ASTA Calls for a Change to Advisor Commission Payment Timing

The American Society of Travel Advisors (ASTA) is calling on industry suppliers to revise their commission payment schedules to pay no longer than 14 days after final payment, a major change that ASTA says is required as the industry continues to work its way through the COVID-19 pandemic.

In a letter from ASTA senior vice president and general counsel, Peter N. Lobasso, ASTA said that while there is encouraging news for the industry, which now seems poised for recovery, “the prospective optimism is tempered somewhat in recognition of the fact that full economic recovery of the travel agency industry will almost certainly lag the recovery of the travel industry as a whole by months” because of the standard commission payment schedule.

The shortcomings of that schedule, which ASTA said works “passably well when the economy is strong,” have become clear during this crisis. And for the trade to not just survive but accelerate through the crisis, things have to change.

“Clearly, this is an untenable state of affairs for businesses in an industry struggling to survive,” Lobasso wrote, adding that the schedule also allows suppliers to hold commission until clients have actually traveled, forcing advisors to bear the worst of cancellations, in some cases not receiving any compensation for work that they have already done.

The risk of COVID-19, and other pandemics and events, continuing to impact travel, “should be borne by the supplier and not the advisor who has already rendered the compensable service and has little if any control over his or her client’s conduct after the booking.”

“For these reasons, and others, we call on all travel suppliers to review their existing agency commission structures and where necessary implement appropriate changes to more timely and fairly compensate advisors for the valuable services they render.

“While payment upon booking would be the ideal, ASTA believes commissions ought to be (1) paid no later than fourteen days after the date of receipt of full payment from the traveler and (2) not subject to recall should travel be cancelled for any reason not attributable to the acts or omissions of the advisor,” he added.

Lobasso, in the letter, applauded the suppliers who already have a “more equitable structure” in place and said that ASTA recognizes the impact that COVID-19 has had on suppliers, too. But the letter, and this time in history for the industry, can be viewed “as an opportunity to work together to achieve a mutually beneficial new solution.”