How to Determine the Commissions as a Travel Agent

Travel agents provide valuable advice for tourists and business travelers. They earn money for their expertise from commissions paid by cruise lines, hotels, tour companies, and car rental agencies. In contrast to independent agents, an agent working for a larger agency might receive a salary or hourly wage, instead of a direct commission.

A travel agent commission is the difference between the retail price of a travel service, which the customer pays, and what the travel agency pays. The amount the travel agency pays is typically less than any amount a customer could find on his or her own. Cruise lines, hotels, tour companies, package tours, and car rental agencies usually provide this type of commission to a travel agent. However, in the United States, airlines no longer pay a commission to agents. To book an air ticket, an agent will sometimes charge a traveler a service fee to compensate for the time the agent spends finding a good deal.

Pressure on Commissions

Like the airlines, cruise lines are increasingly putting pressure on agents to accept lower commission rates. For example, cruise lines often do not pay commission on extra charges, such as tax, fuel surcharges, or excursions. Along with competition from the Internet, these practices have made it harder for travel agents to get compensated for their services.

Independents vs. Agencies

Even though all travel agency revenue is ultimately based on commission, the way a travel agent gets paid may differ. Travel agents who work for agencies may not receive commissions directly. Rather, they may receive a salary or hourly rate, while the agency receives the commissions. Independent travel agents usually receive commissions directly. Both independent and larger agencies often use third-party settlement companies to track commissions. These companies link up with hotels and other travel providers to verify, track, and collect commissions. They then distribute the funds to travel agencies and agents.

Other Rewards

Although it can be difficult to work on commission, travel agents gain satisfaction from creating memorable vacations for customers. They also may receive other perks, such as free trips from tour companies that wish to promote their services.