The American Society of Travel Advisors (ASTA) is calling on the travel industry to revise how it pays commissions.
Travel advisors make most of their income on commissions paid by travel companies. These payments usually aren’t completed until travel is completed by the client. With a near-global shutdown of travel, advisors are not being paid as ASTA’s Peter N. Lobasso, senior vice president and general counsel, points out as he calls for a shift in the industry.
“In many cases travel suppliers–hoteliers, cruise lines, tour operators, airlines, and the like–do not issue full commission payments to the booking agencies until their clients have actually completed their travel, meaning that a sale made today often generates no immediate income for the agency,” Lobasso writes in a statement from ASTA. “Worse, should the previously booked client decide for whatever reason to not travel and elect to cancel the trip, in many cases the commission is lost entirely.”
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“This is the situation many of our members find themselves in–working harder than ever before but essentially without pay. Clearly, this is an untenable state of affairs for businesses in an industry struggling to survive,” noted Lobasso.
ASTA is calling on the travel industry to transform what it sees as an outdated, non-sustainable model for the new world we find ourselves in.
For these reasons, and others, we call on all travel suppliers to review their existing agency commission structures and where necessary implement appropriate changes to more timely and fairly compensate advisors for the valuable services they render,” wrote Lobasso. “While payment upon booking would be the ideal, ASTA believes commissions ought to be (1) paid no later than fourteen days after the date of receipt of full payment from the traveler and (2) not subject to recall should travel be canceled for any reason not attributable to the acts or omissions of the advisor.”
ASTA remarked that if these steps are taken, it will go a long way to creating a more sustainable industry.
“Adoption of a more equitable payment schedule by all suppliers will not only assist travel agencies to better weather the inevitable economic downturns of the future but will also help to ensure the viability of a distribution channel so critical to the suppliers’ own success,” said Lobasso. “Indeed, taking this step will go a long way toward ensuring that this critical channel remains open and the traveling public continues to have access to the vitally important services advisors provide.”