By Charles Tan
When working with Wholesalers, the commission structure differs significantly from standard OTAs (like Agoda or Booking) because wholesalers act as a B2B bridge, distributing your inventory to smaller travel agents and tour operators worldwide.
To maintain a healthy profit margin while staying competitive, here is how you should structure your commissions:
- Standard Commission Benchmarks
Wholesalers typically require a deeper discount because they need enough “room” to add their own markup before selling to a secondary agent.
|
Partner Type |
Typical Commission / Discount |
Purpose |
|
Retail Travel Agents |
10% – 15% |
Direct B2C sales; they sell at your Best Available Rate (BAR). |
|
Wholesalers (B2B) |
20% – 25% |
They distribute to smaller agencies who then sell to the public. |
|
Inbound Tour Operators |
25% – 30% |
Often bundled into “all-inclusive” packages (flight + hotel + tours). |
|
Global Wholesalers |
30% – 35% |
High-volume players who provide massive global exposure. |
- Net Rates vs. Commissionable Rates
In the hospitality industry, you will usually negotiate in one of two ways:
- Net Rates (The Most Common): You give the wholesaler a “fixed low price” (e.g., $75 for a $100 room). They then add their own profit margin and sell it. You receive exactly $75 regardless of what they charge the guest.
- Commissionable Rates: The wholesaler sells the room at your official public price (BAR), and you pay them a percentage (e.g., 25%) after the guest checks out.
- Key Strategy: “Rate Parity”
- The biggest risk with wholesalers is rate leakage. If you give a wholesaler a 30% discount, and they decide to sell that room online for a very low price, they might undercut your own website.
- Pro Tip: Always include a “Non-Opaque” clause in your contract. This ensures that the wholesaler can only sell your rooms as part of a package (flight + hotel) or to closed user groups, preventing them from competing with your direct bookings.
- Why give such a high discount?
While 25%–35% sounds like a lot, it is often justified by:
- Volume: They fill rooms during the “Low Season” when your website traffic is down.
- Guaranteed Allotments: Some wholesalers “buy” a block of rooms in advance, ensuring you have baseline occupancy.
- New Markets: They reach travelers in regions where you don’t have a marketing presence (e.g., a specific agency in Europe or South America).
