Commissions on Vouchers Should Be Paid Upon Issuance, ASTA Says

(Tero Vesalainen/iStock/Getty Images Plus/Getty Images) Photo by Tero Vesalainen/iStock/Getty Images Plus/Getty Images

After previously calling out suppliers for retroactively amending their cancellation or commission policies in April, the American Society of Travel Advisors (ASTA) is now coming to the defense of travel advisors and agencies, saying compensation for future travel credits must be made up front.  

Due to the current travel climate, many travelers have come to value FTCs as opposed to simply cancelling their trip outright. Accordingly, in lieu of issuing refunds when travel plans are cancelled, the use of FTCs by suppliers has seen a sizable uptick during the current pandemic crisis.

ASTA’s take: Apart from the travel originally booked, the FTC itself constitutes a transaction for the promise of future travel. Therefore, any commissions earned from an FTC transaction should be payable to the advisor upon the issuance of that voucher, and not at the time of the future travel.

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“Analogous to a FTC, when you sell a new home, you pay the realtor’s commission at closing, not when the new owner moves in; likewise, when you send a gift certificate to a loved one, you pay when you purchase it, not when the certificate is redeemed,” said Mark Meader, ASTA SVP of industry affairs and education, in an official release. “It stands to reason that when a travel voucher or FTC is issued as the result of a sale made by a travel advisor—whether outright or in lieu of a refund—the corresponding commission owed the advisor should be paid at the time the voucher is issued, not when the traveler takes the trip.”

ASTA says it applauds those suppliers who have already chosen to pay agency commissions upon the issuance of the FTC. For those who have yet to adopt such practice, ASTA argues it should become standard practice. In these situations, the supplier has already collected full payment through the advisor; it follows, then, that the compensation owed the advisor should be paid when that full payment has been received. With the advisor having completed and closed the sale, collected all monies due and remitted such to the supplier, the advisor has fulfilled all of her or his duties with respect to the transaction. Compensating the advisor for that success is the logical follow-on step that should occur at that point without delay, ASTA says.

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