One tour operator’s bold business move is challenging the efficiency of the custom-travel booking process as travel’s roaring comeback tests understaffed businesses.
Custom travel tour operator Authentic Vacations started requiring a $99 refundable deposit of either direct clients or travel advisors who wish to have a representative build an itinerary.
The change was introduced as a way to weed out window-shoppers who don’t commit to booking and enable staff to focus on genuine inquiries that convert into sales.
It is an uncommon move for a tour operator to make, industry experts say, and one that takes a page from the travel advisor playbook: Agencies and advisors have long been charging service fees to not waste their time on inquiries that are not serious. Travel Weekly’s 2021 Travel Industry Survey found that the share of revenue from service fees increased from 18% to 27% from 2018 to 2020.
In the custom-tour segment, however, service fees are uncommon. But with short-staffed tour operator call centers being inundated with near-unprecedented volume, leading to long hold times, operators might reconsider the status quo.
Authentic Vacations launched the deposit in December, along with a $49 fee to use its online self-service itinerary builder called Trip Planner App, when pandemic-driven staff cuts forced it to re-examine its business.
After losing 50% of its team at the height of the pandemic, and with its frontline sales teams reduced by 65%, CEO Simon Russell realized they were going to be doing more work with less people when travel eventually resumed.
Like most custom-travel companies, Russell said, Authentic Vacations’ staff spent its time pre-pandemic servicing one of two types of customers through its call centers: the “lookers” and the “bookers.”
“Even with the best marketing, high repeat rate and highly experienced team, the best conversion you’ll get is maybe 30%,” Russell said. “So that means 70% of your work is wasted, and you earn no revenue from it.”
The time spent on the lookers, as opposed to money earned from the bookers, became harder for the company to ignore. In late 2020, Authentic Vacations began an 18-month re-engineering of its approach to booking inquiries.
“We didn’t have anything to lose,” Russell said. “We had time for our partners to get used to a different way of working before things returned to normal.”
Today, the company’s booking numbers are quickly recovering to 2019 levels.
“In a busy month before Covid, we’d take on an average of 1,000 inquiries a month, convert 15% of those and get 150 bookings,” Russell said. “With our new model, in a similar month, we’re now only dealing with 200 inquiries to get the same 150 bookings. [We’re] able to take more time on genuine inquiries, as they are now all genuine, and putting together even better trips for our clients.”
Skepticism about the business model
Knowing that soaring demand and the consumer willingness to splurge may not last, combined with the need to recover from the pandemic’s economic wounds, has made companies more aware than ever of the value of their workers’ time.
Still, in response to an inquiry sent by the USTOA and ASTA to its members on Travel Weekly’s behalf, several tour companies said collecting upfront deposits for time spent crafting a trip is too risky a business model, one they are not considering.
“At EF Go Ahead Tours, we will never require a deposit for a potential traveler to speak with any of our tour consultants,” said Jessica Trammell, EF’s vice president of marketing, who added that the company has a dedicated team to work one-on-one with “anyone interested in a travel experience.”
Goway Travel‘s director of sales Renee Stanton-Defaria said that while it may be “a model that other companies will follow,” Goway has no plans to do so. In fact, she said, booking inquiry conversion rates are doing better now than in 2019.
“We believe this is due to our extensive training in-house and the qualifying process we do with our travel advisors before we initiate a quote,” she said.
Kathy Writer, president of Celtic Tours, said the company sees its fair share of window-shoppers despite its model, which collects deposits once someone wants to proceed with a quote.
“Around 40% never make it to an active booking state,” Writer said. “Sadly, we still experience a lot of work without return. We are somewhat in a pickle when it comes to streamlining work; if we lessen our services until deposits are paid, the travel agent will just look for another operator, or complaints will come in. So it’s a tough one to tackle.”
Travel advisors, however, say they charge those fees for the cost of their time.
“I have charged hourly rates since I started my business 15 years ago,” said Nicole LeBlanc, owner of custom-travel agency Mon Voyage Travel. “All work before, during and after a trip is subject to these fees, because my professional expertise and my time have a value.”