What tour operators call booking commission is really three separate charges: the booking system's own fee on your direct bookings, the commission a marketplace or online travel agency takes for sending you customers, and the payment processing fee for moving the money. They stack up on the same bookings, but only the first is a software cost you could replace.
Lumping them together leads to bad decisions in both directions. It is easy to blame the booking system for commission it never charged, or to overlook its fee beside a larger line.
The booking system's fee on direct bookings
This is what you pay the software for bookings that came through your own website, phone or desk. It may be a share of each booking, a fixed amount per booking or per passenger, a monthly subscription, or a mix. Some systems add it to the customer's price as a booking fee. It then does not show in your revenue, but your customer still pays it.
On these bookings the customer found you without help. The fee buys the calendar, the checkout and the confirmations, and nothing else.
Marketplace and online travel agency commission
This buys distribution. The marketplace put your tour in front of someone who was not looking for you, and takes a share of the sale for doing so. Treat it as a marketing cost. It is not a software fee, and no booking system makes it go away.
Check one thing: whether your booking system also charges its own fee on bookings that arrive through a marketplace connection, so that those bookings pay twice.
Payment processing
Every card payment carries a processing fee, charged by the processor and sometimes billed through the booking system under its own label. It follows you to any system. The questions to ask are whether you are paying the processor's own rate or a marked-up one, and whether you are able to choose your processor.
Total each one from a season's reports
- From the booking system, export all bookings for the season with source or channel, gross value and any fee columns.
- Split the bookings into direct and marketplace by source.
- Total the booking system's fees on direct bookings. Put customer-paid booking fees in a separate column.
- Total the booking system's fees on marketplace bookings, if there are any.
- From each marketplace's statements, total the commission withheld.
- From the processor's statements or the payout reports, total the processing fees.
- Add the subscription invoices for the same months.
Suppose, purely for illustration, you took 2,000 direct bookings at 60 each and the booking system charged 3 percent of each. That is 120,000 in direct sales and 3,600 in booking system fees for the season. Replace every figure with your own, since none of them is meant as what any system charges. To run the sum over several years, use our free calculator for per-booking fees and flat monthly fees, which shows the yearly and three-year totals.
What the three totals tell you
Put the three totals side by side with a note of what each one buys. Whatever size the marketplace commission turns out to be, the response to it is more direct bookings, not different software.
The booking system total is the one to weigh against what you use. If you rely on its channel connections, resource scheduling and reseller tools, a fee that scales with sales can be fair. If you use a calendar, a checkout and a manifest, a charge that rises with every booking you win yourself is worth questioning.
Our page on what tour and activity operators rent and what can be rebuilt sets out where Hiro fits: we rebuild the direct booking side for one flat monthly price and build around marketplaces and card processing, which we do not replace. The guide to renting versus owning software covers running both systems side by side before anything is switched off.