By Blake Ng — 20 Jul 2017
Creating a distribution strategy with many different types of agents is necessary to increasing the bookings at your tour and activity company. These partnerships are valuable and beneficial, especially when it comes to improving your brand recognition on a global scale. However, along with those benefits, comes the fact that you must pay agents commissions for reselling your products. Setting your commission rates is a delicate balance of motivating agents to book your tours while also maintaining your profit margins.
Here’s what you need to know about setting agent commission rates:
These agents work directly with travelers in order to book all aspects of their upcoming trips. This can include their flights, transportation, accommodations and excursions. By offering a favorable commission rate, you will motivate retail travel agents and visitor information centre representatives to include your tours in the packages that they create for their clients.
Most retail travel agents will expect a 10% to 20% commission when they book one of your tours and activities.
Tour wholesalers and operators often serve as the link between an independent tour and activity operator and a retail travel agent. They look for valuable experiences and market them to travel agents, allowing them to promote those products to interested travelers. A tour wholesaler is a necessary distribution partner because they will take on some of your marketing efforts and associated costs for you.
In exchange for their promotional efforts and the increased bookings that you will enjoy, tour wholesalers expect a commission that ranges between 25% and 30% of the retail price of your tours.
Inbound tour operators, or ITOs, are based out of your destination, and they typically market travel products in that destination to the international travel market. By partnering with inbound tour operators, you can reach outside of your local sphere of influence and connect with travelers from every corner of the world. ITOs often design vacation packages that appeal to niche groups, such as special interest groups, church organizations or volunteer organizations. They typically market their packages to other tour distributors, such as travel wholesalers or group travel planners.
Similar to tour wholesalers, ITOs expect tour and activity operators to pay them a 25% to 30% commission on the retail price of the tour for reselling their products.
Once you have set the commission rates for agents who resell your tours and activities, you can input that information into your online booking system. It automatically calculates commission payments and distributes the income accordingly when a booking is generated through your channel manager. This simplifies the process for both you and the agent, and can motivate agents to work with your tour and activity company. They know that you stand by your commission rates, and they won’t have to wait endlessly for their commission payment after they finalize a booking for their clients.
For more information on agent commission rates, download the Rezdy distribution ebook now.