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.

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.

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.

If you don’t yet have this capability and are interested in learning more about how it works, take an obligation-free trial of Rezdy. You can set it up see it in action on the same day.

You can also download our free ebook to keep learning about distributing your tourism products:

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14 Comments

  • Tour operators commission describe any booking amount and so it is very critical moment in your topic.

  • Hello am a tour operator based in Uganda how can i connect with travel agents overseas to sell my tour packages.

  • Is this article suggesting, rather than subtracting the commission from the retail cost of the tour, that it should be added on? That is what the chart appears to indicate in the column “gross rate third parties will sell tour for”

    But presumably, I am not relying exclusively on these 3rd party sales, I also have a website for direct sales. I think I would be very angry as a customer, if I paid 25% higher rate for a tour, then I saw the website I could have paid 25% less. Shouldn’t the commission be subtracted from the retail price instead?

    • Hi Dan, You can have a the same retail price on your own website and for agents. Agent booking generally cost you 20% commission, where as you need a marketing budget for bookings on your website. At the moment most of our customers have the same retail price on their own websites as for agents. However, consumers already accept different prices. Look at the airline and hotel industry for instance. It quiet often happens that passengers in airplanes have paid different prices. Something you’d able to manage within a booking software. It really depends on how you want to run your business.

  • I am a sales and reservation to a New Travel Agent base in Malaysia, Borneo. I need your advice of how to promote our tour packages to overseas.

    • Hi Rose,

      Maybe a give away, but are you working with agents from overseas yet? That could be a very good start, as they are usually well connected in their own domestic market. Maybe have a look at our marketplace, There are some large agents that might be willing to sell your tours.
      Also, you might want to try some advertising. Are some of your existing customers from a specific country?

  • I’m a tour operator based in India and have some great itineraries for cultural and wildlife. How can I get hold of travel agents to sell my tours?

  • Hi – I am planning to set up a Travel & Tour Company and I would like to know the charges each transaction (min to max by percentage), such as Local & International airticket booking, hotel booking, tours.

    I am also looking for which systems do I need to put up the business. Hope you can give me more ideas on how to set it up. I am only referring to the websites.

    Thanks and I do appreciate your help.

    Kel

  • I’m a tour operator based in Namibia and have some great itineraries for landscape and wildlife. How can I get hold of travel agents to sell my tours?

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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:

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.

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.

If you don’t yet have this capability and are interested in learning more about how it works, take an obligation-free trial of Rezdy. You can set it up see it in action on the same day.

You can also download our free ebook to keep learning about distributing your tourism products: