Commissions

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Pricing your Product

Commissions

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1. Know the definitions of rack and net rates. Check out our glossary.

2. Expect to provide the following commissions, or net rate reflecting the following discounts from your rack rate, when dealing with the international market:

Business Type:	Percentage:
US Receptive Operator	25-30%
Overseas Wholesaler or Specialty Tour Operator	20-25%
Overseas Retailer (travel agency)	10-15%

The US Receptive Operator generally works directly with other tour companies, not the consumer. An example of htis type of company is Rocky Mountain Holiday Tours, Allied/Tpro, ATI, etc. They plan itineraries and programs that they wholesale to overseas tour operators to sell to their customers through retail travel agencies. Each business in the chain is in this to maike a living, so each one gets paid 10% for their efforts.

The Overseas Tour Operator or Specialty Tour Operator sells his product through retail agencies, so they have to pay the retail travel agent 10% for their selling efforts, and need 10% for themselves.

The Retail Travel Agent is selling the product of the overseas wholesaler or specialty tour operator, and receives 10-15% for his efforts.

How do you know who you are selling your product to , and therefore which commision to offer? Ask! Sometimes even the US Receptives get fooled and have to do some qualifying. So ask who is buying your product.

In addition, the wholesalers and specialty tour operators are promoting your product for you by featuring it in a four-color brochure. You are not paying for that advertising, other than providing the commission. And, you only pay the commission if the business is booked.

Do not increase your rack (brochure) rates by 20-30% and offer that as your commissionable rate!! If you do this, you can count on never working with that operator again. They can easily discover you rack rates by reading one of the rate cards in your brochure, going to your web site or by just calling and asking your front desk or reservations department.

3. Commission requests may differ among the various tour companies, so keep an open mind and listen to what the tour operators' needs are. They will tell you what their commission requirements are, and indicate if negotiations are possible.

4. You can also establish black out dates when the ful commission or lowest net rate is not available, but be honest and up-front about it with the operator. Think about offering better commissions during shoulder seasons or slow periods when you really need the business.

5. The rate you are quoting the operator should include taxes, gratuities, etc. (see pricing page).

6. You must be prepared to honor the rates you have quoted, even if those quoted over one year out. European operators are obligated to provide printed in their brochures, as outlined by the European Consumer Protections Laws.