LYCEUM-NORTHWESTERN UNIVERSITY

Dagupan City, Pangasinan

COLLEGE TOURISM MANAGEMENT

Study Guide 4
Rate Minus and Cost Plus Concepts
Technical Terms
1. Cost Plus – extra amount to a cost of an airline ticket or cruise ticket,
hotels, etc.
2. Incentives - something given that motivates or encourages a person to
do something
3. Rate Minus – fixed commission on regular rates given to travel agents
4. Rebate - partial refund to someone who has paid too much for a
product or service
5. Revenue – the amount of money received from sales of products and
services that are derived after all costs are deducted

Sales and Revenues of Travel Management Companies

A. Cost Plus
More often than not, airline rates, hotels, attractions, and resorts
have fixed rates for their services. At times, when bookings are done
through TMCs travelers need to pay an extra amount for booking. This
negotiated professional or handling fee is referred to as cost-plus.

B. Rate Minus
Suppliers in the travel industry consist of the transportation industry,
the accommodation industry, entertainment and activities, and food service
industry. When the TMCs are able to sell services, they are given fixed
commissions on regular fares. They refer this as rate-minus. Some travel
professionals also refer to this as net-plus.

C. Service Fees
TMC also offer other services aside from sales of airline or cruise
tickets and tours. They also help facilitate acquisition of travel documents
such as facilitation of passport, visa application, and other travel related
documents. When these travel professionals are able to help tourists in any
of these, they charge additional fees to the tourists.

D. Rebates and Production Incentives

This is one of the perks of travel agencies. If they are able to book big
groups in airlines of hotels, for example, they may be given free seats in the
airlines and free hotel rooms. These seats or rooms may be sued or may also
be sold to other clients. At times, it is the owners, staff, and their family
members who use these free incentives.