Travel agent commission: what hotels pay agents, on what, and when

• A commissionable rate: the agent sells the room at your price, the guest or the agent pays it, and after the stay you pay the agent its commission. VisitEngland's glossary for the travel trade calls commission the fee paid to agents to market, distribute and sell your product.
• A net rate: you give the agent a lower price, which it pays you, and it sells the room at a price it sets, keeping the difference. The same glossary defines the net rate as the gross rate less the commission: the amount you receive.

Booking sites work on the first model too, and their commission has a page of its own. This page is about travel agents and tour operators who book for their clients.

The IH&RA and UFTAA code of practice between hotels and travel agents says a hotel's commission policy must be clearly stated, and agreed by the agent before or at the time a booking is confirmed. Its checklist for a contract lists what to settle:

• Whether commission is paid at all, and on which services: rooms only, or meals and extras too.
• The rate or rates.
• Whether it is worked out before or after taxes and service charges.
• How and when it is paid.
• Whether it is paid on an extra night the guest adds during the stay, or on a later stay the guest books while with you.
• The longest stay commission is paid on.

The code says too that when an agent books rooms the guest pays for at the hotel, the hotel still owes the agent its commission on the services confirmed. And it asks hotels not to solicit an agent's clients to book direct in future: agents expect it of you, so think before you send their guests your own offers.

Agreements with single agents, operators and their associations vary around it, and your contract with each is what counts. A higher commission for a season, a market or a number of room nights is one way to win an agent's attention without lowering your price to the public.

• Ask every agent you deal with for its company's name, address and GST number before you pay it, and keep them with the contract.
• Many agencies, in India and abroad, are known to suppliers by an IATA or TIDS code. IATA says suppliers, hotel groups among them, rely on TIDS to identify and manage their partnerships with agencies, including granting commissions.
• Pay against the agent's invoice, or by a statement each month, for stays completed, and keep a record of each booking: the guest, the nights, the price and the commission.
• Ask your accountant how tax applies to the commission you pay and to the invoices agents send you.

• Write your commission policy on your rate sheet: the rate, what it is paid on, before or after tax, and when it is paid.
• Pay on time. Agents remember the hotels that pay them, and send their next clients there.
• Keep commissionable and net rates apart, and never let a net rate reach the public on its own.
• Count what each agent brings and costs you each month, beside what the same rooms leave you through a booking site.
• Give the agents who send you most a reason to send more: a higher commission past a number of room nights, or an upgrade for their clients.