Hotel Commission Revelations – “What We’ve Discovered”
Did you know on average $59 of hotel commission is missed per booking? That is a lot of missed revenue, especially considering that hotel commissions are a source of income for travel agencies.
Below is a quick summary of hotel commissions data that we collected and analyzed. One interesting point to note is that when looking at the average hotel commission based on the star rating of the hotel, there is a significant drop in dollars paid out from 4 star hotels. This is due to the fact that many hotels within this star rating are premium brands that offer exceptionally good value.
Hotel Commissions: Common Misconceptions
“If I made a booking, then I automatically will receive the commissions”
Even if a hotel is obligated to pay a commission for a booking, this does not mean it is automatically paid out or even guaranteed. Here are a few reasons as to why you may not receive a commission that is owed to you:
Administrative errors: In some cases, commission payments may be delayed or missed due to administrative errors within the hotel's accounting or payment processes. These errors could be as simple as overlooking or misplacing the necessary documentation.
Financial difficulties: If the hotel is facing financial challenges, such as cash flow issues or financial instability, they may delay commission payments to manage their finances or prioritize other payments.
Changes in ownership or management: If a hotel undergoes a change in ownership or management, it can sometimes lead to disruptions in commission payments as the new entity takes over the responsibilities and processes.
“I already have a system in place and so I cannot just change my booking behavior”
Changing behaviors can be cumbersome, especially when those behaviors are firmly established. Here are a few examples of why a travel agency may want to adapt their booking behavior:
Shifting focus: A travel agency or management company can change its target market or customer segment. For example, they might decide to diversify their clientele by expanding from corporate travel to include leisure travel or vice versa. This shift can lead to different booking patterns and strategies.
Preferred partnerships: Agencies can modify their approach by establishing preferred partnerships with specific hotels or hotel chains. By focusing on these preferred partners, they can leverage their relationships to secure better offers for their clients, which can influence their booking behavior.
Technology and automation: Agencies can adopt new technologies or software solutions that streamline the booking process. By leveraging automation and online booking platforms, they can optimize efficiency and handle a larger volume of bookings. This can potentially influence their booking behavior and allow for more diversification or specialization.
“No worries, I’m getting all the commission money that is owed!”
This may be good news or bad news, but chances are you are not getting all the money that is owed to you. Afterall, we have found that on average $59 of commission is missed per booking!
There can be several reasons why a travel agency or travel management company may mistakenly believe they are receiving all the commission money owed to them, even if they aren't. Here are a few possible explanations:
Overlooking commission discrepancies: Even with a commission collection agency, due to the complexity of managing multiple bookings, it is possible to overlook commission discrepancies or miss identifying irregularities in payment amounts. Without a diligent review process, these discrepancies may remain undetected.
Incomplete tracking or reconciliation: The agency may not have robust systems or processes in place to track and reconcile commission payments effectively. This can lead to gaps in their records, making it difficult to identify missing or incorrect commission amounts.
Lack of transparency: The hotel or hotels they work with may not provide transparent reporting or documentation regarding commission payments. Without clear and detailed reporting, the agency may assume they are receiving the correct amount of commission, even if some payments are missing or inaccurate.
Communication breakdown: There may be a breakdown in communication between the agency and the hotels regarding commission payments. If there is limited or irregular communication on commission-related matters, the agency may assume that all payments are being made as expected.
Want to see exactly by city how many hotels pay commissions within 180 days? Reach out to us today!
