Industry News

Service fees - a winning strategy for growth

Last month we told you about the study that set out to show how leisure and business travel agencies can maximise their service-fee revenue. We talked in broad brushstrokes about the service-fee model. This month we'd like to look at another independent study, one that evaluated the impact automated service-fee management products can have on travel agency business.

A golden opportunity

The transition to a service-fee driven business model concerns nearly all markets and should be seen as an opportunity instead of a threat. Independent studies from different countries around the world have proven that travel agencies which no longer rely on commissions can actually earn more than before! The independent study (in which Amadeus Service Fee Manager was used) showed that travel agencies could grow their service-fee revenue by up to 28%.

Automation is the secret

Travel agencies in markets which have gone through commission cuts first - like Scandinavia and the UK - show not only a higher share of their revenues originating from service fees, but the highest margin.

A quote from the study: "Agencies which calculate fees manually find themselves forced to stick to simply-structured fee models. The vast majority of general managers of these agencies confirmed that an automated service-fee management system would improve their processes substantially and they would be willing to invest in such a tool, estimating that it would soon pay for itself."

Technology - Your friend!

Amadeus Service Fee Manager not only reduces the amount of manual interventions considerably and therefore the number of errors that invariably occur, but you can implement sophisticated service-fee schemes - the automation of processes - which enables agencies to grow their service-fee revenue considerably. Automation makes you clearly more productive, and when front and back office 'talk to each other', you have saved even more time and effort.

What are 'sophisticated' service-fee schemes?

Sophisticated schemes include a wide variety of transaction fees, all reflecting the value of services provided and in line with the cost of the actual activities. Implementing sophisticated schemes does not mean charging higher fees but to opt for more profitable schemes, and they, in turn, let you achieve higher service-fee revenues. Just as for air, service fees can be charged for everything you do for your customers, for example hotel, rental car, insurance etc, and even for transactions like modify, re-book, cancel, exchange.

Facing the future with optimism

There is no reason why leisure providers may not also consider commission cuts in the future. Instead of fearing this development, get ahead of the commission game by switching to the service-fee business model. With your technology partner at your side, the change will be painless.

According to the study, using Amadeus Service Fee Manager to automate the management of service fees enables travel agencies not only to maintain their fee revenue but even increase it by as much as 28%.

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