How much commission does the Travel Agency get?
In the (business) travel industry if you book a hotel online or via intermediary travel agencies for a conference, meetings or a weekend getaway, it's very common for the hotel to pay a commission to that intermediary. However, a lot of (online) travel agencies worldwide do not talk about their revenue model; therefore, customers are often required to guess how much a travel agency earns from a booking.
Since hotels require a middleman they are willing to pay commission to an intermediary. Read here why hotels need the middleman and why the prices are equal or even cheaper.
The necessary questions to answer is how and how much these travel agencies make from booking a conference in a hotel. In order to explain this, we would like to distinguish 3 different types of bookings: Individual, Meetings/Conferences and All Inclusive packages.
Individual room bookings
There are thousands of online travel agencies that make money from individual hotel stays. In general, OTAs are fairly open about the commissions they receive. Currently, the major players in the market are:
Booking.com & Tripadvisor
Booking.com & Tripadvisor earn money through commissions that they receive from hotels. Booking.com on their website state that it has an average commission of 15%. However, these percentages vary considerably because hotels can also purchase website packages from booking.com and pay considerably more commission per room. Read more here.
Google earns money in several ways from a hotel booking. They charge a referral fee to an OTA such as booking.com if a user starts the process with Google Hotels and ends up booking on booking.com. Additionally, Google also has a direct hotel booking system, which allows an individual to book a room at most favorable price just like booking.com. Google receives between 10-30% commission.
Meetings & Conferences
The meeting and conference agencies are much less open about how and how much money is earned from a booking. After years of working at such agencies and learning that they lie about the ways they make money we wanted to be transparent to our customers. We want to take an extra step and be the first agency to tell you what’s earned with every booking.
Conference booking agencies have three different ways to make money:
Pay per listing
Cvent is currently one of the larger hotel meeting and conference websites that earns its money through hotel profiles on their website. The price of a hotel profile varies enormously per hotel. The downside of booking a hotel via Cvent is that it’s a tool with no personal service and lack of knowledge about this business.
If you book a meeting or a conference in a hotel with a travel agency, the hotel pays commission on the room rate, DDR, meeting rooms & F&B. The amount of the commission varies per hotel, continent or chain, but on average about 10% of commission is paid. Hotels can also provide a commission on the rooms and meeting rooms, but not on the F&B.
Travel agencies will often say that they are paid on the basis of an annual target or that they receive a sales fee. However, in most cases this travel agency will simply be paid through commission.
All in package / Markup
Unfortunately, companies that work with markups still exist. A markup is when a travel agency has received a quote from a hotel and then adds an x amount of money by itself. This is mainly evident at travel agencies that organize the entire event or handle the entire payment. In addition to the markup, these parties often also receive commission. As a result such travel agencies earn a large amount of money.
We will never work with a markup and will always give the customer the lowest price. Rather a lower price for the customer than a higher commission.