Losing money out the back door

One of the businesses that I own is a travel agency. Even in the best of times, the amount of money that we make is not very large. We don't charge the customer a dime. how we make money is through commissions. The commission on a five day cruise to the Caribbean is usually about $14 per passenger. A one week cruise to Alaska usually gets me a $110 commission on a $2200 cruise fare.  We are not a big agency and mostly just book for family and friends. We usually have about $100,000 in sales, earning about $2,500 a year in commissions. The required licenses and insurance bond cost around $1,200 a year. Small margins. We typically book cruises 3 to 12 months before sail date.

This requires hours of work, making the hourly earnings rate close to zero. For example, we had a group last year that wanted us to book them a cruise to Alaska. It was a group of 20 people, and they wanted it all: airfare from Florida to Vancouver, a one week cruise from Vancouver to Anchorage,  followed by a 14 day train and bus tour from there to Fairbanks, then airfare from Fairbanks back to Florida. They wanted suites, good hotels, and a tour guide to accompany them. We spent days putting the trip together and agreed to go to the home of one of the cruisers to present what we had put together. When we got there, we did an entire presentation of what was included. Then they asked for the cost. A total of three weeks' vacation including airfare came to $5,000 per person. As soon as they heard the price, they all balked. I asked them what their budget was, and they only wanted to spend $1,000 per person. That amount would cover the airfare and the deposit on the cruise. That was typical. We would get dozens of calls and only close the deal about a ten percent of the time.

Summer is the busy season for cruises. Not this year. Since the beginning of the COVID cruise line cancellations, we have had two thirds of the cruise bookings for the year be cancelled by the cruise lines. The remainder have been cancelled by the passengers. When they are cancelled, the cruise line refunds the money to use, and then we have to refund to the passenger. The cruise line is not asking for a refund of our commissions. It would seem that this is good for us, but the problem is that our credit card processor is not refunding the servicing charges that were charged to us when we accepted payment.

We are bleeding money. So we have made the decision to completely stop any and all sales of cruises from this point forward. We will continue to service the refunds to our current bookings, but there will be no more new sales. The profits were never really there, and this makes it worse.


EDITED TO ADD:
Most of the refunds processed correctly. All but one. One of them refunded the cruise to the wrong credit card. The guest contacted me, and I spend over three hours on the phone getting it fixed. I called, waited on the phone for 45 minutes and was disconnected without ever talking to anyone. I called a second time, was on hold for thirty minutes, was told that I needed to talk to a different department, was placed on hold for another thirty minutes, the person that I spoke to next said they would fixed it, and placed me on hold. An hour later, they came back to tell me they were almost done fixing it. Another twenty minutes, and they were finally done and came back on telling me that they were going to have to do a "billing workaround," then it took another 15 minutes to get the final resolution. The entire cruise and its refund earned me $184 in commissions, but cost me $82 in credit card processing fees, a $4 payment processing fee, and three hours to process the refund. That was in addition to the two hours I had already spent booking the trip and collecting the fare.

This particular fare was a nightmare. They booked last June for a cruise to Alaska during June 2020. Then in February, they added their daughter to the cruise and with only 4 months to sail date expected to get the same fare that they had gotten a year from sailing. After a lengthy back and forth, we were able to get them a steep discount. Final payment for all three of them was due in March, and they hadn't paid yet. We had to pursue them for payment, and they finally paid on the last possible day. Then, just a week later demanded a refund. Thirty days later, today, they wanted to know why they didn't get their refund yet.

This business is more trouble than it is worth, and that is why we are done with it. However, that was our last booking. We have no more active bookings to service, so with that, we are officially, completely out of the travel business.