What you NEED to Know and What you SHOULD Know when Starting a Travel Agency in 2023!

Written By: Tom Ogg, Co-Founder and C0-Owner – Travel Professional NEWS

 

It comes as no surprise that the interest in becoming a travel agent is as popular as it is. The COVID pandemic taught the absolute value of working with a travel agent rather than discount online travel agents, big box stores and booking directly with suppliers. The pandemic also saw millions of people leave their downtown offices and relocate to a home-base to operate. This one event introduced millions of people to the reality of operating remotely and independently.

 

At the same time, the pent-up demand for travel sparked wide spread interest in exploring the world in the post-pandemic environment. With their new found independence to work remotely and today’s global technology, people started to understand that if they could work from home, why not work remotely while traveling or from a different country? The technology that evolved during the pandemic also made it much easier to operate from a remote location throughout the world.

 

The confluence of these events have created a situation where the idea of starting a travel agency became highly desirable for many families and individuals. However, the pandemic changed many aspects of starting a travel business in the post pandemic world. Here are 5 things you must know before you start a travel agency in 2023.

 

It’s a Business

The U. S. travel industry is a trillion dollar business made up of a massive amount of infrastructure that supports it. Hotels, resorts, airlines, railroads, sightseeing attractions, theme parks, cruise ships, car, boat and RV rentals and the sharing economy are all a part of the travel industry and represent tons of opportunity for travel entrepreneurs. But, the important thing to remember is that the travel industry is made up of sophisticated business people who are in it to make a living. As such, here are the traits of successful travel agents. If you do not possess these traits, you may want to take a much closer look at starting a travel agency in 2023.

 

 

Are You Detail Oriented?

Selling travel is a non-stop flow of details, deadlines and minutiae all requiring precise execution. The bottom line is this that if you are not detail oriented, starting a travel agency is not for you.

 

Are You An Expert?

In 2023 it is very easy for a consumer to make travel arrangements directly with airlines, hotels and resorts, car rental companies and in the sharing economy. What consumers want when they travel is expertise on the destination, resort, cruise ship or wherever they are traveling to and on. The more complex the travel arrangements are, the more they need an expert. If you do not currently have an area of expertise that relates to travel you may want to rethink your idea about opening a travel agency. However, if you have focused on a niche and intend to obtain knowledge at an expert level, that would be a green light.

 

Are You Entrepreneurial?

Running a successful travel business will require entrepreneurial skills, professionalism and motivation. It also requires you to understand accounting, the legal aspects of the business, management skills and focus. If you have never run a small business before, then you may want to get training on the topic.

 

What is Your Travel Business Concept?

Starting a travel business without a firm business concept is kind of like going on a roadtrip without a destination. With no business concept, you are likely to wander around with virtually no results that match your expectations. More importantly, the COVID pandemic forever changed many of the realities for travelers who now have a new perspective on where, when and how they want to explore the world  Here are some elements to consider when developing your travel business concept.

 

 

What is Your Travel Business Objective?

OK, so you have decided to start a travel business. The very first thing you need to establish is exactly what your motivation for doing so is. Are you looking to build a large agency? Are you thinking of starting a part-time business? Exactly what is your reason for starting a travel business?

 

What are Your Travel Business Expectations?

You should completely understand your expectations long before starting a travel business. Are you looking to travel? Generate a side income? Build a significant travel business? There is no right answer to this question. Instead, it will help you understand what your specific expectations for starting a travel business in terms of income, involvement and investment of time, energy and capital are.

 

What is Your Travel Passion?

Most people get into the travel business because they are passionate about some aspect of travel and there seems to be an unlimited array of travel genres. Folks specialize in destinations, activities such as biking, SCUBA diving, fishing, surfing and so on, social travel such as ecotourism, volunteerism, Seminars at sea and resorts, workations and on and on. You will need to identify and quantify your travel passion before you go any further.

 

What are the Numbers?

Once you have identified your travel passion, it is time to look at its potential to generate an income that is consistent with your expectations.  Here is a basic way to start. Understand how you will make money selling your passion. If you plan on selling cruises, are you selling luxury, mass market, river or another specialty cruise? What is the commission potential from the niche you will focus on? As an example, if you are going to sell luxury cruises, what would be the normal commission a sale would generate? Are you adding value in the way of a seminar, tour guide, translator or some other value add? What is the value add worth to your clients? This will help you arrive at some sort of pricing for your business.

 

What are your costs going to be to package the event? Don’t forget to amortize your operating and marketing expenses to the cost of the event. Once you understand your potential income from selling the event and also the various costs of creating it, you will discover the potential yield.

 

Once you understand the potential yield, you will need to understand how many transactions it will take to generate your income expectations. This is critical to understand before you go any further, The last thing you want to do is start a travel business without this information confirming that your travel business concept is viable.

 

What is Your Travel Business Plan?

Now that you have established a viable business concept, it is time to start working on an initial business plan. Understand that your business plan will change as you learn more and more about the realities of your travel business. Because of this you should avoid committing to a formal business plan in favor of one that simply helps you understand the parameters of your business and can be modified on a daily basis, if needed. Here is a great way to establish a flexible business plan. Just use the 5-W questions of Who, What, Where, When and Why.

 

 

Who?

Who will be your target clients? Who will be your suppliers? Who will handle your accounting and marketing? Who will be your host partner (if you work with one)? You can apply the Who question across all aspects of your business.

 

What?

What is your niche going to be? What is your target income for a month, quarter and year? What role will social media play in your business? What education will you need? What is your initial capitalization going to be? What technology will you need to acquire and learn?

 

Where?

Where are you going to operate your business? Where are you going to advertise and promote your business? Where is your market going to be? Are you marketing locally, regionally, nationally or internationally?

 

When?

When do you intend to start your business? Are you going to start part-time or full-time? When are you going to review your business and marketing plan for revision? When are you going to fund your business?

 

Why?

Why will clients plan their vacation or business travel with you? Why are you the most logical choice for your travel niche?

 

How Will You Organize Your Business?

Now that you have your travel business concept well thought out and a basic business plan, it is time to organize your agency in preparation of launching it.

 

 

Your Business Name:

Considerable thought should go into establishing your business name. Depending on your marketing plan, your business name should be completely compatible with your market. If you are going to be Internet based a .com name may be the best choice, a local agency may want to select a name that reflects the fact that you are local, a niche business might want a business name that amplifies your expertise in your niche and so on.

 

Your Business Structure:

You should talk with your legal advisor as to which business structure will be the best for you. You can be a sole proprietorship, partnership, LLC, LLP, Subchapter S Corporation of a full C Corp. You decision will have tax and accounting consequences.

 

Your Accounting System:

If you are starting out part-time, accounting software like QuickBooks would be fine. If you are going to generate a meaningful income then you should seek the counsel of a CPA and use whatever they suggest that will integrate with their systems. It is important that you understand the accounting function for your business. If you elect to use a host agency they may well offer a fully integrated accounting / commission tracking and reporting proprietary systems for your use.

 

Your Legal Counsel:

Right when you make the decision to move ahead with starting your new travel business, you should establish a relationship with a competent business attorney. While there are several attorneys that specialize in the travel industry, a local business attorney familiar with your state’s laws is preferable at this point. Your attorney should advise you as to which business formation would be most appropriate for your individual situation.

 

Your Office Set Up:

Deciding where your office is going to be located is another major factor that needs to be planned well before launching your business. You should invest in the best quality furniture and technology that your budget allows. Your office should be exclusive use, not only for tax purposes but from the perspective of efficiency.

 

 

 

Finding Your Host Agency Partner

Now that your proposed business is well defined, it is time to explore the use of a host agency partner. Each host agency has their own unique value proposition and finding the one with the most relevant business model to support your travel business is critical to your success. Many of the larger host agencies are recruiting new agents to operate their business within the host’s operational structure and this may or may not be what you are looking for. Here are some elements to look for while entertaining entering into a partnership with a host.

 

 

Focus Compatibility:

If your niche is going to be selling river cruises, working with a host that specializes in mass-market cruises is not going to be much help. They may have sold some river cruises as a byproduct of selling mass-market cruises, but it is quite doubtful that they have both the expertise and connections to help you in your business. Your best bet is to find a host that specializes in river cruises as a partner. This holds true in all niche categories.

 

Operational Compatibility:

Each host has their own proprietary operational structure for accounting, commission tracking, group and override management and so on. Make sure that their operational behavior will cooperate with your business functionality. Many operational processes may be too complex for your needs and the best time to find this out is before you make a commitment to a host agency.

 

Personal Compatibility:

If the host you are considering has a large support staff that cover all aspects of processing transactions without having an individual competent in your niche that is assigned to you, then you may want to look further. On the other hand if a smaller host run by a river cruise expert that is available to you for consultation and advice, this may be the best situation.

 

Finding the right host agency for your specific business will reward you with rapid growth and expertise and is well worth investing in the relationship. But, you want to make sure that the compatibility level fits your business plan.

 

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