Travel agent action group Target is calling on tour operators to agree to a ‘Fair Share Code’ in which they pay commission on holiday deposits.
Travel Agents Reform Group Engaged Together (Target), which has already warned of redundancies as pressure mounts due to cancellations and amendments, said it would be contacting agency consortia to help lobby the case for agents to be paid commission on deposits instead of when clients pay their holiday balance.
It aims to draw up a list of operators as they sign up to its new code in a bid to encourage more suppliers to join.
The plea comes as agents struggle to survive on existing cashflow and continue to work on amendments or cancellations for no income.
Target co-founder Graeme Brett, of Westoe Travel, said the group had been contacted by agents frustrated at receiving no commission for deposits, particularly when bookings are amended several times, or have lost money when bookings are cancelled at the deposit stage.
Target wants operators to pay commission on deposits immediately when the deposit is paid, and the rest when the balance is paid. For example, an operator which pays 10% commission on a £2,000 booking would pay £20 of a £200 deposit when the booking is taken, and the remaining £180 when the balance is paid.
The group also argues that when bookings are cancelled and the client loses their deposit, the operator should pay the ‘relevant commission rate’ on the deposit paid by the client and not refunded, or a percentage of the booking, to recompense them for the work they have done.
Brett said: “It’s common sense but certain companies are not doing it. Agents incur credit card fees when they take the holiday deposit and are then out of pocket if the booking is cancelled and are not paid any commission to cover the costs and the work done to take the booking.”
Brett said the group did not expect operators to pay commission to agents where the customer is due a full refund, and conceded operators may need to increase deposits to pay agents part of their commission earlier.
The current cashflow crisis for agents has been exacerbated by the number of bookings being deferred until next year due to the Covid-19 pandemic, meaning agents are not receiving any income until the balances for these sales are taken shortly before departure.
“Some customers have changed their plans five or six times and we have done all the extra work and changed the bookings, but we still only get paid commission when the balance is paid,” he said. “In normal times you have got bookings coming in and customers going away all the time so managing cashflow is less of a challenge. This situation is going to get worse when furlough ends.”
Brett said the group would now contact consortia to put pressure on operators. “We hope consortia will support us on this as it’s in the interests of their members,” he added.
Co-founder Jill Waite said some operators already complied with the code. She added: “We are asking the remaining operators to agree and help agents improve their cashflow. We’re sure operators will see the benefit in supporting the code as agents will be more inclined to support operators supporting them.”