The formerly unusual practice of charging customers for advice is rapidly becoming commonplace, with Tui Travel and The Co-operative Travel recently introducing agent consultation fees in their shops.
Independent agents as well as the multiples are waking up to the need to protect their margins and focus on worthwhile business.
In the business travel sector, service fees are now the norm despite initial scepticism when first levied about eight years ago.
While many leisure retailers in the UK remain unconvinced by the charges, one agent in New York has already made an art of it, charging each client a one-off $100,000 introductory fee and an annual retainer of $25,000.
Although Bill Fischer, chief executive of Fischer Travel in New York, is not suggesting UK agents should introduce such astronomical fees, he believes they must make some charges to demonstrate the value of their services.
Paying brings appreciation
“When customers pay for something, they appreciate it. When you give something for free, they couldn’t care less,” he said.
Fischer, pictured with daughter and company president Stacy Fischer-Rosenthal, launched the introductory charge in the 1980s when he decided to work only with the top 20% of his customer base. He had already shifted the business’s focus to luxury travel in the late 1970s.
However, to justify the price, he had to ensure the agency’s service was the best.
“We started to offer customers what they wanted – and that was the availability of sold-out hotels, restaurants, theatre tickets and sporting events,” he said. “When you are dealing with people at this level you can’t say no; you’ve got to say yes and worry how you’re going to do it later.”
Bill has:
- Arranged for a hidden frogman to hook fish on a client’s line to ensure a catch.
- Organised for camels to be shampooed for a posh party.
- Procured four trained dolphins for a client to swim with at just a day’s notice.
Service fees in the UK trade
Co-operative Travel
Trevor Davis, The Co-operative Travel’s retail distribution director, said the agency chain introduced a £15 handling fee last month for any bookings made to price-match online deals.
The decision was made after 77% of branch managers backed the proposal. Davis said: “Travel agents are under pressure when it comes to margins and so we’re looking at how to make our experience and quality of service pay.”
He believes now some of the larger agencies have introduced charges more will follow, adding: “I urge them to follow suit as we’ve got to make a stand against margins coming under pressure.”
Tui Travel
Nick Longman, Tui Travel’s distribution director, is also running a pilot scheme with agents charging between £5 and £10 for producing price-match quotes for product from their own websites.
He said: “I don’t think we should be shy about asking customers for a small fee for good service.”
Somewhere2travel2
Devon-based agency Somewhere2travel2 introduced a £50 charge for advice nearly two years ago, a sum that is then credited against a holiday booking.
Director Diane Denney said average spend had risen from £750 to £3,000 and average commission rate had gone up from 9.8% to 12.6%. She also said she had overcome the temptation to discount, giving away just £980 on £500,000 of turnover since March.
Denney said: “We’ve got rid of the 30% of our customers who were time-wasters.”