We started our tour company, MaxTour in 2017 to give travelers a better option when touring the Grand Canyon. Booking fees were our first priority when we chose an online booking system and booking fees should still be the first priority of any new tour operator in 2021.
In the four years since we began, the options for third-party booking systems have increased from dozens to hundreds. In our opinion, despite the many options, there are really only a few suitable choices worth considering.
We say this because only a minimal number of online booking systems offer an acceptable pricing structure. The majority of booking platforms use a model that charges a percentage of your booking fees to your customers. They advertise this model as “free,” but it is anything but free.
This is a significant step backward for the industry. As one of the few platforms that does not charge an additional percentage per booking, Checkfront is by far the obvious choice for any new tour operators. If I were starting a tour business in 2021, I would unquestionably partner with Checkfront.
These are the most relevant features we have found for a booking service to have. Listed in order of importance, they are:
- Flat-rate monthly pricing structure
- Integrations with the major OTAs
- Built-in multi-system integrations
The first consideration when reviewing a new booking platform should be its fee structure. This is, by far, the aspect that will affect you and your clients the most. At MaxTour, we would never consider contracting with a company that tacks on additional fees for our clients to use their service. There are two primary reasons for this, and both can have a significant effect on your return.
1. Surprise fees kill conversions
Online booking systems have a variety of names for the fees they charge tour operators and their customers. They can present them as booking fees, ticketing fees, taxes and fees, or something of the like. Under any name, these additional fees are hurting your conversion rate.
According to Statista, 56 percent of shoppers abandon shopping carts when they encounter unexpected costs upon checkout. None of the online booking systems that charge these fees seem to address this high level of shopping cart abandonment.
2. You lose with comparative shoppers
One reason fees added at checkout have a high correlation with shopping cart abandonment is that those fees make your service more expensive than your OTA partners. TripAdvisor, GetYourGuide, and other major booking platforms make a point of emphasizing that there are no additional fees when booking on their platforms.
Customers have come to expect that the price they see on a trip is the price they will pay for a trip. Whether due to budget or principle, many customers begin to have second thoughts about purchasing as soon as the final cost increases. This can push them to shop around for your product at a lower price. When they do, there is a good chance they will find it or one like it on an OTA without any booking fees.
Your guests should only pay for the service you provide
Based on the data from Statista above, less than half of customers will continue with a purchase after additional fees are added. The remaining 44% of customers are still willing to click Purchase after seeing a price increase due to added fees. That shows that the total price itself may not be the issue. At checkout, there is no indication that the additional fees go to the booking service. Most customers will assume the tour company is receiving the extra fees and they are willing to pay them.
At MaxTour, we will never tack on additional fees for our clients; it is a standard we are passionate about. This approach has served us well and is supported by the market data discussed above. We recommend the following strategy for companies that are currently using a third party booking system that charges their customers a percentage.
Switch to Checkfront, which offers 0% booking fees. Then, raise your prices across the board by the same percentage your previous service charged your customers. This allows your business to enjoy an increase in revenue from the price adjustment and the boosted conversion rate you will gain from people not abandoning their carts due to unexpected fees.
The additional fees charged by third party booking services are taking money that would otherwise go to your company. This is the most maddening aspect of this pricing structure. It is absolutely false to say that a service is free or that businesses are not paying for the service when fees are passed on to clients. While it is true that you may not receive a monthly bill, the service is costing you in lost revenue and lost conversions.
Keep in mind that direct bookings are coming from your own customers. These are consumers that found your business through your own marketing and word of mouth campaigns. The booking service is merely used to help the customers you already have book your services.
When your booking service charges additional fees to your customers, they not only make your services more expensive and decrease the chance that a customer will book with you, they also insert themselves into the purchase and pricing process. Your customers don’t want to know who does your accounting or which web hosting service you use.
Likewise, they don’t want to be involved in your relationship with your booking vendor. Customers often prefer concierge-style service where they come to you, select a service, pay your fee, and your company handles everything else behind the scenes. The fewer background processes your clients need to worry about, or even see at all, the more confidence they will have in your company.
During my research for this article, I found that things are actually much worse now than when I compared booking services for my own business. Many booking services are now using a hybrid pricing model. Aside from the hit you are taking with percentage fees to your customers, you will also be charged a monthly fee.
To add insult to injury, I found platforms that charge up to 5% for bookings made through partner OTAs! Considering OTA commissions are already sky-high, it’s astounding that any operator would choose a platform that increases that number at all.
Look at your bottom line
With the percentage fee model, they penalize you for your success. The higher your sales, the higher the cost of maintaining your partnership with your booking vendor.
Let’s do some quick math. If you sell $5,000 a month directly via your website and your booking software adds 5% to every booking, then that booking software cost you $250 that month. $20,000 in sales? Now you are losing $1,000 in that month to your booking platform.
It’s imperative that you do the math on your own sales to see how much this pricing model will cost you. Once you know that figure, compare it to the cost of partnering with Checkfront. Checkfront’s most expensive package is only $169 a month! Their most affordable plan starts at $42, which is an outstanding value to anyone looking to start a tour company.
That said, if you are absolutely adamant about going the booking fee route, Checkfront is one of the only booking systems to offer both payment models. You can learn more about their Flex plan here.
Connects to major online travel agencies
After fees, the next consideration should be API connectivity with the major OTAs. Our current set up has our calendar connected to our product calendars on all of the OTAs we work with. We have at times worked with OTAs that didn’t offer API connectivity with our online reservation system. Therefore we spent significantly more time than we should have to keep multiple calendars up to date. In the worst cases, we regrettably had to cancel guests on occasion because a tour they purchased was sold out or closed.
Obviously, it is imperative to prevent situations like this as much as possible. Aside from the loss of revenue, we risk negative online reviews and less than favorable word of mouth references anytime this happens. Making sure your booking system can connect your calendar with the leading OTAs is critical. Luckily Checkfront connects to all the major OTA players.
Finally, we recommend that any new tour company in 2021 consider integrations when shopping for a third party booking service. Our booking platform must work fluidly with all parts of our business. Checkfront integrates with all of the major integration tools you are likely to be already using, including Quickbooks Online, Google Ads, Facebook Advertising, and Paypal. As a bonus, Checkfront offers support for Zapier. With Zapier, you can build connections between Checkfront and any other service you may need.
Choosing the right booking solution for your business
In the end, you want to partner with the booking service that meets all of your business’s needs. Fortunately, there are companies that provide great options for someone starting a tour company in 2021. Checkfront stands out in its pricing structure, and for that reason, they should be the first option anyone turns to when looking for booking software.
Matthew Meier is the Founder of MaxTour, a Las Vegas based tour operator offering small group tours to the Grand Canyon.