Avoya Travel’s new Instant Commission 2.0 initiative aims to rally the travel industry around a new type of commission structure — one that gives travel advisors a portion of their supplier payout when a booking is made (called “booking commission”), followed by the rest of the payment at the time of travel (called “departure commission). Avoya is currently in talks with various supplier partners about implementing this two-part distribution system, either through their own means or by using Avoya’s existing technology (called “Instant Commission,” developed about 10 years ago). Under this proposed method, suppliers cannot recall the booking commission, even if a client cancels the trip.
Why It Matters
The COVID-19 pandemic has severely impacted travel agency cashflow, and the industry’s traditional payment model has some agents waiting up to 18 months (or longer) to be compensated for the trips they are selling today. Under current economic conditions, this method is no longer sustainable. Avoya rightly believes that travel advisors should be viewed as an asset to be invested in — and key to travel’s overall economic recovery. Early supplier adopters of this distribution model will be seen as top-notch partners and invaluable contributors to the recovery of the industry as whole.
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- Under Avoya’s previous Instant Commission system (developed about a decade ago), an advisor would receive a percentage of their commission in advance, which was paid by Avoya. When the remainder of the commission was paid out in full by the supplier, Avoya retrieved its initial advance before forwarding the rest to the agent.
- Under this second iteration of Instant Commission (Instant Commission 2.0), the initial “booking commission” (which is paid on the service rendered for initial deposit), cannot be recalled by the supplier. On the other hand, departure commission (paid based on final payment, or departure date) may be recalled.
- Avoya estimates that this solution will cost only $6,000 per $1 million (0.6%) in sales, with its return on investment having greater potential than many other sales, revenue management and marketing tools.
- If a supplier's teams do not have the funds to implement this distribution model themselves, they can partner with Avoya, which already has the technological capabilities to put the system into place. If they choose to the latter option, the system could be rolled out as early as November.
- Although some suppliers may not choose to partner with Avoya, the organization says it hopes this will be a “rallying cry” for the entire industry to demand earlier payment.
What They Are Saying
“In order for the recovery to really happen here in the way that is best for the industry, you have to bring everybody closer to where they were from a cashflow perspective,” said Jeff Anderson, co-president of Avoya Travel. “And we believe that these new terms would deliver that. If we can’t figure out a different way of adjusting the commission structure, the investment the suppliers have made over many decades into the travel distribution system will be lost.”
“The finance department of suppliers convinced us it was OK to wait 12 months to get paid on work that we were doing today, but COVID-19 has created a new [challenge], and we have to move on from it,” he added. “Every supplier is under a lot of difficulty, but deposits shouldn’t just fill their own bank accounts … it needs to fill the seller’s, as well.”