How Do Travel Agent Commissions Work?

Travel agent commissions originate from the accreditation number assigned to travel agencies. When you make a booking, the supplier asks for your agency's accreditation number to identify you and allocate the commissions accordingly. Think of it as a unique identifier, similar to providing your name and date of birth at a doctor's office. Common identification numbers are IATA, ARC and CLIA.

Host Agencies and Travel Agent Commissions

Host agencies play a significant role in the travel industry. They have a network of travel agencies and agents that use the same accreditation number, making it easier for suppliers to recognize them as a single entity. Consortia and some franchises, on the other hand, require individual agencies to have their own accreditation numbers.

Using a host agency's accreditation number offers several benefits, including simplified accreditation processes and better commission levels due to higher sales. Host agencies negotiate higher commission tiers based on their sales volume, allowing them to offer more lucrative opportunities to their agents.

To better understand the flow of commissions, let's use a real-world analogy. Think of the relationship between a real estate broker and a real estate agent. The broker receives the commission at closing and then pays the agent their commission after taking their cut. Host travel agencies work the same way. The host agency and the agent, or agency, agree to a commission split. The host receives the comission from the travel vendor, and then gives the agent their cut.

Typical Travel Agent Commissions

We cover this in more detail in our training, but commissions differ from vendor to vendor. The average commission you earn is called your "yield" - you want this to be above 10%, which is easy to do in this industry unless you're booking frequently with vendor that has an increidbly low commission payout. We like our agents to be closer to 14% in their yield. As you learn to navigate the industry, you will find amazing vendors with high commissions that can get your yield up. It is important to note, however, that the most important thing is matching your client to the best property, regardless of comission, so that they book their next trip with you. Long term clients will make you more money than short term, but high yield bookings.

Another thing to understand is in regards to flights. Many flights pay zero commission, and can event cost the agent money. However, international first and business class flights can pay incredibly high commissions and be a profitable business segment.

We are constantly negotiating for higher commissions for our agents, and even have members of our team dedicated to negotiating wholesale contracts, which have incredibly high yields. However, we cannot share the specifics publicly.

Understanding Commission Confidentiality

Commission contracts between travel agencies, consortia, and vendors are confidential, similar to trade secrets. As a result, consortia and hosts may not readily provide detailed commission guides. However, you can still inquire about commission information for your top vendors, ask for a list of preferred suppliers, and get an idea of the sales volume associated with those vendors.

More Ways to Earn

Aside from travel agent commissions, there are other income streams available to agents. These include service fees, consultation or planning fees, markups from net rates, and selling insurance. We ban charging clients fees at our host agency, as we have proven multiple times that charging fees decreases earnings long term, however, many host agencies and industry resources encourage charging fees.

We hope this article provides you with a thorough yet simplified understanding of travel agent commissions. Remember, joining a host agency, franchise, or consortium can offer valuable benefits, including access to negotiated commission tiers and better contracts with suppliers. If you are searching for a host agency, check out our free travel agent training program. We may or may not be the right host agency for you, and we suggest that you shop around before committing to a host.

Our agency is built to be higher pressure and caters to those looking to earn six or seven figures. Our travel agent training is very difficult and you are not gauranteed to pass. We take a loss on all recruits until they start selling, so we are very motivated to help you make bookings. That being said, we would not be a good match for something looking to make a few thousand dollars a year so that they can take thier family to Disney. If you are not good at sales, do not want pressure to perform, a host agency that charges a fee and who does not care whether you actually make sales would be a better match.