Collecting commissions has long been a pain point for travel agencies. And it’s only gotten worse in recent years as more travel advisors enter the industry as independent contractors (ICs) and the legacy booking technology that much of the industry is built upon continues to age.
It is a problem that up-and-comers are stepping into to help solve. Several players are introducing or working on solutions that attempt to track or collect commissions, or both, in seamless and, in some cases, fully automated ways.
A legacy player
Onyx CenterSource works with travel agencies to chase commissions.
Collecting commissions can be complicated for many reasons, including old technology, a lack of data and the cumbersome and manual processes necessary to get a check into a travel advisor’s hands.
Take, for instance, a hotel booking. Many require that advisors send commission invoices. However, the agency might not have accurate data on their client’s stay: The client could have missed the stay, checked in late or upgraded. All of that could change the commission amount.
On the hotel side, it likely takes multiple people to reconcile the commission, cut a check and mail it. In some cases, it can take months for an advisor to get paid.
“Commission collection has been the bane of our existence, and many other companies’, and it’s really sad, because this is how people make their living,” said Jack Ezon, founder and managing partner of Embark Beyond in New York. “They work so hard, and to collect money has become almost a full-time job for so many people.”
Some agencies have multiple people on staff just to chase commissions, he said, at a cost “sometimes so astronomical that whatever is left over is not even exciting.”
Commission-tracking company Sion, launched in 2019, estimates that more than 40% of commissions either have discrepancies that need to be reconciled or do not get paid. Nicolas Peluffo, CEO of travel payment company Trvlr, calculates that more than 20% of commissions are getting lost in the shuffle and go unpaid. He also estimates it takes an average of 90 days for an agency to be paid via check.
“It’s such a headache,” Ezon said. “Sometimes you feel like you’re the only one that has all these receivables, and then you talk to everyone else and you’re not. And you know, a lot of times, it’s not just the hotel’s fault. It’s just that it’s a cumbersome accounting feat, and they’re not necessarily programmed for it.”
While some companies have over the years come up with systems to assist agencies with commission collection, advisors say these solutions either fell short of their mission or were too costly.
The new players
Sion and Trvlr, which launched a year ago, are two of the new entrants attempting to make it easier for agents to get paid.
Travel advisor Irving Betesh co-founded Sion in an attempt to solve what was a frustrating part of his business. The platform enables users to track and manage commissions, helping advisors collect about $4.3 million in delinquent commissions this year alone, Betesh said.
Sion is expanding its capabilities. It recently partnered with payments company Flywire to enable payment processing on its platform and, later this year, hotels and other suppliers will be able to use Sion to issue commissions. The company is also working on auto-invoicing for advisors.
Host agency Departure Lounge uses Sion as its back-office system, and founder and director Keith Waldon called it “fantastic.” The system cut labor costs thanks to its automated commission matching, he said, and it “has allowed Departure Lounge to continue to grow without back-office growing pains or restrictions.”
Flywire is also looking at ways to solve the commission problem, said travel general manager Colin Smyth. The 12-year-old company had been largely focused on building its global payment network, but about a year ago, leadership decided to work on facilitating commission payments to agents.
“We started to get really excited about how commissions could flow, the ability to manage both the receivable and the payable, and at the end of the day really just helping our clients have a better experience on both the paying and the payout side,” Smyth said.
The company sees an opportunity to pay agencies faster, he added, increase the data an agency receives and offer the service at a competitive rate thanks to its existing payment network. Smyth said feedback from agencies has been positive.
Peluffo’s company, Trvlr, is still beta-testing its product, which directly links agencies and hotels and fully automates commission payments. Peluffo called it the only B2B solution that integrates bookings, payment processing and automatic commission settlement.
His ultimate goal is to make Trvlr “channel and brand agnostic, essentially like a PayPal.” Whether an agent is booking on a GDS, a supplier’s website or elsewhere, they will check out using Trvlr.
Ezon is part of Trvlr’s beta-testing. He called any solution that can get prompt commission payments for agencies “a game-changer for our industry.”
The influx of ICs joining the industry was on Jacey Jones’ mind when she co-founded TripSuite a year ago, as were the most delinquent suppliers when it comes to paying commission.
TripSuite is a full customer relationship management, or CRM, solution that offers commission tracking. Jones, who is the CEO, said TripSuite wanted to modernize the way agencies track and use data, and commission tracking was the area tackled as part of that mission. She said it is especially important for advisors joining the industry as ICs because many have to manually invoice their host agency for all of their commissions.
Jones also hopes to highlight suppliers that pay commissions on time, and those that don’t, using TripSuite data. She called it a “carrot-and-stick approach” that can prompt agents to book away from bad actors, forcing them to change their behavior, and reward good ones.