How do travel agents make money?
When people start inquiring how to become a travel agent, their first question is always, “but how do travel agents make money?” The idea of being a professional travel consultant is really appealing because of the flexibility and perks that come with it. However, many people hesitate to pursue it because they’re not sure exactly how travel agents make an income. There is a little mystery surrounding this question, partly due to the fact that things have changed for travel agents over the past 20 years or so.
How technology changed everything
In the 1990s, most travel agents received their income from commissions. When airlines stopped offering travel agents commissions on airfare, it was a huge blow to the industry. Online travel agencies made it possible for travelers to book their own airfare and the Internet age allowed people to feel empowered to do their own trip planning. Many predicted the end of the travel agent. But then something happened that no one could have predicted.
Travelers came back to travel agents in unprecedented numbers.
Travel agents make an epic comeback
So what drove travelers back to travel advisors? Surprisingly enough, the very thing that pulled them away in the first place — the Internet. Yes, we have a fount of knowledge at our fingertips. But we also have a lot of useless, confusing, and factually incorrect information floating around. Fishing through it for helpful answers is time-consuming and overwhelming. Today’s traveler craves a unique, custom-designed itinerary with lots of local flavor. They are willing to pay a travel expert to do this research for them. Using a travel advisor ensures they can get exactly what they want and avoid feeling too much like a tourist.
So now that we have a little history, how do travel agents make money today?
Three ways travel agents make money
1. Travel agents make money by charging a flat fee
You’re not doing yourself any favors by promising the world on a shoestring budget.
If a travel agent can offer expert knowledge and a bespoke itinerary, travelers are more than willing to pay a flat fee for their time and service. In order to be successful and confident with charging a fee you have to target the right customer. You’re not doing yourself any favors by promising the world on a shoestring budget. You’re not Costco. You don’t sell travel… and patio furniture and mattress toppers, and bulk-packaged hot dog condiments. You are an expert at one thing and you do it really well. Customers whose top concern is the price tag might go elsewhere and you have to be okay with that.
2. Travel agents make money with commissions
While consultation or trip planning fees are starting to take the center stage, commissions are still out there! Cruiselines, hotels, and other travel vendors may offer commission or other perks for selling their products. In order to do this, you will usually need an accreditation number such as an IATA or CLIA. If you aren’t looking to start a travel agency from the ground up, you can get accreditation by working through a host agency.
3. Travel agents make money selling airfare
This is one of the easiest ways to increase your bottom line. If you’re not offering your clients airfare, it’s time to include it. Why? First and foremost, your clients come to you because they want to save time and because they trust you to create a seamless experience. If you’re not offering a full service, they will have to go elsewhere for their air. You run a risk of eventually losing them to a travel agent who will offer a full service. But selling airfare can also add a quick chunk of change to each sale, especially if you are going through an airline consolidator, like Centrav.
[Consolidator] fares are often low enough that travel agents can build in a good markup and still provide their clients with airfare saving…
An airline consolidator contracts special negotiated rates directly with airlines and then offers them to qualified travel agents. These fares are often low enough that travel agents can build in a good markup and still provide their clients with airfare savings they are unable to get anywhere else.