So you’re thinking about starting a travel agency from home.
You’re one step closer toward location independence and a lucrative lifestyle business (read: six figure income) doing something that you love.
In this blog post, we are going to review everything you need to know about becoming an independent travel agent, including what it will cost you, how much you can make, and the best way to get started.
First, let’s answer a few common questions…
What exactly is an independent travel agent?
Independent travel agents are independent contractors (also known as ICs) that affiliate with a host agency.
A host agency is an accredited travel agency that provides support to independent travel agents in the form of operational necessities like insurance, licensing, preferred partners, marketing collateral, booking technology, and so on.
Independent travel agents are technically not employees and therefore, are not bound by the typical regulations of an employee-employer relationship.
You are your own boss.
That means you are free to decide when… where… and how you work...
But the trade off for this freedom is that independent contractors forgo the typical employee benefits.
What are the requirements of an independent travel agent?
Of course, you have to be well-traveled.
That’s a given.
But what many would-be travel agents fail to realize is that this is a sales role.
The primary objective of an independent travel agent is to generate new leads and repeat business, so you must be confident in your travel knowledge and your ability to convince others to trust you with their hard-earned vacation time.
You should also be able to convey the reasons why someone would book with a travel agent. To get a better sense of all the value that a good travel agency provides its clients, review our blog post, 10 Reasons Why to Use A Travel Agent.
Successful sellers often bring a strong sales or entrepreneurial background to the role, and many have an extensive network of affluent consumers from their personal or professional relationships, local communities, online audiences, or elsewhere.
That said, sales skills are learned, not inherited.
Even if you do not come from a sales background, you can still be successful. Providing exceptional customer service is key to generating repeat customers and referrals -- the fastest way to grow your business.
What are the benefits of being an independent travel agent?
As an independent travel agent, you are your own boss.
You should think of your host agency as a partner – albeit, a partner who drives a lot of value for your business and one who is due the courtesy of regular communication to show that you are truly vested in the relationship…
But a partner, nonetheless.
There is no one to tell you to get to the office by 8 a.m.
And since you are working remotely, your morning commute is only as long as it takes you to get from your bed to your home office. Alternatively, you opt to rent a desk at your host agency, a local co-working space… or even work from your favorite coffee shop!
As long as you have a steady phone and internet connection, you can do your job.
You are completely location independent – which may come in handy, because this job comes with a lot of travel perks!
You see, travel suppliers (e.g. hotels, tour operators, cruise lines, etc.) often offer heavily discounted ‘Industry Rates’ to accredited travel professionals.
For example, we recently saw a major cruise line offering industry rates starting at just $35 per day...
For that price, you can spend a week in the Bahamas for under $300!
Not only that, suppliers will regularly invite travel professionals on all-expenses paid trips, known as FAM trips (short for "Familiarization”). In exchange for the complimentary trip, travel agents are expected to conduct site inspections of hotels and complete destination training.
The purpose of FAMs is not only to educate you on the destination, but also to deepen your relationship the suppliers.
Good travel agents will also take advantage of the great marketing opportunities that FAMs provide. Sharing your travels via videos and photographs not only drives interest from your social network; it also subtly positions you as an in-the-know travel expert with first-hand experience.
As a new agent, you can realistically expect at least one FAM trip within your first year, usually to the destination in which you plan on specializing.
That said, we regularly see high-producing agents receive multiple, fully-comped FAM invites each year, especially as they begin to sell more and more of a particular destination.
It is hard to assign an exact dollar amount to the FAM invitations you will receive, but there are many great opportunities out there for strong sellers that can literally add tens of thousands of dollars to your overall compensation.
What are the downsides of being an independent travel agent?
As with any new business, there are inherent challenges and startup costs that are unavoidable at the onset.
At a minimum, you will need your own business entity formed – usually an LLC or sole proprietorship – which you can create fairly easily with your lawyer or an online service like BizFilings or LegalZoom.
Many host agencies also charge an affiliate fee to join them.
These affiliate fees can vary anywhere from $199 to upwards of $500 and help cover the basic overhead costs of the host agency – including accreditation, licensing, and administrative expenses – as well as provide you with operational support, such as printed promotional materials, desk fees, marketing tools, and the like.
Paying an affiliate fee may also grant you access to higher commission payouts.
Beyond these startup costs, this role brings the challenge of a commission-only compensation structure, which we cover in full detail below.
While getting paid based on strictly commission provides you with the highest earning potential, you will usually not receive your commission until after your clients have returned from their trip, as suppliers typically wait for your clients to check out before sending the commission payment to your host agency.
This creates a bit of a cash flow issue when you are just getting started, as it may be several months from your first booking before you see any payment.
Thoroughly review your finances to make sure you have enough savings stored away or a supplemental income to fully support you in the first several months while you get your travel business off the ground. Many first-time independent travel agents will start part-time, outside of another full-time job, until their travel business can fully support them.
That said, it’s important to remember that challenges and upfront costs are typical in any new business.
If you think about these startup costs as a necessary investment to build a lifestyle business that you love, then the investment will seem well worth it!
How do independent travel agents get paid?
Good independent travel agents can bring home more than $100,000 per year between commissions and advisors fees… not to mention, tens of thousands of dollars in complimentary travel perks.
Below is an overview of the primary sources of income for independent travel agents.
First up: commission.
In exchange for bringing them a sale, suppliers will pay travel agencies a percentage of the gross booking. While commission rates vary by supplier and your agency’s sales volume, the industry standard starts at 10% of the commissionable rate and can go as high as 40% for certain products.
Generally, travel agencies earn 10% of the gross booking and then arrange some sort of commission split between you (the travel agent) and the agency.
For example, let’s say you book a family of 5 out to Aspen for Christmas.
If the gross price of the package is $8,500, your agency will have $850 in commission to split with you (assuming your agency is earning a 10% commission). With a 70-30 commission split, in which you retain 70% of the commission, you earn $595 on this booking.
Now let's scale this example to an annual income.
If you can book 5 trips like this each month (i.e. one trip per week), that equates to $510,000 in gross annual bookings, which means that you will take home $35,700 in commission over the course of the year.
Not a bad year for a new travel agent!
In fact, we find that good independent travel agents typically generate $100-250,000 in gross annual bookings within their first year, upwards of $500,000 in their second year, and over $1,000,000 in gross annual bookings from their third year on.
While most commission splits start in the 50-50 range, many hosts agencies will charge independent contractors an affiliate fee that will increase your commission payout to anywhere from 60 to 80%, depending on how much of an affiliate fee you are willing to pay.
You can also negotiate a higher commission split as your sales volume increases.
That said, it’s worth mentioning that you typically will not receive your commission until 30 days after the trip has occurred. In our example of the Christmas booking to Aspen above, you would likely not receive that commission until January, even if the trip was paid-in-full in August.
Travel agents provide their clients with a lot value – saving them time, money, and headaches on the road – so it's important that you be compensated adequately for your time. Preparing accurate and professional travel itineraries takes a lot of expertise and attention to detail, particularly for products like economy airfare, which often pay little or no commission (don’t worry, first class and business class flights both pay generous commissions).
To compensate for this, many agencies charge a ticketing fee of $25 or $50 for every economy airline ticket issued.
Most good travel agents will also charge a flat “Advisor Fee” of $100 to $250 (and beyond) per booking. This is no different than any other expert, such as a lawyer or financial advisor, who charges their clients a retainer or transaction fee. Consumers are used to this model and most will happily pay this small fee in exchange for access to a travel agent’s expertise and preferred amenities.
Charging a fee not only helps to weed out the serious clients from the window-shoppers, it also has a significant impact on your bottom line...
For example, 5 trips per month is equivalent to 60 individual bookings over the course of a year.
By charging a $250 advisor fee per booking, you're earning an additional $15,000 per year! Combined with your $35,700 in commissions, that little fee of $250 per booking adds up to an annual income of over $50,000.
How to Get Started
Ready to start your own independent travel agent business from home!?
Then it’s time to decide which host agency is right for you.
Rollinglobe works with the leading travel agencies, many of whom are apart of the largest luxury travel network in the world! Our Career Coaches are happy to pair you with the perfect agency for your focus and expertise.
Submit an application below and if you meet our criteria, a Rollinglobe Career Coach will reach out to coordinate next steps.
If you have already been contacted by a Rollinglobe Career Coach, reply back to his or her last email with your availability for a 30-minute phone call this week and next.
Here’s to taking the next step toward career freedom and doing what you love!
Disclaimer: The details shared herein are strictly opinion and are not intended as legal advice. Consult your lawyer regarding all legal matters when starting a travel agency or becoming an independent travel agent.