how to set agent commission for tours & activities
DESCRIPTION
Setting the right commission rate for your agents is a tricky task for tours and activities. We break down the essentials of what you need to know to get your rates right in distributing your tour products.TRANSCRIPT
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How to set
AGENT COMMISSIONfor Tours & Activities
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For tour and activity operators,
setting agent commissions can
be tricky.
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It’s a delicate balance of
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It’s a delicate balance of
- Motivating agents to sell
your tours
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It’s a delicate balance of
- Motivating agents to sell
your tours
- Remaining profitable
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Here’s what you need to know.
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#1
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#1
Rate Lingo
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Retail rate● What customers pay
● Should be consistent across distribution network
● Based on consideration of your operating costs, profit margin, and
distribution network costs
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Nett rate● Operation costs + profit margin you want to
make per sale
● The minimum amount you can sell your tour for while still making a profit
● What distributors see to add their commission to
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#2
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#2
Industry Standard Commission Rates
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Direct DistributionCommission is set by you and your
agent (not less than 10%)
Hostel
You
Concierge
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Complex DistributionThe tourist contacts a retail travel
agent, booking accommodations and tours for several weeks
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Complex DistributionThe retail travel agent plans an
itinerary through a brochure of a tour wholesaler
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Complex DistributionThe tour wholesaler contacts an
inbound tour operator to book each element of the tour itinerary
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The inbound tour operator plans the itinerary through a brochure of a tour wholesaler and books with individual
suppliers - including you!
Complex Distribution
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You DO NOT pay commission to each person
in this process.
Instead, you pay all of the commission to the ITO.
Each agent will then take their cut.
Complex Distribution
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Complex DistributionYou pay an ITO 30% commission directly
The ITO keeps 10% and gives 20% to a Tour Wholesaler
The Tour Wholesaler keeps 10% and gives the remaining 10% to the Retail Travel Agent
The Retail Travel Agent retains the 10% commission
30%
10% 20%
10%
10%
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#3
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#3
Quoting Commission Rates
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Use the formula created by Small Business WA. Repeat for each of your
products.
Commission Rate Formula
You may also want to offer additional “over-ride” commission to encourage sales, which is generally 2-3% on top of existing commission rates.
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#4
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#4
Ongoing Management
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Consider how you will manage agent bookings
on an ongoing basis.
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Does your online booking software manage agent
bookings?
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Does your online booking software manage agent
bookings?
Allow agents to check
availability and book in real time
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Does your online booking software manage agent
bookings?
Allow agents to check
availability and book in real time
Manage commission reconciliation payments
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Does your online booking software manage agent
bookings?
Allow agents to check
availability and book in real time
Manage commission reconciliation payments
Produce agent sales
reports
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Rezdy does.
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“[Agents] can see your live calendar, book people in, and bang - you get
the money, they get the commission, and everyone’s happy.”
Colin Thwaite, Owner & Director of Oz Whale Watching
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Agents can log in, send you bookings, and get paid - all
based on the commission and products you set for them.
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That means less admin, and more time doing what you love.
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ABOUT REZDY
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ABOUT REZDYRezdy is a powerful online
booking software for over 700 tour operators worldwide
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ABOUT REZDYRezdy is a powerful online
booking software for over 700 tour operators worldwide
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Want to learn more?
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Get in touch!
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Get in touch!
Aus: +61 (0) 2 8244 3060USA: +1 415 655 1633