How Much Income Can a Home Based Travel Agent Expect in 2022 and Beyond?
Written By: Tom Ogg, Co-Owner – TravelProfessionalNEWS.com
One of the first questions most new agents have is about the potential income that can be generated by a home based travel agent. Industry resources show relatively low incomes for agents at an average of around $37,000 per year and this is because many home based travel agents only work part time and do not have the expectation of generating large incomes. Many are retired from other careers and have pensions and investments they depend on and enjoy the benefits of being in the travel industry as their primary motivation. Other agents sell travel to family and friends part time and also maintain a full time career in another industry. Other more successful travel agents operate as C Corporations and pay themselves relatively low salaries and prefer to take money out of the C Corp as distributions thereby avoiding the self employment tax if they took it all out as salaries. So, while the numbers seem depressed, be assured that there are a good number of home based travel agents making excellent incomes from their business. So the question becomes “How can I make a substantial income as a home based travel agent”.
And, the answer is certainly much more complex than the question. Before we get too far into the subject, you should read the tutorial “Developing a Travel Business Concept” to understand some of the basic elements that will affect your ability to make a generous profit from your business.
In its most simplistic form, profits are generated by the payment of a commission from the supplier to the agent. Commissions are paid for handling the sale on behalf of the supplier and virtually every supplier has different remuneration programs.
Suppliers may also pay “overrides” or additional commission based on the total productivity of an agent. Many suppliers offer override programs based on the total volume of business the agent books with the supplier. As an example, a supplier may pay a 10% commission to an agent for the first booking, but then have a sliding scale of overrides that may stretch from 1% to even 6 or 8% on top of the base commission.
To make matters even more confusing, a supplier may also have money to invest in promotions and promotional materials on top of the commission and overrides that are paid to the agent. The trick is to access these base commissions, overrides and promotional cooperative funds to generate the highest possible yield in your revenue. This is accomplished by focusing your business in a highly productive and complex niche where the rewards are substantial.
So let’s explore the various types of travel products that are likely to generate a substantial income once you become expert at selling them. But, before we get into the details, the industry has not yet settled down from the COVID pandemic and it is quite difficult to know how the industry will shape up. One thing is for sure though. Suppliers will look towards travel agents to create demand and then fulfill it and they will be more than willing to pay handsomely for the business
The Types of Travel That Could Make a Home Based Travel Agent Money
While most mass-market cruise lines (Carnival, Royal Caribbean, NCL, etc) pay a 10% commission, the question is 10% of what? NCFs (Non Commissionable Fares) have increased dramatically thereby reducing the overall percentage of commission on selling mass-market cruises. For more information on selling mass market cruises be sure to read “How to Make Money Selling Mass Market Cruises” and also watch the video tutorial. Both the luxury cruise market and niche cruise markets pay a true 10% base commission and can be highly lucrative niches. The River Cruise market is extremely popular right now and also quite competitive among river cruise companies and represents an excellent opportunity to earn very attractive margins. All cruise lines have override programs and also money to invest in well thought out promotions with productive agents. While the cruise lines have suffered financial losses during the pandemic shut down, look for each cruise segment to reward travel agents with excellent commissions and incentives as they return to profitability.
Packaged and FIT (Free Independent Travel, or independent tours) pay at least a 10% commission. There are many tour companies that serve individual destinations or niches that one may evolve a special relationship with that could far exceed 10%. There are also many tour companies such as Globus that offer worldwide tours to virtually every destination around the world. Virtually all tour operators offer defined override programs and also have cooperative promotional and advertising funds available for agents. Specializing in complex FIT and Escorted international tours is an excellent way to generate a large income. This is especially true as the world reopens after the pandemic. Escorted tours are becoming very popular with clients that want to travel internationally, but also want the security of knowing there will not be issues encountered while traveling.
The demand for all inclusive resorts has exploded and has become an excellent market to specialize in. I know of one agent who specializes in luxury all inclusive resorts and is generating over five million in sales annually between he and his wife and three independent agents. By focusing the bookings with operators that handle all inclusive resorts, such as Apple Leisure Group, they gain considerable overrides and other benefits. You can focus your attention on a certain level of all inclusive, or on a particular destination. However, you must be able to add expert value to the client booking with you to really capture the market. All inclusive resorts have not had the trauma that the cruise industry has during the COVID pandemic.
Groups can be highly profitable, especially if you are packaging complex international groups and adding specific value that the client is looking for. This is especially true in the post-pandemic era. Clients want to feel safe and secure. While many agents use tour operators to package the group and work on a commission basis, the real profits come from negotiating net rates with the suppliers that you will be using and marking up the group so that you earn a 25% to as high as 40% commission. The more complex and niche specific with a substantial value-add by you is the way to go. You can operate the same itinerary multiple times and generate huge profits. Look for a niche that you have special knowledge of and also are connected to, for an obvious opportunity.
Specializing in a specific travel niche is a wonderful way to generate an excellent income. However, the niche needs to be complex and your value-add is your expert status within the niche. Niches including international travel and special knowledge or talents to plan the travel is what you should look for. Many times an agent’s passion for a certain type of travel is what leads to establishing their niche. Marketing niche travel is becoming so easy because of social media and Internet search. Here are just some of the travel niches you might want to explore.
The Millennial generation isn’t really interested in sightseeing, but would rather pursue experiential travel instead. This would include many aspects of adventure travel.
Bucket List Travel
Many baby boomers have more money than time and have a list to “to-dos” on their bucket travel list. Think about focusing on travel experiences that might be high on many baby boomers bucket list. Look for the baby boomer market to explode with pent up demand for bucket list travel once the pandemic is behind us.
Very popular with the Millennial generation, specializing in destination weddings in offbeat locations is a definite winner as a travel niche. All-Inclusive resort destination weddings with a twist is the way to go. The key to selling destination weddings in the post-COVID era is to completely understand the situation in the destination you are selling.
Oh boy, this niche has really increased in popularity. Travelers of all ages are so interested in exploring different culinary experiences. European Villas with chefs that take clients shopping in the local markets and then show them how to prepare superb meals are wonderful. Look for post-pandemic foodie travel to become extremely popular, as it checks all the boxes for safe international travel.
The LGBTQ market is huge and loves to travel. Specializing in LGBTQ travel destinations is an excellent way to generate a meaningful income. This is true especially as the pandemic slows down. Knowing current travel conditions in LGBTQ destinations is a huge value to this particular market.
While not new in the travel industry, Medical Tourism has matured as a real niche that you can explore. As an example, the new Punta Mita Hospital in Punta Mita, Mexico performs cosmetic surgeries and clients can recuperate in 5-star resorts or villas while they heal. There are thousands of opportunities across the world for folks that want quality care at affordable prices.
There are opportunities in every sport known to mankind to specialize in. Here are just a few ideas. Fishing, skiing, surfing, SCUBA diving, hunting, hiking, mountain biking, zip lining, skate boarding, snowboarding, para gliding, golf, tennis, organized sports like baseball, football, basketball, soccer, and so many more. The trick is to find a sport that you are well invested in and have a great deal of knowledge about.
Women Only Travel
Women only travel has grown in popularity and will continue to do so and is an excellent niche to pursue. Women that have been through various types of personal trauma (divorce, loss of spouse, loss of career, loss of a child and so on) need time with their peers to recover.
One of the most interesting niches that the pandemic has created is that people that were office centric became working-from-home-centric and loved it. The move from city to country is now widely understood and these folks that have sought to relocate to a much nicer work environment also understand that they don’t actually have to be home to work. Anywhere in the world with a good Internet access becomes a great location for them to work. And, the rest of the family benefits from being located in a completely different culture or vacation environment.
While there are several other categories of travel that could result in a rewarding income, If your objective is to make profits in the six-figures as a home based travel entrepreneur you need to follow these ideas in a way that will create your ability to conclude complex and high yielding transactions with a minimum of time invested. Once you have achieved this objective you will find yourself amply rewarded with an excellent income.