Few would dispute that suppliers have been working hand-in-hand with their travel advisor partners to help them cancel, refund and rebook their clients in the wake of the coronavirus.
However, moving forward, agents would like suppliers to do more when it comes to protecting their commissions.
“We would love to see a change in the industry to pay agents once the reservation enters full penalty as opposed to waiting until after guests travel, as the livelihood of our businesses rely on it,” said James Berglie of Be All Inclusive.
As an example, Berglie is moving 13 groups scheduled to travel over the next two months to future travel dates. “These groups are paid in full, and in full penalty, so the resort is not issuing any refunds for them,” he said. “The vast majority of the work on our end has been completed, but now our expected income has been moved with those groups to 2021.”
European suppliers such as Trafalgar “have decided to pay agents their commission early since the company is only issuing future travel credits to guests in full penalty,” Berglie said, “but we have not seen that come from the tour operators we work with in the Caribbean.”
Berglie noted that the vast majority of resorts throughout the Caribbean have not altered their penalties for existing groups scheduled to travel in April, May and June. “Those contracts are in full penalty, but the resorts are allowing groups to move to future travel dates into 2021,” he said. “Group contracts are quite different than individual travel—which have a lot more flexibility.”
While he discussed the subject with a number of hotel companies, “they advised the issue is not with the specific hotel, but lies with the tour operators,” he said. “The tour operators collect the payments for the group, and we have hundreds of thousands of dollars paid to them right now that they hold and then pay the hotel the net amount—usually around 30-45 days prior to travel. The tour operators hold our commission and then pay us that portion after guests travel.”
With one large supplier, which accounts for about 90 percent of Be All Inclusive’s business, groups are being moved “all the way up to December 2021—groups we have already done the bulk of work for, and who are in full penalty periods, so will only be issued future travel credits, and now we won’t see a dime of income that was expected in May 2020 until possibly December 2021.”
He added, “With cash-flow obviously being an issue right now, we need a better solution.”
Be All Inclusive groups have specific contracts outlining due dates and penalties. “What I’d like to propose to the suppliers is that once a group enters full penalty, meaning the guests will not be getting any refunds, that they go ahead and pay the commission earned to the agents at that point, as they are guaranteed their money and we have done the vast majority of our work.”
Claire Schoeder of Elevations Travel agreed that commissions should be paid in full once the reservation enters the nonrefundable/full penalty stage. “There’s no reason to sit on that money rather than paying the agency the money due,” she said. “When it is nonrefundable the [the supplier] has the money and should remit payment to the agency. And if rescheduling, they should not include an increase in price as the circumstances are beyond the control of the agent and the group—as long as new dates are in the same season of the year. Moving from shoulder to high season would incur an increase but using the same week of the year should not unless a holiday with a variable date falls in that week—Easter being a prime example.”
Meanwhile, Angela Turen of Churchill & Turen said “some suppliers are not paying commissions on the bookings they have canceled—even though the bookings were paid in full—[while] other suppliers are paying commissions.”
She added, “Since we are in the distribution industry, we give the clients on a platter to the suppliers [yet] we cannot partake in their decision making. This has resulted in many lost commissions.”
All things considered, Schoeder noted that things have gone more smoothly than she anticipated through all the coronavirus chaos. “There have been a few bumps in the road and I have lost a lot of commission,” she said. “But this too shall pass.”
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