There are several ways that travel agents get paid but most importantly travel agent commissions. Another popular way for travel agents to get paid includes fee-based charging. Fee-based charging insures that the travel agent is not incentivized by the biggest commission as opposed to the best accommodations for their client. On the other hand, often suppliers have commission baked into a price which means that a travel agent can help earn a commission and still achieve the low price for their client. Fees can make the pricing more expensive.
Hotel commission list rates tend to be the lowest possible commission rate that you will receive. Often as your production increases with a certain hotel so too does your opportunity to earn a larger commission. Large OTA’s such as Expedia are able to earn up to 25% commission on hotel rates due to their leverage in terms of customers and their negotiating power. Commissions can depend on placements within Expedia’s listings.
Please note: The travel agent commissions referenced below are educational and meant to serve as a reference. Before making a reservation, double check with the vendor to make sure that you fully understand the commissions, the terminology and the disclaimers. Commission programs can change and they can be described without full information. A quick checklist of items to double check includes:
- Is commission on net or gross amount?
- Is commission payable upon payment or after travel?
- Is there a commission ceiling or cap?
- Are there different commissions for FIT, wholesale, charter and scheduled air?
We have described some of these travel agent commission concepts in additional detail below.
Travel Agent Base Commission
Travel Agent base commission is typically the lowest tier commission amount that a tour operator or hotel will offer. This is a rate that is offered to any travel agent who sells their product. For instance, below we have described several hotel base commissions, all of which are 10%. The more you sell, the more commission you can make. Many tour operators and hotels will have commission levels like bronze, silver, gold… and the tiers can be reached based on your aggregate sales. There are some hotels and tour operators that don’t have aggregate commission levels but most do.
Travel Agent Tiered Commission
Travel Agent tiered commission is typically based on aggregate sales and provides more commission the more you sell. For example:
|Annual Sales||Commission Rate|
Some tour operators don’t have tiered structures based on aggregate commissions, but instead they are based off of total booking value. So if you book a group with a total price of $2,500 you might get 10%, but if you book a group for $3,500 you get a commission of 12%. The tour operators that offer commissions based on total booking value tend to be better for travel agents who don’t book a lot overall but book large or luxury vacations when they do book.
Travel Agent Upsell Commission
Travel agents can earn larger commissions for selling higher priced accommodations. For example upselling customers to suites from standard rooms or first class from coach. It pays to keep track of current sales and opportunities for upselling. The commission is typically on the total accommodation price, not just the difference between room categories but this can vary depending on the tour operator.
Let’s do the math:
Base Commission for this hotel is 20%
3 Nights Standard Room @ $150 per night = $450.
Commission is $90.
Upsold to 3 Nights in Suite @ $333 per night = $1000
Commission is $200 + $20 for the upsell = $220!
Travel Agent Upsell Commission of $20. Not too shabby for a little “suite” talking and helping your travel client get the room that they deserve. Also, please note, this is an addition to your base commission. This type of offer might help give you an extra push to help yourself and your client.
Travel Agent Commission Cap
Some tour operators include commission caps on offers. Typically these are great offers for customers but end up being so-so for travel agents due to the commission cap creating a maximum amount that the travel agent can earn. For instance, for a certain promotion, commission may be capped at 8%.
Travel Agent Bonus Points
Different tour operators and hotels offer bonus points and bonus cash programs. These programs can be run in a variety of ways. You can use points for trips, discounts, and a variety of other travel agent freebies. Typically bonus points are used to directionally point travel agents to a specific offer which is funded by the offeree. As an example, XYZ vacations might say that you get 100 bonus points to book ABC hotel in the month of January.
Scheduled Air vs. Charter Commissions
Typically for a given tour operator charter commissions are going to be the largest. For charter products a tour operator is taking a risk on selling them and thus has more to gain. Scheduled air is plane seats which were already scheduled via the airline provider and the tour operator is just attaching them to a hotel or other offering. When comparing options for selling charter vs. scheduled air always consider your client needs first and all else equal try to sell charter.
Land Components and Travel Insurance
Travel agent commissions on travel insurance and land components tend to be the highest. Hotels are second and air is third. Although sometimes hotels can bump up your potential commission when they are really trying to move product. You know that your clients are going to be doing land components (car rental and excursions) so why not help them do a little advance planning and add on to your commission.
If your operator doesn’t offer land components, viator is the largest in the business and provides excursion listings all over the world.
Phone Commissions vs. Online Commissions
Sometimes tour operators and hotels will offer different commissions based on the channel that you use to make the booking. Typically online bookings take less effort on behalf of the vendor so they will offer a greater commission for using this channel.
Host Accounts vs. National Accounts vs. Independent Travel Agent
This is an ever evolving comparison as the lines between different programs evolve and work at home travel agencies continue to grow. If you are starting from scratch with no previous experience in the industry my first suggestion would be to get a job with an existing travel agency. Get paid to learn the ins and outs of travel and build a book of clients.
Since the purpose of this post isn’t to tell you where to start we will compare the commissions of the different types of organizations. The pecking order for commissions tends to start with highest commission going to independent travel agencies followed by host accounts and lastly national accounts. The reason for the pecking order is that although host agencies have negotiating power with suppliers, they also take a small part of the commission for themselves. It decreases your risk but also your reward.
If you are looking to join a host agency, compare commissions as this should be a large part of your decision making.
Online booking affiliate programs
There was a great write-up here on comparison’s between online hotel booking affiliate programs if you are considering complementing your travel agency with an online affiliate program. At the at end of the day the commissions aren’t as great but there is the opportunity to service more customers online so it is a trade-off. If you plan to be mainly a online travel agent, do some research into both the online commission structures and also the available information that you can use. Some operators will provide marketing collateral. Some operators have APIs or and XML feed which will enable you to set your website on autopilot and provide fresh information for potential customers. One consideration about online travel agents is who owns the customer relationship after the customer buys online. Ideally you keep it, but this is something to check.
For instance here is an example of Best Western’s affiliate program – https://www.bestwestern.com/en_US/about/affiliate-program.html
Las Vegas Commissionable Opportunities – http://www.lasvegas.com/travel-professionals/commissionable/
How to negotiate Travel Agent Commissions
Leverage in the travel industry comes from production. Whoever is selling the most product is in theory able to negotiate the best rates. This is one reason why host agencies were formed. Travel agencies within a host agency have more collective bargaining power. The only thing that I would suggest is that you shouldn’t ever feel that you can’t ask for a higher commission. Whether from the hotel or from the tour operator or anyone else.
Many suppliers value loyalty. Pick a hotel that you really like to work with. Get to know some of the people who work there. If your clients come to you and don’t know who to go with, send them in this direction. Once you have a decent client list, go back and see if you can negotiate a better rate. If your favorite hotel won’t negotiate, find someone else who will.
This page used to contain information relating to specific hotel programs which has been moved to our hotel travel agent program review page.