Why booking fees hurt your business

Why charging your customers a booking fee hurts your business

Published by Nicole Kow on Sep 27, 2017

Booking fees, transaction fees, resort fees, service fees and whatever else they're called, no one likes them. 

This is especially the case for "surprise" fees that pop up only at the end of the booking process, a practice commonly adopted by companies like Ticketmaster and Seatwave. 

A quick Google search on "How to avoid hidden travel booking fees" produces over 35 million articles that discuss the various hidden fees consumers regularly come across. (My favourite one is the "print at home fee" where Ticketmaster charges you a fee to print your own tickets in your own home.)

The thing to note here is that people, your customers, are going online to look for ways to avoid those fees. If they can't find a way to avoid it, they might avoid your services altogether. 

According to Which?, a British consumer rights group, 4 in 5 consumers feel that high ticket fees are a rip off, especially when they're not clearly justified. Funnily enough, people also don't really care about what the fees are for, as Ticketmaster discovered back in 2010 when they wrote a blog post explaining their exorbitant booking fees. "Stop trying to make us care", was the general response to Ticketmaster.

Lawmakers believe that by breaking down all the different costs and fees, tickets sellers, hoteliers, airlines and the like get to advertise their services at a cheaper rate compared to what it really costs. To combat this in the UK, it is mandatory to disclose all information about ticket prices and be upfront about extra charges. While in the US, lawmakers are investigating hotels who charge "resort fees" on top of room rates, instead of disclosing the total fee upfront. 

 

Airlines are notorious for hidden fees

For tour and activity operators, imposing hidden charges can be bad for business. 

1. It adds up

Say a customer books a skydiving trip with you directly on your site, and your trip costs $175. With a 6% online booking fee, the total quickly goes up to $185.50. That's more than $10 your customer is paying just to book a trip with you online (which is meant to be more convenient for both parties, incur zero paperwork, and improve your services).

While this might not be a problem for luxury travellers, the additional $10.50 would definitely turn a few customers away. 

 

2. Customers who book through OTAs can cost you more

For customers not willing to pay the additional fees, they can easily hit up Google, shop around, and find cheaper alternatives. They could also look up your company on an OTA like Viator who offer "low price guarantees" and book your trip there. 

Consider this example: 

  • Your Private Family Tour costs $300 on your website. With an additional 7% booking fee, your customer pays a total of $321. They don't like what they see so they head over to Google to search for alternatives.
  • Your same tour costs $300 on an OTA site with no additional costs, so they pay a total of $300, saving them $21 in fees.
  • However, the OTA charges you a 25% commission each time your tour is booked so you pay $75 to the OTA for their services and make a profit of $225 (instead of the $300 you could have made from a direct booking).

Whenever a customer does this to save money, you end up paying for it, one way or another. 

 

3. You're annoying your customers

Probably the most obvious point of all, you're annoying your customers before they've even made a booking with you. 

For tour operators and activity providers, delivering professional services and stellar experiences is the cornerstone of your businesses. Delivering a seamless booking experience online is a part of that. 

 

Seamless booking experience

What can you do to deliver a great booking experience?

1. Include your booking fee in your total price

As an operator, you can choose to absorb the booking cost or include it in your trip price and present it as a whole. Remember that your customers don't care why there's an added charge and don't want to be educated on something they don't care about. Your job is to make life easier for them. 

Read more: How to make the most of your booking engine

 

2. Be upfront about your fees if you can't include it in your total cost

If you work with a booking system that doesn't give you the flexibility to absorb the cost or include it in your total price, make sure to indicate the extra fee at the start of your booking process or in small print on your product page.

Alternatively, you can look for alternative booking systems that give you full control over how your tours are priced. Arrange a call with us if you'd like to find out more. 

 

Want to learn how your booking engine can improve booking conversion rates?

We'll show you around. Book a demo

 

 
Nicole Kow

Published by Nicole Kow

Having graduated from the UK, Nicole travelled around Europe before joining TrekkSoft's marketing team. She is now based in KL and regularly blogs about her travels at Next Train Out.

Topics: Business advice

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