What Markup means
Markup is the main way intermediaries earn money on net-priced products. A supplier gives the seller a net fare or net rate, and the seller decides what to add before quoting the customer. This is the opposite of a commission model, where the supplier sets the selling price and pays the agency a share of it.
In air, net fares are usually filed as negotiated fares in ATPCO Category 35. Travelport's documentation describes three levels for these fares: the net amount the airline accepts, the selling fare the passenger pays, and the gross fare shown on the ticket. Agencies with the right authority from the airline can apply a markup to create the selling level and, where allowed, redistribute the fare to other agencies.
In B2B distribution, markups often stack. A consolidator or wholesaler adds its margin and sells to a sub-agent, who adds a second margin for the end traveller. A B2B travel portal typically lets the platform owner set markups per agent group, supplier, route or product type, and lets each sub-agent add its own on top. Hotel bedbanks and dynamic packages use the same idea, where the margin is often hidden inside a single package price.
How Markup works
Most booking systems apply markup through a set of rules evaluated at search or pricing time.
- Receive the net priceThe system gets a net fare from a GDS, NDC or private fare source, or a net rate from a hotel supplier or bedbank.
- Match the markup rulesRules are checked in order of priority, for example by airline, route, cabin, fare type, hotel star rating, supplier or the buying agent's group.
- Apply the amountThe rule adds a fixed amount, a percentage, or both, sometimes with minimum and maximum caps per booking or per passenger.
- Add downstream layersIf the buyer is a sub-agent, its own markup is applied on top of the price it was offered, producing the final customer price.
- Display and ticketThe selling price is shown to the customer, while the net, markup and any service fee are kept separate in the booking record for accounting.
Markup in practice
Illustrative example: a consolidator holds a private net fare of US$600 on a Dhaka to Dubai return. Its B2B platform rule adds 4% for agents in its standard group, so sub-agents see US$624. A sub-agent then adds a fixed US$30, and quotes its customer US$654 plus taxes. The airline receives US$600, the consolidator keeps US$24 and the sub-agent keeps US$30.
Hotel example (illustrative): a bedbank returns a net rate of €100 a night. The platform's rule for four-star city hotels adds 12%, giving €112. For a corporate client the same system applies a lower 6% rule, showing how one net rate can produce different selling prices for different customer groups.
Who uses it
Advantages and limitations
Advantages
- Sellers control their own margin instead of relying on a supplier-set commission.
- Rule-based markups let one inventory source serve many customer groups at different prices.
- Layered markups allow consolidators and sub-agents to each earn on the same booking.
- Margins can be adjusted quickly by route, season or competitor pricing.
Limitations
- Airline net fare agreements may restrict who can mark up, redistribute or ticket a fare.
- Stacked markups can make the final price uncompetitive against airline direct or OTA channels.
- Some hotel contracts and rate parity terms limit how net rates can be resold or displayed.
- Poorly ordered rules can apply the wrong margin, causing losses or pricing errors that are hard to spot.
Frequently asked questions about Markup
What is the difference between markup and commission in travel?
With a markup, the seller starts from a net price and adds its own margin, so it sets the customer price. With commission, the supplier sets the selling price and pays the agency a percentage or fixed amount from it. Many agencies now combine both, plus service fees, depending on the product.
How much markup do travel agencies add?
There is no standard figure. Markups depend on the product, market, competition and agreement with the supplier, and are often set differently for air, hotels and packages. Air net fares tend to carry small fixed or percentage margins because prices are easy to compare, while packages and hotel-only bookings often allow larger margins.
Can a travel agency mark up a published airline fare?
Generally an agency sells a published fare at the filed price and earns through commission or service fees instead. Markups are normally applied to net or negotiated fares, where the airline has authorised the agency to set a selling level. Agencies should check the fare's rules and their agreement before changing a price.
What is a B2B markup?
A B2B markup is the margin a wholesaler, consolidator or B2B platform adds before selling to another travel business. The buying agent then adds its own retail markup for the end customer. Platforms usually let the owner set B2B markups per agent or group, and let each agent configure its own on top.
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