The world-changer

The world-changer

By Arnie Weissmann

Travel Weekly Editor in Chief Arnie Weissmann recently joined a jungle cruise offered by G Adventures on the Peruvian Amazon aboard the Queen Violetta, a riverboat leased by the operator earlier this year. View the slideshow by clicking here or on any of the photos.

There are a handful of companies in the world that are recognized for extraordinary levels of customer engagement: Apple, Amazon, Starbucks and Zappos define the set and are much admired (and dissected) as models of New Marketing.

It’s hard to find a parallel in the travel space. The large online travel agencies (OTAs) such as Expedia, Priceline and Orbitz have certainly changed the travel-buying habits of millions of Americans, but as their leadership knows quite well, there’s very little loyalty to individual OTAs. They built their brands on the promise of low price and were all too successful in training consumers to believe that smart travelers not only shop online but shop around.

BRUCE POON TIP, world changerWhile there are many travel suppliers that can point to strong consumer loyalty, with enviable repeat business rates, the industry is generally very old school in its approach to marketing and branding. Loyalty programs abound — after all, the loyalty concept started in the travel industry, with airlines — but the innovative marketing that produces a deeper connection between buyer and product has, by and large, been absent, with Virgin being the exception that proves the rule.

Though not well-known in the U.S., there is one travel company, the tour operator G Adventures, whose different approach to marketing puts it, in many regards, within the same corporate set as Starbucks, Amazon and Apple.

It certainly doesn’t belong there as a result of its scale. G Adventures claims a respectable, but relatively small, $250 million in sales from 100,000 passengers last year. But its founder and chief executive, Bruce Poon Tip, has nonetheless been invited to address Apple and Google employees on his approach to customer relations, has become friends with Zappos CEO Tony Hsieh, secured a meeting with Netflix CEO Reed Hastings to discuss corporate core values and been invited to give TED talks about his marketing philosophy.

Last week, his book, “Looptail: How One Company Changed the World by Reinventing Business” (Business Plus, 2013) was issued as a major release. The title may sound over-reaching for a company that you might not be all that familiar with, and Poon Tip is not exactly a paragon of modesty within its pages.

But if you live in Europe, Australia or Canada, where G Adventures is better known, the claims might not seem so hyperbolic. The U.S. is currently only the fourth-largest source market for the Toronto-based tour operator, a ranking Poon Tip is eager to reorder.

Poon Tip has brought the concepts of customer connectivity and social enterprise to travel in a unique way. On the surface, some of what G Adventures does looks very familiar: It’s certainly not unusual for a tour operator to integrate aspects of philanthropy, sustainable practices and support for a destination’s cultural traditions into its programs. And many other operators have launched sophisticated social media plans.

But Poon Tip’s innovation is to permeate his company with 2013 values, from the urge to give back to destinations to ironic attitudes toward escorted tours, incorporating “fun” in the workplace and tapping into the longing for belonging to something greater than oneself.

Did I mention that the Dalai Lama wrote the introduction to Poon Tip’s book?

Road trip

The Queen Violetta, alongshore at sunset.As part of his effort to establish a greater North American presence, Poon Tip invited nine industry executives and their significant others to join a jungle cruise on the Peruvian Amazon aboard the Queen Violetta, a riverboat he leased earlier this year.

He wanted to tell this captive audience of travel agents and consortia executives (and one outlier, a product development vice president from Marriott Vacations Worldwide) the G Adventures story, provide a G Adventures experience and listen to the feedback. I was invited to facilitate an onboard discussion around sustainability and travel.

Poon Tip is proud of the G Adventures product, but he freely admits, “It doesn’t take a rocket scientist to run a great trip.” His insight was to differentiate his product by overtly telling travelers, as the title in his book trumpets, “Go on a G Adventures holiday and you will change the world.”

Change the world. Not merely that you will support a project or that a portion of the proceeds will go to charity or that if you elect to reuse your towel you will help the environment. When you book a G Adventures tour, he explicitly states, you will join a community of world-changers.

There is nothing subtle about his messaging. And Poon Tip has little but scorn for companies that make a donation to organizations such as the World Wildlife Fund and then receive permission to put the WWF logo on their brochures. He sympathizes with companies like Marriott, which purchased huge swaths of Brazilian rainforest to protect and preserve as an offset to its global carbon footprint, and Royal Caribbean Cruises Ltd., which hired a respected environmentalist to head up its sustainability efforts. But he cites these as examples of companies “retrofitting” to a sustainability positioning.

While he believes retrofitting is positive, his company, he told the industry group assembled in the Queen Violetta’s dining room, “transcends travel.” By including dialogue that doesn’t focus on the trip, travel advisers can avoid selling commoditized travel and differentiate themselves from Internet competition, he said.

Guests had an opportunity to swim in the Amazon during the trip.“When I speak at Google, they never ask me about the trips,” he said. “They want to talk about branding.”

And the branding is often tangential to actual tour content. G Adventure slogans such as “I’m not a tourist, I’m a traveler,” speak to consumer attitudes that also reject commoditization. And they transcend generational demographics.

G Adventures was until two years ago known as GAP Adventures. It changed its name after a long legal battle with the Gap clothing chain. For Poon Tip, “GAP” was an acronym for Great Adventure People, but it had also caused him marketing headaches because people associated the company with “gap year” travel, which appeals to recent high school or college graduates. He sees the change to a more age-neutral “G” as the one bright outcome of a bitter experience.

Another example of Poon Tip’s branding approach was a contest in which consumers were invited to submit ideas for projects inspired by the slogan “What will you do today, for tomorrow?” There were four categories — beauty, community, knowledge and freedom — and authors of the winning proposals, judged in an elaborate event among finalists in the jungles of Costa Rica, received $25,000 grants to see the ideas, which were not necessarily travel-related, through to completion.

World-changers

To back the brand claim that G Adventures changes the world, Poon Tip created a foundation, Planeterra, which not only supports relief efforts in locales that G Adventures operates but engineers businesses that he believes preserve traditions, improve the health of local people, create employment opportunities and may support the infrastructure of his tours, from restaurants to lodges to centers where traditional crafts are showcased.

Some projects, such as a home for street kids in Cusco, Peru, existed before he began supporting them and do not receive G Adventures passengers. But in other instances, the services of Planeterra social enterprises are supported by and integrated into the infrastructure of his tours — but pointedly, not available to competitors.

“They can start their own woman’s traditional weaving cooperative if they want to,” he said.

A local family gathered turtle eggs in its dugout canoe to turn over to conservation officials for protection.A short list of other Planeterra-supported projects includes training street kids in Delhi, India, to be G Adventures tour guides; a program that includes guest stays in homes of aboriginal people in Australia; and a day school for kids whose parents have died from AIDS in South Africa.

Then there are the one-offs, in which past passengers who feel part of the G Adventures community are tapped for help. A one-night circus with street performers in Toronto to celebrate the company’s 20th anniversary raised $75,000 to build an eye clinic in Cambodia (they had already funded similar centers in Tibet and Tanzania), and after identifying a need for clean water in an East African refugee camp, Poon Tip sent out a tweet to his @PlaneterraCares followers and raised $100,000 in a weekend, he said.

Perhaps the most striking aspect of Planeterra initiatives is that Poon Tip does not support them with his own or the company’s money. They are financed primarily by G Adventures passengers, although he has also received grants.

G Adventure’s blurring of the lines between the profit and nonprofit world has not been without controversy. He says he was booed by nonprofits as he stood to make a pitch for a grant before the Inter-American Development Bank. But he walked away with a $1 million grant, the first for-profit company to receive the bank’s funding, he said.

Another of Poon Tip’s talking points is wealth distribution. In its most practical application, G Adventures focuses on sourcing as many employees, contractors and supplies in destination markets as possible. He pointed out that he supported the builders of the Queen Violetta in helping them “break the cartel” that dominated shipbuilding and operating on that portion of the Amazon.

The group of industry executives on this tour visited a local school on the banks of the river and distributed school supplies. Poon Tip said that G Adventures visits schools on a rotating basis to ensure that no one “model” village gets all the benefit nor becomes dependent upon riverboat visits.

But on a larger scale, and more worrisome, he said that only 5% of the money travelers spend to visit developing countries stays in the country, and that reality builds resentment and hostility towards the industry. “The travel industry will be held accountable,” he said, and travel sellers need to understand this issue and other issues that tie into his company’s philosophical positioning. Travel advisers need to be able to “speak with authority” about, for example, ethical travel and climate change.

“To say it’s too complicated is to go back to selling commoditized travel,” he said.

Ethics are complicated

Complications arise when tours are actually being run in countries where not every citizen — or local escort or hotelier — subscribes to Western values, ideas and ethics.

A G Adventures guide holds a 15-foot anacondas head down with a forked stick while a guest holds on to the tail.Just such a conflict arose on our trip. On an excursion, our excellent local guides, who were trained naturalists, came across an anaconda — or rather, they spotted about five inches of snake skin showing through a hole in the ground. They told everyone to be quiet and gather around. Using a machete, one of them hacked a seven-foot-long forked branch so the forked end extended only about five inches. Not knowing where the snake’s head might appear, they prodded it through the hole, and when the snake popped through the ground a few inches to the left of the hole, one guide used the forked end of the stick to hold the snake’s head down.

The rest of the 15-foot long constrictor uncoiled to the right, and the other guide, calling for assistance from the group, grabbed its tail and held tight. The snake was held stretched out for about five or six minutes, with various group members holding on.

Toward the end of the display, Nicole Mazza, executive vice president for marketing at TravelSavers, said, “Haven’t we bothered this poor snake enough? Let’s let him go.”

I later asked Poon Tip, who was present on that excursion, about the ethics of interfering with a wild animal to that extent, given G Adventure’s positioning.

“I was horrified,” he said. But, he added, it was a complex scene. While he would have preferred it hadn’t happened, he said that what we also saw was a reflection of the native culture of the guides, both of whom were born in the jungle. For them, this sort of treatment of an anaconda would not be considered unethical in the least.

He said one guest asked him “if we had stressed the snake. I’m not sure an anaconda can be stressed. Every day they’re hunting, and they’re hunted.”

To Poon Tip’s point about native culture, the guides were very excited and proud of the incident, with one of them later citing it as “the highlight of the day,” ranking it above piranha fishing, the sightings of pink river dolphins, swimming in the Amazon, visiting a shaman and viewing macaws, three-toed sloths and other wildlife.

And indeed, that afternoon two local members of the crew who had stayed behind on the ship during that excursion saw that I was downloading photos on an upper deck. They approached and asked to see photos of the snake, and had me estimate how long I thought it was. They were extremely impressed.

Poon Tip said that perhaps a better example of local culture vs. respectful treatment of animals occurred at a lodge farther south in Peru. The property was thriving on the business G Adventures sent its way but also kept a few jungle animals captive on site. One night, the owner, drunk, chased after passengers, swinging a small anaconda over his head.

A brown capuchin, at right, approaches a resting howler monkey.Poon Tip immediately moved the business to another lodge. But later, the offending lodge owner wrote to say his business was failing and his children were going hungry. He begged for the business back and promised not to keep captive animals. At the same time, Poon Tip was getting reports that the replacement lodge had started to keep captive animals on site.

He ended up first splitting the business between the lodges, then added another lodge that he helped to finance.

In the end, he concluded, it was, at heart, a cultural clash between Western and indigenous values.

“You can take the man out of the jungle, but you can’t take the jungle out of the man,” he said. “And at least they’re no longer killing animals just so they can show them to passengers.”

Will agents sell the message?

On the final day of the trip, I moderated a roundtable among the industry guests. I was asked to focus on sustainability but found that I had as many questions about how the company was being received by this group of agents, who represented billions of dollars in leisure business. Some excerpts:

Arnie Weissmann, Editor in Chief, Travel Weekly: Bruce appears to believe that your clients care enough about sustainability and related issues that you could sell a tour based to a large degree on your clients’ capacity for caring. Do they care? And can you sell them based on that?

Karryn Christopher, vice president of marketing, Signature Travel Network: Not for all purchases. That’s why you have a portfolio.

Glen Wells, senior manager, Merit: I think most travelers wouldn’t consider sustainability and the issues we’ve been talking about. But as travel agents, we have a duty to educate people.

Industry executives gather on the deck of the Queen Violetta during their Amazon River cruise with G Adventures founder Bruce Poon Tip.Nicole Mazza, executive vice president of marketing, TravelSavers:When I think about vacationing with my family, I do not think about sustainability. Not ever. But quite honestly, after listening to [Poon Tip] speak and what the brand stands for, if I have to choose where I want to go around the world, it’s going to be one that I look at first. [Poon Tip’s] belief system, what [he] stand for, really piqued my interest.

But clients and agents need to feel this spirit and be able to share it with their clients. I am predicting [G Adventures] will become very cult-like, what Club Med was in its heyday, and it still is, in France. Their clients keep coming back because they love what they stand for. It’s what G is positioned to do.

Arnie Weissmann: Will a frontline agent who hasn’t heard Bruce speak in great detail about the company be able to convey the G Adventures message?

Christine James, vice president (Canada), Vacation.com: Our frontline agents can take control of that sale and then drive that message to clients who are socially and environmentally conscious.

Pelin Karaca, vice president for product development, Holbrook Travel: In our experience, if sustainable trips cost more, it adds additional pressure. The tourism industry itself, the whole industry, should be elevated so that it should never be a choice between sustainable or not. For the most part, though, people leave their beliefs at home. They just like to travel.

Tiffany Glass, vice president for e-commerce, technology and member services, Vacation.com: It’s very tough to lead on sustainability, but there are a few niches where you could. We see it in the millennials, but the millennials are not users of travel agents at this point. We also see it among empty-nesters.

Lindsay Pearlman, co-president, Ensemble Travel Group: When it comes to sustainability, you have to say, “Does the consumer really know what that means?” They’ll hear statistics like “the new [Boeing] 737 is 30% more fuel-efficient” or “the new cruise ships recycle gray water.” Consumers don’t really know what that means. The opportunity with G [Adventures] is that it does mean something when a consumer is having this experience. And that could be a deciding factor on future purchases.

Arnie Weissmann: Scott, you represent a timeshare vacation company with thousands of products. Can this be sold by a call center? Can your people differentiate this experience?

Scott Bahr, vice president for product development and strategic alliances, Marriott Vacations Worldwide: We have 700 or so call-center agents picking up the phone, talking to 400,000 owners and their families. I don’t think you can lead purely with sustainability. However, the core values that G has matches what we represent to our customers, and from that perspective, it makes a lot of sense to start with, “Who is this behind the trip?” And then we could talk about the trips, because the trips are secondary. If you can’t convey alignment of values to your agents, and then from the agent to the person on the phone, you’ve already failed. And in our portfolio today, we have nothing that matches this product in terms of experience.

Arnie Weissmann: Would anyone else sell the branding and positioning of G Adventures, and then the vacation?

Christopher: You market the experience, but you don’t necessarily market the brand, because there are a lot of ways to have those experiences.

Arnie Weissmann: Bruce, you’re nodding, but I’m surprised you’re nodding. You link G Adventures to all these projects. Wouldn’t you expect travel agents to start off with that?

Bruce Poon Tip, founder, G Adventures: I would love them to, but no, that’s unrealistic. In many ways, we’re the extreme on the sustainable scale, and that can scare people. It’s a marketing challenge, where people might say, “It’s for young people.” “It’s for people on a budget.” “It’s not comfortable.” We have quite a bit of our own educating to do in order to get to a stage where our brand is omnipresent. We’re doing everything in our power to be that strong, but we understand where we fit on the tourism industry food chain. We’re a niche product, and we’ll always be a niche product, and out of 10 clients that come into your office, maybe one of them might be remotely interested in an adventure product. So, it’s our goal that when someone comes in and wants something different, that our name pops up, because we’ll have something for them.

Arnie Weissmann: Earlier today, Bruce, you said you wished you were selling something that wasn’t a niche product. Do you believe that five-plus years down the road, you will be as large and well-known as, say, Trafalgar or Globus?

Poon Tip: Yeah, I do. I’m driven to grow this business, so I know that, organically, we can go to a billion dollars.

Refining brand and corporate culture

Poon Tip claims that he has had month-over-month growth this year that was never less than 35%. In addition to what he sees as a unique branding position, one other reason he’s optimistic that he’ll hit $1 billion in sales is travel itself is on track to become the largest industry in the world, thanks in large measure to economic growth in China, India, Russia and Brazil. Poon Tip points out that the biggest challenge is that travel isn’t going to scale equally — it might double in Peru by 2020 but grow tenfold in China, so the challenge is to pick markets intelligently.

A tiny poison dart frog rests on the palm of the hand of a G Adventures guide.But most important to him is the further refinement of his branding and corporate culture, and much of his time is spent focusing on employees. The G Adventures office in Lima, Peru, which is the company headquarters for South America, is filled with a bright, young, energetic staff. They might have meetings in the “Legos Room,” which features a table filled with small plastic bricks, or interview potential employees in the “Michael Jackson Room,” complete with a statue of the singer and Michael Jackson-themed wallpaper. Interviewees spin a wheel and must answer some questions that are certainly atypical in most job interviews, such as “What was your best Halloween costume?” and “Would you rather be rich or famous, and why?”

Poon has boiled down his company’s core values to five words: People, planet, profit, passion and purpose. “I met with the CEO of Netflix. Their core values are 14 pages long. But if you’re a cook for us, you’d never understand them. [Our] values could work for anything. Our vehicle is travel, but with these same values, we could sell mood rings.”

It’s easy to see why a publisher would solicit Poon Tip to write a book. His head seems to be bursting with business concepts that he can reduce to pithy advice (“Happy people drive your brand to success. The Four Pillars to Happiness are: Ability to grow, being connected, being part of something greater than yourself and freedom.”)

From an industry point of view, Poon Tip’s lasting impact won’t be measured in book sales. He might yet, as his title promises, change the way businesses operate, but those claims today are a bit reminiscent of President Obama receiving the Nobel Peace Prize in his first year in office.

Long term, his greatest impact on the industry might not necessarily spring from customer satisfaction or growth rates. Rather, the question is whether he will shake up the corporate behavior of a largely tradition-bound industry segment: tour operations. Tour operators have certainly evolved over the past decade, becoming more experiential and marketed, in part, through sophisticated social media, but the companies themselves follow business and branding models that have remained largely unchanged for years.

Mazza’s analogy with Club Med might be the fairest measure of G Adventure’s ultimate impact. Club Med’s success was driven by concept, culture, engagement and experience, and its influences created a multibillion-dollar subset of hospitality: the all-inclusive.

Companies built on social enterprise are taking root in many industries, and it’s a model that could well proliferate throughout this decade. While it would be difficult for large operations to “retrofit” along the lines of G Adventures, it’s not impossible that they would create subsidiary brands that mirror its approaches to branding, marketing and social enterprise.

Write downs a factor in lower Q3 earnings for Carnival Corp.

Write downs a factor in lower Q3 earnings for Carnival Corp.

By Tom Stieghorst
Carnival Corp. earned $934 million in the key third quarter, down 28% from the $1.3 billion earned in the same quarter last year.

Revenue of $4.7 billion was in line with last year, Carnival said.

Carnival said it had impairment charges of $203 million to write down the value of two older Costa ships, its Ibero Cruises trademark and other items. Those were partly offset by a gain on fuel derivative contracts.

Like other cruise lines, Carnival earns the bulk of its annual profits in the third quarter, which at Carnival includes the months of June, July and August.

For all of 2013, Carnival said it expects to earn $1.2 billion.

Carnival also reported income on a non-GAAP accounting basis, a method favored by some investors. By that measure, it earned $1.1 billion, down from $1.2 billion a year ago.

Exploring expert fee models

Exploring expert fee models

By Kate Rice

Revenue is the real top line

Travel agency revenue is different from sales. It includes commissions, fees, override bonuses and net price markups.

Sales represent the amount of money clients pay the agency for a cruise, hotel or other travel product. Most of this, less any commission earned, is passed on to the supplier.

Robert Joselyn, president of Travel Agency Management Systems, put it this way: “Sell a cruise for $5,000, and that is $5,000 in sales for the agency and $5,000 in revenue for the cruise line. If an agency makes a 10% commission, the agency revenue is $500.”

Agencies still are defined by their sales volume, mainly out of habit, a holdover from the days when the commission-only model reigned supreme. When commission rates rarely or never changed, it was a stable and easy-to-understand measurement, said Nolan Burris, president of Visionistics Enterprises.

But, said Burris, in today’s agency environment, revenue is a far more accurate measure of an agency’s productivity. Today, he said, he sees agencies getting the bulk of their revenue from fees instead of from commissions or overrides.— K.R.

Commission-based sales, the traditional revenue model of the travel retailer, continue to fade as suppliers shrink their percentages or compete with tight discounting. So savvy agents are turning to the one revenue model that enables them to determine their own margins: professional fees.

Unlike traditional transaction fees for services like booking airline tickets, agents who embrace a professional fees model are charging for their brainpower. In some cases, fees are already accounting for between 10% and 50% of revenue, and that share is widely expected to grow in the future.

Depending on the size, duration, complexity and nature of the travel being planned and sold — and depending, too, on the level of expertise required to assemble a given vacation — those fees can add up to as much as hundreds, thousands or even tens of thousands of dollars for a single trip.

There are several fee models from which to choose: flat fees, hourly fees, access fees, membership fees, even subscription fees. They can also be described variously as consulting fees, professional fees or planning fees. But whatever they are called, fees are designed to achieve the same result: leverage an agent’s expertise to achieve fatter bottom lines and increased respect from clients.

They often also result in higher self-esteem for agents who embrace the professional fees model because the model attracts only clients who value the retailer’s knowledge and professionalism.

Nolan BurrisNolan Burris, president of Visionistics Enterprises of Vancouver, said he has witnessed a steady shift toward professional fees in the past several years. Between five and seven years ago, he estimated, fees rarely approached more than 15% of revenue. Today, he sees leisure-only agencies charging fees that account for between 40% and 60% of revenue.

ASTA reports that more than 60% of its members charge for planning FITs, while the number of agencies charging fees overall has increased to 85% in 2012 from 64% in 1999. While the ASTA numbers include transaction fees for booking airline tickets, they also include fees for booking hotels, all-inclusives, tours, cruises, ancillary services, shore excursions and car rentals.

Brownell Travel, a Virtuoso member based in Birmingham, Ala., with about $100 million in annual sales, instituted the adviser model six or seven years ago, positioning its agents as professional travel consultants who charge for their services. Since then, the agency, which has three offices and associates in 20 states, has seen its revenue increase by 50% per staffer, according to Brownell President Troy Haas.

Haas said that the change to the adviser model increased overall productivity and has resulted in better pay for everyone on the team.

That’s important, said Robert Joselyn, president and CEO of Travel Agency Management Systems in Scottsdale, Ariz., a financial benchmarking and networking group of agencies. Typically, Joselyn said, commissions do not give agencies a rational return on their business investment.

Eric Maryanov, president of All-Travel.com. a Los Angeles-based agency that is a member of the Signature Travel Group, attributes part of that to noncommissionable fees (NCFs). As a result of NCFs, he said, cruise commissions have shrunk to the point that a $6,000 or $7,000 cruise commission is now less than 10%, even though All-Travel is technically performing at a 16% commission level.

Nor do commissions enable agents to make the kind of living they ought to earn given their expertise, skill set and the time they spend acquiring those skills, Joselyn said.

Exploring expert fee models“Supplier revenue doesn’t cover the time the travel agent spends providing the service to the customer,” he said, adding that FITs are the perfect example of how irrational the commission model has become. They can take hours of time, but many of an FIT’s components generate no commissions, small commissions or irregularly paid commissions.

Charging consulting fees for building an FIT, on the other hand, brings rationality to agency compensation, he said.

In addition, fees decrease agencies’ vulnerability to suppliers’ whims. Relying only on commissions puts the entire financial well-being of a business into the hands of another business that has very different priorities.

“It makes your business susceptible to their financial pressures, shareholder demands, corporate restructuring and supplier industry changes,” Burris said. “One boardroom decision in the middle of the night and your entire business can be thrown into turmoil. Anyone who lived through the airline commission cuts, caps and eventual elimination remembers that period.”

In addition to introducing financial stability and independence to travel agencies, the fees model contributes to a self-perpetuating, positive cycle.

“They are the vehicle for establishing us in the client’s eyes as a professional, and that is the most important thing that fees do,” Haas said. “At the end of the day, the adviser is happier, more productive and working less with the people who do not value you and working more with the people who do.”

Even agencies that get the bulk of their leads from the Internet — the most price-sensitive channel — are charging professional fees. All-Travel.com does most of its marketing online and sells cruises. The Web is a great commoditizer, narrowing consumer focus on price, and cruises are a very competitive product to sell, attracting some very price-focused customers.

But All-Travel has long charged a booking management fee, and All-Travel is very clear about what the fee is for.

“It is for professional consultation and advocacy throughout the booking process,” Maryanov said.

Generally, resistance to fees tends to come more from the agent community rather than from consumers.

“Travel advisers are their own worst enemy,” Haas said. “Clients have many, many fewer problems with fees than agents.”

Diana Hechler, owner of D. Tours Larchmont, N.Y., a member of the Ensemble Travel Group, instituted fees when she opened her agency in 1999. Ever since, she said, she has had customers who ask of the fees, “Is that all?”

On the other hand, shifting to the professional fees model is not simply a matter of owners telling agents to do so. It requires preparation and training.

First, agents have to recognize their value.

“We are an industry of caregivers, and caregivers don’t value themselves as highly as they should,” Maryanov said. “We always want to take care of people and fix their problems. There’s nothing wrong with that, but if you’re bringing value, people will pay for it.”

And Hechler observed that to achieve success with the fees model, “You really have to believe in your heart that you are solving people’s problems.”

Robert JoselynVictoria Boomgarden, president of the luxury travel division of Best Travel Gold, a Virtuoso agency in Naperville, Ill., has agents go through specialist training so they can internalize why they are charging a fee and not merely “parroting back what I say.”

To help agents see the value that they provide, Joselyn conducts workshops in which he has them log all of what they do for clients, much like lawyers do for per-hour fees. He has agents log the date, exactly what they did, the value that added to the client’s vacation and how much time they spent doing it.

“They start forgetting themselves that they are doing all these good things,” Joselyn said, adding that the exercise helps them articulate the value they bring to the customer.

Joselyn’s workshops include exercises in which agents explain the reasons for charging fees and create responses to objections customers might raise.

Brownell provides agents with a short list of what each of them does, as a way of helping them explain their value.

“It just goes back to being confident in stating your 30-second commercial and not be offended when asked what you do to justify a $300 fee,” he said.

The goal in all these training exercises is to raise the agent’s self-image.

“Once advisers start charging fees, what it does for their morale is amazing,” Joselyn said. “You just see them blossom.”

Follow Kate Rice on Twitter @krtravelweekly.

Examples of agencies’ fee models

Fee models and the amounts they generate can vary from $50 to $60,000. Agents might charge flat fees, hourly fees, member fees or subscriptions. Many charge several types of fees. Some post them on their websites, while others explain them to customers after they call. What they all have in common is that they are charges that clients are paying for their time and knowledge.

Brownell Travel

Martha Gaughen, vice president of Brownell Travel, has charged as much as $60,000 in consulting fees for a major trip.

Brownell has made collaborative planning the foundation of its business model with Discover More, a five-point plan whose tenets are discover, design, connect, experience and share — everything from planning the trip to sharing the experience of the trip once it’s over.

Brownell uses a worksheet to calculate fees for different parts of a trip, which can be anything from hotel reservations to theater tickets. The agency can also charge hourly fees.

Gaughen said she will often will use net pricing and charge a fee of 25% of that net price. She finds this works particularly well when she is using an on-site provider, a tour operator or any travel provider who will offer her net pricing. She has clients who point out that she earns commissions on her hotel booking. She responds that those commissions do not pay her adequately.

“I am worth more than that,” Gaughen said.

The beauty of net pricing is that her clients will never find the products or services she has created for them at a lower price online, if they can find them at all. She works closely with providers and clients to ensure that clients are getting exactly what they want. She’ll ask providers if what they’re offering is essential to the quality of the clients’ experience. She’ll work to keep within the clients’ budget but also go back to clients if the provider thinks that a certain experience is worth going over budget.

Because Brownell has a fee schedule, clients are always clear on what they’re paying for.

“There is no gray area,” she said. When her clients see the prices she can get for them and see the added value she can provide, they pay her fees willingly. That’s when they see the value of a fee of $4,000, $10,000 or, in one instance, $60,000 for a major trip that included components such as private planes, Gaughen said.

Best Travel Gold

Best Travel Gold, a Virtuoso member, has a graduated series of fees. Best Travel interviews potential clients, charges them an access fee and then assigns them an hourly fee based on they agent they are assigned to work with. The agency’s hourly fees start at $150 but can go far higher, depending on the type of travel and who their adviser is, said Victoria Boomgarden, president of the luxury travel division of Best Travel Gold. Fees for after-hours services can be double or triple the fees for services provided within office hours. Best Travel Gold is happy to accommodate its travelers after hours but makes sure that its agents are appropriately compensated for that service.

Andrew Harper

The Andrew Harper agency, a member of American Express, uses a subscription model, providing its 22,000 subscribers with a variety of publications, both print and online, to which they can subscribe as well as access to its travel office. “The Hideaway Report gets you to dream,” said Lorelei Calvert, the agency’s COO. About 35% of subscribers use the travel office, which makes money on its subscriptions and on commissions for the travel its agents book.

In the Know Experiences

In the Know Experiences, a Virtuoso agency based in New York City, initially offered trip-planning fees but then had some clients who traveled frequently suggest that they pay the agency an annual fee to handle them and their families, according to co-founder Seth Kaplan. The agency started out on a per-trip fee model, charging $350 per person for domestic trips and $400 to $450 per person for international trips. That covered trip planning, 24/7 customer service, customized itineraries and high-touch service. When booking large families or larger groups, In the Know will adjust those fees. The agency now has about 30 clients who pay membership fees, which start at $10,000 for a couple or a family with children and range up to $30,000.

D. Tours Travel

Diana Hechler, owner of D. Tours Travel, posts her fees on her website. She charges $300 for up to four reservations to cover her time and expertise. If a trip takes an additional amount of work, she charges an additional reservation-management fee of $40. She also charges a $50 airline-booking fee. If she is booking a group — for example, a family reunion at a villa or on a cruise — she’ll just charge the $300 fee because she will make money on that group. Her fee schedule gives her the flexibility to charge more for any trips that are particularly labor-intensive.

MoonRings Travel

MoonRings Travel in Chicago, a member of the Ensemble Travel Group, publishes its fees on its website. They are based on the number of destinations on an itinerary as well as on the length of the trip. Fees start at $150 for a single-destination trip of under eight days in the U.S., Canada, Caribbean and Mexico, and can go as high as $625 for trips of 30 days or more in Europe, New Zealand, much of Asia and other parts of the world. “My business partner and I came out of management consulting, and it seemed obvious that if you offer a specialist service, you would want to charge some sort of fee,” said Carrie Wallace, president of MoonRings, which specializes in honeymoons and special-occasions travel. “We knew that once a client has agreed to a fee, they have agreed to working with you. It is sort of a financial and psychological hook.” – K.R.