Working with travel agents in return for commission can be a powerful way to grow your tour or activity bookings. Did you know that 72.65% of respondents in our latest Global Industry Survey said that they’re working with other agents and/or resellers? 

There are several important reasons why commission-based reselling can benefit your business and provide great value. But setting travel agent commission rates can be tricky. How can you set these so that resellers are motivated to sell your tours, without leaving you at a loss? 

By the end of this post, you’ll have a clearer idea of what commission to pay each of your agents in 2022.

How do travel agent commissions work?

A commission is the fee you pay to travel agents and resellers who market and resell your products to their own customers. In many ways, commissions can be more advantageous than other marketing and promotion efforts. After all – people are actively looking to book when they speak with a travel agent!

So what is best practice for agent payments and commission rates in 2022? Let’s look at the different ways commissions are paid.

Types of travel agent commission structures

Travel agents typically either work by Percentage or Net Commission, depending on how they operate and the size of their business.

Percentage Commission

Percentage commission rates are a popular option for travel agents and resellers. With this option, you set a retail rate that includes both your business profit and a percentage-based commission for the agent. So if you’re selling a tour at $80 with a travel agent commission percentage of 20%, the final retail price via that reseller would be set at $100.

Net Commission

The net commission option is often favored by larger agents and online travel agents (OTAs). With net commission, you set a minimum net price for your product and agents get to choose which commission rate they apply on top of that. So you might sell a tour at $80 which is profitable for you, and the reseller could then choose to resell it at $80, $100, $110, or their price of choice.

Charging Fees

Some travel agents and OTAs may charge a payment processing fee or other fees on top of your commission rate. These are fixed, so you can typically research these extra costs before choosing to work with that reseller. 

Typical commission for travel agents by type

typical travel agent commission

Now let’s explore the industry standard rates for tourism products. These vary with the type of travel agent you work with, so here’s a quick recap of the booking process:

  • A traveler contacts a retail travel agent and books accommodation and tours for several weeks.
  • The travel agent plans an itinerary through a brochure of a tour wholesaler.
  • The tour wholesaler contacts an inbound tour operator (ITO) to book each element of the tour itinerary, and the ITO then contacts individual local tour operators to book tours directly.

So typical commission for travel agents will largely depend on which of these tour agents you are working with:

Retail Travel Agents

Visitor information centers and traditional travel agents fall into this category. Think those with brick-and-mortar stores such as Flight Centre or Helloworld. They sell travel services directly to customers and book and purchase all elements of the holiday on their behalf. You might not often deal with retail travel agents directly, but rather with a tour wholesaler or inbound tour operator. 

Standard commission rate in 2021-2022: 10%-20% of the retail price.

Tour Wholesalers

Tour wholesalers never sell directly to consumers. Instead, they link individual tourism operators with retailers, supplying touring options that include travel, accommodation, and tours.

Tour wholesalers promote tour programs that they think will appeal to certain markets, targeting both consumers and retail travel agents in their advertising campaigns. Every wholesaler has a different price for operators to participate in their programs. Because they can connect you to a wider range of distributors, the standard travel agent commission percentage for these resellers is usually higher than for retail travel agents.

Standard commission rate in 2021-2022: 25%-30% of the retail price.

Inbound tour operators (ITOs)

Inbound tour operators are based in your country, and they develop programs for distribution through overseas travel distributors. ITOs link-local tourism products with the overseas travel distributors that buy them (which can be travel wholesalers, direct sellers, travel agents, meeting planners, and event planners).

ITOs typically have packages tailored to the individual’s interest. For example, volunteering could be one such tailored tourism package. They create an itinerary that includes accommodation, tours, transport, and meals – coordinating the booking confirmation and payment for clients. An ITO does lots of the heavy lifting, so they typically require a higher commission rate that they then share with the wholesaler and/or travel agent.

Standard commission rate in 2021-2022: 25%-30% of the retail price.

NOTE: You don’t need to pay commission to each of these distributors separately – if you use an ITO and the commission is 30%, they will then pass 10% on to the wholesaler and 10% on to the retail agent.

How much should I pay? Calculating travel agent fees & commissions

The Tourism Council of WA has provided a useful calculation table that you can use when setting rates.

calculating travel agent commission and fees

 

Another useful tip is to consider offering an additional “over-ride” commission to encourage sales: generally 2-3% on top of existing commission rates. This acts as an extra incentive for agents to put time and effort into promoting your products.

How can tour operators simplify tour agent booking management?

As you negotiate and set your commission levels for travel agents, you’ll need an effective way of accepting and managing bookings that you receive via tour agents. If you already use an automated tour booking system, it should allow tour agents to log in for free and send you bookings – all while calculating the appropriate commission that they’ll be paid. Rezdy Marketplace is an ideal option. Not only can this make life much easier for you, but your agents will love it too.

Step two is to download our free handbook on finding and working with the ideal travel agents. By mastering the art of partnering with agents, you can increase your bookings and maximize your profit.

Download Finding the Right Reseller

To find out how Rezdy can help your tour and activity company, start your FREE 21-day trial or request a free demo today.

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