From commission to service fee: how travel agencies actually make money today
Tour operator commission is still important, but today’s travel agency economics have many more layers. Service fees, GDS incentives, volume bonuses, net rates, markups, insurance and even the method of payment to suppliers can determine how much of the total turnover will actually remain with the agency.
A travel agency that sells a million euros worth of trips annually does not have a million euros in revenue. For its business model, a much more important question is how much of that turnover remains as commission, fee, or margin.
That is precisely why the current commissions of German tour operators for the 2026/27 season should be viewed more broadly than just as a race for a few percentage points.
DERTOUR has, for example, lowered the threshold for the base 10 per cent commission from 130,000 to 100,000 euros in annual turnover. Below that threshold, the base rate is eight per cent, while the maximum standard commission can reach 12.75 per cent, or 13.75 per cent on selected Top Choice bookings. From the new financial year, the system will also include the turnover of I.D. RIVA Tours, the Croatia specialist.
TUI retains 10 per cent of the 80,000 euros total turnover and the possibility of additional earnings through EXTRA STARS, up to two percentage points on top of that. Schauinsland-Reisen starts with 10 per cent from the first booking and goes up to 13 per cent, while Bentour Reisen gives independent agencies 11 per cent with no minimum turnover, with the possibility of growth up to 13 per cent.
Olimar stays at 10 to 12.5 per cent, while Anex introduces an interesting difference: for Turkey it starts with 10 per cent, whereas for other destinations the initial rate remains at 11 per cent.
Those are nice percentages. However, they are merely the first line in a travel agency's revenue and cost indicators.
Commission remains the cornerstone, but the percentage doesn't tell the whole story
The traditional model is simple: the supplier pays the agency a percentage of the value of the sold service. Tour operators, hotels, car rental companies, cruises, insurers and numerous other suppliers still use such a system.
However, more important than the nominal rate may be the tax base to which it is applied.
Code 10 percent remains a frequent benchmark for hotels. Hyatt offers 10 per cent on eligible rates, Marriott also pays 10 per cent to Preferred Travel Agency partners, while paying eight per cent to standard agencies. Hilton offers up to 10 per cent on commissionable rates. Taxes, resort fees, incidentals and other items may, however, be excluded from the commissionable base.
The same applies to other products. Two holiday packages worth 2,000 euros do not necessarily bring the agency the same revenue, even when both carry a “10 percent commission” on paper.
That's professional agency Don't just track the commission rate. Track the commissionable amount, payout timing, criteria for higher tiers, and the possibility of additional overrides.
Here tour operator models are particularly interesting. DERTOUR, for example, notching down the threshold isn't the only thing it does, but it also retroactively raises an agency that reaches 100,000 euros during the year from eight to 10 percent in base commission. Consequently, concentrating sales with a single supplier can have a very tangible financial impact.
The plane ticket has a small commission, but behind it lies an entire economy
Code the situation with plane ticket sales is quite different. Traditional airline commissions have over the past decades been largely reduced or completely abolished. That is why earnings from the sale of air tickets often come from several other sources.
The first is the service fee paid by the passenger or corporate client. The second can be individually negotiated airline bonuses. The third is the GDS incentive.
In the traditional GDS model, the airline pays a distribution fee to the GDS, and the GDS uses a portion of its economics to encourage agencies to make bookings through its system.
In its 2025 financial report, Sabre describes this kind of mechanism very openly. Most of its incentives for travel agencies are tied to booking volume, such as the number of segments booked, and the amount can increase after agreed thresholds are reached. Sabre also states that competition for large agencies and TMCs is driving up the incentive consideration paid by GDSs to distribution partners.
In other words, for a larger agency, a GDS is not just a technology cost. It can also be a revenue line.
Exact rates are mostly not public. They depend on volume, market, contract, productivity targets and the agency's relationship with the GDS or consolidator.
NDC further changes the calculation. Some airlines encourage NDC sales with special bonuses, while shifting volume from the traditional GDS channel can reduce an agency's GDS revenue. Therefore, the decision on which channel an agency uses to book is no longer just a question of content and ticket price. It becomes a question of the overall booking economics.
Service fee is no longer an unpopular surcharge
Perhaps the biggest change in agency business is, after all, the fact that clients are increasingly paying directly for the agency's work.
According to research by the World Travel Agents Associations Alliance, professional fees are used by more than 66 per cent of European agencies surveyed. Among the agencies that use them, 85 per cent report better revenue predictability and 60 per cent higher profitability.
The logic is simple. If an advisor spends several hours researching a complex FIT itinerary, compares flights, hotels and transfers and communicates with the client, that work has a cost regardless of whether the supplier pays a commission six months later.
That is why consultation and planning fees, ticket issuance, change or refund fees, after-hours support, complex itineraries, group bookings or concierge services apply.
In corporate travel, that model has long been the standard. Business Travel News states that the transaction fee is the most common form of charging for TMC services, whereby online and offline bookings, international tickets, changes, refunds, VIP or after-hours support can be charged separately. Other models use a fixed management fee, and subscription models with a monthly or annual price are also increasingly appearing.
An important shift is happening to the team: the agency is no longer paid just for selling something. It is also paid for making something.
Net rate and markup: when the agency sets its own margin
The second major model is not commission-based, but commercial.
A hotel, DMC, bedbank or other supplier can give an agency a net price of, for example, 800 euros. The agency then sells the product for 900 euros and keeps the difference as a markup.
Unlike the traditional commission model, the merchant or net-rate model gives the distributor greater control over the final price and margin.
This is particularly relevant for DMCs, incoming agencies, specialists and other companies that create their own packages. A margin can be generated on accommodation, transfers, excursions, guides and other local services, and then managed at the level of the entire package.
However, greater control also means greater commercial risk. With the merchant model, you have to manage billing, refunds, exchange rates, payment costs and the relationship with suppliers' net prices. Therefore, a higher markup does not necessarily mean a better bottom line.
Insurance, flex products and payments also generate revenue
A large part of profitability is often hidden in products that seem incidental.
Olimar provides a prime example. Alongside a base commission of at least 10 percent, it pays agencies a fixed 20 percent for HanseMerkur travel insurance. Its Flex Fee, with which the traveller purchases greater booking flexibility, is commissioned to the agency at 50 percent.
Such products change the yield of the entire reservation.
Insurance, private transfers, excursions, car hire, premium seats, extra baggage or other ancillary services can have a similar role when the supplier pays a commission or bonus on them.
There is even revenue on the supplier payment side. Virtual cards have become an important tool in B2B travel payments, with certain issuers returning part of the card economy to the user through rebates. WEX explicitly positions such rebates as an additional revenue stream for business users of virtual cards.
For a large OTA, bedbank or TMC that executes a high volume of hotel payments annually, even a relatively small difference per transaction across the entire volume can become a relevant item.
The difference between 10 and 12 percent is greater than it looks
On an individual reservation, the difference looks small.
On a €2,000 package, 10 per cent means €200 in gross commission income. Twelve per cent means €240.
However, for a commission of 200 euros, another agency can charge an additional 50 euros as a professional fee. Its revenue on the same booking then rises to 250 euros, which is 25 percent more than in the model that relies solely on the basic commission.
A third agency may have a higher commission tier due to overall volume, GDS incentives on the flight portion of the trip, insurance revenue, and markup on local transfers.
They all sold a trip of equal value. Their economics are nonetheless completely different.
Therefore, agency turnover in itself says less and less about the quality of the business model.
Revenue mix is more important than the highest commission
A retail agency selling package holidays can combine the organiser's commission with a fee for more complex advisory services and additional products. A TMC can build its model on transaction fees, GDS revenue and contracted supplier bonuses. A DMC can work on net rates and its own markup, while technologically more advanced intermediaries can further optimise payment economics.
At the same time, DERTOUR's takeover of I.D. RIVA Tours shows how much a revenue model can also impact the destination. From 1st November, sales of the Croatian specialist will be included in the calculation of DERTOUR's commission tiers. For the German agency, selling Croatia can thus help not only by earning on a specific booking, but also by reaching a more profitable tier for overall sales.
That is perhaps the best example of how distribution has changed. An agency should no longer just ask: “What is the commission?”
A better question is: how much total revenue can we generate from a single booking, how much does it cost us to process it, and how much of that revenue actually remains in the end?
