How to Start a Travel Agency

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That’s why travel agents are so important: they help bring our vacation dreams to life and build memories that will stay with us forever.

Even with the rise of online travel booking, many vacationers want the reassurance of a travel expert to talk them through countries, destinations, hotels, flights, tours and more.

If you have the expertise to understand travel itineraries and match the right people with the ideal experience, then opening a travel agency could be a great business move.

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We’ve helped over 500,000 people form their business and provided answers, guidance and support to transform them into entrepreneurs. We’ll guide you through what you need to know to start your travel agency business and get it off the ground.

To get you started on the right foot, here’s our simple guide on how to become a travel agent. From highlighting important facts to validating your ideas, and from choosing the right structure to managing and running your business, you’ll find the answers you need.

Read on for some insight into creating your own travel business and becoming an entrepreneur. In this guide we will cover:

Facts and figures on the success of travel agencies

Choose the right business structure for your travel agency

Learning if a travel agency business could be right for you

Ideas for the type of travel agency that you could form

Groups, forums and support for travel agency owners

Helpful software for travel agency business owners

Proving your travel agency can work

Travel agency business planning

How to start your travel agency, with information on equipment, employees, location, permits, finances, taxes and more

Why You Should Start a New Travel Agency

The demand for travel and expert travel agents is growing.

900B

Is spent on private construction in the U.S. every year

$17B

Projected revenue a year for the travel agency industry in the U.S. by 2020

$15BT

Significant growth of annual revenue in 2015

Of travel agents report an increase in sales year over year

Travel agency profits have also doubled from around 6% of revenue to 12%

Just over three-quarters of travel agent business revenue comes from commission, with the remainder from service fees

Over the last five years, the number of travel agency businesses has grown by almost 4 percent

The time to take advantage is now — we’ll help you be a part of that success!

Is a Travel Agency Business Right for You?

Before deciding to start a travel agency, it’s important to understand the skills and approach you’re likely to need.

A Day in the Life of a Travel Agent

Here are some of the typical tasks you’ll be performing for your travel agency business on a daily basis:

Dealing with inquiries through your website

Creating itineraries, destinations and activities for customers

Keeping up to date with the latest offers from tour operators

Understanding available activities and travel options for specific locations

Booking and administering travel and other vacation plans

Answering questions and providing information to customers

Skills Needed by a Travel Agent Entrepreneur

The following skills will be very useful in your role as a travel agency small business owner:

Amazing administration skills to stay on top of every customer’s travel plans

Great interpersonal skills for dealing with customers, tourism operators, airlines, hotels and more

The ability to take in and analyze large amounts of information to help customers make the right choice

Understanding the vacation experience from the customer’s perspective and working to make that as good as possible

Willingness to spend lots of time on travel research and destination websites finalizing details

What Your Travel Agency Customers Are Looking For

Customers come to a travel agent because they want a really great experience, and they want a travel agent to help them achieve that. Some customers simply don’t want to deal with all the administration themselves and use a travel agent to take away that burden. Other customers have specialized needs that a dedicated travel agent can help them to meet.

What Type of Travel Agency Business Should You Start?

If you want to start a successful travel agency business, it’s important to know what your options are. Here are some of the more popular business ideas:

Specialize in Travel to a Specific Destination

Some travel agents have deep expertise in a particular part of the world. For example, some travelers may want to go to Japan and will need an experienced guide who can explain all of the cultural differences and idiosyncrasies. Other travelers may want a specialized trip to the Baltics and Scandinavia.

Specialize in a Particular Type of Vacationer or Traveler

Some vacationers will seek out a travel agent that can help with their particular needs. For example, some travel agents may provide specialized services to people with disabilities, choosing locations and activities that can be enjoyed from a wheelchair.

Specialize in Particular Dietary, Cultural or Other Needs

Other travelers may have preferences when it comes to diet, culture, religion or other aspects. A travel agent may choose to specialize in vegan or artisanal food and tours, while another may focus on all-female tour groups.

Specialize in Types of Travel and Tourism Activities

There’s another niche for catering to vacationers who want to experience specific activities. For example, some tourists may want high-adrenaline activities, while others will want a deeply artistic experience.

Validating Your Travel Agency Business Idea

The travel and tourism ideas above are all great starting points, but you will need to build on them to make the business your own. You have unique skills and insight that you can use to create a travel agency business that will really stand out. Your travel agency business will have dozens or hundreds of competitors, and you need to deliver superior travel and tourism services and excel in your chosen travel niche.

Identify your travel agency business’s unique selling points (USPs)

When you know the travel niche you want to go into, make sure you have a compelling and unique tourism proposition. Your USPs set you apart from competitors and encourage customers to come to you.

Look at who your travel competitors are in the space

Having competitors is a good thing as it shows there’s a market, but if there are too many, you’re likely to struggle without a really good unique selling point. See how many other tourism experts operate in your chosen niche.

Understand your travel and tourism market

Clearly identify exactly who your vacation and travel customers are likely to be, where they hang out and how you’re going to reach them. This will be essential to your marketing, communications, sales and customer support.

Talk to clients

Speak with potential vacationers to understand what they want from your travel and tourism services. Ask about what they need from you to plan the perfect vacation or getaway.

Get involved with business communities and discussion groups

Your Travel Agency Needs a Business Plan

Profit margins in travel agency businesses can be tight (between 6 and 12 percent), so you need to stay on top of your finances and business planning.

A business plan will help you decide and define how you’re going to run your travel agency business, where you will get money, how you will market your tourism services, how you will create your sales plan and what you envision for your profitability and future growth.

All travel agencies need a solid business model, which is how you will generate sales, provide services and make money.

Think about your travel and tourism business model now, because it’s better to have that in place so you can start acquiring customers and generating revenue from day one.

Business plans do vary slightly, but they should all cover the following areas:

An executive summary with the most important points from your business plan

Your goals and what you hope to achieve with your travel agency business

A description of your travel agency business, including background information, your chosen niche and context

A market analysis and likely demand

An overview of how your travel agency business is structured

Your business model

How you will market and sell your offerings

Financial projections, revenue and profitability

Appendices

We’ve got the perfect guide to writing your business plan.

Choose the Right Business Structure and Register Your Travel Agency

There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:

Sole Proprietorship

This is the "default" business structure and is what your travel agency business will be if you decide not to create a more formal structure. We don't recommend this type of business as it doesn't give you the legal protections you need.

Partnership Company or LLC

Similar to a sole proprietorship, if you go into business with someone else without forming a legal business entity, you will be treated as a partnership. This doesn’t give you limited liability protections, so we don’t recommend it for your travel agency business.

Limited Liability Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to set up and maintain. It protects your personal finances and assets and is a great way to start your travel agency business.

S Corporation

This is a more complex type of business and isn't generally recommended for smaller organizations, like a travel agency business.

C Corporation

These are the largest and most complex types of businesses and are typically far more than the average entrepreneur or travel agency business owner will need.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you’ve still got questions, we’ve answered them to help you choose the right business structure for your travel agency business.

In most cases, our recommendation for your travel agency business would be to create an LLC. We’ve got a complete guide to everything you need to do. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.

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Setting up Your Travel Agency Business Operations

Once you've legally created your travel agency business, you’ll need to get some other things in place.

Location of Your Travel Agency

Many new tourism entrepreneurs choose to be work-from-home travel agents. In almost all cases this is the right choice, as you will be able to prove out your travel agent business model before investing in separate or shared office space. Don't forget that if you work from home, you can write off part of your utility and housing costs against your taxes.

Finances and Taxes

You will need a separate business bank account for your travel agency business. You might also want to consider a business credit card. Additionally, you will also need to keep careful bookkeeping records and file business and personal taxes. Here at Incfile we can even help you file your taxes.

Marketing Your Travel Agency

Marketing is everything to a travel agent, and you will want the right mix of marketing channels to target your specific niche. Email, social media and your travel agency website are the most popular channels for travel agents, although newsletters, community events and local networking are also useful ways to reach new customers.

Software and Processes

The right software and processes will make running your travel agency business much easier. See our list of the best apps and software at the end of this guide. You may also want to look into specialized travel agency software that can integrate with major tourism providers and make planning your itineraries and bookings that much easier.

Use the Right Social Networks

The equipment needed to run a travel agency business is likely to just be a computer and a smartphone. Of course, you will also need to invest in good travel agency software that will make administering your tourism business that much easier.

Employees

To begin with, you probably won’t need to hire anyone else for your travel agency business, especially if you’re a good administrator.

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A Clear and Comprehensive Guide to Starting Your Business the Right Way

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Rules, Regulations and Taxes for Your Travel Agency

It’s very likely that your travel agency business must meet certain regulations. You achieve this through acquiring licenses and permits and complying with regulations. You will need to explore local, state and federal licenses and permits, and we can also help out with researching your travel agent business licensing needs.

Taxes

Taxes are a fact of life if you’re in business, and there are various ways you will need to file and pay them. This can include self-employment tax, state income tax and federal income tax. Depending on where and how you’re selling products and services, you may also be liable for sales and use tax.

As a rule of thumb, we recommend holding back around a third of your earnings to pay your taxes. We can also prepare and file your tax returns for you.

Insurance for Your Travel Agency

Most travel agency businesses should have comprehensive business insurance. There are various types.

Workers Compensation Insurance

Workers’ compensation insurance provides coverage for job-related illnesses, disabilities or injuries that affect employees. Regulations for this insurance vary from state to state. It typically covers areas like medical costs, loss of earnings, compensation and retraining. If you’re not employing others, you may not need this insurance.

General Liability Insurance

This insurance protects your travel agency from claims due to being sued. This may include injury to members of the public, property damage, personal liabilities, legal defense and more. It can help protect your travel agency business from financial penalties and bankruptcy.

Home and Auto Insurance

If you are working from home on the administration of your travel agency or driving a vehicle for work, check whether your existing home and auto policies cover you for work use of your home or car. If not, you should either expand your policy so you’re covered or get dedicated business insurance.

Maintaining Your Travel Agency Business

There are certain forms and legalities you need to follow to keep your travel agency in good standing.

File an Annual Report

Depending on the state you’re located in, you will probably have to file a report every year. This report tells the state about any major changes to your business, and we can file your Annual Report on your behalf.

Annual Report

Pay estimated taxes

You will be expected to pay estimated taxes on what you plan to earn in the current business year. Typically, you will need to pay estimated taxes in April, June, September and January (of the following year).

Renew Business Permits and Licenses

Your federal, state, regional and city licenses and permits may need to be renewed on a regular basis, typically once a year.

File your taxes

You will need to file your taxes once a year.

Pay payroll and sales taxes

If applicable, you will need to make payroll and sales tax payments on a regular basis.

Prepare Your Taxes

You will need to work with your accountant to prepare all the taxes you need to pay.

Useful Online Tools for Your Travel Agency

Here are some really great online tools for managing your travel agency business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.

Project Management

Asana Basecamp Trello

Productivity

Todoist Evernote

Collaboration

Google Docs Dropbox Box

Social Media Management

Hootsuite Buffer Sprout Social BuzzSumo

Communication

Skype Grasshopper Slack Yammer

Email Marketing

MailChimp CampaignMonitor

Advertising

Google AdWords Bing Ads

Marketing Automation

Hubspot Hatchbuck

Customer Relationship Management (CRM)

SalesForce Insightly Zoho CRM

Customer Support

ZenDesk GetSatisfaction SurveyMonkey

Human Resources

Gusto Hire Athena

Legal

DocuSign RightSignature

Ecommerce

Wix Recurly Vendio Square

Website Development

Wix Squarespace Wordpress

Analytics

Google Analytics SumAll

SEO

SemRush KWFinder AHREFS Moz

Hiring

ZipRecruiter

Conclusion

The internet has lowered the barriers to finding the perfect vacation, but many people still need the experience and expertise that a great travel agent provides. Find the right niche, get your marketing right and you could see huge success as a travel agent.

Start your Travel Agency Business with us, today