Travel Agent Commissions, Explained. [Infographic]
There’s no two ways about it, travel agent commissions are complicated—the numbers are not black and white numbers and there is no set way of doing things. Simply put, there is no "average" travel agent commission. Heck, if that were the case we'd be wrapping up this article by now!
We’re going to try to simplify things but since the system is complex, explaining it can be tough.
As you read this, just remember that commission levels vary by a travel agency's sales, an agency's consortium, franchise or host agency affiliation, vendor, destination, how the booking is made, and more (and that's just to name a few).
This article is a rough guide to travel agent commissions. It will give you a thorough, yet general, idea of travel agent commissions and what to expect.
If you're a sucker for details, don't worry. Once you join a host, franchise, or consortium, their commission guides will have all sorts of juicy details on specific commission levels!
Now, let's start breaking this stuff down, shall we?
⭐️ har's Travel agent commissions article highlights ⭐️
- Travel Agent Commissions, Big Picture: Curious about the average commission rate for different travel products? You can check out our infographic in this section!
- How Do Travel Agent Commissions Work? Commissions are typically tiered according to annual sales and/or passenger sales.
- Host Agencies and Travel Agent Commissions: A host agency can help travel agents receive higher commission levels due to economies of scale.
- Types of Travel Agent Commissions: There are 2 primary kinds of commissions for travel agents, flat commissions and tiered commissions.
- Airline Commissions: Airline commissions are a different beast altogether because their commission range depends on a variety of different factors! (Read this section to find out why.)
- Negotiated Contracts: Going with a host or consortia can help you leverage their commission contracts with suppliers.
- Commission Confidentiality: You might not know the exact commission rate you'll receive until you sign on with a host. This section is where we tell you why.
Travel Agent Commissions: The Big Picture
Let's start with a visual to give you the 40,000-foot view of travel agent commissions. You can see some hard numbers and how things are broken down in an easy-to-digest infographic.
After you've checked that out, we'll deep dive into how travel agent commissions work to make sure you know all the ins and outs!
How Do Travel Agent Commissions Work?
First things first: where do travel agent commissions come from? How do they get from supplier to host to travel agent? How does a supplier know who gets what?
At its simplest, a supplier/vendor recognizes a travel agent from any Joe Blow on the street because travel agencies have an accreditation number.
These magic accreditation numbers are how travel agents get commissions! When you call/login to make a booking, the supplier asks for your travel agency's accreditation number. This is how they know who to send the commissions to.
It's like when you call any doctor's office and they always ask for your name and date of birth to identify you. Travel suppliers ask for an agency's accreditation number to pull the agency up in their system.
Host Agencies and Travel Agent Commissions
Not sure what a host agency is? We got you.
In the case of a host agency, all of the travel agencies in the host's network use the same accreditation number (the host's). The supplier/vendor will recognize all of the host's independent contractors (ICs) as "one" large agency since all of their ICs are using the host's accreditation number.
Consortia and some franchises are a little different from hosted agencies in that each individual agency needs its own accreditation number.
If that's a little confusing, let's try to give a similar example in the real world . . .
I like to think of the host agency model being like the relationship between a general contractor and a homeowner. A homeowner paying a general contractor is like a supplier paying a host agency.
Instead of paying the electrician, plumber, and architect separately, homeowners pay the general contractor who in turn pays the individual companies (that's the hosted agents!).
So the supplier pays the host agency (general contractor) commission because they are what's called "the agency of record". In turn, the host agency pays the individual independent contractor (IC) travel agencies their share of the commission.
Using a host's accreditation is one of the major benefits of using a host agency . . . not only does it spare you the hassle of getting your own accreditation, but a host agency is able to negotiate better commission levels than an individual agent because of their higher sales.
The general rule in travel is, that the more your agency sells of a vendor, the higher the commissions (to a point).
This is a great segue into our next section! (PS: Did you know it's segue and not segway? I just found out and want to make sure you appreciate my newfound knowledge by pointing it out.)
Want to know the other benefits of using a host agency? Read "Benefits of Using a Host Agency."
Two Kinds of Travel Agent Commissions
1. FLAT COMMISSION RATES
A flat-rate travel agent commission is the simplest type of commission. The flat rate is just what it sounds like: every travel agent gets the same no matter how much they book, what consortium they belong to, or how cute their dog is. Flat-rate commissions are actually standard and predictable! Hooray!
Here are a few types of vendors with a flat rate commission:
→ Hotel-only bookings and car rental companies: These types of bookings typically pay travel agents 10% commission and that’s that. There are small variances but car and hotel-only bookings are probably the most predictable commission level in this whole mess.
→ Boutique tour operators: Smaller or boutique vendors will typically pay a 10% commission or give agents net rates. They won’t have sales tiers (more on that soon). If you’re sending a boutique hotel or small tour operator tons of business, there may be room to negotiate a higher commission.
→ Disney: Okay, so they're not exactly a boutique vendor! But Disneyland and Disney World have a flat rate commission of 10% for all agents. No matter how special you, your consortia, or host agency are, you're not going to be able to negotiate a better commission.
When it comes to Disney Cruise Line and Adventures by Disney products, their commissions are tiered (we'll talk about tiered commissions in-depth in just a sec) but the sale thresholds for those are the same for every. single. agency. out there.
2. Tiered COMMISSION RATES
It only seems fair that if you sell more of something, then you get a higher commission, right? Well, a lot of vendors think so too! Tiered commissions essentially mean that the more you sell, the higher the commission you get. Sounds simple?
I hate to burst your bubble, but tiered commissions are so complex so I'm going to put them in the spotlight after our intermission...
Rigel Break!
Ugh. My mind is wandering too. Let's take a break and look at a cute picture of my dog, Rigel. This is his "business dog" look.
Sigh. Handsome lil' devil, isn't he? Sorry, that's all the cuteness for now; back to work!
Tiered Commission Rates. How Are They Determined?
So why would Travel Agent #1 receive a 12% commission for selling vendor X, while Travel Agent #2 receives a 16% commission for selling the same product?
There are two major factors that will determine travel agent commission tiers:
1. Aggregate/ Annual Sales Volume
For some vendors, the commission level (or tier) they pay an agency is determined by the sales volume under that agency's accreditation number. A vendor may increase commission based on annual sales of an agency (or their host agency).
Here's an example (numbers are hypothetical)
Annual Sales Commission Level:
- 10% . . . $0-$49,999
- 13% . . . $50,000-$249,999
- 14% . . . $250,000-$499,999
- 15% . . . $500,000+
From the numbers above, you can see that as a solo travel agent, it's a heckuva lot easier to reach 15% when you belong to a host agency!
So even though you may have a commission split with your host agency, in the end, many agents stand to rake in more dough with a host because they are earning more commission.
Want to crunch number to determine the value of going with a host agency? Check out HAR's Commission Plan Comparison Calculator.
When you look at the big picture, it's also worth noting that nearly all host agencies also belong to a travel consortium (such as Travel Leaders Network, Signature, Virtuoso, or Ensemble). With a host agency's aggregate sales among ICs and their consortia relationships, host agencies are able to bring in higher commission tiers with vendors than most individual travel agencies.
2. Passenger Count
While many vendors use sales numbers to determine an agency's commission level, there are a handful of vendors that use a different marker. Instead of looking at the total sales coming from an agency, a vendor will look at how many passengers you're sending their way.
You’d see something like this (these are hypothetical numbers):
Annual PASSENGER Count Commission Level:
- 10%: 0-20 passengers
- 11%: 21-49 passengers
- 13%: 50-199 passengers
- 15%: 200+ passengers
A Note on Airline Commissions
I always say airlines are another animal and honestly, they're not my forte. So I’ll say this. Don't expect to become a millionaire by selling domestic tickets from JFK to LAX.
In August 2017, American Airlines announced they would pay travel agents a $2/segment for airline ticket commission — which is the first time airlines have offered all agents commission on all air tickets since the 1990s.
Kinda huge. But really, is it just me, or is the $2/segment airline commission incentive not really doing it for anyone else? Well, don't worry, because going through a host agency and/or travel consortium can give you access to private air contracts that are quite a bit more attractive.
Airlines offer travel agent commissions through two routes:
1. AIRline Consolidators:
These are airline wholesalers. They specialize in air and have private contracts with the airlines. Travel agents can make money with these airline consolidators in one of two ways: commission and marking up net rates.
Confused about air fare types? Read up on them right here.
2. Airline Contracts:
Your host agency or consortium/franchise/co-op will most likely have private air contracts that allow for travel agent commissions on certain airlines. Not every domestic or international ticket is going to be commissionable, it depends on things like city pairs, class of service, the carrier, time of year, etc.
The commission percentage agencies earn on air depends on numerous factors, the most important one being which private contracts you have access to.
Here's a general rule of thumb on the airline ticket commission range you can expect as a travel advisor:
- Domestic: 0-5%
- International: 10-22%
For most leisure agents, airline ticketing alone is not a large source of commission. That's why the most common fee travel agencies charge is a service fee for airline tickets. It helps stabilize an agent's income and ensures they're being compensated for their work.(Looking for more data on travel agent fees? HAR's 75+ page travel agent research reports are just what you need.)
Travel agents can book air-only reservations in a variety of ways, most notably through consolidators (often used by leisure agents) and for corporate agents, through a Global Distribution System (GDS).
Want to explore becoming a corporate agent? Start here.
Now, let's chat about how companies like host agencies, consortia, and franchises help secure better commission deals for their agency members...
Negotiated Contracts: Host Agencies, Consortia, and Travel Agent Commission Agreements
Alright, you've probably figured out that the travel industry is all about economies of scale. The more you bring to the table, the more leverage you have.
So it's no surprise that host agencies (a group of independent agencies using the same accreditation number) and consortia (independent agencies with their own accreditations that band together for more buying power and access to marketing/tech tools) are able to negotiate better commission tiers.
For you, as an agency, these negotiated commission tiers are a big benefit of aligning with a host agency or consortium. When you (or your host agency) are affiliated with a travel consortium, the consortium will negotiate lower sales tiers/passenger thresholds with their preferred suppliers.
Let me break it down in real terms.
Most vendors will have commissions broken down into tiers. Maybe they say an agency has to sell $75,000 of their product to get a 12% commission. But, if a host/franchise/consortia has a negotiated commission agreement, their agents may only need to sell $50,000 to reach the same 12% commission tier. A deal!
Since many of the readers of this site align with host agencies at some point in their careers, we’ll mention again that for hosted agents, your tier is not dependent on your individual agency’s sales, but the cumulative sales of all of the agencies under the host’s umbrella.
The value in this becomes a little more clear if we compare two agencies: one is a hosted agency that belongs to a $100M host agency, the other is a smaller agency that has $2M in sales.
Both of our agencies belong to the same travel consortium. Both agencies have access to the same negotiated commission tiers because they're members of the same consortium. But, who is going to have a harder time meeting the $50,000 commission tier the consortium worked out?
You got it. The $2M agency because they have to rely on only their sales, whereas the agency who belongs to a host agency — regardless of how much of the vendor they actually sell — reaps the benefits of the sales of all of the other agencies in their host agency's network.
Host agencies and consortia will have the strongest travel agent commission agreements with their preferred suppliers. When a vendor is on a "preferred supplier list," it means that the host or consortium will have better contracts with them and likely sell a higher volume with that vendor.
Pro Tip: This is why finding a niche is so helpful. If you know a couple of suppliers you think you'll be utilizing a lot, you can ask host agencies and/or consortium what their commission tier and relationship is with those suppliers!
Understanding Commission Confidentiality
As you can imagine, commission contracts between travel agencies and vendors, as well as those between consortia and vendors, are confidential. They’re like trade secrets that can give one travel agency/consortium an advantage over the other.
Knowing that, don’t be surprised if a consortium or host is tight-lipped when you ask for their commission guides. Sadly, they're not going to hand over a detailed pamphlet listing all their trade secrets. If you made it to this point, you can understand why :)
Or maybe they're tight-lipped because they're spies? I dunno. I say follow your gut on that one.
All that said, if you do sell a lot of a certain vendor(s), it’s perfectly acceptable to ask about commission info for your top vendors.
Even if a host/franchise/consortium doesn't spell out the commissions you'd get in detail, you can ask for:
- a list of the preferred suppliers and
- an idea of the sales volume with your favorite vendors
More Ways to Earn . . .
Believe it or not, there are multiple ways an agent can earn money beside travel agent commissions!
A few other common income streams agents included service fees, consultation or planning fees, markups from net rates, and selling insurance (which is technically still a commission, but worth a note!).
Here's a few more resources to check out:
Wondering what travel agents do? We thought so.
Here's more detail on how travel agents make money.
Commissions aren't the only travel agent perk. Learn about FAM trips and travel agent rates.
Curious to Start Earning Commissions Like a Bona Fide Travel Advisor?
Looking for some resources on how to start your own travel agency?
We happen to have oodles of resources on our site. But I have to say, that at this stage in the game our 7 Day Setup Accelerator course takes the cake.
Why?
Because it cuts the noise for you and delivers the exact info you need to launch your agency, with the support of industry experts and the accountability to make things happen!
Editor's Note: This article was originally published in Oct. 2021. We occasionally update it with the latest data, indicated by the publish date listed on the article.
