GDS Bookings: Agency Commissions
How important it is for a hotel not to underestimate the payments of Travel Agency GDS Commissions?
We answer below, offering some reflections:
- Who. Let’s start from the consideration that agencies work for the GDS Commission, and not paying means “do not book my hotel”. Agencies (especially foreign ones) expect to receive commissions within a month to check out, no matter the instrument used to pay, and very rarely they send invoices to the hotel. If they do not receive commission payment, they will put the hotel in a “black list” making it difficult to book and possibly take actions to recover it.
- How. It is important to know the mechanisms of how the Commission are calculated (commission before VAT or commission after Hotel VAT) and determine how to operate.
The first, before VAT (on net) is conceptually more correct (hoteliers can avoid to pay a commission on top of VAT) and safeguards the hotel costs; the second (on gross) one is more welcomed by the agencies and it saves time in managing payment requests for fees already paid. It happens that some Agencies, expecting the count on after VAT, instead of reconciling the payments received they seek explanations, wasting precious time away.
- Where. Which are the platforms used for the commission payement?
The most common practice is the use of aggregator tools such as:
– ONYX (formerly WPS)
- When. Timing is important!
Leave unmanaged commissions for months is detrimental to the reputation of the hotel.
Agencies prefer to book those hotels that are fast-payers.
- Why it is necessary to pay agency commissions. Aside from the obvious: Agencies work for commissions and if they book your Property they are entitled to their commission, we have observed how the precise balance of commissions to agencies becomes an important factor in optimising the increase and the management of hotel bookings on GDS.So, an agency that has already booked in a particular hotel, if readily payed, will be motivated to book again at the same hotel.