Money matters: The problems agents face with chasing commission payments
A famous saying states that time is money – and in the travel industry, that couldn’t ring more true. Agents often dedicate countless hours to confirming bookings, crafting itineraries and fine-tuning every tiny detail of their clients’ trips, with the end goal equating not just to happy holidaymakers but, crucially, commission payments.
However, it’s not as simple as a straight line from sale secured to commission received. In many cases, agents reportedly have to wait months before funds are paid, with delays often resulting in additional time being spent chasing suppliers and attempting to reconcile incorrect payments. As the saying goes, these agents aren’t just losing time; they’re losing money.
For advisors, receiving timely commission payments is paramount – not only to ensure business security, but to feel valued and respected.
Waiting game
Across the sector, standard practice dictates that commission is settled once the client has paid their final instalment or completed their stay. While this may be the norm, it means agents often have to wait a long time after securing a booking before receiving their earnings. Add on the time it takes to follow up on delayed and missed payments, and you’re looking at many months of waiting before remuneration is made.
This industry gripe is felt at concierge firm Ten Lifestyle Group, which has introduced changes to make the commission payment process smoother for its team.
David Farrell, head of product and commercial partnerships, says: “In about 80% of cases, we have moved our suppliers to net rates, which means the rate has no commission built into it, so we add a markup to that net rate before quoting it to a client.
“When we make a sale, we collect the total amount from the client and pay the supplier what we owe them for the net price. Then, essentially, we already have the commission in house, because that markup we added is our commission.”
The delay between making a booking and receiving payment is an issue also felt by Nadine Brady, director of luxury agency Limelight Escapes and travel brand Travl.Love, who says in the past she’s waited up to two years to receive payment.
She describes the pressure chasing invoices can place on businesses, particularly for agents within The Travel Sisterhood, the all-women
collective of advisors she founded last year.
“We have lots of agents who are one-woman bands, and they don’t have a team behind them,” Brady says. “To look after their clients and deal with everything around a trip, and then also have to spend a lot of time chasing commissions just doesn’t feel very fair.”
Hidden fees
As well as late payments, advisors also have to deal with discrepancies between the funds they receive and the amount they were expecting, because the legacy systems used by many hotels and operators to process commission payments can sometimes leave agents shortchanged.
Amanda Macleod, head of memberships and accounts at hotel booking app Little Emperors, explains: “Facilitation platforms allow you to have your payment deposited only in one currency. By the nature of what we do, we are all interchanging and transacting in different currencies every day, and the exchange rates these platforms use can be unfair.”
Little Emperors found that, over a period of six months, the exchange rates used by facilitation partners were “5%-8% less favourable” than the standard exchange rate, which, over time, equates to “thousands and thousands of pounds” lost.
Whether it’s a result of exchange rates or another factor, such as facilitation fees or system errors, Macleod says the commission Little Emperors receives is “quite often incorrect”. This creates financial uncertainty for the business and makes it difficult to “effectively forecast cashflow”.
Mary Steadman, co-founder of luxury agency Lura Lifestyle Management, echoes this sentiment: “We’re all working in numerous currencies, and the exchange rate on the day of booking is going to be different than when clients depart. This can cause discrepancies with what you expect and what the bottom line actually ends up being.”
She says her business has devised a formula to predict commission income as accurately as possible, but it can be “very difficult to know what’s coming in and out”, resulting in “a lot of work for something that should be very straightforward”.
Paving the way
Late or incorrect commission payments aren’t an issue for all – independent agent Emma Mackley says she receives payment promptly as she books through operators who pay her once clients have travelled.
But it’s clearly enough of a bugbear to be warranting change: across the industry, suppliers are implementing initiatives to speed up commission payments.
Boutique London hotel The Beaumont Mayfair made the “bold move” in May to introduce a policy that guarantees commissions are paid directly to agents within 24 working hours of guests’ departure.
“We truly value our travel advisor community and the support they provide us, so why wouldn’t we want to ensure they receive their commission in a timely manner?” the property’s chief executive Stuart Procter says. “We have already received our guests’ payment for their stay, so it makes perfect sense to pass on their payment immediately, rather than wait the industry average of 30-90 days.”
Procter explains the “exceptional levels” of slow commission payments and the cost to agencies of chasing them prompted the hotel to introduce its policy, which has been met with “a huge wave of appreciation”.
Ripples of change are also evident in the cruise sector. In February, Crystal unveiled an accelerated commission payment policy, ensuring “advisors receive their earnings sooner than ever before”.
Luke Smith, vice-president of sales for the UK and EMEA, says the “proactive” step was taken to make life easier for agents. “If you’re an independent business owner or you’re looking to expand your business with new retail locations, having suppliers that pay faster means you feel supported and gives you the confidence that you can maintain sales growth,” he says.
Ultimately, the benefits of effective commission payment processes extend far beyond the financial. Being paid in a timely and accurate manner makes agents feel appreciated and supported – which in turn builds trust. The cost of that? Priceless
Look ahead
While changes are being made, there is still a way to go to ensure commission payment policies across the sector are fair and effective.
The Beaumont Mayfair’s Stuart Procter says the hotel is looking for a payment partner to help automate commission payments.
He acknowledges that, as an independent hotel, The Beaumont can “be nimble and act quickly”, but urged other companies to “start recognising the travel advisor community as our partners and treat them that way”.
Little Emperors’ Amanda Macleod also highlights the importance of technology, which the business is using to save time with chasing payments. The company is building an AI platform that will sit within its existing system and “mean we’re able to use fewer resources to reconcile the payments that we receive”.
While this will save time, Macleod believes that, to enact industry-wide change, the commission payment structure needs to be “revolutionised” – something that can happen only if “all of the small voices come together to make one big voice”.
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