Steve Jones’ Say Feb 2017

THE cost of service

One of the industry debates that crops up from time to time is whether travel agents should charge fees for their services.

It’s been a talking point ever since commission cuts began chipping away at travel agents’ income, so it’s hardly a new conversation. But it remains relevant, and was recently raised again in the digital pages of the trade press.

Some agents, particularly those operating at the luxury or bespoke end of town, have been charging fees for a while now.

Indeed, Virtuoso trains members to introduce and explain the concept of service fees to clients, having been astute enough to realise the service levels and expertise their agents provide are eminently sellable.

But could agents across the board realistically charge fees? I don’t think so, not in a transparent way anyway. Anyone can hide fees in a final cost of course – and maybe that’s what some agents do – but it’s hardly ethical.

Charging a transparent fee can only work if a travel agent adds something truly tangible to the transaction, which means more than processing an order. It means detailed, professional planning, knowing your customer, knowing your product and destinations on more than a superficial level, and demonstrating the ability to create the X factor.

Simply recommending a hotel in Bali based on a famil you went on doesn’t cut it as one-to-one service deserving of a fee, not in my book.

One school of thought reasons that travel agents are no different from lawyers in that both supply professional services. The argument, therefore, is that both should command a fee for services rendered.

The comparison is wishful thinking. That’s not meant to belittle the role of agents. Some, clearly, are worth their weight in gold.

But the public simply do not view lawyers and travel agents in the same light, and to argue differently is frankly absurd. The overwhelming majority of us would have no hope of navigating our way through the legal system and its unfathomable and intimidating layers of complexity. We don’t even try and expect to pay experts to help us.

We approach travel with a completely different mindset. We can and do book travel ourselves, and, in the main, enjoy researching online. Paying for a lawyer is unavoidable, paying for a travel agent is not. That is the thought process of many people.

Linked to this is the fact that talking to a travel agent has traditionally cost us nothing. I attended a conference recently where the CEO of a behavioural advertising agency — which uses science economics to change consumer behaviour — explained that the “perceived difference” between free and five cents is far greater than the difference between five cents and 50 cents. In other words, asking people to pay for something they have always had for free is far harder than increasing an existing price.

Of course service fees are partly designed to protect against consumers who adopt the unpalatable tactic of picking the brains of a consultant with the intention of using that knowledge to book online. Asking for an upfront fee may deter such tyre-kickers.

There is merit in that, yet the risk is obvious. A customer with a genuine interest in booking a trip may be deterred from forking out $250 for advice they may or may not take, even if it’s in the form of a deposit. The result? The loss of a potential booking.

And agents are far from the only ones to be faced with this problem. Virtually every retail sector or service which offers advice is susceptible.

I spent 40 minutes talking to an expert on fridges last week. I am genuinely in the market for a fridge — ours is far too small — but would I have paid $50 for his advice? Very doubtful. I would have jumped online and done my own research.