How to Start a Travel Agency
Most travel agencies earn revenue through commissions. Consumers often choose agencies because they help cut down on time needed to research various locations and book accommodations. A popular trend in the industry is online agencies, which operate mostly or exclusively online.
Learn how to start your own Travel Agency and whether it is the right fit for you.
Ready to form your LLC? Check out the Top LLC Formation Services.
Start a travel agency by following these 10 steps:
- Plan your Travel Agency
- Form your Travel Agency into a Legal Entity
- Register your Travel Agency for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Travel Agency
- Get the Necessary Permits & Licenses for your Travel Agency
- Get Travel Agency Insurance
- Define your Travel Agency Brand
- Create your Travel Agency Website
- Set up your Business Phone System
We have put together this simple guide to starting your travel agency. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Travel Agency Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
What are the costs involved in opening a travel agency?
While some sources suggest you can pay a host agency $400 to $1,200 to get started from home, there are host agencies that don’t charge you anything to use them as your host. A host agency basically takes care of all the regulatory and back office requirements and splits the commission with you as the business owner.
To start your own independent agency may cost you between $1,000 and $10,000, depending on the markets you serve and your existing book of clients.
What are the ongoing expenses for a travel agency?
Fortunately, expenses for this type of business are low and are limited to printed brochures and typical office paperwork. If you are working through a host agency, some or all of your advertising may be paid for.
Who is the target market?
Most clients and customers are people who want to travel to another country. While domestic agencies do exist, the market is really in international travel these days. The types of clients an agency might serve depend entirely on the current market place. Client needs range from simple vacations to corporate retreats to medical tourism.
How does a travel agency make money?
Commissions are the way in which travelling agencies have traditionally made the majority of their income. Airlines and hotels would pay agencies a certain fee for utilizing their companies when booking for a client. However, with the recent proliferation of booking technology, including Google Travel, travelling apps, and company websites, these businesses are more accessible to consumers and no longer rely on travelling agencies to promote their services. For this reason, airlines and hotels have largely stopped paying travel agencies commissions. As a result, travel agencies have been forced to adapt, focusing less on simple bookings and more on navigating complex itineraries and the legalities of travelling in specific regions or countries. They have shifted to charging flat rates for bookings and hourly rates for consulting services related to planning travels and navigating legalities.
How much can you charge customers?
Travel agents working independently typically charge $30 for booking a flight, $50 for sleeping accommodations in a single destination, and $100/hour for research and planning advice. If a travel agent manages to procure commissions from an airline or hotel, these will typically be around 10%.
How much profit can a travel agency make?
First-year income for a home-based agency is between $30,000 and $50,000. As the business expands, revenues can rise to over $100,000, but this usually requires hiring other agents and staff support.
How can you make your business more profitable?
Travel agencies that specialize tend to make more money. For example, according to the US Bureau of Labor and Statistics (BLS), travel agencies can bring in between $30,000 and $50,000 per year. General agencies or agencies that offer only leisure travel services make the least, while corporate and medical tourism specialties tend to make the most.
There are several types of specialties in the travel industry:
- Leisure Agent
- Corporate Agent
- International Agent
- Medical Tourism Agent
- International Agent
A leisure agent books primarily leisure and vacation travel. For example, this might include family vacations or sabbaticals.
Corporate agents primarily book travel for corporations. Usually, corporate clients are looking for business trips or retreats. Often, the corporate client needs special attention, including complex booking schedules that include both accommodations, local travel, and entertainment
Medical tourism is a highly specific niche segment of the industry. These agents research countries for medical patients who want treatments that are either not available or are too expensive in their home country. For example, a patient may be looking for an experimental cancer treatment which is only available in a particular country.
International agents book international travel plans. These could be for corporate clients but are typically for individuals. These individuals may be looking for universities abroad, a new country to buy property in, or even a new country to move to.
STEP 2: Form a legal entity
The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your travel agency is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Fourteen states require a Travel Sellers Registration License to sell travel. A license can be obtained through an application, which typically involves a fee and supporting documents such as membership in a professional association. Here is a list of states requiring Travel Sellers Registration Licenses.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Certificate of Occupancy
A travel agency is usually run out of a physical location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an travel agency business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your travel agency business will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Travel Agency needs and how much it will cost you by reading our guide Business Insurance for Travel Agency.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a travel agency
Most new agency owners come from an established agency and have a book of clients. If you don’t start with an established agency, you must advertise your services. The best source for clients are referrals.
How to keep customers coming back
Agencies that are the most successful are specialty shops. For example, a travel agency might specialize in medical travel or corporate travel. A general agency will find it difficult to compete in today’s market.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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Is this Business Right For You?
This business is perfect for individuals who are passionate about travel, love learning about and visiting new places, and are very detail oriented. Travel agency owners have very flexible hours but usually only after they have an established book of clients.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a travel agency?
Day-to-day activities of a travel agency owner include checking faxes, phone messages, and incoming emails. You may also meet with clients and book numerous client trips during the day.
What are some skills and experiences that will help you build a successful travel agency?
There is no formal education or certification required to become a travel agent, but some states require you to have a license to operate as an agency:
Aside from that, there are voluntary certification programs that may help you enhance your knowledge of the industry and of travel in general:
Certified Travel Associate (CTA)
To get the CTA, you must have 18 months experience in the industry. You must take 8 core classes and 4 electives. You can finish your course in 3-6 months, but you have up to 12 months to finish. Cost for this course and exam is $350 and $250 for the test only. To maintain this certification, you must complete 10 CE credits each year.
Certified Travel Counsellor (CTC)
You must have 5 years experience in the industry and a CTA designation. There are 10 courses to complete, including a 3,000 word “white paper” assignment (in which a complex issue is explained concisely in a report). You must finish in 12 months, but may finish in 9 months. Cost is $550 for the course and exam or $320 for the exam only. To maintain this certification, you must complete 10 CE credits each year.
Certified Travel Industry Executive (CTIE)
This designation is only for non-consumer sales roles. You must have 5 years experience. The course consists of 100 videos, each 10 to 15 minutes in length. You must also complete a 2,000 to 3,000 word “white paper.” It takes 18 months to complete the course. Cost is $550 for the course and exam or $320 for just the test. To maintain your certification, you must commit to the annual Travel Institute membership and take 10 CE credits each year.
What is the growth potential for a travel agency?
Most small travel agencies are started as home-based businesses. Larger agencies adopt a traditional office model. Agencies can be run as a single-owner business or as a multiple-employee organization.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
A travel agency can be built with a single owner. However, time is the limiting factor. Because this business carries a low overhead, your need for employees is limited by your time in the business. When it’s time to expand, most agency owners hire another agent or support staff so they can delegate responsibilities.
If you start with a host agency and want to move away from it, then you would expand by hiring administrative personnel to handle the regulatory and back office functions.
Real World Examples
- Courses and books on how to become a travel agent
- Description of different types of travel agents
- Advice on being a travel agent