How to Start a Travel Agency

How to Start a Travel Agency

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How To Start a Travel Agency

Starting a travel agency can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful travel agency.

Importantly the most important step in starting a travel agency is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.

17 Steps To Start a Travel Agency

  1. Decide Which Type of Travel Agency To Open
  2. Choose the Name for Your Travel Agency
  3. Develop Your Travel Agency Business Plan
  4. Choose the Legal Structure for Your Travel Agency
  5. Secure Startup Funding for Your Travel Agency (If Needed)
  6. Secure a Location for Your Business
  7. Register Your Travel Agency With the IRS
  8. Open a Business Bank Account
  9. Get a Business Credit Card
  10. Get the Required Business Licenses and Permits
  11. Get Business Insurance for Your Travel Agency
  12. Buy or Lease the Right Travel Agency Business Equipment
  13. Develop Your Travel Agency Marketing Materials
  14. Purchase and Setup the Software Needed to Run Your Travel Agency
  15. Start Building Partnerships
  16. Hire Employees (If Needed)
  17. Open for Business

1. Decide Which Type of Travel Agency You Want To Open

There are a few decisions to make when choosing which type of travel agency you want to open. You might want to consider starting a specialty travel agency focused on business travel or another specific niche market, or a more general agency that works with all types of travelers.

You will also need to decide if you want to operate an independent agency or join a host agency or franchise.

An independent agency will give you the most freedom and flexibility when it comes to running your business and is a popular choice for travel agents who work from home but can be more challenging to get off the ground.

A host agency is a business that works with independent agents and can provide them with resources, partnerships, and clients. You will often have to pay a fee to join a host agency.

Finally, joining a franchise will give you access to more training and support, but will also require fees to join and may limit how you run your business. If you choose to go the franchise route, be sure to check with your desired franchise to determine what they provide before completing steps like picking a name or building a website.

Deciding whether or not to join a host agency or franchise really depends on how much training and support you need, and whether or not you feel that the fees that a host agency or franchise will charge are worth it to you.

2. Choose the Name for Your Travel Agency

The next step to starting a travel agency is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally, you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your travel agency:

  1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
  2. Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
  3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your software company.

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3. Develop Your Travel Agency Business Plan

One of the most important steps in starting a travel agency is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  1. Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your travel agency.
  2. Company Overview – this section tells the reader about the history of your travel agency and what type of travel agency you operate. For example, are you a business travel agency or a special interest travel agency?
  3. Industry Analysis – here you will document key information about the travel industry. Conduct market research and document how big the industry is and what trends are affecting it.
  4. Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, are they in a specific income bracket?
  5. Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
    • Product: Determine and document what products/services you will offer
    • Prices: Document the prices of your products/services
    • Place: Where will your business be located and how will that location help you increase sales?
    • Promotions: What promotional methods will you use to attract customers to your travel agency? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
  7. Operations Plan – here you will determine the key processes you will need to run your business operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  8. Management Team – this section details the background of your company’s management team.
  9. Financial Plan – finally, the financial plan answers questions including the following:
    • What startup costs will you incur?
    • How will your travel agency make money?
    • What are your projected sales and expenses for the next five years?
    • Do you need to raise funding to launch your business?

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4. Choose the Legal Structure for Your Travel Agency

Next you need to choose a legal business structure for your travel agency and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the travel agency and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a travel agency together. The partners share in the profits and losses of the business. The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a travel agency include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a travel agency is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others. Once you register your travel agency, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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5. Secure Startup Funding for Your Travel Agency (If Needed)

In developing your travel agency plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a travel agency to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a travel agency that they believe has high potential for growth.

6. Secure a Location for Your Business

Operating a travel agency gives you some flexibility in where you do business. If you plan to work from your own home, then you will not need to find an office space to rent or buy. Even if you hire other team members, you can still all work remotely if you choose. You can meet with clients virtually from home, or have them come into an office location.

If you do want to find another physical location for your travel agency, consider:

  • Driving around to find the right areas while looking for “for lease” signs
  • Contacting a commercial real estate agent
  • Doing commercial real estate searches online
  • Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

7. Register Your Travel Agency With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

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8. Open a Business Bank Account

It is important to establish a business bank account in your travel agency’s name. This process is fairly simple and involves the following steps:

  1. Identify and contact the bank you want to use
  2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  3. Complete the bank’s application form and provide all relevant information
  4. Meet with a banker to discuss your business needs and establish a relationship with them

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9. Get a Business Credit Card

You should get a business credit card for your travel agency to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

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10. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

  • General Business License – This license is required for most any business operating in the United States.
  • Seller of Travel License – A Seller of Travel License allows you to legally sell travel services such as airline tickets, hotel rooms, and car rentals.
  • Permits To Sell Insurance – Some states may require travel agents to obtain a special license to sell travel insurance.

Licenses and permits required for travel agencies vary from state to state, so be sure to check your state and local guidelines to determine exactly what you need.

11. Get Business Insurance for Your Travel Agency

Business insurance is important for any business, and a travel agency is no exception. There are several types of insurance that a travel agency should consider, including:

  • General Liability Insurance – This insurance protects your agency from lawsuits alleging bodily injury, property damage, personal injury, and advertising injury that occur on your premises or because of your business operations.
  • Professional Liability Insurance – This insurance protects your agency from claims arising out of errors or omissions in the performance of professional services.
  • Product Liability Insurance – This insurance protects your agency from claims arising out of injuries or damages that occur because of a defect in a product that your agency sells or rents.
  • Errors and Omissions – This insurance protects your agency from claims alleging that you have failed to provide the services that you promised to provide, or that you have provided those services in a substandard way.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

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12. Buy or Lease the Right Travel Agency Business Equipment

Most travel agencies don’t need much equipment to start. All you really need is a computer, business phone line, printer, and fax machine. If you are operating from a location outside of your home with additional employees, you might also need to provide basic office equipment and reception furniture.

13. Develop Your Travel Agency Marketing Materials

Marketing materials will be required to attract and retain customers to your travel agency.

The key marketing materials you will need are as follows:

  1. Logo – Spend some time developing a good logo for your travel agency. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
  2. Quickly and easily create a memorable business logo

    Use Smashing Logo’s unique logo builder to design your logo in just minutes.

  3. Website – Likewise, a professional travel agency website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers in your target market perceive you. Make sure to optimize your website so that you rank well on search engines.
  4. Build a professional website for your business with B12 Website Builder

  5. Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your travel agency. Social media is also a great place to run promotions and generate new business.

14. Purchase and Setup the Software Needed to Run Your Travel Agency

Travel agencies require software that can do a few things.

First, you will need software for booking and making reservations. Popular options include Rezdy and TravelPerk.

Next, you will want accounting software to handle invoicing, commissions, and any bookkeeping tasks. You can use more general software like Quickbooks or FreshBooks.

Having software like TripActions or TripCreator that can quickly create itineraries for your clients is also very helpful.

Lastly, a good customer relationship management tool will help you stay in touch with existing customers and bring them back in for more services. Many businesses use options like HubSpot and ActiveCampaign.

Be sure to check the features of any software that interests you as some might do more than one of these things. Research the software that best suits your needs, purchase it, and set it up.

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15. Start Building Partnerships

Before you start your own agency, it’s important to have industry relationships in place. You’ll need a travel wholesaler, as well as preferred supplier agreements with airlines, hotels,
car rental companies, and tour operators. These partnerships will give you access to the best rates and products so that you can offer your clients top-notch service.

You can start building relationships by attending trade shows and other networking events, joining online communities for travel industry professionals, and simply reaching out. If you decide to join a host agency or franchise, you may already have access to some partnerships.

Another great way to find support is to join one of the popular travel associations. Groups like the American Society of Travel Advisors require some fees to join but give you access to training and other helpful resources.

16. Hire Employees (If Needed)

If you plan to run a small travel agency by yourself, then you will not need to hire additional travel agents or other team members. A larger travel agency will need a few different types of employees. You might need a sales team to book trips and sell products, customer service representatives to assist clients, and marketing professionals to promote your company and generate new leads.

If you do need additional employees, consider posting job openings in the local community or online. Make sure that your candidates’ backgrounds are a good fit for the job descriptions you create and that the individual is a good match for the brand you want to build.

17. Open for Business

You are now ready to open your own travel agency. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

 

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How To Start a Travel Agency FAQs

Generally speaking, starting a travel agency is not difficult. Your biggest early challenges when starting your own travel business will most likely be developing industry relationships, generating clients, and funding your launch. Following the steps we have outlined will help you get started successfully.

One of the first things you should do is research the travel industry and important travel agency trends. You can also speak with travel agents and travel agency owners to get their insights and helpful tips. In addition to degrees from 2 and 4-year colleges that focus on travel and tourism, there are also a number of shorter online training programs for getting a travel agent certificate.

There is no definitive answer as to which type of travel agency is most profitable. However, many experts agree that the most successful travel agencies are those that can offer a comprehensive range of services. This may include everything from booking airfare and hotel reservations to arranging car rentals and guided tours. By being able to provide a one-stop shopping experience for their clients, travel agents can increase the likelihood of completing a sale and improving customer satisfaction.

In order to start a travel agency, you will need to invest money in licenses, marketing, and travel software. The cost of starting a travel agency can range from a few thousand dollars to over $100,000, so it's important to do your research before getting started.

One of the biggest expenses you'll incur when starting a travel agency is the cost of purchasing or licensing travel software. This software is essential for managing your reservations and bookings, so it's important to choose a reputable provider. Other costs you'll need to consider include website development and design, marketing materials, and employee salaries (if you're not doing all the work yourself).

Before starting a travel agency, be sure to do your research and crunch the numbers to make sure it's the right decision for you. There are many things to consider before making such a large investment.

There are a few key things to keep in mind when it comes to the expenses of running a travel agency. The three main areas of ongoing costs will be staffing, marketing, and operations. Staffing costs can vary greatly depending on the size of your agency and the number of travel agents and other employees you have. Marketing costs can range from online advertising and website development to tradeshows and print advertising. And finally, operational costs can include everything from licensing and insurance fees to office supplies and rent. By understanding these three areas of expense, you can create a budget for your travel agency that is realistic and sustainable.

Some key costs to keep in mind include:

  • Wages – 35.4% of the industry’s revenue is allocated to wages.
  • Depreciation – Only 0.4% of the industry revenue is accounted for depreciation.
  • Other – Advertising and marketing costs account for 4.3% of revenue.

There are numerous ways for a travel agency to make money. The most common way is through commissions on airline tickets, hotel rooms, and other travel-related services. Travel agencies can also charge a fee for their services. Some agencies may also sell souvenirs or other travel-related products.

Owning a travel agency can certainly be profitable, but how much profit your business earns will depend on a variety of factors, including the size and location of the business, the type of services offered, and the level of competition in the area.

A travel agency manager's salary ranges from $30,000 to $78,000 per year.

A travel agency can fail for a number of reasons. One reason is that they may not be able to generate enough business. This could be due to a poor marketing strategy, or because the agency is not offering appealing products or services. Another reason a travel agency might fail is if they are not well managed. This could lead to financial instability and a loss of customers. Finally, an agency might fail if it is not properly organized and lacks clear goals. Without a strong plan in place, it can be difficult to succeed in the travel industry.

There are 11,108 travel agencies in the U.S. and they generated $34.0 billion in revenue last year. This represents an annual growth rate of 2.5% over the last five years.

 

Travel agencies are segmented by their bookings. The main segments of the industry are tour and packaged travel bookings, followed by cruise bookings and International and domestic airline bookings. Accommodation bookings and other bookings account for the remainder of the industry’s revenue.

A number of factors affect the performance of the travel agency industry. These drivers include:

  • International Trips By US Residents - A lot of international trips by US residents are made through travel agencies. This year, international trips are expected to increase as well as the travel agency industry.
  • Consumer Spending - Travel spending is counted as a consumer expense. An increase in the consumer’s tendency to spend money affects the industry positively.
  • Domestic Trips By US Residents - Domestic trips are also booked through travel agencies. The travel agency industry is affected by domestic trips in the US in the same way as international trips.
  • Percentage of Services Conducted Online - Availability of online travel arrangements reduces the number of consumers booking their travels in actual offices of travel agencies. This year, there’s been an increase in services conducted online.
  • Consumer Confidence Index - High consumer confidence index also means that consumers have a higher tendency to spend on travel.

Leisure travelers are, by far, the top key customer segment for the travel agency industry. Corporate travelers make up the next largest segment of the market and other travelers account for just 4%.

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Additional Resources in the Travel Agency Industry

For additional information on the travel agency market, consider these industry resources:

 

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