Host Agency Commission Plan Comparison Calculator [+ Infographic]
Here's a little secret that you probably already know: Comparing host agencies is maddening! The fees vary, the resource offered vary, and the programs vary, which unfortunately makes it very difficult to run the numbers. *Sigh.* There's no comparing apples to apples here. It's more like apples to ... goats? 😊
But running the numbers is important and it's worth doing, which is why we created a to try to help you analyze the hard numbers! Want a basic rundown of commissions before you dig in? You can check that out here.
Run the Calculator Every ABC
Most agents will do their due diligence when they first start out, comparing the program costs and commission splits in order to find the best one for their travel agency. But what about later on?
New players come into the market, different programs pop up, and those changes could save your agency a chunk of change. That's why we recommend coming back and running the calculator anytime one of the ABCs occurs:
B efore any Big Bookings (especially groups)
C hanging Host Agencies or Consortia
If you'd like us to send you a reminder to check the calculator, we'll send you one every spring. Just enter your email here:
A Primer on the Commission Payment Process
Before we dive into finding the best commission plan, I want to make sure we have a good understanding of how the whole host agency commission process works.
There are lots of reasons travel agents sign up with a host agency but one of the main reasons is to book under the host’s accreditation number (kind of like a travel agency’s ID #). The benefit of using a host’s accreditation number is two-fold:
First, it means you don’t have to have the experience, time and money involved in getting your own accreditation.
Second, it means you’ll likely earn higher commission cut from vendors if they pay on a tiered commission structure. Since a host’s sales are an aggregate of all the independent travel agencies booking under their number, they will typically have much higher sales than an individual agent with main suppliers. That equals more ‘pull’ and often higher commissions.
To give you an example of the whole process:
You book with Supplier ABC using Awesome Host Agency’s accreditation number.
Supplier ABC recognizes your booking as belonging to Awesome Host Agency and pays the appropriate commission to them.
Awesome Host Agency receives the commission and looks in their records to see which one of their independent contractors made that booking. Host agencies typically have some sort of invoicing process in place where ICs let their hosts know details on the bookings they’ve made. Without that, hosts don’t know who booked what under their accreditation number and can’t pay you! Moral of the story – make sure you know your host’s invoicing process!
Once Awesome Host Agency finds your booking information, they know the commission belongs to you. They take out their agreed upon commission percentage and pay the rest to you!
Host Agencies and Commission Splits
If you belong to a host agency, chances are that your contract with them will include a commission split. Some agents express soreness at having to split commissions with a host, but it’s important to remember what you get in return.
Hosts—with their higher cumulative sales—are typically better able to negotiate higher commissions with a vendor than an individual agency. This means you’ll be able to earn a much higher commission from a host’s preferred vendors than you would earn on your own, big time. (Want to read up more on preferred suppliers? Check out this resource!)
Just a little side note, it is also important to remember that host agencies are businesses too. They have staff that provide support, marketing, programs, etc. You want your host agency to be a successful business—to continue to grow with you in a symbiotic relationship. A good host will grow with you and be continually improving what they can offer you in terms of programs, support and networking.
To give you a concrete example, let's say you have annual sales of $10,000 with Supplier ABC. According to their commission tier table, you would be earning 10% if you were booking with supplier ABC on your own (not through a host and with no consortia/co-op/franchise affiliation). Now let's say you decide to join a host agency whose sales with Supplier ABC are over $500,000. That means when you book w/your host's accreditation number, your booking now earns 15%. Hurray, 5% more!
So on a $5,000 booking you went from making $500 in commission to $750. Woo hoo! Now let’s factor in your commission split with your host agency. Maybe you're on a 80% split where your host agency takes a 20% cut. That leaves you with $600—$100 more than if you had booked on your own. That is just for one booking—those extra percentage points really add up!
Everyone's situation will be different and there are so many factors that can affect attempting an equation like above (any host fees you have, your commission split level, the vendor commission structure, your sales with specific vendors, etc.). But it should give you a general overview of how to start thinking about commissions.
If you want a more thorough look at commissions, definitely check out our Travel Agent Commissions, Explained article!
Common Host Agency Commission Structures
Like comparing different vendors, commission splits and fees are going to vary between different host agencies. Each individual host typically has a range of commission split options. Sometimes they're straightforward options while others may depend on your sales volume, whether you’re using their leads program (some hosts pay a lower % for leads), and what commission split you’re able to negotiate with your host (for those open to negotiation).
I took a look at our most recent host agency audit to give you a general idea of what kind of commission splits and fees you can expect from hosts listed on the site.
Our FREE Host Agency Commission Comparison Calculator
Alright, you’re armed with data of common host agency commission and fee structures; plus you’ve got the foundations of how commissions work between suppliers, hosts and you, right? Perfect! Now let’s dive into finding the best plan for you!
We created two slightly different commission calculators for you depending on if you’re comparing plans with the same host or are comparing plans across host agencies. Basically, if you’re comparing across host agencies, we’ve added fee sections so you can account for the different fee structures of the agencies you’re considering.
If you’re more of a visual person, we whipped up a quick video to show you how the calculators work!
How to Use the Host Agency Plan Comparison Calculator to Compare Tiered Plans from a Single Host
Many hosts offer different tiered plans for different costs. Is it worth it for you to bump up to a higher tier? To find out, enter the total amount of commissions you earned over a 1 year period. You want the full amount BEFORE your commission split or fees were taken out. (If you’re already with a host, it’ll be the number on your 1099.)
If you’re just starting out, use $2,500 as an example. According to our 2017 Travel Agent Income Report, this is the average AGI for new agents.
Next, enter in the plan details
Finally, check out your bottom line!
How to use the Host Agency Plan Comparison Calculator to Compare Plans from Different Hosts
Take the same steps as above except you'll have a lot more details for each plan to fill out. See below:
Our Secret Sauce Tips:
- If you’re not sure on a fee for one host, leave it $0 for all hosts so it doesn’t skew your numbers
- If one host offers a program that another host doesn’t—keep that in mind when looking at your bottom line. It might look like one host has a lot of fees but they might be justified by access to more programs than another host
- If a program is optional and you won’t use it, don’t add it to the calculator!
- Don’t forget it isn’t a straight numbers game. How you get along with the host, who their preferred suppliers are, what programs they offer, etc. are all going to vary and what is best for you will likely be different from another agent.
Choosing a host agency or consortia can be a time-consuming and tedious for many agents. I hope our calculator helps make things a bit easier for you! If you're a new agent, make sure to check out our Tips on Finding the Best Host Agency article and sign up for our FREE 7 Day Set Up program to get your agency off the ground and running.