HOW TO START A TRAVEL AGENCY
Most travel agencies earn revenue through commissions. Consumers often choose agencies because they help cut down on time needed to research various locations and book accommodations. A popular trend in the industry is online agencies, which operate mostly or exclusively online.
Learn how to start your own Travel Agency and whether it is the right fit for you.SKIP AHEAD TO
Luckily we have done a lot of this research for you.
What are the costs involved in opening a travel agency?
While some sources suggest you can pay a host agency $400 to $1,200 to get started from home, there are host agencies that don’t charge you anything to use them as your host. A host agency basically takes care of all the regulatory and back office requirements and splits the commission with you as the business owner.
To start your own independent agency may cost you between $1,000 and $10,000, depending on the markets you serve and your existing book of clients.
What are the ongoing expenses for a travel agency?
Fortunately, expenses for this type of business are low and are limited to printed brochures and typical office paperwork. If you are working through a host agency, some or all of your advertising may be paid for.
Who is the target market?
Most clients and customers are people who want to travel to another country. While domestic agencies do exist, the market is really in international travel these days. The types of clients an agency might serve depend entirely on the current market place. Client needs range from simple vacations to corporate retreats to medical tourism.
How does a travel agency make money?
Commissions are the way in which travelling agencies have traditionally made the majority of their income. Airlines and hotels would pay agencies a certain fee for utilizing their companies when booking for a client. However, with the recent proliferation of booking technology, including Google Travel, travelling apps, and company websites, these businesses are more accessible to consumers and no longer rely on travelling agencies to promote their services. For this reason, airlines and hotels have largely stopped paying travel agencies commissions. As a result, travel agencies have been forced to adapt, focusing less on simple bookings and more on navigating complex itineraries and the legalities of travelling in specific regions or countries. They have shifted to charging flat rates for bookings and hourly rates for consulting services related to planning travels and navigating legalities.
How much can you charge customers?
Travel agents working independently typically charge $30 for booking a flight, $50 for sleeping accommodations in a single destination, and $100/hour for research and planning advice. If a travel agent manages to procure commissions from an airline or hotel, these will typically be around 10%.
How much profit can a travel agency make?
First-year income for a home-based agency is between $30,000 and $50,000. As the business expands, revenues can rise to over $100,000, but this usually requires hiring other agents and staff support.
How can you make your business more profitable?
Travel agencies that specialize tend to make more money. For example, according to the US Bureau of Labor and Statistics (BLS), travel agencies can bring in between $30,000 and $50,000 per year. General agencies or agencies that offer only leisure travel services make the least, while corporate and medical tourism specialties tend to make the most.
There are several types of specialties in the travel industry:
Leisure Agent
Corporate Agent
International Agent
Medical Tourism Agent
International Agent
A leisure agent books primarily leisure and vacation travel. For example, this might include family vacations or sabbaticals.
Corporate agents primarily book travel for corporations. Usually, corporate clients are looking for business trips or retreats. Often, the corporate client needs special attention, including complex booking schedules that include both accommodations, local travel, and entertainment
Medical tourism is a highly specific niche segment of the industry. These agents research countries for medical patients who want treatments that are either not available or are too expensive in their home country. For example, a patient may be looking for an experimental cancer treatment which is only available in a particular country.
International agents book international travel plans. These could be for corporate clients but are typically for individuals. These individuals may be looking for universities abroad, a new country to buy property in, or even a new country to move to.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Travel Agency Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
Your state's business records
Federal and state trademark records
Social media platforms
Web domain availability.
It's very important to secure your domain name before someone else does.
Find a Domain Now Powered by any domain company of your choice
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your travel agency is sued.
FORM YOUR LLC
Read our Guide to Form Your Own LLC
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Have a Professional Service Form your LLC for You
TWO SUCH RELIABLE SERVICES:
ZenBusiness ($39 + State Fees)
LegalZoom ($79 + State Fees)
You can start an LLC yourself and pay only the minimal state LLC costs or hire a Business Formation Service for a small additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
This separates your personal assets from your company's assets, which is necessary for personal asset protection.
It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Get a business credit card
This helps you separate personal and business expenses by putting your business' expenses all in one place.
It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Fourteen states require a Travel Sellers Registration License to sell travel. A license can be obtained through an application, which typically involves a fee and supporting documents such as membership in a professional association. Here is a list of states requiring Travel Sellers Registration Licenses.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Certificate of Occupancy
A travel agency is usually run out of a physical location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease a location:
It is generally the landlord’s responsibility to obtain a CO.
Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an travel agency business.
After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
You will be responsible for obtaining a valid CO from a local government authority.
Review all building codes and zoning requirements for you business’ location to ensure your travel agency business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
Recommended: Learn what business insurance for your Travel Agency will cost.
BUSINESS INSURANCE FOR
TRAVEL AGENCY
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a travel agency
Most new agency owners come from an established agency and have a book of clients. If you don’t start with an established agency, you must advertise your services. The best source for clients are referrals.
How to keep customers coming back
Agencies that are the most successful are specialty shops. For example, a travel agency might specialize in medical travel or corporate travel. A general agency will find it difficult to compete in today’s market.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.Start A Travel Agency In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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Is this Business Right For You?
This business is perfect for individuals who are passionate about travel, love learning about and visiting new places, and are very detail oriented. Travel agency owners have very flexible hours but usually only after they have an established book of clients.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
ENTREPRENEURSHIP QUIZ
What happens during a typical day at a travel agency?
Day-to-day activities of a travel agency owner include checking faxes, phone messages, and incoming emails. You may also meet with clients and book numerous client trips during the day.
What are some skills and experiences that will help you build a successful travel agency?
There is no formal education or certification required to become a travel agent, but some states require you to have a license to operate as an agency:
California
Florida
Hawaii
Iowa
Washington
Aside from that, there are voluntary certification programs that may help you enhance your knowledge of the industry and of travel in general: Certified Travel Associate (CTA) To get the CTA, you must have 18 months experience in the industry. You must take 8 core classes and 4 electives. You can finish your course in 3-6 months, but you have up to 12 months to finish. Cost for this course and exam is $350 and $250 for the test only. To maintain this certification, you must complete 10 CE credits each year. Certified Travel Counsellor (CTC) You must have 5 years experience in the industry and a CTA designation. There are 10 courses to complete, including a 3,000 word “white paper” assignment (in which a complex issue is explained concisely in a report). You must finish in 12 months, but may finish in 9 months. Cost is $550 for the course and exam or $320 for the exam only. To maintain this certification, you must complete 10 CE credits each year. Certified Travel Industry Executive (CTIE) This designation is only for non-consumer sales roles. You must have 5 years experience. The course consists of 100 videos, each 10 to 15 minutes in length. You must also complete a 2,000 to 3,000 word “white paper.” It takes 18 months to complete the course. Cost is $550 for the course and exam or $320 for just the test. To maintain your certification, you must commit to the annual Travel Institute membership and take 10 CE credits each year. What is the growth potential for a travel agency? Most small travel agencies are started as home-based businesses. Larger agencies adopt a traditional office model. Agencies can be run as a single-owner business or as a multiple-employee organization
Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
Funding
Events
Guides
Support
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
A travel agency can be built with a single owner. However, time is the limiting factor. Because this business carries a low overhead, your need for employees is limited by your time in the business. When it’s time to expand, most agency owners hire another agent or support staff so they can delegate responsibilities.
If you start with a host agency and want to move away from it, then you would expand by hiring administrative personnel to handle the regulatory and back office functions.NEXT STEPS
Get more ideas with our Business Ideas Generator.
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