How Travel Agents and Travel Management Companies Make Money From Hotel Bookings

August 15, 2016
Reading Time: 2 minutes

There are a number of ways travel agents make money off the booking of hotels.

The rise of the internet means that businesses have more choice than ever before when it comes to booking their travel, but an increased number of options means that it is harder than ever for companies to know if they are getting the very best deal.

This situation has led to many firms deciding to use the services of a travel management company (TMC), which often have the right connections with various hotels around the world, working to offer their customers the best value for money.

The level of commission that an agency earns on the booking of certain hotels is often a great source of their income. Travel agencies sell rooms per night on behalf of the hotels in their business portfolio, while also providing a valuable service to their hospitality partners. Commission is then made through the use of manual invoicing, before the payment is then processed by the bank and placed into company accounts.

This approach to making money is not exactly foolproof as, due to the fact that commission payments are made individually and manually, they can often be inconsistent, a situation that can cause great stress and worry for a TMC, especially when the global financial crisis has left many businesses across a number of industries becoming less financially secure.

This situation is made all the more serious given the fact that payments from hotels have become more of a priority to many agencies, due to the fact that other areas, including airline and car rental commissions, have started to dwindle.

It is therefore of the utmost importance that a travel agency has a commission system that is financially efficient, as this can substantially boost its bottom line in a difficult economic climate.

Yet there are still a number of firms that have to endure unnecessary difficulties when collecting commission payments from hotels.

Whether it is because of a system failure, a genuine reluctance to pay, or even a just a misunderstanding resulting from different linguistic and cultural boundaries, the process of collecting money that is owed is sometimes not as simple as it should be.

The outsourcing of commission can offer a helping hand to agencies, by not only offering the resources and expertise needed to chase up and negotiate with hotels, but also the ability to communicate with a firm’s business partner more effectively.

One of the advantages of a company such as Onyx can boast, is the fact that they employ professionals capable of speaking the native language of a hotel firm, immediately strengthening any position of negotiation.

It also enables agencies to not only be paid more quickly, but also in their preferred currency as part of one monthly invoice, reducing the amount of time and money wasted in bank charges and employee work hours.

Travel agents can also benefit from knowing that the funds collected from the hotels within their respective portfolio is contained within a safe and secure environment, offering extra peace of mind.