As the travel and tourism industry faces unprecedented challenges, some suppliers are showing their support of the travel agency community by paying a percentage of their commissions upfront.
Among the companies that have recently made the decision to do so is Titanium Tours, a Bedminster, New Jersey-based tour operator that specializes in Western Europe.
“We only sell through travel advisors, so we really believe in the partnerships that we have,” said Jesus Repetto, co-founder and CEO of Titanium Tours. “The response has been very positive.”
Titanium previously didn’t pay commissions until clients returned from the trip. Now, the company pays advisors 50% of their commission once a booking is fully paid, or if an advisor includes the commission in their client’s deposit. The balance is paid upon the client’s departure from North America. The new policy will stay in place permanently, according to Repetto.
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Another company that has changed its commission policy is Austin Adventures, a Billings, Mont.-based tour operator that sells adventure packages across multiple continents, including U.S. national park tours.
Dan Austin, the company’s founder and owner, says the decision to revise the policy was a response to the reality of today’s marketplace.
“It became clear that agents were working harder than ever canceling, rescheduling or just comforting their clients,” he said. “As we went back and forth with agents, it dawned on me that while this has been tough on us, agents were looking at no commissions until the guest travels — and that is likely going to be 2021. This is a chance to illustrate and highlight our commitment and get a chance to earn agents’ trust and business.”
As we went back and forth with agents it dawned on me that while this has been tough on us, agents were looking at no commissions until the guest travels — and that is likely going to be 2021.
Described as a “two-part stimulus program for travel agents,” Austin Adventures now pays travel advisors half their commissions for all new bookings in 2020 and 2021 at the time of booking, rather than after travel is completed. In addition, the company has designated certain tour departures from fall 2020 through 2021 that will allow advisors who book 10 customers on their departure to receive a 12% commission as well as free travel for themselves and a companion.
The new program is in place through 2021, although Austin says that “the more we think about it and the more we talk to agents, we will likely extend indefinitely.”
Early commission payments are especially crucial for travel agency survival in today’s challenging business environment, according to Andre Robles, managing director of Voyagers Travel Company, a travel agency with offices in New Jersey and Ecuador.
“We cannot be expected to send all funds to our suppliers and have to take out a loan for us as travel agents,” he said. “That would make no sense. Fortunately, we have an amazing network of suppliers that are willing to offer commission or the proportion of commission related to the deposit they receive be discounted upfront.”
Suppliers that do not understand this and who will not release part of the commission in advance will not be getting our business in these times.
Robles, whose agency specializes in South America travel, says that companies including Latin Trails, Kleintours, Legendary Peru and Aqua Expeditions are among the operators that offer either upfront commission or the possibility of taking direct payments and subtracting the commission.
“We are in this together, and most of our suppliers agree,” Robles said. “We will work with them together as a team and are preparing to emerge stronger from this crisis. Suppliers that do not understand this — and won’t release part of the commission in advance — will not be getting our business in these times.”
Will more suppliers take note and join the ranks of upfront commission payments?
“It depends, since everyone has a different business model,” said Titanium’s Repetto. “Some fellow tour operators have reached out to me to see how we created the program, but they didn’t follow through later.”
Suppliers That Pay Upfront Commission
Some suppliers have been paying some or all of the commission upfront for years. A few examples:
- The Caribbean Crewed Charter Yacht Association pays travel advisors a full 10% commission at the time the charter agreement is signed, and the charterer's deposit is made.
- Eurobound, which sells customized European tour packages, typically mails advisors a full commission check along with client documents.
- 5 Star Villa Holidays, a U.K.-based villa rental service, pays full commissions on the seventh of the month following the reservation.
- Ultimate Jet Vacations, meanwhile, pays the full commission on its luxury vacation packages as soon as the booking is paid.
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