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Do Travel Agents Make Money – “How do travel agents make money?” This is a question I hear often. Usually the people who ask are those who are interested in becoming a travel agent or come from those who find out I work in the travel industry and can’t believe travel agents still exist! (Um, they are, and they’re the new favorites of today’s information-overloaded, time-hungry travelers!)
I’ll dig deeper in a second, here’s a list of steps that show how travel consultants make money:
Do Travel Agents Make Money
Now, if you’re looking at how travel agents who are employed by an agency make money, that falls more into the territory of travel agent salaries. You are in the right place, just in the wrong article. 🙂 Here is our article that delves into travel agent salaries.
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To give you an answer on how travel agents make money, it’s important to know a bit of history. I promise to be brief: It’s actually quite fascinating how the industry has changed over the years.
In the good old days, a large part of the revenue for travel agencies came from airline commissions. Since tickets were expensive, in demand, and only agents or airlines could issue tickets, they were the bread and butter of all agencies.
They were travel agents in every sense of the word because they were agents for travel providers. His income came from commissions earned from the sale of travel products. However, when airline commissions were cut and capped in the 1990s, sad face! — the main revenue base of travel agencies disappeared. Hurts. A lot.
Airlines reduced their commission because they could now reach travelers via the web and online travel agencies (OTAs) like Expedia and Booking.com. Travel agents, who once received drinks and meals from airlines, were left out. Oh.
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With this rapidly changing travel landscape, travel agents needed to find a new way to earn money. . . and fast. And that’s where our modern story of ‘How do travel agents make money?’ begins
With commission cuts and the ability for clients to book online, agencies needed to adapt to the new travel planning and booking landscape. The travel agency community was honestly devastated by this. Many agencies that did not adapt quickly enough had to close their doors.
Well well. Before you end up with a whole box of tissues, I want to assure you that the ending is happier. Stay with me. 🙂 Although smaller than in its glory days, the travel agent community has found a balance.
Starting in 2013, travel agents began to see their numbers increase. Where once there was a concern that there would be no travel agents to take the place of those retiring, there was an influx of new blood, eager to take advantage of the flexibility and travel opportunities that a travel agent career provides.
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Did you get that?!? We went from 70% of the workforce over 55 in 2013, to 50% of the workforce under 55 in 2022! While ASTA and HAR tend to appeal to different demographics (ASTA was traditionally larger retail storefronts and HAR is usually smaller non-storefront agencies), but even so, the trend is clear. Travel agents are no longer endangered. (HUZZAH!!!)
A big reason for this new influx? The rise of the agent who works remotely. Call them independent/work-from-home/location-independent entrepreneurs, whatever modern term you want to use. They may be harder to see without a storefront, but this new segment of the industry is now a force to be reckoned with!
In general, the most popular agency model has changed from the storefront agencies of the past to the remote agencies of today.
Do you think it’s too good to be true? Read about the career prospects for a travel agent, which has the data to back it up!
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Along with the loss of airline commissions, travel agents are challenged by non-commission fees (NCF) from many major cruise lines. Yes, it’s self-explanatory: these are miscellaneous fees that are not commissionable. While a cruise can cost $2,000 to sell, as little as $1,400 of it may be commissionable. The trick is that an advisor will still put a lot of effort into reserving those NCF for their client.
Travel agency business models (both corporate and leisure) are moving to become less reliant on commissions alone. Why the change? Not only were commissions from airlines and other providers lower than in the past, but the industry has experienced tremendous industry and economic ups and downs, including 9/11, recessions, and pandemics. (Am I missing any? Ugh, travel agents are resilient!)
Commission income went on roller coasters during these times. During the coronavirus pandemic, for example, advisors were working overtime canceling trips, doing everything they could to get their clients home safely, spending a lot of time keeping up with ever-changing travel regulations, and rebooking. trips despite the fact that the commissions arrived. to a halt. That’s right, they were working overtime for essentially no pay. These big hurdles helped advisers realize the importance of diversifying income streams to help stabilize income.
So how do travel agents make money in a world where their commissions are lower (and even unpredictable at times)? One solution for advisors to counteract declining commissions was to diversify their income by charging fees. This helped move agencies away from complete reliance on provider commissions, helping them increase a bottom line that was once cushioned by generous airline and provider commissions.
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Okay, before we really dive into things, it’s important to understand that different types of travel agencies make money in different ways.
To make it easier, we’ve broken down the question of how travel agents make money into 4 main types of travel agents: corporate, leisure, custom and ‘the big players’.
How do corporate travel agents make money? Corporate travel agencies make their money primarily from service fees, net/private fees, and airline commissions.
Airline tickets are the lifeblood of corporate agencies (also known as TMCs or Travel Management Companies). Were the TMCs going to stop selling plane tickets just because the airlines stopped charging? No way. They had to get creative to make up for the lower commissions. What did these corporate agencies do? They implemented a service fee when they booked a ticket.
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In addition to air, corporate travel agencies earn commissions for booking cars and hotels for business travelers. Corporate travel agencies make their money primarily from service fees, net/private fees, and airline commissions.
The average service fee for air ticketing in 2022 was $39 for domestic flights and $63 for international flights for agents who booked corporate travel.
Travel agencies, depending on the airline contracts they have access to, can earn commissions on both domestic flights (typically 0-5%) and international flights (approximately 10-22%).
So how much do corporate travel agencies charge? According to our 2022 Travel Agent Fee Report, the average service fee for air ticketing in 2022 was $39 for domestic flights and $63 for international flights for agents who booked corporate travel.
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✈️ Read more about the types of airline fees here. ✈️ Do you want to venture into corporate travel? Read how 3 corporate agents entered the industry.
After the commission cuts, many travel agencies switched to selling expensive products that still paid travel agent commissions. These products were essentially vacation packages and cruises. Today, these are your leisure travel agencies (the ones you probably think of when you think of a travel agent).
In general, the main income of leisure travel agencies comes from the commissions that providers pay for vacation packages, cruises, flights and other accessories. However, consultation fees and service fees are becoming more common as agencies try to diversify revenue sources to become less dependent on vendor commissions.
If you’re wondering how many travel agents make money charging a fee, you’ll want to take a look at HAR’s full archive of fee surveys here.
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In 2022, 53% of advisors reported charging fees. Just to compare to the days of yore, only 33% of advisors charged a fee in 2017. My goodness, that’s a huge increase.
Charging a fee helps agents improve their bottom line and compensates them for their expertise. For agents who are hesitant to charge fees, some agents implement a ‘look to book’ fee or a ‘plan to go fee’. This is an advance fee for research, which is applied to the reservation when it is made. Other agencies charge a direct, non-refundable fee for consultations.
Airline ticketing service fees are usually the most common among advisors. When focusing on non-air ticketing fees, these services ranked in the top 5 for advisors to apply fees for:
Learn from an agent who earns 80% of his income from fees. (No, that’s not a bug!)
Trending Online Travel Agency Businesses [2023]
Mass-market travel like cruises, all-inclusive resorts, or group bus tours of Europe aren’t for everyone. When you want an itinerary built just for you, travel agents call it an F-I-T trip; In plain language, I would call it a custom itinerary. But why be that simple when you could just make up an acronym, right? 😉
Custom itineraries require more time and may involve booking places that do not pay travel agent commissions. Agents who create FITs typically charge higher fees for consultations, travel planning, and/or services to compensate.
FIT travel agents don’t make money
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