Travel advisors have learned a lot from the experiences surrounding the COVID-19 crisis and the impact on their business and, in many cases, have now instituted new business and financial protocols including annual subscriptions and cancellation fees to ensure and protect their income in the future.
Travel Experts, one of the leading Host Agencies with nearly 500 affiliated independent contractors, recently hosted a business panel to help its members refocus on how to protect their time and income from the losses inflicted by the COVID-19 crisis.
The top subject discussed by many of the participants was the need to institute cancellation fees on all planned travel. “I always charge a 15 percent cancellation fee,” said Ralph Iantosca, Iantosca Travel, Irving, TX. “This way the suppliers will not control my destiny with their commissions,” he added.
Becky Lukovic, Bella Travel Planning, Alpharetta, GA, says, “We charge a cancellation fee of $300 pp to cover all costs as well as our time spent on planning and booking travel for our clients.” She also noted that “we are going to implement a change fee as well because when a client changes anything we have to start the booking process all over again and our time is valuable.”
Maureen “Mo” Smith, Travel Smith, Bluffton, SC, has a unique take on COVID-19 related cancellation fees. “I call it ‘Loss of Anticipated Revenue’ and I make sure my clients know that this is a voluntary and temporary fee structure, which will be replaced in the near future by Revised Terms & Conditions going forward.”
Laura Madrid, Resort to Laura Madrid, Atlanta, GA, has recently introduced a cancellation fee noting that “95 percent of our work is done on the front end of a trip, so a cancelled trip, where we do not earn our expected commission, can actually cost us money without a solid cancellation fee in place.”
Barb Holmes, Soba Travel Group, Fairhope, AL, said, “We have a 10 percent charge for cancellations or any changes after a booking is finalized.”
The consensus was that cancellation fees should be a permanent part of all travel advisors’ business structure going forward to protect advisors from a mass cancellation crisis such as we all experienced with the COVID-19 global pandemic.
At the same time, many of the travel advisors were creating new business platforms that based their fee structure on their value as travel experts and took into account the time and expertise that they provide to their clients.
“There is probably not going to be another opportunity to build a new model going forward,” noted Ralph Iantosca, adding, “This new business model will not be based on commissions, but rather on our value as travel advisors.”
At the forefront of this new business model is an annual retainer, subscription fee or initiation fee for the potential customer to become a client of that travel advisor.
Iantosca is a strong proponent of this new business model and charges his clients an annual subscription fee. “I have an annual travel subscription model with a certain number of hours per year included based on $250 per hour with a minimum subscription of 20 hours annually or $5,000,” he explained. “I work with people I genuinely like and charge them an annual subscription to be one of my clients,” he said. In addition “I get a signed agreement up front and charge them for my time to make all their travel arrangements.”
Michelle McDonald, The Core Traveler, Rogers, AR, said, “We are redefining our billing process. For custom itineraries we charge in initiation engagement fee of $250 to start planning a trip and then add $250 hourly rates as we move forward.” On top of those fees McDonald looks at the budget and charges a percentage of the overall cost of the trip which could be as much as 15 percent of the trip.
Becky Lukovic has a variable fee program. “Clients can either pay a planning fee per trip, or they can pay the annual $1,000 retainer. My planning fees are dependent on the type of trip we are planning and begin at $100 pp for a basic cruise or tour and move up to the $300-$500 range for custom-designed trips.”
Laura Madrid, charges an annual retainer fee of $1,500 and also charges separate flight fees. Barb Holmes says, “We have an upcharge on all tour operator packages and a $150 booking fee plus $500 fee for arrangement for each destination package.”
However, not everyone fully agrees. Margaret Williams, Williams Luxury Travel, Montrose, AL, does charge fees, but believes that “a varied fee structure based on the needs of the clients is more appropriate. We are not a one size fits all agency. In addition, we may charge cancellation fees depending on the time spent.”
Maureen “Mo” Smith noted that her business model has allowed for “fewer clients, but better revenues. I can devote more time to clients that generate better revenues. I care about my clients and my clients care about me and my business.” It showed during the early days of the COVID-19 crisis as clients willingly paid cancellation fees that they were not originally prepared to pay. “My clients showed they valued our relationship and most of them voluntarily paid these fees,” Smith added.
Margaret Williams added that “There is value for us as travel advisors and we need to get paid for our service.”
Ralph Iantosca summed it up by saying, “Remind your clients about your value. Our clients need us more than ever to be there for them when they land.”