Travel Advisors Are Changing the Way They Do Business

July 30, 2020
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Travel advisors are instituting new business and financial practices in order to cope with the coronavirus pandemic.

Some advisors have started annual subscriptions or have instituted cancelation fees to protect their income in the future.

Travel Experts recently held a Business Panel to help members refocus on how to protect their time and income from the losses inflicted by the Covid-19 crisis.

One of the top topics discussed was cancellation fees.

“I always charge a 15 percent cancellation fee,” said Ralph Iantosca, Iantosca Travel, Irving, Texas. “This way the suppliers will not control my destiny with their commissions.”

Becky Lukovic of Bella Travel Planning in Alpharetta, Georgia, also charges for cancellations and now will also charge for changes.

“We charge a cancellation fee of $300 per person to cover all costs as well as our time spent on planning and booking travel for our clients,” said Lukovic. “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, of Travel Smith in Bluffton, South Carolina, has made temporary fee changes.

“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,” Smith said.

Laura Madrid of Resort to Laura Madrid in Atlanta, Georgia, pointed out the importance of a cancellation fee.

“Ninety-five percent of our work is done on the front end 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,” Madrid noted.

Travel advisors came to the conclusion that cancellation fees would be necessary going forward to protect their incomes.

At the same time, many advisors are working at creating an entirely new business model.

“There is probably not going to be another opportunity to build a new model going forward,” said Iantosca. “This new business model will not be based on commissions, but rather on our value as travel advisors.”

The new model calls for annual retainers, subscription fees or initiation fees for potential customers to become clients of travel advisors.

Iantosca has chosen to go with a subscription model.

“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 said. “I work with people I genuinely like and charge them an annual subscription to be one of my clients. In addition, I get a signed agreement upfront and charge them for my time to make all their travel arrangements.”

Michelle McDonald, The Core Traveler, Rogers, Arkansas, uses an initiation fee.

“We are redefining our billing process,” McDonald said. “For custom itineraries, we charge an 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.

Lukovic offers a choice.

“Clients can either pay a planning fee per trip, or they can pay the annual $1,000 retainer,” she said. “My planning fees are dependent on the type of trip we are planning and begin at $100 per person for a basic cruise or tour and move up to the $300-$500 range for custom-designed trips.”

Williams noted that “there is value for us as travel advisors and we need to get paid for our service.”

Perceived value is key.

“Remind your clients about your value,” said Iantosca. “Our clients need us more than ever to be there for them when they land.”



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