should be paid for your time. There are travel elements that pay low or no commissions, and you should be compensated appropriately for booking these elements. By implementing a service fee, you are working smart and exercising a degree of control over your income, rather than being hostage to the supplier dictated commissions. Also, your business should have multiple streams of income. For example, you can receive commissions and services fees, ancillary services, and possibility sub-agents. It would be best if you want to protect your business during mass cancellations. Last but not least, you need to show your commitment to your client. The fee commits the advisor to work for the client from start to finish.
Service Fee Structures
Generally speaking, there are four service fee structure types. These include a flat fee, ala carte fee, hourly rate, and vacation total percentage.
A flat fee is a predetermined fee amount per person, per household, or per itinerary. For example, $100 per person traveling. Or $200 per household traveling. Or $400 per itinerary created for a group of people. The flat fee can also have stages or levels. For example, $200 for up to 5 travel days, $300 for 6-9 travel days, and $500 for 10+ travel days.
An ala carte fee is a fee charged for every element of travel. For example, a fee for hotel only, a fee for hotel/flight package, a fee for domestic and international air, a fee for rail, a fee for car rental, and a fee for activities and tours. The total fee for the client would be the sum total of fees for each element booked.
An hourly rate is another fee structure available to you. In this case, you could bill a minimum number of hours upfront, track all time spent working on the client’s behalf, and before travel, finalize the invoice to bill for any excess time spent on the client’s travel planning.
Last but not least, you can use the percentage of vacation structure. After researching and planning the travel itinerary, you would calculate the service based on a rate, like 10% or 20% of the vacation package total.
Once you have decided to charge a fee, how do you determine what service fee structure to implement? It depends on where you are in your business and how comfortable you feel with each fee structure type. If you have just started your business and you’re learning every aspect of the travel industry and business, you may want to select the simplest forms of travel planning service fees. The most straightforward service fee structures are a flat fee and ala carte fee. If you’re more advanced in business, have more travel planning experience, and have systems in place, an hourly rate or percentage fee may be more appropriate.
Naming the Service Fee
Why does it matter what you call your service fee? Well, it’s all about perception. Many times when you purchase products or services, there is a line item on the receipt called service fees or admin fees. What is this fee? It seems like it is nothing more than an opportunity to collect more money. As a consumer, it does not feel good to see service fees in your total, especially when they have not been explained and you don’t know what they are for. It leaves a negative impression. On the other hand, if your fee’s name is more thoughtful, it can provide guidance as to its purpose and leave a more favorable impression. Examples of service fee names are Travel Research & Planning Fee, Travel Management Fee, or Professional Travel Planning Fee. In addition, you will still want to explain your fee during your travel consultation.
Implementing Your Service Fee
Implementation of your service fee starts with naming the fee. The next steps are identifying everything included with the fee, writing a script for presenting the fee, adding the services and fees content to your website, and creating a service agreement.
What should be included as services for your service fee? Everything. You will want to list everything you do for your clients; I mean everything. A listing of items you may want to include are:
- Research and Present you with a selection of accommodation and flight options.
- Research and validate online reviews
- Layout your itinerary so you have the perfect balance of activities and relaxation that you need
- Coordinate and organize all your daytime and evening activities, including restaurants, theater, entertainment, museums, galleries, and tours.
- Plan and coordinate special occasion celebrations
- Arrange special needs accommodations and provide detailed instructions for the travel
- Create a plan of how to maximize your time in a destination, so you know which areas to go to and when so you can avoid the crowds
- Read and analyze small print (rules and conditions) for each element of your travel
- Ensure you have all the tickets you need before you leave so you don’t have to wait in line
- Make sure all the feelings and all the experiences you want to capture are bundled up and included
- Make sure you have the right travel insurance policy to cover your itinerary, so everything important is included
- Triple-check all of your documents to make sure everything is great and one last final check at the end.
- Prepare all of your documentation in digital format, and if you prefer paper format
- Provide insider travel tips specific to your destination and travel style
- Invite you a pre-departure call to review your documents and prepare you for travel
- Leading up to departure, you’ll have a lot of questions, and we’ll be here to answer them
- Assist with unforeseen changes or cancellations
- While you’re away, we are also here for you… 24/7 in-destination support, we’re only an email, text, or phone call away
- Also, while you’re away, if you have an emergency, you won’t have to wait on hold; of course, we hope nothing happens.
- Once you arrive back home, we are still here for you.
You will only want to include items that you actually do for your clients.
Website Content
After you have developed a good listing of items you perform for your clients, add the information along with your fee amount or fee structure to your website under a Services or How We Work page. This way, your website visitors will know more about how you work, what you do, and how much you charge. Additionally, while conducting your travel consultation, you can refer to your website for the listing of services.
Script
You will use the same content from your listing of services to create your script. Your script should include details of working with you. More specifically, you will explain exactly how you work with clients, what they can expect, your commitment and service fee, and a closing question to ask for the sale.
Sandra Mclemore recommends that you write the script for the inexperienced, clueless, or people new to working with a travel advisor. The flow of the conversation should be as follows:
- Allow the client to share their travel dreams
- Ask if you can share how you work together
- Tell them everything you do and how your process works
- End with the fee for the fully inclusive travel planning service
- Ask if you can send them everything to get started
Meredith HiIl, with Global Institute for Travel Entrepreneurs, developed the A, B, C, D model (Ask, Build, Commit, Deal)
A. “Ask Open-Ended Questions
B. Build Up Your Value
C. Commit to Them and Get a Commitment Back (your fee)
D. Deal With The Price-Shopping (Confront It)”
No matter which method you use to develop your script, you will want to memorize the script to the point of communicating the information with excitement and confidence.
Service Fee Agreement
The last element of implementing your service is to create a service fee agreement. You have identified your service fee pricing, developed & memorized your script, and added the I am not an attorney, and I cannot advise on legal matters. However, your service fee agreement will likely include your payment structure, the scope of services, termination, and other provisions that your attorney will recommend.
Conclusion
Deciding to establish and implement services fees in your business is an important strategic decision to make. Once you’ve decided to charge service fees, you will want to address any feelings or fears you have about implementing the service fee. Keep in mind that fears are just thoughts and feelings that can be overcome by confrontation and preparation. You will create a script for presenting your service fees and rehearse the script until you are excited and confident about your fees. You spend lots of time and energy researching and planning travel itineraries, and you deserve to be paid for it. Not only that, but it is also essential to have multiple streams of income to be a thriving, prosperous business.
Your service fee structure will be either a flat fee, ala carte, hourly rate, or vacation total percentage. Implementing the fee begins with giving the fee a name that describes or defines what it is. Then make a list of everything you do for your clients, create your script and add the content to your website. Last but not least, consult an attorney to create your service fee agreement.
References
Hayes, Adam. “What You Should Know About Entrepreneurs.” Investopedia, Investopedia, 26 Feb. 2021, www.investopedia.com/terms/e/entrepreneur.asp.
Hill, Meredith. “A Travel Agent’s Script for Introducing a Service Fee (and Building Your Value).” Global Institute for Travel Entrepreneurs, 19 May 2020, www.travelbusinessu.com/a-travel-agents-script-for-introducing-a-service-fee/.
Mclemore, Sandra. “Not Sure How to Explain Your New Travel Planning Fee to Your Audience?” TRAVEL MARKETING & MEDIA, 17 Feb. 2021, travelmarketingandmedia.com/2021/01/06/not-sure-how-to-explain-your-new-travelplanning-fee-to-your-audience/.
