Why Charging a Booking Fee May Hurt Your Conversion Rates

Did you know that at one time in the past three years travel booking abandonment rates reached a whopping 90.74% globally? This was due to several factors, one of them being pricing as a result of booking fees and other hidden charges.

The modern-day consumer has access to lots of information at the tap of a button, giving them plenty of alternatives. This is why it is crucial to improve your customer experience throughout the entire booking process. 

So today we look at the effects of charging booking fees and the alternative strategies you should consider for boosting your conversion rates.

Let’s get started!

Effects of Charging Booking Fees

According to the Baymard Institute that analyzed 44 studies on checkout abandonment by consumers, the average cart abandonment rate is 69.8%. This means that seven out of ten people choose an item, service, or product but do not follow through to purchase it in the end. 

In comparison to the global average, the travel industry comes in as the third-highest rate at 81%. This means you have 4 out of 5 visitors taking business elsewhere or not making a purchase. 

Source

In the highly competitive world of tourism, there’s no room for practices that lead to a large chunk of visitors leaving to seek services elsewhere.

Another study dug in further to find out reasons for abandonment. 56% of the participants cited hidden costs including booking and service fees as the main reason for not purchasing.

What You Can Do Instead

1. Bundle Your Fees With the Price of a Ticket

You can calculate all your additional costs and add them to the basic cost of the ticket. So, while you know that there are surcharges in the total cost, the customer will only see that one price. You may also choose to absorb the booking fee cost, giving you an upper hand against your competitors.

2. Remove Booking Fees Above a Certain Purchase Threshold

Consider removing the booking fee for purchases that pass a certain threshold. For customers who spend more, reward them by waiving the booking fee and indicating this. Ultimately, this will increase the chances of your customers following through with the booking. 

3. Introduce a Subscription Service

Encourage customers to subscribe to a membership program and do not forget to mention the perks they will receive. 

For example, if you offer a tour or activity for locals, you can have a monthly or annual subscription that removes all booking fees and provide extra benefits like free snacks or priority access. 

What if You Can’t Remove the Fee?

We understand that in some cases removing the booking fee is not possible. Maybe you are using a booking system that doesn’t allow you to bundle your fees with the ticket cost. Or perhaps it’s a directive from top management that deprives you of the flexibility to absorb the extra cost. 

Here’s our advice: provide full disclosure. You can add a small link or collapsable text during checkout with more information on booking fees.

Specifically, explain to your customers in detail why you’re charging a booking fee to justify the expense. This shows that you have nothing to hide and the customer will be more inclined to follow through to the end of the booking process.

Wrapping It Up

In a competitive industry such as leisure and tourism, dealing with what triggers your clients to abandon purchases is just as important as advertising and marketing your business.

In summary, these are the tips you can implement to avoid charging a booking fee:

  • Bundle your fees with the trip’s price
  • Waive booking fees above a certain purchase threshold
  • Introduce a subscription service
  • If you can’t avoid it, explain in detail why you have a booking fee.

We hope these actionable tips have pointed you in the right direction as you strive to improve conversion rates.

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