Commissions: Myths vs Facts
Commissions are a crucial part of the hospitality industry, but they can be confusing. Here are some common myths about commissions and the facts that clarify them:
Myth: All hotel rate categories qualify for commissions.
Fact: Not all rates are commissionable. It's important for hotels and agencies to understand which rates qualify based on their agreements.
Rates That Typically Do NOT Earn Commissions:
Client-Negotiated Rates: Corporate rates agreed directly with hotels are usually non-commissionable. However, group rates outside these agreements may offer commissions.
Staff Negotiated Rates: Staff rates are typically non-commissionable as they are already discounted rates.
Hotel Additional Concessions: Free room nights offered as incentives (i.e., 1/40) to book more room nights are not commissionable.
Rates That Typically Earn Commissions:
Room Sale Commission: Negotiated room rates offer commissions on specific rooms or blocks.
Rack Rates: Publicly available rates are usually commissionable.
Direct Agreements: Commissions can be earned on applicable rooms based on agreements.
Promotional Rates: These can sometimes be commissionable, but it depends on the situation.
Myth: Commission processing times are the same everywhere.
Fact: Commission payments can vary. They aren't immediate due to factors like hotel accounting cycles, technology, and data quality.
Processing Schedules: Payments often follow a cycle (weekly, bi-weekly, or monthly).
Program Final Payments: For group agreements, commissions will not be processed until the Master Bill is finalized and the venue has received full payment.
Technology: Some hotels offer quicker processing with online systems and direct deposits, while others may be slower due to outdated technology.
International Venues: Commission rates and processing times vary by country, so always clarify these details before finalizing contracts.
Key Takeaway: Always make sure you fully communicate your requirements and understand the terms and conditions of the commission process before signing agreements. By understanding these key points, both hotels and agencies can navigate commissions more smoothly and avoid any confusion after the event.
