Host Agency Not Paying Commissions? Here's What to Do.
Any time you say the word travel agent and the phrase host agency not paying commissions, it's not good. Let’s face it, when a host agency isn't paying commissions, the topic is a complete Debbie Downer. While I’m happy to report that this does not happen very frequently, there have been times that a host agency has defaulted on paying travel agents their commissions. After all, that's probably why you're popping by here for a visit.
But we’re going to try to make the best of a bad situation. The article is going to be kind of like a choose your own adventure. Here are a few shortcuts linked to paths you can take:
1. Damage Control Maybe you're just starting out. Maybe you haven't even chosen a host yet. If that's you, then just keep on reading dear friend. We start of with some damage control strategies for newer agents to keep in consider when choosing a host agency.
2. Damage Is Already DoneIs your host agency not paying you commissions? This path is for those who are in that bind—regardless of whether your host owes you $200 or $20,000.
First just let me say that I'm very sorry this has happened to you. We've consulted a legal expert to outline concrete steps you can take in order to have the best chances of getting your host to compensate you.
After you complete those steps, I recommend you come back and read step 1 to start your search for a new host agency.
3. Link to PATH Hosts Listed on Host Agency Reviews Want to check out which of our listed host agencies affiliated with the Professional Association of Travel Hosts (PATH)? Look no further. We made a resource for you here to speed up your research process.
Okay, I know I'm a new parent, but I'm not going to be one of those annoying parents who's like, "Well how did you get in this situation in the first place?"1 Because you know what? It happens to the best of us.
But I will be the over-cautious parent who tries to give you a million ways to prevent the situation from happening in the first place. Basically it comes down to this (I promise not to try and make it sound like a lecture):
Choose Your Host Agency Very Carefully . . .
I know, this sounds obvious. But here's the thing, when I get really excited about something—like how you're excited to start a travel agency or you're ready to switch host agencies—sometimes I jump into decisions. Even big ones. Is this you? Are you one of the aspiring agents who are ready to be selling travel yesterday?
Well you might want to slow down and take a deep breath. Because choosing a host agency, franchise or consortium is kinda a big deal. You need to go through a dating phase before you commit.
Where to start? Well if you're reading this and you have not stumbled into our 7-Day Setup Travel Agency Challenge, for the love of all things holy stop reading this and go sign up —and I do not say this lightly, because I really do want everyone to read this article—and come right back.
You're back? Okay, good. Now that you're signed up, here's a few strategies to make sure you really dot your i's and cross your t's when looking at a host agency. There are a few additional steps to take after you've already narrowed down your list through your 7-Day Setup work:
1. Read Reviews & Reach Out on the 7-Day Setup Support GroupReading the reviews is a no-brainer, but don't miss out on checking out hosts in the 7-Day Setup FB Support Group as well. The nifty thing about the support group is that you'll get candid feedback from agents who are (or were) in the very beginning process of signing up with the host agency.
This is awesome because they're in the same boat as you when they comment—they're also just starting out, and many of the comments relate to the early communications with a host and/or their on-boarding process. (PS: If you're an experienced agent, a better Facebook group to research hosts would be our Travel Agent Think Tank FB Group.)
The best way to check out the group's conversations is to search for the host agency or franchise in the search field on the left hand side of the screen. This way you can see what people have already said about that particular host agency, then post any new questions you may have to add to the conversation!
2. Check a Host's AffiliationsPeople email me all the time asking how I know if a host agency is legit. There's not a whole lot of regulation in the US host agency industry (like, zilch), so any Jane or Joe can go on and open an host agency without so much as batting an eye. So it can be tough to put your trust in a host agency where there are so few barriers to entry in the host industry.
Luckily, there are organizations such as PATH (Professional Association of Travel Hosts) and ASTA affiliate, NACTA (National Association of Career Travel Agents), that do have barriers to entry—rigorous ones. They don't just accept host agencies willy nilly. Organizations like these offer a level of accountability to travel agents. To join these organizations, as well as maintain membership, hosts need to be in good standing with with their agents.
These agencies create barriers to entry for the host industry. With PATH, for example, if a host isn't in good standing with their agents, they risk losing their affiliation.
According to Betsy Geiser, PATH board Vice President and Vice President of Uniglobe host agency, if a host agency doesn't follow up on a claim of not paying their agents commissions, "[PATH] would call the agency and tell them they need to rectify immediately or the lose their PATH Membership."
The good news is that this is a rare occasion for PATH hosts due to their rigorous membership standards . . . all the more reason to look for a host agency that's affiliated with them.
What exactly do these associations require for a host's participation? Check out
It's no cakewalk.
3. Read Your Host Agency Contract Carefully:The host agency contract is not a time when you want to sign whatever piece of paper someone puts in front of you. The golden question is what to look for in a host contract when it comes to commission payment.
I asked one of our favorite lawyers on the block, Mark Pestronk, about this and here's what he had to say when I asked him what to look for in a host agency contract in regard to commission remuneration—that is, what happens if the host agency is not paying commissions but you think you are owed the commission:
"Since the most common cases of hosts’ failure to pay are due to controversies about what is owed, make sure that the contract is very, very clear on the issues of:
1. The percentages of revenue split for each kind of sale
2. The types of revenue to which the percentages apply
3. The types sales to which the percentages apply
4. The extent to which costs are deducted before the split
5. The method or timing of recognition of revenue or sales (very important)
6. The frequency of payment
7. The deadline for payment
The second most common cases of hosts’ failure to pay are due to departing ICs who expect to get paid after they leave. So, the contract should cover:
1. Whether the IC gets paid after leaving for revenue received by the host after the IC has left
2. For how long after termination the payments continue
3. When such payment is due"
If a host doesn't have the above information in their contract (a red flag?), you can ask to get it in writing. This is material you'll point to if the situation ever arises that a host doesn't pay your hard-earned commissions.
Have more pressing questions about a host contract? Contact Mark or another travel lawyer to advise you. We have MORE legal advice in this very article, but in the interest of suspense, I'll just end on this cliffhanger here.
If you're already contending with this conundrum, and host agency isn't paying you commissions, then here's what you can do.
Damage Is Done: Host Agency NOT Paying Commissions
First Things First: Verify It's Your Host's Responsibility
If your host agency is not paying commissions, don't fret just yet. There may be a clerical error on your part. Or, if not, it might be the responsibility of the supplier.
First, you'll want to double check your own records to make sure that you invoiced the sale and are owed payment. Double check your clients' travel dates and the deadline for payment. If you have Mama brain like me, this could be the culprit.
Most host agencies have an internal program via their travel agent portal where travel agents can track their commissions. Here you can see what’s paid, what’s outstanding and other details. In fact, this is one of the under-sung advantages of going with a host agency . . . host agencies do a lot of accounting for you.
If you have taken these measures and are still looking for your moolah, you'll also want to make sure the supplier has followed through on remitting payment to the host agency. Jackie Friedman, Director of the PATH board and President of Nexion host agency offers a few tips:
I would certainly suggest that the agents contact any suppliers that the have outstanding commissions with, and determine if those commissions have in fact been paid to the host yet. If they have, the agent should document the check number and date that the commissions were sent."
If you do find it's the host's responsibility, hopefully they'll smile, apologize and give you your payment. If you don't, then there are ways to put on extra pressure without a costly lawsuit.
Turning up the Heat When Hosts Are Unresponsive
If you didn't get the smile and apology you were anticipating (or you only got the smile), it's time to take a deep breath and get ready to escalate. But guess what, this does not mean yelling on Facebook or even review sites (yet). It's time to keep your professional cool, even if internally you are a hurricane of rage.
1. Go to the supplierIf going directly to the host agency doesn't work, approach the supplier. They will have more leverage over the host agency if they're willing to cooperate with you. Here's what Jackie recommends:
. . . advise [the supplier] the host agency is not paying commissions that are contractually due to them. The supplier may hold off on sending the commission to the headquarters pending investigation. If multiple agents did that, it might get their attention."
Going to a supplier is effective because they can essentially do to the host, what the host is doing to you—withholding commissions. But a host agency will also be motivated to respond, not just because of the mega moolah being withheld, but because they'll want to preserve their reputation with travel vendors. The travel industry is a small world!
No dice? Well then take Mark's advice—numbers 2, 3 and 4 below.
2. Consult an attorney to see what your rights are (if any).
This will help you escalate your appeal to the host agency. Check out HAR's list of travel industry attorneys. Which brings me to #3 . . .
3. Write a formal business letter demanding payment.
Asking politely didn't work and maybe the supplier told you their hands are tied and there's nothing else you can do? Now is time to get your ink and quill pen to write a formal business letter to the host agency not paying commissions. Mark reiterates to keep your communications 100% formal, "Don’t use email, texts, or phone calls."
This means no Law and Order theatrics. In fact, it'll be a pretty dry read for any party not directly involved.
That's right, keep it old school (and boring).
You also don't want to blow a gasket on your (or the host's) Facebook page. Write that angry email burning inside you in your diary—do not send it to the host! Don't write an angry review on Host Agency Reviews until you've seen this through to the end—and even when that day comes, keep your cool because a review seething with anger tends to lack credibility in the eyes or readers, even if every word rings true to you. When in doubt, ask your friends to take a look to ensure you're submitting an objective, non-emotional review.
Be your most professional self. This formal business letter will also be a part of your paper trail if it comes to litigation.
4. Have the attorney write a formal demand letterIf you're still getting radio silence from that darn host agency not paying commissions, then it might be time to turn to a lawyer to have them write a demand letter. In fancy words, a demand letter is essentially demanding restitution owing to the recipients' breach of contract.
When All Else Fails: Legal Action
So you've sent your stiff letters full of fun legal jargon, yet the host keeps ignoring you (how rude). This is when you may want to consider filing a law suit.
But before you go running to court, Mark suggests that travel agents, "consider settling by compromising if you can get more money than if you litigate . . . Alternatives [to litigation] are arbitration and mediation if the contract allows it or the host agrees."
If the cost of litigation is more than what's owed to you, then suing isn't worth it. Also remember that the cost of litigation is more than the price tag on your attorney's billable time—it also includes the loss of your work time as well.
But if your host isn't paying commissions and steps 1-4 above didn't work then litigation is a logical next (and final) step. If choose your own adventure has landed you here, as a last resort Mark recommends the aggrieved travel agent, "sue in small claims court, or retain an attorney to sue in higher court.
May you never have to use this link: A list of travel industry attorneys
A Nifty List of PATH Affiliated Host Agencies
Is your PATH-affiliated host agency missing from this list? We don't want to leave anyone out! Drop us line to let us know, and we'll be sure to add your host agency in this table!
Thank You, Thank You!
A humungo thank you to the good folks of PATH—Anita Pagliasso of Ticket to Travel, Betsy Geiser of Uniglobe and Jackie Friedman of Nexion—who are committed to maintaining integrity in host industry and chatted with us on the host perspective of what to do when host agency doesn't pay commissions. I also want to thank Mark Pestronk for offering A+ legal advice. Have you been in a situation where a host agency didn't pay you commissions? What did you do? How did it get resolved in the end? Continue the conversation and tell us in the comment section below!
- Please check back with me in 10 years to see if I make good on this promise . . . better yet, check with Avi in 10 years. ↩