How to Make Money Selling Travel Itineraries

How to Make Money Selling Travel Itineraries

“How practice travel agents make money?” This is a question I hear frequently. Unremarkably, the people asking are either those who are interested in becoming a travel agent or it’s coming from those who find out I work in the travel manufacture and they can’t believe travel agencies are fifty-fifty however around! (Um, they are, and they’re the new darlings of the time-starved, data-overloaded travelers of today!)

I’ll become more in-depth in but a second, here’due south a list of steps that show how travel advisors make money:

  1. A traveler works with a travel advisor to plan and finalizes their travel itinerary.
  2. The travel advisor books the entire trip (each vendor used for the air, hotel, car, tours, cruises, etc) used in the traveler’s itinerary. Advisors utilise their accreditation number to book each segment of the trip in a vendor’s special travel agent portal (or by calling the vendor and giving their accreditation number). Depending on the booking type and the agency, the agent may too charge the traveler a carve up consultation or service fee.
  3. The vendor recognizes the travel agency through its accreditation number. Using the accreditation number, the vendor pulls up information most the agency, including the travel bureau’s committee level and the address where the committee check is to be sent.
  4. The travel agent makes the booking and is credited with the booking via their accreditation number.
  5. The commission is paid to the travel agent.
    For most trips, the vendor pays a committee to the travel amanuensis
    after the client has traveled
    .

    For near cruises, the travel amanuensis is paid their commission
    after

    terminal payment
    (typically about 60-90 days before the sailing).

Now, if you’re looking for how travel agents make money that are employees of an agency, that falls more than into the territory of travel amanuensis salaries. You’re at the correct site, just the wrong article. ๐Ÿ™‚ Here’s our article that deep dives into travel agent salaries.

A Short History

pan am

To give y’all an answer on how travel agents make coin, it’s of import to know a picayune history. I hope to keep it bruskโ€”information technology’south really pretty fascinating how the industry has inverse over the years.

In the adept ‘ol days, a large portion of travel agency income came from airline commissions. Since tickets were expensive, in demand, and could only be ticketed by agents or the airlines, they were the staff of life and butter of every agency.

What about commissions from tours, hotels, and cruise lines? Those were merely icing on the block.

They were travel agents in every sense of the give-and-take considering they were agents of travel vendors. Their revenue came from the commissions earned from selling travel products. However, when airline commissions were cut and capped in the 1990s โ€” sad face up! โ€” the principal revenue base for travel agents disappeared. It injure. A lot.

Airlines cut their commission considering they could now accomplish travelers via the spider web and online travel agencies (OTAs) like Expedia and Booking.com. Travel agents, who were once wined and dined by airlines, were left out in the common cold. Ouch.

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With this quickly changing travel mural, travel agents needed to notice a new way to make money . . . and fast. And that’s where our mod-day story of ‘How Do Travel Agents Make Money?’ begins.

A Shift in Business organisation Models

With committee cuts and clients’ ability to book online, agencies needed to adapt to the new landscape of planning and booking travel. The travel agency customs was, quite honestly, devastated past this. Many agencies that didn’t conform quickly enough had to close their doors.

Okay, okay. Before you blow through a whole box of tissues, I want to assure you lot that the ending is a happier one. Stick with me. ๐Ÿ™‚ While smaller than in its glory days, the travel amanuensis community has found an equilibrium.

From Storefront to Home-Based

Starting around 2013, travel agents started to see their numbers increase. When there was once a worry that in that location wouldn’t be any travel agents to make full the shoes of those retiring, there was an influx of new blood, eager to accept advantage of the flexibility and travel opportunities a travel agent career provides.

Check out these industry stats:

  1. In 2013, according to the American Social club of Travel Advisors (ASTA), nearly 70% of the agency workforce was older than 55. Not only that, but the pct of agents over age 65 had about doubled, from 17% to 32%, over the prior decade.
  2. Year after year, stats from our HAR’s income surveys betoken that the median of an amanuensis lands in the early to mid-50s, with the majority working from home. (In 2022, the median age was 55).

Did you grab that?!? We went from 70% of the workforce being over 55 in 2013, to 50% of the workforce existence younger than 55 in 2022! While ASTA and HAR practise tend to attract different demographics โ€” ASTA was traditionally larger, retail storefronts and HAR is typically smaller, non-storefront agencies โ€” merely withal, the trend is articulate. Travel agents are no longer in danger of going extinct. (HUZZAH!!!)

A large reason for this new influx? The rise of the agent that works remotely. Telephone call them solopreneurs/home-based/location-contained โ€” whatever hip term you desire to use. They may be harder to see without a storefront, but this new segment of the industry is now a force to be reckoned with!

By and large, the most popular agency model has switched from the storefront agencies of the by to the remote agencies of today.

Moving to Diversify Income

Along with the loss of airline commissions,
travel agents confront the claiming of many major cruise lines’ non-commissionable fees (NCFs). Yup, it’s self-explanatory: They’re miscellaneous fees that are not commissionable. While a prowl auction may be $two,000, it’s possible but $1,400 of it volition exist commissionable. The kicker is that an advisor will withal put a lot of elbow grease into booking those NCFs for their client.

Travel agency business models (both corporate and leisure) are moving to become less dependent on commissions lonely. Why the change? Not but did commissions from airlines and other vendors lower than in the past, only the manufacture has experienced huge industry and economic ups and downs including nine/11, recessions, and pandemics. (Am I missing any? PHEW, travel agents sure are resilient!)

Commission income went on rollercoaster rides during these times. During the coronavirus pandemic, for example, advisors were working overtime canceling trips, bending over backward to go their clients abode safe, spending oodles of time to keep upward to engagement with constantly-changing travel regulations, and rebooking trips despite the fact that commissions came to a halt. That’s right, they were working overtime for essentially no pay. These major pitfalls helped advisors realize the importance of diversifying revenue streams to assist stabilize income.

I solution for advisors to counteract diminishing commissions was to diversify their income past charging fees.

So how practice travel agents brand money in a globe where their commissions are lower (and fifty-fifty unpredictable at times)? One solution for advisors to counteract diminishing commissions was to diversify their income by charging fees. This helped agencies steer away from complete reliance on vendor commissions, helping them pad a bottom line that was once cushioned by generous airline and vendor commissions.

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The Breakdown of How Travel Agents Make Money

Okay, before we really dig into things, it’s important to understand that different kinds of travel agencies make money in different means.

To make information technology easier, we’ve broken down the question of how travel agents brand money into 4 main types of travel agencies:
corporate, leisure, custom, and ‘the large players’.

How Do Corporate Travel Agents Make Coin?

Corporate travel agencies make money mainly from service fees, net/individual fares, and from airline commissions.

flight

Airline tickets are the lifeblood of corporate agencies (as well known as TMCs or travel direction companies). Were TMCs going to stop selling airline tickets just because airlines stopped committee? No style. They had to go creative to offset lower commissions. What did these corporate agencies do? They implemented a service fee when they booked a ticket.

In improver to air, corporate travel agencies earn commissions from booking cars and hotels for business travelers. Corporate travel agencies make money mainly from service fees, net/private fares, and from airline commissions.

The average service fee for air ticketing in 2022 was $39 for domestic air and $63 for international air for agents who booked corporate travel.

Travel agencies, depending on the airline contracts they have admission to, are able to earn commissions on both domestic air (typically 0-5%) and international air (roughly x-22%).

So how much are corporate travel agencies charging? Co-ordinate to our 2022 Travel Agent Fee Report, the average service fee for air ticketing in 2022 was $39 for domestic air and $63 for international air for agents who booked corporate travel.

How Do Leisure Travel Agents Make Coin?

After the commission cuts, many travel agencies shifted to selling high-ticket products that all the same paid travel agent commissions. These products were essentially vacation packages and cruises. Nowadays, these are your leisure travel agencies (the ones you probably recall of when you think of a travel amanuensis.)

Charging a fee helps agents boost their bottom line and compensates them for their expertise.

By and large,
leisure travel agencies’ main acquirement is from commissions vendors pay on holiday packages, cruises, air, and other add-ons.
Nevertheless, consultation fees and service fees are becoming more than common as agencies try to diversify income sources to go less dependent on supplier commissions.

If yous’re wondering how many travel agents make money by charging a fee, y’all’ll desire to have a peek at HAR’s complete fee survey annal here!

In 2022, 53% of advisors reported charging fees. Merely to compare to the days of yore, only 33% of advisors charged a fee in 2017. Holy smokes, that’s a big increase

Charging a fee helps agents boost their lesser line and compensates them for their expertise. For agents hesitant to charge fees, some agents implement a ‘expect-to-book’ fee or a “plan to get fee.” This is an up-front fee for enquiry, which is applied to the booking when it’s made. Other agencies charge a straight-up non-refundable fee for consultations.

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Air ticketing service fees are typically the nigh common among advisors. When you focus on not-air ticketing fees, these services ranked in the elevation 5 for advisors to apply fees:

Top 5 Service Fees 2022

How Do Travel Agents Make Money with Custom Itineraries?

Mass market trips similar cruises, all-inclusive resorts, or group bus tours around Europe aren’t for everyone. When yous want an itinerary built simply for you lot, travel agents call that an F-I-T trip โ€” in plain-speak, you’d call that a custom itinerary. But why exist simple like that when you could come up with an acronym, right?! ๐Ÿ˜‰

Custom itineraries are more time intensive and may involve booking places that don’t pay travel amanuensis commissions.
Agents that build FITs typically charge college consultation, trip planning, and/or service fees to compensate.

FIT travel agents make coin not simply through the fees mentioned higher up just also through net pricing marking-ups and commissions from the dissimilar vendors they’re booking.

At that place’s no one-size-fits-all fee when it comes to custom itineraries. But if you lot’re curious about learning more about what kind of fee would brand well-nigh sense for your niche, check this out:

How Practise the Big Travel Agencies Make Money?

Allow’south commencement define what a large travel agency is before we talk about how they make money. When nosotros’re talking about a ‘big actor’, we’re talking about an agency that has tens of millions of sales revenue. There isn’t really a cutting-off on when you lot hit this threshold. The reality is that if yous’re in this circle, you’ll know it. They’re the ane% of the travel agency world. ๐Ÿ™‚

While almost agencies earn commission based on their sales tiers, these ‘big players’ can earn overrides based on their revenue on top of commissions. When they encounter a pre-determined sales goal or move market share, the vendor compensates them. These overrides can come up from whatever number of vendors including airlines, GDSs, cruise lines, tour operators, automobile rental companies, and more.

In Endmost

At present that y’all’re aware of how travel agents make money, yous’ve got to be ready to start making money equally a travel agent, stat! Sign upward for our complimentary
7-Day Setup Travel Agency Challenge. Our daily emails for a week will walk you through the process of what you need to get your agency off the ground and running.

7-day Setup

Next time someone asks you ‘How practice Travel Agents Make Money?’ you lot tin now give an amazingly long answer, full of data that will blow their mind. If that’southward where y’all’re at right now, great. That was my goal.

Experience gratis to ask any other questions near how the land of travel agencies piece of work in the comments below. I grew up in the travel industry and have worked with many agents to start and abound their travel agencies. If yous all the same accept questions, drop us a line, join the conversation in the comments beneath, or connect with me on Facebook, Twitter, LinkedIn, or Instagram.


Editor’s annotation: This postal service was originally published in July 2012 and has been updated annually to proceed upward with current data.

Photograph Credits: RapidFire, G. Tawsif Salam

How to Make Money Selling Travel Itineraries

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