How Much Commission Should Tour Operators Give Tour Agents for Bookings?
A successful distribution strategy for tour and activity businesses requires mixing up your sales channels so you’re not overly dependent on any one source for bookings.
We examine the dangers of being overly dependent on any one distribution channel, in relation to the top 5 being used by tour operators.
1. Your website
According to our survey of Australian and American tour operators, direct bookings through your own website are the strongest source of bookings.
- Even though travelers discover you elsewhere, some prefer to book directly with you, because it’s seen as the most reliable way to book themselves in. The perception is you will have the most up to date availability, so there’s less risk of overbooking or error.
- Bookings are cheaper, and can even be commission-free if you’re using a booking system like Rezdy.
The Danger:
If you rely solely on direct website bookings, you are highly dependent on your search engine ranking and any other place that you’re listed. If you lose your place in your listing (eg. Google makes a change that affects your search rank), there goes the majority of your bookings!
2. OTAs (Online Travel Agencies)
Many travelers head to OTAs to book in their tours and activities because OTAs guarantee a high standard of customer service.
- OTAs have the resources to market your tour or activity well. Consider the commission a marketing cost.
- Different OTAs have access to different customer bases. Often they are niche markets, so partnering with OTAs is a great way to tap into new markets.
The Danger:
If you are too dependent on any one OTA, they can easily increase their commission rate. You won’t be able to say no, because if they stop reselling you, you lose a significant percentage of your bookings.
3. VICs (Visitor Information Centres)
Many travelers head to Visitor Information Centres to look for recommendations.
- VICs are great for last minute bookings, because they are often the first point of contact for travelers in your area.
- Most VICs will charge commission for bookings. However, according to our survey, some VICs in the United States do not charge commission.
The Danger:
Depending too much on your local VIC means that you only get bookings when they’re in they’re in the office. When they’re closed for any reason, you lose out.
4. Online Review Sites
There are a heap of stats around why you should be leveraging online reviews for your business.
- 93% of global travelers say their booking decisions are impacted by online reviews (Trip Barometer).
- The most important sources that influenced the decisions of global travelers were travel review websites, online travel agencies, and tour operator sites (Tourism Research Australia).
The Danger:
We’re not here to contest the idea that you should spend time and energy on building positive reviews – we’re just saying you shouldn’t be overly reliant on those sites as a referral source of bookings.
Why? A couple bad reviews can not only scare potential customers away, but they push you down in your rank, meaning less visibility for your business.
5. Concierge services
Concierges often act as the go-to person at a traveler’s hotel. Because of this, they have a lot of power to recommend your business, making bookings on behalf of hotel guests.
- Tour operators usually make deals with concierges individually, giving them cash-in-hand commission.
- Commission rates for concierges average 5-10%.
The Danger:
If you are too dependent on concierges, your bookings slow down when they aren’t at work. They are also heavily driven by commission, so a competitor could easily offer them that bit more, causing them to stop reselling you.
How many distribution partners do you have?
Tour operators in 73 countries use Rezdy daily to sell thousands of products in real-time on their website and through thousands of distribution channels. Take a free trial to see how it works.
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