As part of its Travel Agent Affiliate Program (TAAP), Expedia today announced a new travel agency commission model called Dynamic Commission. Unlike a fixed percentage compensation on all bookings, Dynamic Commission is closer to a revenue-sharing structure between Expedia TAAP and its travel agent affiliates.
It is already successfully operating in some global markets and will be rolling into all global TAAP markets in 2018. It structures the agent-Expedia relationship more like a traditional sales agent relationship, with the supplier pushing the sales team to drive higher margin products.
Expedia says the model gives agents the flexibility to optimise their sales and earn more as well as complete transparency in how much they will earn on each booking.
Good news: Dynamic Commission aligns Expedia and agent incentives.
Bad news: This may result in misalignment of agent and customer priorities.
The question these variable commission-based models pose is: Are agents employed by the customer or the distributor?
Dynamic Commission replaces the previous Expedia TAAP hotel commission payment model which offered a fixed multi-level commission model. Prepaid hotels attracted the highest commission levels, postpaid lower, and GDS bookings typically attracted the lowest. There was some variation across global markets in actual % but in general, prepaid earned 10-11%, post-paid 7% and GDS 2-3%.
The new Dynamic Commission model offers four different commission levels for hotels: Premium Plus, Premium, Basic Plus and Basic. Specifically, the Premium Plus level allows agents to share in the upside where hotels offer Expedia higher margins.
A quick check of the 33 global market sites shows the new commission level nomenclature is in place on all sites already. Levels for the four tiers vary across markets ranging from 11%, 9%, 7%, 3% to 10%, 8%, 6%, 3% depending on the market.
Dynamic Commissions will offer the same commission for “prepaid” and “pay at checkout” options. This is a switch from historical approaches which offered reduced rates for post-paid making it a very welcome development.
“Our new dynamic model was developed specifically with feedback about commissions in mind”
Diego Pedrani, senior director, Expedia PartnerSolutions, commented: “Our new dynamic model was developed specifically with feedback about commissions in mind. It incentivises agencies to focus, where possible, on hotels that pay Expedia higher commission and where we can share that upside with agents.
“Additionally, we believe this model comes as a benefit to our business travel affiliates who now can take advantage of even greater flexibility in both prepaid and pay at the hotel reservations.”
Expedia TAAP has been an extremely successful and high growth program both for Expedia and agency partners globally since it’s launch. They’ve earned a positive reputation in the agent community for the programs commision levels as well as the timely payment of commissions earned.
Dynamic Commissions is currently operating successfully in Australia, USA, Canada and major European markets.