How Much Commission Should Tour Operators Give Tour Agents for Bookings?


3 Jun 2018     |    Blake Ng

To your agent, commissions mean income. But setting commission rates can be tricky. How can you set it in such a way that they are motivated to sell your tours, but it doesn’t leave you at a loss?

Read this post, and by the end of it you should have a clear idea of what commission you will pay each of your  tour agents.

What’s the industry standard for tourism products?

Before we get into it, here’s a recap of the booking process:

  • Tourist contacts retail travel agent and books accommodation and tours for several weeks.
  • Travel agent plans itinerary through a brochure of a tour wholesaler.
  • Tour wholesaler contacts inbound tour operator to book each element of the tour itinerary.
  • Inbound tour operator contacts individual local tour operators to book tours directly.

 

Try Rezdy for free

So typically it depends on what type of tour agent you are working with:

1. Retail travel agents

Visitor information centres and traditional travel agents fall into this category. They will sell travel services directly to customers and book and purchase all elements of the holiday on their behalf. You probably won’t deal with them directly, but will deal with a tour wholesaler or inbound tour operator.

Standard commission rate: 10%-20% of retail price.

2. 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.

They 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.

Standard commission rate: 25%-30% of retail price.

3. Inbound tour operators (ITOs)

Inbound tour operators are based in your country, and they develop programs for distribution through overseas travel distributors. They 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 of travel arrangements on behalf of their clients.

Standard commission rate: 25%-30% of 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.

 

Try Rezdy for free

Is there a formula tour operators can use to calculate commission rates?

Yes! SmallBusiness WA have provided a great formula that you can use.

smallbusinesswacalculatecommission

You may also want to offer additional “over-ride” commission to encourage sales, which is generally 2-3% on top of existing commission rates.

What can tour operators do to simplify tour agent booking management?

Once you have your rates sorted, you need a good way of accepting these bookings that are being sent to you through your  tour agents.

You don’t want to be creating more work for yourself. 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 will be paid.

Not only is it easier for you, but your agents will love it too.

Did you know that globally, 72.65% of respondents in our latest Global Industry Survey said that they are working with other agents and/or resellers? Download the Industry Survey eBook today:
Tour Operator Trends Global 2018

Want to learn more?

Get your hands on the Australia and New Zealand Industry Survey results here: Download here

Or grab the latest United States and Canada Industry Survey results here: Download here

 

How Much Commission Should Tour Operators Give Tour Agents for Bookings?

, , , ,

To your agent, commissions mean income. But setting commission rates can be tricky. How can you set it in such a way that they are motivated to sell your tours, but it doesn’t leave you at a loss?

Read this post, and by the end of it you should have a clear idea of what commission you will pay each of your  tour agents.

What’s the industry standard for tourism products?

Before we get into it, here’s a recap of the booking process:

 

Try Rezdy for free

So typically it depends on what type of tour agent you are working with:

1. Retail travel agents

Visitor information centres and traditional travel agents fall into this category. They will sell travel services directly to customers and book and purchase all elements of the holiday on their behalf. You probably won’t deal with them directly, but will deal with a tour wholesaler or inbound tour operator.

Standard commission rate: 10%-20% of retail price.

2. 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.

They 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.

Standard commission rate: 25%-30% of retail price.

3. Inbound tour operators (ITOs)

Inbound tour operators are based in your country, and they develop programs for distribution through overseas travel distributors. They 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 of travel arrangements on behalf of their clients.

Standard commission rate: 25%-30% of 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.

 

Try Rezdy for free

Is there a formula tour operators can use to calculate commission rates?

Yes! SmallBusiness WA have provided a great formula that you can use.

smallbusinesswacalculatecommission

You may also want to offer additional “over-ride” commission to encourage sales, which is generally 2-3% on top of existing commission rates.

What can tour operators do to simplify tour agent booking management?

Once you have your rates sorted, you need a good way of accepting these bookings that are being sent to you through your  tour agents.

You don’t want to be creating more work for yourself. 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 will be paid.

Not only is it easier for you, but your agents will love it too.

Did you know that globally, 72.65% of respondents in our latest Global Industry Survey said that they are working with other agents and/or resellers? Download the Industry Survey eBook today:
Tour Operator Trends Global 2018

Want to learn more?

Get your hands on the Australia and New Zealand Industry Survey results here: Download here

Or grab the latest United States and Canada Industry Survey results here: Download here