Commission on Trips

[footballmouse]

How does commission on trips work?
- I know travel agents aren't paid for their service, they receive commission. If they split the commission with a company that they work for 80/20, I'm guessing they get 80 and the company gets 20.
- If they client spends $6000 on a trip, is the entire amount split?
- Who's paying this commission?
- Let's say the client is going to Disney, $6000 is the bill due to Disney. Where is the money for the commission coming from?

I've never had a job that is based on commission, I've always heard it's a up/down income. I'm just bored at work right now and this thought popped in my head. It's probably a very easy explanation, I'm just overthinking it.

 

[disneychrista]

Disney pays them to sell their packages

 

[fla4fun]

How does commission on trips work?
- I know travel agents aren't paid for their service, they receive commission. If they split the commission with a company that they work for 80/20, I'm guessing they get 80 and the company gets 20.
- If they client spends $6000 on a trip, is the entire amount split?
- Who's paying this commission?
- Let's say the client is going to Disney, $6000 is the bill due to Disney. Where is the money for the commission coming from?

I've never had a job that is based on commission, I've always heard it's a up/down income. I'm just bored at work right now and this thought popped in my head. It's probably a very easy explanation, I'm just overthinking it.

I worked in accounting for a company where the employees received commissions, so maybe I can help (all fake numbers in example).

Disney and the Travel Company would have a contract that lists each product the Travel Company is allowed to sell and the amount Disney will pay for each sale. It can be either a set amount per item or a percentage of the sale price

The Travel Company then turns around and sets their pay policies with the Travel Agents, laying out the amount of that commission each side is to receive. Again, this can be a percentage or a set dollar amount.

So, in your $6,000 vacation example, the agreement between Disney and the Travel Company may say that the Travel Company will receive 8% on any package above $5,000. That would be a $480.00 payment from Disney to the Travel Company.

The Travel Company receives their $480.00. Their agreement with the Travel Agents might be a 80/20 split for commissions over $500, a 70/30 split for commissions between $300-$400, etc. So since this commission is $480, the agent would get $336 and the company would keep $144.

We sold thousands of items and there was a mix of percentage and flat fee commissions that could be earned. Fortunately it was all programmed into our point of sale system so all I had to do was run a report before doing payroll.

 

[goofyernmost]

How does commission on trips work?
- I know travel agents aren't paid for their service, they receive commission. If they split the commission with a company that they work for 80/20, I'm guessing they get 80 and the company gets 20.
- If they client spends $6000 on a trip, is the entire amount split?
- Who's paying this commission?
- Let's say the client is going to Disney, $6000 is the bill due to Disney. Where is the money for the commission coming from?

I've never had a job that is based on commission, I've always heard it's a up/down income. I'm just bored at work right now and this thought popped in my head. It's probably a very easy explanation, I'm just overthinking it.

You are way overthinking it. When you spend $6000. to company that has commission status for their sales people it comes out of the $6000 you gave them. It is included in what you are being charged. So if the sales persons commission is 10% they will receive $600 and the company they work for have the $5400. for themselves. That is how all commissions work. It is not like dining out where you give tips. In that case, if your bill for dinner is $60 and you decide to give a 20% tip, that meal will cost you a total of $72.00.

Travel related things are the same, but the people receiving the money for services or items will also have the commission deducted before they pay to the provider because a travel agent or agency is selling someone else's product and the commission is taken out directly before a hotel or airline, etc, pays the provider.

Full disclosure... I have been retired for about 15 years now so I can't say with confidence if things have changed since then, but that is how it traditionally worked. Generally commission is something that is paid from the asking price for you and is considered to basically be payroll to the provider. Tips come directly from you at your discretion but not included in the listed cost.

 

[fla4fun]

You are way overthinking it. When you spend $6000. to company that has commission status for their sales people it comes out of the $6000 you gave them. It is included in what you are being charged. So if the sales persons commission is 10% they will receive $600 and the company they work for have the $5400. for themselves. That is how all commissions work. It is not like dining out where you give tips. In that case, if your bill for dinner is $60 and you decide to give a 20% tip, that meal will cost you a total of $72.00.

Travel related things are the same, but the people receiving the money for services or items will also have the commission deducted before they pay to the provider because a travel agent or agency is selling someone else's product and the commission is taken out directly before a hotel or airline, etc, pays the provider.

Full disclosure... I have been retired for about 15 years now so I can't say with confidence if things have changed since then, but that is how it traditionally worked. Generally commission is something that is paid from the asking price for you and is considered to basically be payroll to the provider. Tips come directly from you at your discretion but not included in the listed cost.

We had some products handled that way. Using the prior example, a contract between Disney and the travel company could stipulate that for every five day park hopper sold, the travel company has to pay Disney a set amount. Travel company sells a ticket for the retail price of $500, pays Disney their contracted rate of $450, and then the payroll split is applied to the remaining $50. We had several items like this and made vendor payments on a regular schedule, typically 2-3 times per week for the larger ones. There were times we were paying the vendor, and times the vendor was paying us, depending on the type of item sold and the contractual agreement. Most physical items, like a ticket, were handled the way you mentioned. We also had many items that we booked with just a deposit or, in some cases, no money exchanging hands, Commissions for those items would be remitted to us on a monthly basis as the customer completed the booking since the final payment was collected by the vendor.

For a company like DU, for example, where the payments are being processed directly between Disney and the guest, I would expect their agreement is that once travel is completed, Disney pays a commission out to DU which is then split between DU and the agent. DU wouldn’t have access to the customer funds to hold back the commission.

Commissions and their resulting vendor payments/receipts made month end reconciliation a lot of fun! (not).

 

[china mom]

Former Disney travel agent here.

Disney build a commission into their pricing. If a guest books themselves, Disney keeps the commission. If a travel agent is used, Disney pay the agency a commission Each agency/agent has their own set commission spit.

My agency split the commission 50/50 with me and they handles all of the mailing stuff to clients and invoicing Disney and colleting commission payments from Disney. I had to generate my own leads.

I had a friend who worked for an agency where the commission spit was much higher for the agent but she had to receive the travel packets (luggage tags and such) from Disney and mail them out herself and she had to handle the invoice with Disney and such.

I am sure there are also agencies where the agency provides the leads to the agent but takes a higher commission.

Not al items in the package are subject to commission but I can't remember the exclusions right now.

 

[china mom]

For a company like DU, for example, where the payments are being processed directly between Disney and the guest, I would expect their agreement is that once travel is completed, Disney pays a commission out to DU which is then split between DU and the agent. DU wouldn’t have access to the customer funds to hold back the commission.

Yes, payments were not actually collected by me or my agency. I used my portal to make the payments directly from your payment method to Disney. Then, Disney pays the commission after travel is completed.

 

[clh2]

Wow…never dawned on me that a trip booked out 16 months in the future will ultimately not get paid to the travel agent for 16 months. I mean, it makes sense, in case travel plans change, that is a long time to wait for the money.

 

[china mom]

Wow…never dawned on me that a trip booked out 16 months in the future will ultimately not get paid to the travel agent for 16 months. I mean, it makes sense, in case travel plans change, that is a long time to wait for the money.

Yes. I would have to wait an even longer time because Disney paid my agency after travel but they didn't pay me until the following month on payroll day. I kept a log just to keep track. Luckily it was more of a hobby rather than a source of steady income.

 

[jimmymc]

There are two different ways I've seen travel agencies function:

Traditional way:
1. Travel agent will book travel with Disney for the posted prices
2. The money goes from the traveler to Disney
3. After the trip, Disney pays a commission based on the price of the trip. The travel agency and the agent split this.

In this case, Disney is paying the commission in exchange for the travel agent booking a customer. If people book online with Disney, then Disney keeps the commission.

Room block way:
1. Travel agency reserves block of rooms as soon as they're available
2. Agent rents out these rooms to clients
3. Clients pay agency, profits are split between company and agent

This way is riskier for the travel agency, and some providers might not allow it, but it can also be more profitable.

 

[tvguy]

Yes. I would have to wait an even longer time because Disney paid my agency after travel but they didn't pay me until the following month on payroll day. I kept a log just to keep track. Luckily it was more of a hobby rather than a source of steady income.

During the pandemic when cruising was shut down, travel agents had to handle all the cancelations and rebookings for free in some cases. I think some cruise lines did pay a nominal fee, but in some cases, trips were booked, canceled, rebooked, cancelled multiple times.

 

[fla4fun]

Wow…never dawned on me that a trip booked out 16 months in the future will ultimately not get paid to the travel agent for 16 months. I mean, it makes sense, in case travel plans change, that is a long time to wait for the money.

It can be tough when someone is just starting in the business, but once you get a good customer flow, you don’t notice it so much as there is always income flowing in.

 

[china mom]

duplicate post

 

[china mom]

During the pandemic when cruising was shut down, travel agents had to handle all the cancelations and rebookings for free in some cases. I think some cruise lines did pay a nominal fee, but in some cases, trips were booked, canceled, rebooked, cancelled multiple times.

I stopped being an agent right around that time and I didn't have any cruises booked but yes, Disney did give some sort of compensation to agent who had to cancel bookings. I am thinking it was something like a half commission. I remember thinking at the time that it was fair.

The worst is when you have a tire kicker who wants you to run all of the different possibilities of dates, resorts, number of guests, dining versus no dining and after you get it all done and give them all the quotes, they decide not to go or worse, they go an book it on their own.

 

[goofyernmost]

Yes, payments were not actually collected by me or my agency. I used my portal to make the payments directly from your payment method to Disney. Then, Disney pays the commission after travel is completed.

It's possible that everyone's is different. I makes sense for Disney because many things could happen that would prevent the buyer from being able to go there. If the commission was paid ahead of time what happens to the salesperson that has already been paid. Housing is another example where the commission is not part of the sales price. That is another add on usually at closing.

 

[tvguy]

I stopped being an agent right around that time and I didn't have any cruises booked but yes, Disney did give some sort of compensation to agent who had to cancel bookings. I am thinking it was something like a half commission. I remember thinking at the time that it was fair.

The worst is when you have a tire kicker who wants you to run all of the different possibilities of dates, resorts, number of guests, dining versus no dining and after you get it all done and give them all the quotes, they decide not to go or worse, they go an book it on their own.

I have had great experiences over the years with Travel Agents, they had the experience or access to resources to answer any question I had. But now, I see Travel Agents with YouTube channels that don't seem to know the basics. One was surprised to learn that many countries require your passport to have six months left before expiration when you arrive. Or another who specializes in cruises, but does not book air for his clients. My Travel Agent basically did everything for me, I just wrote the check and took the vacation.

 

[kdonnel]

Wow…never dawned on me that a trip booked out 16 months in the future will ultimately not get paid to the travel agent for 16 months. I mean, it makes sense, in case travel plans change, that is a long time to wait for the money.

Game show winnings generally work similarly.

You generally don't get paid your winnings until the show airs on television or plays on whatever streaming service.

If for some reason the show never airs, you don't get paid.

 

[declansdad]

The worst is when you have a tire kicker who wants you to run all of the different possibilities of dates, resorts, number of guests, dining versus no dining and after you get it all done and give them all the quotes, they decide not to go or worse, they go an book it on their own.

Which is exactly why many TAs now have fees that must be paid before any planning begins.

I have had great experiences over the years with Travel Agents, they had the experience or access to resources to answer any question I had. But now, I see Travel Agents with YouTube channels that don't seem to know the basics. One was surprised to learn that many countries require your passport to have six months left before expiration when you arrive. Or another who specializes in cruises, but does not book air for his clients. My Travel Agent basically did everything for me, I just wrote the check and took the vacation.

Many TAs not longer book air travel unless it is part of the package. Airlines do not pay commission to TAs anymore.

 

[china mom]

Many TAs not longer book air travel unless it is part of the package. Airlines do not pay commission to TAs anymore.

True. If a client wanted airfare through the Disney booking portal, I would happily book it for them when booking the package. But, most of my clients lived near an airport with inexpensive flights on Southwest Air and since Disney does not interline with SWA, I would suggest my clients book their own airfare for cheaper than Disney offered.

 

[declansdad]

True. If a client wanted airfare through the Disney booking portal, I would happily book it for them when booking the package. But, most of my clients lived near an airport with inexpensive flights on Southwest Air and since Disney does not interline with SWA, I would suggest my clients book their own airfare for cheaper than Disney offered.

Me too.