Agencies can increase service fee revenue and productivity by 28% and 67% respectively by automating the management of service fees according to a study conducted by Dr. Fried and Partner, a German consultancy.
This…
Agencies can increase service fee revenue and productivity by 28% and 67% respectively by automating the management of service fees according to a study conducted by Dr. Fried and Partner, a German consultancy.
This independent study on service fee management in travel agencies in five European countries has been commissioned by Amadeus.
The study compares agencies calculating fees manually with agencies using an automated solution. Automating service fee management was found to allow travel agencies to adopt more sophisticated fee schemes which include a greater variety of transaction fees. The resulting increase in service fee revenue can be as much as 28%.
Compared with agencies calculating fees manually, agencies using an automated solution integrated into their selling application can, on average, increase productivity by 67% for service fee application activities and by 12% for the overall booking process. The productivity gain can be achieved by using the time saved through automated fee management to make more bookings.
Maximising service fee revenue is crucial as the travel agency business model relies ever more on Service Fees as airline commissions disappear. According to research published by Amadeus in July this year, 34% of travel agencies see falling commissions as the biggest challenge their business faces. Moving to a service fee-model is one of the key ways travel agencies can prepare their business for the next phase in the travel industry’s evolution. In Scandinavia, which is leading the way in this trend, 73% of business travel agencies` total revenue comes from service and transaction fees. Notably, the average revenue/gross sales margin among these agencies is higher than among agencies which have not adopted the service fee model to the same extent.
“Amadeus commissioned this study to help our customers as they move to a service fee-based business model. Our close relationship with thousands of travel agencies around the globe allows us to compare trends in service fees and how they are managed by agencies,” says Claude Giafferri, VP, Travel Office Products & Solutions, Amadeus, “We are convinced that there are strong revenue opportunities to be uncovered by travel agencies and this study demonstrates that automated processes are a key enabler to making the most of the service fee revenue opportunity.”
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
