Starting a travel agency from home begins with deciding whether you’ll start from scratch, join a host agency, or buy into a franchise. Before opening, you’ll want to organize your legal documents, such as your business registration and Seller of Travel license. Using the latest software, such as video chat, will allow you to do business with customers outside your city.
The income for a travel agent varies, depending on whether you’re working full time or part time and how long you’ve been an independent travel agent. The first five years of being an independent travel agent can be a struggle as you grow your client and referral base. Typically you’ll earn under $20,000 a year during your first few years in business. However, if you keep with it, income can double every two to three years.
1. Research Types Of At-Home Travel Agencies
First, do research on the type of travel agency you’d like to open. You need to decide on the travel niche you’d like to specialize in, such as luxury cruises or adventure travel. You also need to decide if you’re starting from scratch, using a host agency, or buying into a franchise.
Choose Your Travel Niche
The very first step you need to take to start your at-home travel agency is to determine what area of travel you’d like to focus on. When you’re first starting out, it’s important to brand yourself as a specific type of travel agent. Your marketing materials, social media, and networking pitches will be much more memorable if they’re clear about what you specialize in such as destination weddings, wellness-based travel, or international luxury resorts.
How do you determine what your niche is? Think about what type of vacations you have taken in the past and enjoyed. It’s much easier to build credibility as a travel expert if you’ve taken the trip you’re selling. Additionally, think about the type of people you’d like to work with. Would you rather work with soon-to-be brides, families interested in Disney, or boomers looking to take a two-month retirement trip?
Starting From Scratch
Starting a travel agency from scratch is for those who have robust travel industry experience. You won’t receive any of the formal training that franchisees do. When you start from scratch you’ll have to develop your own branding and marketing materials. Benefits of starting from scratch are being able to brand yourself as a unique travel agent and saving money on the upfront and recurring cost of a franchise.
Join A Host Travel Agency
The vast majority of travel agents join a host agency to receive better rates on travel packages. There are over 100 host agencies to choose from. You’ll find that there are several “host agency review” websites such as those that compare and contrast different host agencies. A couple of the top host agencies are Travel Planners International and Nexion Travel Group.
When choosing between a host agency, consider the type of travel you’d like to specialize in, if you need upfront or ongoing training, and marketing support.
Buy Into A Travel Agency Franchise
A travel agency franchise is also considered a host, but with additional support such as training, branding, marketing, and business systems. One main difference between a host and a franchise is that a franchise typically lets the owner keep 100% of the commissions. For example, Cruise Planners doesn’t charge a commission on each sale. However, they do charge a 1% to 3% royalty fee on total sales, depending on the travel supplier rate. The cost to join an at-home travel agency franchise is anywhere from $5,000 to over $30,000.
Develop A Cost Estimate
Once you determine what type of travel agency you’d like to start it’s important to get a rough estimate of what it will cost to start. In addition to the stated costs, do your research to see if there are any ongoing or hidden fees the franchise or host may have. You will take your startup and ongoing cost estimate and use it in your business plan.
2. Write Your Travel Agency’s Business Plan
Whether you’re starting a full-time or part-time travel agency, it’s important to write a business plan. This will help you determine if starting your particular type of travel agency is a good idea and how you will make it a success. If you find it difficult to write a business plan from scratch or a template, consider using a business plan software as a guide.
Traditional Business Plan
A traditional business plan explains why your business will be a success and how you will make it a success. This type of business plan is required by banks and investors. In a traditional business plan, there are required sections, such as an executive summary, industry analysis, and financial projections.
Modern Business Plan
Many business owners are choosing to do a more modern business plan instead of the traditional plan. The Business Model Canvas (BMC) is the most popular modern business plan. There are several aspects that make the BMC different from a traditional plan.
In the BMC you’ll fill out different sections about your business such as Value Propositions, which is the problems being solved for your customers, and Customer Relationships, which is about how and when you’ll interact with customers. Revenue Streams is another new section, which is how you will convert your value proposition (problem being solved) into money earned.
Many business owners prefer the Business Model Canvas because it’s designed as a visual chart and can be worked on as a team. It may be a good idea to use the BMC if you’re opening a partnership travel agency. Work on the BMC together as a visual exercise with sticky notes on the wall. Once you and your partner complete the high level overview of the BMC, use the notes to organize a plan in more detail.
A downside of the BMC is that many banks won’t accept it as a business plan. Before requesting a business loan from your banker, ask them about their preferred business plan format.
Whether you choose to do a traditional or modern business plan, it’s important to do a thorough competitor analysis. This is where you review your competitors to determine how you will position your company differently from theirs. For example, if you notice that your market is saturated with Cruise Planners franchises, maybe you want to specialize in a different travel agency niche.
When creating your competitor analysis, you’ll want to choose at least four competitors. Once you have your competitors, collect as much information about them as you can. Visit their websites, social media pages, and download their marketing materials. Once you have a good idea of the services they offer, write down what they will do better than your travel agency and what you will do better than theirs.
The financial projections section of the business plan is the most challenging part of a plan, but also the most important. This is where you outline how much money it will take to start the agency (startup costs), and how much money it will make (revenue) and spend (expenses) over the first three years in business.
The Service Corp Of Retired Executives (SCORE) has a fantastic financial projections Excel workbook you can download and fill out for free. The SCORE download includes all of the important projections you need to create such as the income statement and balance sheet.
Business Plan Software
You may find that it’s a struggle to create the business plan and financial projections by following a free template online. Additionally, many business owners are not natural writers and struggle coming up with the words to accurately discuss their business. If you find yourself in this situation, we recommend using a business plan software such as LivePlan.
A business plan software walks you step-by-step through the business plan process and includes educational videos to help you learn what needs to be completed. LivePlan has over 500 business plan examples so you can learn how to best write your plan.
3. Organize Legal Documents For Your Travel Agency
Before opening your at-home travel agency, you will need to do everything necessary to legally operate in your state. Some states, including Florida, California, Hawaii, Iowa, and Washington require a seller of travel license before operating. Additionally, you’ll need to obtain a surety bond, which is required to protect clients from travel agents that accept their money and don’t book the requested trip.
Obtain Your Employment Identification Number
The Employment Identification Number (EIN) is a number issued by the federal government to identify your business when you file taxes. Additionally, you may need an EIN to open a bank account or get a bank loan. It is free to apply for an EIN and typically takes less than 15 minutes to get one.
Register Your Travel Agency As A Legal Entity
We recommend all businesses register as a legal entity such as a limited liability company (LLC), with the state. Registering your travel agency as a legal entity protects your personal assets if a lawsuit were to occur against the business. Only assets in the business can be seized.
While a travel agency is a relatively low-risk business, if a client is injured on a trip or there is a financial loss on a trip, and it was shown that your agency was negligent, a judge may find your business liable for the client’s losses. If your business isn’t registered as a legal entity, your personal funds are at risk to pay for the client’s losses.
IncFile is an online legal service that assists business owners get their business registered with the state. IncFile is free when you register an LLC (excluding any state specific fees).
Get A Seller Of Travel License
California, Florida, Hawaii, Iowa, and Washington require a seller of travel license to become a travel agent in the state. You can expect to pay around $300 in annual fees for a seller of travel license. Go to your state’s official business or tourism website for additional information on the seller of travel license.
Obtain A Seller of Travel Surety Bond
All travel agents are required to obtain a seller of travel surety bond, which is to ensure that the funds paid to your business by a client is used to pay for a trip. The surety bond is used as a way for travelers to ensure their money isn’t stolen by an unscrupulous travel agent.
If a traveler’s trip was not paid, the surety bond refunds the traveler and the travel agent is liable to pay the funds to the surety bond company. A travel agent with good credit can expect to pay $100 for a $10,000 surety bond.
Open A Business Bank Account
It’s important to open a business bank account to keep business and personal finances separate. This is a requirement for an LLC, and makes an audit process go smoothly if you’re ever audited by the Internal Revenue Service (IRS).
4. Obtain Capital For Your Travel Agency
Now that your business plan is written, it’s time to obtain the funds needed to open your at-home travel agency. Your capital startup costs shouldn’t exceed $30,000. You won’t need the same capital requirements at a brick-and-mortar agency. Your best option for financing will be a personal business loan or credit cards. Additionally, you can seek out an investor who may be interested in funding your business.
Personal Business Loan
If you need capital to open your at-home travel agency, you most likely will need to take out a personal business loan. This is an unsecured debt, typically under $50,000. The interest rate on a personal business loan depends on your credit score. Expect anywhere from a 12% to 25% interest rate on a personal loan.
Additionally, a business credit card can be considered a small line of credit to open your travel agency. Depending on your credit score, you may be able to take advantage of a low or 0% interest rate for up to 18 months on a business credit card.
Traditional Bank Loan
It’s likely you won’t need a traditional bank loan, which typically will have a minimum of $100,000. Most startups don’t qualify for traditional bank loans because the bank requires the amount of the loan in a liquid account such as a certificate of deposit (CD). A bank also requires a thorough business plan with financial projections.
Find An Investor
Another option to help finance your travel agency is to find an investor. An investor should be your last funding option because they are typically the most expensive option. The investor will want a percentage of your business in exchange for the capital they give you. Similar to a bank, an investor will want to see a thorough business plan with financial projections. If you’re looking to connect with an investor, it’s best to network in your local entrepreneurship community.
5. Implement Software For Your Travel Agency
Using software effectively will help you save time and earn more money in your travel agency. Accounting software helps you keep track of income and expenses. Email marketing software helps you stay connected with customers so you can earn referrals and repeat business. Video chat software allows you to communicate with customers from all over the world.
As an at-home travel agent your expenses and income will be fairly straightforward. Regardless, you still want to track your monthly income and expenses to determine if your business is growing month over month. An affordable and simple software to use to track income and expenses is Freshbooks. Additionally, you can use Freshbooks to send clients invoices if you provide a service such as travel consulting.
A lot of your income as a travel agent will come from repeat customers and referrals. It’s important to keep in contact with your clients. One way to do that is through email marketing. Consider emailing your clients once a month with valuable information about the travel industry such as trending travel locations, and popular itineraries. An easy-to-use software for email marketing is Mailchimp, which is free for the first 2,000 subscribers.
Client Scheduling Software
As you become a successful travel agent you may find that phone calls from clients become overwhelming. To help remedy this, consider an online scheduling software so that clients can make an appointment with you without calling. The scheduling software syncs the appointments to your online calendar and will populate appointments automatically. Consider a free online scheduling software, such as Acuity.
Video Chat Software
Video chat software allows you to speak directly to clients from any location around the world. If you’re using social media to get new clients, you may find that your clients are not in the area where you live and cannot meet in person. Consider using a free video chat software to connect with these potential clients, such as Zoom.
6. Market Your Home Travel Agency
Marketing your travel agency is very important to your long-term success. When someone needs assistance booking a trip they should either think of you or be able to find your business online. You need a mix of traditional marketing, such as business cards and brochures, in addition to online marketing, such as a Google My Business listing.
Traditional marketing is considered physical materials such as business cards, brochures, and branded attire. If you buy into a franchise, these materials may be included in your marketing package. If you’re starting from scratch, you may need to create these materials yourself or hire a branding expert to do so.
It’s important to remember that the traditional marketing materials need to have consistent branding. Colors, fonts, and overall feel need to be consistent across all materials. You should plan all of your materials in advance so that you don’t have inconsistent branding across your materials.
Once the traditional marketing for your travel agency has been created, it’s time to do local networking so that people in your area know who you are and what travel services you provide. Bring your physical marketing materials so you can provide a memorable networking experience.
The conventional wisdom of networking is that you need to have a memorable interaction with someone at least seven times before they’re likely to do business with you. One networking event isn’t enough; you need to attend them regularly to be top-of-mind for potential customers. At least eight interactions is also important to build trust with the potential customer or business referrer.
Set Up A Website
If you choose to buy into a franchise or an agency host that has marketing support, you may receive a complimentary website. If you don’t receive a website (or you don’t like the one provided) you’ll have to create your own. We recommend using the website builder Wix to create your website. Wix provides a customizable template specifically for travel agents.
Claim Your Google My Business Listing
The Google My Business listing is a free online profile Google provides all businesses looking for local customers. When someone searches for your business in Google, this listing will appear on the side of the page. It’s important to fill the listing out and optimize it to build trust with customers before they visit your website or make an appointment with you.
Social Media Profiles
You’re in a great business to take advantage of free marketing because travel photos perform well on social media platforms such as Facebook, Instagram, and Pinterest. Even if you don’t believe you’ll use social media to grow your travel agency client base, you should still, at a minimum, make a few posts for a Facebook page, because your business’s page will show in Google when someone searches for your business name.
Frequently Asked Questions (FAQs) For How To Start A Travel Agency From Home
How much does it cost to open a travel agency?
It can cost anywhere from $5,000 to over $30,000 to open a travel agency at home. If you’re considering a physical location with additional employees, this will cost substantially more money. Additionally, costs vary depending on if you’re starting from scratch, joining a host agency, or joining a franchise. Typically, the franchise will be the most expensive option.
How do travel agents make their money?
The main way travel agents make money is through commissions. For example, if you book a cruise for a client, you may earn between 10% to 16% of the final cruise amount paid. If you book a $3,000 cruise, you would earn between $300 to $480. If your client needs additional services, such as a car rental, hotel, or insurance, you can make commissions on those items as well.
How do I become a successful travel agent?
Travel agents typically become financially successful after a few years in the business. After the first few years, you’ll start to receive repeat customers. Some clients may book one to two trips with you a year, others may go several years between booking trips. Additionally, once you build up your client base, you will start to receive more referrals which will also grow your business.
Do you need a license to be a travel agent?
Depending on the state your travel agency is located, you may need a state license, which is called the seller of travel license. Five states require this license before becoming a travel agent: California, Florida, Hawaii, Iowa, and Washington. To receive a license, you will need to fill out an application, pay around a $300 fee, and show proof of a surety bond.
Several years ago, the travel agency was a dying business due to an industry disruption from the internet. Now with an increase in traveling complexity and the ability to work with low overhead from home, the travel agent has made a comeback. Starting a travel agency from home has never been easier for many reasons, including affordable franchises, availability of host agencies, and free software. Stick with being a travel agent for at least five years and expect to earn around $40,000 per year.