What’s the deal with commissions? For as long as anyone can remember, commissions have been part of the game with business travel. But the fact that the airlines have moved away from this practice may have given the impression that commissions are artifacts of the past. The reality, though, is that they are alive and well today, and should remain on every travel manager’s radar screen. 

“While the rules and structures have evolved, commissions remain an active and essential component of the industry,” says Kristen Pratt, SVP, partnerships for Onyx CenterSource, a provider of payment solutions for the hospitality and travel industry. “Over the past five years, corporate buyers and hoteliers have adjusted their corporate rate negotiation strategy.” 

Historically, corporate buyers would negotiate preferred rates, typically net of commission, in their primary, secondary, and tertiary lodging markets. With distribution, demand and rate changes, Pratt says hotels and corporate buyers have seen lower ROI for those efforts and turned increasingly to agency sourced or market rates in lower volume markets.

Dale Eastlund, senior consultant for GoldSpring Consulting, notes that despite this evolution, he doesn’t see today’s environment as fundamentally different. “Suppliers continue to manage their distribution costs and invest selectively,” he says. “For intermediaries, the role remains the same: Ensuring customers have the right information, content, and guidance to make decisions that align with their travel policies and program goals.” What has changed, he adds, is how suppliers use this wealth of intelligence. Instead of broad, across-the-board payments, suppliers now manage their distribution costs more intentionally and invest selectively.

Maureen Brady, head of North America for the consulting firm Areka, agrees. “Commission models have shifted away from broad, standard structures toward more targeted and performance-based arrangements,” Brady says. “Airlines largely no longer pay traditional commissions, while hotels and other suppliers continue to in more differentiated ways, often tied to channel, volume or segment.”

Chloe Carver, engagement manager with Acquis Consulting Group, points out that even though airlines have largely moved away from base commissions, incentive payments still exist in a number of forms. Such payments include GDS segment fees, volume-based overrides in certain international markets, and increasingly, carrier incentives tied to NDC channel adoption.

Complicating Factors

While leisure commissions remain a cornerstone of supplier-seller relationships, corporate rates often exclude commissions unless specifically negotiated. “Some corporations intentionally negotiate commissionable rates, but the standard approach varies distinctly between leisure and corporate travel,” Pratt notes.

One area where commissions are still routine is the hotel industry, says Bruce Kopkin, head of sales at CTS Systems, which provides custom-designed collection and payment solutions in the hospitality space. “Most hotels still offer commissionable rates,” Kopkin explains. “They can be paid to either the TMC, CTD or corporation.” His company collects on behalf of all of these.

Kopkin adds that while hotel is the biggest area for business travel, several others also come into play. “Commissions are also paid for air, rental car, insurance, cruise and more,” he says. “Meetings and events are also a large commission source for the lodging, plus even F&B and A/V.”

For hotels, there is pressure to carefully manage distribution costs, yet commissions paid to travel sellers remain a vital revenue stream for agencies, according to Pratt. “Today, commission structures are highly nuanced, controlled, and tailored to specific markets or types of travel.” She notes that hotels increasingly use commissions strategically to incentivize travel sellers to adopt specific distribution paths or preferred booking channels. This evolution reflects a broader trend of aligning incentives with strategic goals, benefiting both travel sellers and buyers.

Hotels continue to pay commissions to TMCs on some rates. “When companies negotiate directly with hotels, they typically receive net rates with no commission built in,” Carver says. “However, when TMCs negotiate rates through their consortium or preferred programs, those rates often include a commission paid back to the TMC. As long as the client gets a competitive rate, I don’t think there is a need to villainize a TMC for also earning commission on their rates.” 

Nevertheless, Carver warns commission structures are getting more complex while buyer visibility into them is getting worse. “What was once a relatively straightforward transaction has evolved into a layered system of overrides, incentive payments, and soft-dollar arrangements that most buyers never see, and few TMCs volunteer to explain the specific economics at play.” She added that NDC is accelerating this dynamic, and airlines are using NDC to restructure how they pay TMCs and other intermediaries. The result is that the tension around commissions is intensifying. 

“Suppliers are increasingly looking to reduce commission expenses and drive travelers to book direct,” Carver noted. “This directly challenges traditional TMC commercial models that rely heavily on supplier commissions as a core revenue stream.”

CTS Systems’ Kopkin advises that commissions are a matter of routine for most hotels, a normal part of conducting business. “It’s not that hotels don’t want to pay,” he says. “It’s part of their marketing plan.” 

At the same time, while commissions may still be a routine part of the travel landscape, dealing with them is more complicated than in the past, Kopkin says. “There are many requirements to collect commissions, such as GDS and non-program rates, invoicing, taxes, and FOREX fees,” he cautions. “That’s why companies such as us exist.”

Underlying Conditions

Giving due consideration to options with commissions can be well worth the effort.

Lora Ellis, head of consulting at Festive Road, suggests that travel managers conduct an analysis based on the commercial model of their program. “If costs are pushed to the point of sale, buyers understand that a supplier keeping commissions and incentives drives down the fees that travelers see,” she says. “If costs are centrally managed, returning commissions and incentives will help cover some of those costs.”

Brady feels it’s important for travel managers to understand how commissions factor into their TMC’s revenue model. It’s also wise to ensure transparency around how incentives may influence supplier selection or program structure. “Alignment with program goals remains key,” she says. “Travel managers should also understand that vendor or distribution channel changes in their program could impact their TMC’s commission revenue.”

To gain a full understanding, some probing may be needed. “Don’t be afraid to ask your TMC how they make money from your program beyond a management or transaction fee,” Carver says. “It’s helpful for buyers to understand the full value of their account to the TMC.” While most TMCs don’t disclose how much they earn in commissions, buyers can use transaction volumes and booking patterns to build a model that helps them assess the value of their account.

Although transparency around commissions is important, Carver says it’s also a fact that they’re a key source of revenue for TMCs. “For buyers that want to share commissions with their TMC, expect to pay higher management fees to compensate,” she says, adding that TMCs that negotiate rates that are favorable to their clients and are commissionable are creating a win for both parties. 

“A TMC’s revenue has to come from somewhere, and a TMC that isn’t making money isn’t a sustainable partner,” Carver says. “The goal shouldn’t be to eliminate TMC earnings, but to understand them well enough to have an honest conversation about how the economics of your program work for both sides.” 

Determining Priorities 

Pratt emphasizes that buyers must understand the true value of their travel program to determine which commercial model works best for their specific needs. “Some buyers allow their agency or travel management company to retain commissions to help offset agency fees and operational investments,” she says. “Others negotiate agreements where commissions are shared with or rebated back to the corporation.”

Commercial arrangements should prioritize rate competitiveness, traveler safety, travel policy compliance and strategic alignment, Pratt advises, “rather than focusing solely on intermediary economics.”

Eastlund also recommends buyers have open, transparent conversations with partners. “Suppliers will continue to make decisions about how they manage distribution and where they invest, and it’s important to understand how those choices interact with your program,” he says. “You want to be sure those actions aren’t unintentionally causing your travelers to make decisions that don’t align with your goals.”

The most effective way to do that, according to Eastlund, is through clear contracts that put your program priorities first. “It comes down to the overall results,” he says. “If you’re getting strong value, the right level of service, and your costs are where they need to be, then your program is performing the way it should.”

At the end of the day, it’s about mutual success, Eastlund says. “Buyers are focused on managing costs and guiding travelers to make the right decisions, while suppliers and TMCs are focused on growing their revenue.” And that’s a good thing, he concludes. When your partners are healthy and successful, it usually shows up in better service and stronger support for your program.