In Does the Supplier Commission Timeline for Travel Advisors Need to Change?, Travel Market Report spoke to two travel agency host executives about how COVID-19 completely broke the commission payment process. With no one traveling and the majority of commission checks paid after travel, there was no money coming into agencies. That, despite the vast amount of work the advisors were doing to cancel and rebook travel.
The issue of after-travel commission payments was not something new. New advisors starting out have always had to find ways to make it through the first one to two years without a steady stream of income. But the pandemic and related travel shutdown brought the issue to light more prominently than ever.
While some suppliers have always paid prior to travel (usually upon full payment), some others began exploring how to speed up the commission payment timeline.
Why did some tackle the issues, while others did not?
TMR spoke to some of the suppliers paying commissions ahead of travel to find out why they’re doing it, how hard it really is, what some of the complexities are, and whether they think advance payments will be the norm in a few years.
In the part one, we discuss suppliers’ reasons for offering advanced payments as well as what the agency community’s response to the new programs has been. In part two, we explore how complicated it is to create an advance commission payment system and why some of the complexities may be holding suppliers back from changing their policies.
Partners Support Partners
“We wanted to respond to the voices saying we’ve got to change the commission payment process,” said Chris Austin, chief sales officer at Explora Journeys.
The yet-to-launch luxury cruise line is already paying out commissions to travel advisors, well before its first ship launches next spring.
Austin told Travel Market Report that Explora launched its rolling commission program after talking to leaders at travel agency groups, as well as front line advisors.
The travel advisor community, he said is “literally the heart and soul of Explora Journeys. We are absolutely fully committed to supporting their business health and their longevity.”
Explora Journeys is one of just a handful of suppliers that actually pays a percentage of commission upon deposit. The deposit required by Explora is 25% of the total price and advisors get a piece of that, depending on where they fall on the scale of commission percentage. They get the remainder of their commission upon full payment, meaning they can get 100% payment on a booking if their client pays everything up front. (Commissions are paid within 21 days of receipt of full payment.)
Another supplier paying advance commission on deposit is tour operator Collette, which rolled out its advance commission program in the midst of the COVID-19 pandemic.
“When COVID happened, the agents were doing a lot of the work and we needed to figure out a way to recognize that they’re doing the work,” said Christian Leibl-Cote, executive vice president, global business at Collette. “At the same time because we were refunding 100%, we’re not getting any money either.”
After some thought and a long conversation with the company’s CFO, the advanced commission program was launched, which pays up to $200 per booking upon deposit.
“We want to be able to help agents because they’ve been helping us. It’s an opportunity for us to say, ‘We are a true partner. We want to recognize the work that you’ve done. And we want to say, thank you for supporting us.”
Like Explora Journeys, the health and stability of the agency community is pivotal to Collette’s success.
“The agent community for us is everything. They’ve helped us grow tremendously and they helped us go through COVID,” Leibl-Cote said. “When something like COVID happens, you can’t just shut down and forget about everybody that’s supported you throughout the years. You have to think about them and support them. Even during a tough time.”
Ann Chamberlin, vice president of sales at Scenic and Emerald, echoed both Leibl-Cote and Austin. The company recently launched an advance commission policy payable upon full payment (for bookings made more than six months before departure).
“We want to take care of those who are taking care of us… maybe we’re avoiding further consolidation in the industry if we can help the smaller businesses… We want to keep a large and robust distribution channel.”
Scenic and Emerald rely on the trade for more than 80% of their bookings, she added.
“It’s just a win-win. It’s a win for the agency to get money in their pocket early.”
Win For Suppliers, Too
As much as suppliers want to support their trade partners, if advance commission policies don’t push the needle on new bookings, it’s harder for them to justify.
“Like any great idea, it must be supported by the travel advisor community,” Explora Journeys’ Austin said, adding that advisors need to "vote” with their business.
And, so far, they are.
“We’ve got a lot of support,” he said. “We have great momentum and I believe that our rolling commission payment program is one of the many reasons why travel advisors are supporting Explora Journeys at the moment.”
He added that the company is seeing “high utilization” of the early booking discount, which rewards guests for paying in full at the time of booking, which, in turn, rewards advisors with 100% commission.
Explora is not alone in receiving positive feedback from the advisor community.
“The support has been tremendous,” Leibl-Cote said. “We’ve gotten a very, very good response from it.”
The policies aren’t only rewarding on a financial level.
Leibl-Cote said they first time Collette sent a commission check after launching its commission-on-deposit program in September 2020, they got a phone call from an agent crying because it was their first bit of income in months.
Scenic and Emerald have also seen an uptick in bookings, along with messages of thanks, Chamberlin said, though she added the company still needs more awareness of the program in the agency community, having only launched it a little more than a month ago.
“We need more awareness around this… but, yes, we’ve seen it payoff. It has definitely impacted our new bookings.”