How Much Commission Should Tour Operators Give Tour Agents for Bookings?
Your market presence depends entirely on how well you distribute your tourism products to your customers. Here’s what you need to know to do it well.
What is my target market?
You need a clear idea of who you’re marketing to so that you can make sure that your selected agents have access to them. If you’ve been around for a while, take a look at your existing customers. Otherwise, you need to describe who you hope they will be.
Describe your typical customer’s
- Demographics (gender, age, and salary)
- Geographics (location)
- Psychographics (type of lifestyle, motivations)
- Behaviours (frequency of purchase, loyalty to your business)
You will probably end up with more than one type of customer. For example, if you’re a walking tour, you probably have tourists and locals of all ages who come to your tour.
This is OK. You just need to figure out whether you want to increase your market share with them or not, and structure your distribution strategy accordingly.
What costs are involved with distribution?
The commission you pay your agents per booking depends on what kind of agent they are:
- Retail travel agents expect 10-20% of retail price
- Tour wholesalers expect 25-30% of retail price
- Inbound tour operators expect 25-30% of retail price
You can also offer 2-3% commission on top of the existing commission rate to encourage the sale of your product (when they also resell your competitors, for example).
What distribution channels can I use?
Selling direct to your customers isn’t enough to maximise your profits. You need to increase your profits by choosing the right distribution channels:
- Online travel agencies
- Government websites
- Visitor information centres
- Daily deal websites
- Concierge services
It takes a bit of trial and error to figure out which one works best for you. However, there’s one channel that you can’t ignore: direct online sales.
It’s no longer news that travelers are planning and booking tourism products online. In fact, your website is a major indicator of professionalism.
To pass the legitimacy test, think about
- How your audience will find you – are you linked to sites like TripAdvisor?
- Updating site information – is it a quick and simple process?
- Maintaining your site to keep moving with modern technology – is it easy for you to do?
- Online travel agents – which ones can you partner with to direct more traffic to your website?
- An online booking system – do you have a real-time booking form that includes availability?
The internet is being used as a purchasing tool by your customers. If you fail to adapt, then you will inevitable miss out. Travelers will go for convenience every time.
If you don’t have an online booking system yet, learn about how you should go about your selection with our Buyer’s Guide to Choosing An Online Booking System. Many tour operators have found it to be a good resource in their research.
You can also download our free ebook to keep learning about distributing your tourism products:
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