According to IBIS World, the market size of the Travel Agencies industry in the US has grown 1.2% per year on average between 2018 and 2023. Can travel agents succeed in an industry increasingly driven by technology and customer preferences?
Table of contents:
- Introduction
- Brief history of travel agencies
- Types of travel agencies
- Step-by-step guide to starting a travel agency
- Final thoughts
A travel agency is a business designed to help travellers organise, plan, and book services connected to their journeys. These can include flights, hotel stays, excursions, car rentals, and even specialised travel packages. Travel agents often have extensive knowledge about specific destinations, visa requirements, cultural insights, and popular activities. They serve as intermediaries between the traveller and service providers, ensuring a smooth and enjoyable experience.
Running a travel agency can be both fulfilling and profitable, as it involves helping others experience the joys of travel. Whether it’s curating tours, planning dream vacations, or organising corporate travel, a travel agency business offers diverse opportunities. However, to succeed in the competitive world of travel, careful planning, knowledge of industry trends, and excellent customer service skills are essential.
This article provides a comprehensive guide on how to set up, manage, and grow a travel agency business, covering aspects such as creating a business plan, understanding legal requirements, marketing strategies, and customer retention.
Brief history of travel agencies
The concept of travel agencies has deep historical roots, beginning as early as the 18th century when travel was mostly the preserve of the wealthy elite. The first known travel agency is believed to be Cox & Kings, established in 1758 in London. Originally catering to military and government personnel, Cox & Kings soon became an invaluable resource for those needing assistance with complex travel arrangements, setting a foundation for organised travel services.
Another significant milestone came with Thomas Cook in the 1840s. Recognised as one of the earliest modern travel agents, Cook revolutionised the industry by organising a group rail trip from Leicester to Loughborough in England in 1841. This marked the beginning of packaged group tours. By 1855, Cook had expanded his services to include European travel, and eventually, he led excursions worldwide, including to the United States and Egypt.
As rail travel became more widespread and affordable in the late 19th century, travel agencies flourished. Cook’s travel services expanded, setting up offices across Europe and later globally, enabling travellers to book tickets, accommodation, and even guided tours all in one place. The travel agency concept started to take root, offering greater accessibility to the public and moving beyond exclusive high-society patrons.
This period also saw the founding of Abreu Agency in Portugal in 1840, making it the first public travel agency to open its doors to general travellers. This made travel more accessible to a broader clientele, enabling the middle class to partake in tourism as transport infrastructure expanded.
The post-World War II era saw a surge in travel demand, spurred by economic growth, advancements in aviation, and the rise of commercial airlines. In the 1950s and 60s, travel agencies experienced a boom as they began selling airline tickets and holiday packages to the general public. By this time, agencies started to focus on creating entire travel experiences, combining flights, hotels, and tours into convenient packages.
In the United States, travel agents grew in prominence, providing essential services for both domestic and international travellers. Many agencies also began specialising in particular destinations, themes, or types of travel, helping to tailor services more specifically to customer needs.
The Internet revolution of the 1990s transformed the travel industry profoundly. The emergence of Online Travel Agencies (OTAs), such as Expedia, Booking.com, and later TripAdvisor, introduced a new model where travellers could research, compare, and book their travel arrangements directly online. OTAs empowered customers with the flexibility to customise their own itineraries, book their travel instantly, and explore a wider range of choices. This shift disrupted traditional travel agencies, leading many to transition online or redefine their business models to focus on personalised, niche services.
Types of travel agencies
- Offline Travel Agency
Offline travel agencies, often operating from physical offices, provide personalised face-to-face services to clients. These agencies guide customers in planning holidays by offering various packages and tailored trips, often with expert advice on destinations, accommodations, and activities. The offline approach is particularly valued by those who prefer a personalised touch, enabling them to ask questions, compare options, and make decisions with the help of a knowledgeable travel agent.
- Customised holiday packages
- Visa assistance
- Travel insurance options
- In-person consultations
- Online Travel Agency (OTA)
Online Travel Agencies, or OTAs, are web-based platforms allowing customers to book various travel services independently. These platforms have grown rapidly in popularity, offering services like flight bookings, hotel reservations, car rentals, and holiday packages. OTAs often appeal to tech-savvy customers who prefer the convenience of comparing prices, reading reviews, and making reservations online. Popular examples include Expedia, Booking.com, and TripAdvisor.
- 24/7 booking access
- Real-time price comparisons
- Customer reviews and ratings for decision-making
- Wide range of options across airlines, hotels, and tour operators
- Wholesale Travel Agency
Wholesale travel agencies purchase travel products (such as airline seats, hotel rooms, or tour packages) in bulk from suppliers at discounted rates. They then resell these packages to other travel agents or travel agencies rather than directly to individual consumers. Often, wholesale agencies act as intermediaries within the B2B space, connecting retail travel agencies with service providers.
- Facilitates cost-effective travel package distribution
- Enables retail agents to access bundled travel services
- Primarily operates on a business-to-business model
- Business Travel Agency (Corporate Travel Agency)
Business or corporate travel agencies specialise in managing business-related travel arrangements on behalf of companies. They coordinate travel plans for business trips, conferences, meetings, and other corporate events, often offering services like arranging flights, hotel bookings, car rentals, and visa assistance for employees. This type of agency is also known as a Travel Management Company (TMC).
- Specialisation in corporate travel requirements
- Access to exclusive corporate travel discounts and perks
- 24/7 support and emergency assistance
- Expertise in travel policies and compliance with company standards
- Franchise Travel Agency
Franchise travel agencies are branches of larger, established travel brands operating under a franchising model. Franchisees benefit from the branding, resources, and support of the parent company, which includes marketing, customer service frameworks, and established operational protocols. Franchise travel agencies often appeal to entrepreneurs who prefer starting a business with an established name and ready-made support systems.
- Access to proven business models
- Support in marketing, training, and operational resources
- Increased credibility due to brand association
- Reduced risk compared to starting an independent agency
- Home-Based Travel Agency
Home-based travel agencies operate from the comfort of a home office, often with minimal overhead costs. This model has become more popular with advances in technology and the rise of remote work opportunities. Home-based agents typically serve niche markets or rely on extensive networks of friends, family, and referrals for client sourcing.
- Lower initial setup and operating costs
- Flexible work hours and work-from-home convenience
- Access to virtual networks and partnerships
- Specialisation in niche travel markets (e.g., destination weddings or adventure tourism)
Step-by-step guide to starting a travel agency
Step 1: Research and choose a niche
Successful travel agencies often specialise in a particular type of travel, destination, or traveller demographic. This niche approach helps agencies stand out in a competitive market. Consider options such as adventure travel, luxury holidays, eco-tourism, or family trips. Use research tools like Google Trends, SEMrush, and Answer the Public to analyse the demand and potential profitability of different niches.
Step 2: Write a detailed business plan
A solid business plan is essential for establishing a successful travel agency. This document should outline key components, such as your agency’s objectives, operations plan, marketing strategy, and financial projections. This plan acts as a roadmap, guiding your business decisions and attracting potential investors if you plan to seek funding.
Include the following sections:
- Executive summary: An overview of the business, including mission and vision statements.
- Market analysis: Details on market research, target audience, and competitive landscape.
- Services offered: Outline the types of travel services, packages, and any niche focus.
- Marketing strategy: Strategies for reaching the target market, branding, and promotions.
- Financial projections: Estimated revenue, expenses, and profit margins.
Step 3: Choosing a business structure and legal setup
To operate legally, a travel agency must follow certain registration and licensing requirements. In the UK, a travel agency can be established as a sole proprietorship, partnership, limited company, or limited liability partnership (LLP). Each structure has implications for taxes, liability, and regulatory obligations.
Key legal considerations include:
- Business Registration: Register the business with the appropriate authorities, such as Companies House for limited companies.
- Licensing and Permits: Certain services, like arranging international travel, may require licensing with organisations like the Association of British Travel Agents (ABTA) or the International Air Transport Association (IATA).
- Insurance: Travel agencies need liability insurance to protect against claims related to travel mishaps, as well as errors and omissions insurance.
Step 4: Build a website for your agency
In today’s digital world, an attractive, user-friendly website is a must for any travel agency. Use a content management system (CMS) like WordPress, which is highly customisable and affordable. Consider adding plugins like WP Travel, which can help manage bookings, itineraries, and customer information.
Ensure your website has:
- Easy navigation: A well-organised layout with clear menus.
- Booking features: An optimised booking process using plugins like WP Travel.
- User-friendly design: Aesthetic elements that create an enjoyable browsing experience.
- Contact forms: A way for customers to reach you with questions or custom requests.
- Relevant content: Up-to-date information about destinations, packages, and services.
Step 5: Market your travel agency
Marketing plays a critical role in attracting customers to your agency. Digital marketing methods, including search engine optimisation (SEO), search engine marketing (SEM), and social media advertising, are highly effective for reaching audiences. Additionally, traditional marketing methods, like print advertisements, TV commercials, and outdoor billboards, can help promote your agency locally.
For a well-rounded marketing strategy, consider using:
- Brand identity: Develop a memorable logo, brand colours, and tagline that reflect the agency’s services and values.
- Content marketing: Share blog posts, travel guides, and destination spotlights on the website and social media.
- Email marketing: Build a subscriber list and send newsletters with special offers, travel tips, and agency updates.
- Social media marketing: Use visually engaging posts and stories on platforms like Instagram and Facebook to showcase destinations, travel deals, and client testimonials.
- Search engine optimisation (SEO): Ensure the website ranks well on search engines by incorporating keywords relevant to travel, such as “family vacation packages” or “luxury travel agency UK”.
Step 6: Establish relationships and partnerships
Successful travel agencies often rely on strong partnerships with airlines, hotels, tour operators, and local vendors. These relationships allow your agency to offer exclusive deals and expand its reach. Consider attending industry events, trade shows, and conferences to connect with potential partners.
To initiate and maintain partnerships:
- Attend industry trade shows and networking events.
- Identify target partnership entities that align with your niche.
- Start with informal pilot projects to assess compatibility.
- Address any issues or feedback promptly to build trust.
Step 7: Set up daily operations
Efficient daily operations are essential to managing a travel agency effectively. This involves organising office space, managing a finance system, and implementing customer service protocols. Whether you operate from a physical location or remotely, having the right systems and processes in place is key.
Consider focusing on the following operational areas:
- Office design and layout: Ensure a productive work environment.
- Staffing: Hire knowledgeable employees or freelancers if necessary.
- Accounting and finance systems: Establish tools for tracking expenses and profits.
- Customer service protocols: Develop guidelines for handling customer queries and complaints.
Step 8: Increase recurring revenue
Securing repeat customers can help maintain a steady revenue stream. Implement strategies that encourage customer loyalty, such as loyalty programmes, referral rewards, or exclusive discounts for repeat bookings. This not only improves customer retention but also builds a positive reputation through word-of-mouth recommendations.
Effective strategies include:
- Loyalty programmes: Reward repeat customers with discounts or perks.
- Referral rewards: Incentivise current customers to refer friends and family.
- Customised packages: Tailor packages to meet individual preferences.
- Membership options: Offer exclusive deals for members.
- Promotional offers: Attract customers during peak travel times.
Step 9: Integrate travel management software
Investing in travel management software can streamline bookings, payment processing, and customer data management. Look for software solutions that offer these functionalities, as well as tools for managing customer relationships. This not only enhances customer experience but also reduces the workload on your team.
Step 10: Staying updated with industry trends and technology
The travel industry is dynamic, with trends and technology constantly evolving. Staying updated helps the agency remain competitive and responsive to client needs. Attend industry conferences, follow travel publications, and consider joining travel-related associations. Technological advancements such as artificial intelligence, data analytics, and virtual reality offer new opportunities to enhance services.
- Virtual reality (VR): VR can provide customers with a preview of destinations or accommodations.
- Artificial Intelligence (AI): AI-powered chatbots can handle common client queries and assist with bookings.
- Data analytics: Analyse customer data to identify preferences, trends, and improvement areas.
Final thoughts
Starting and running a travel agency involves various responsibilities, from market research and building partnerships to providing exceptional customer service. Successful travel agencies understand the importance of adapting to market trends, maintaining customer relationships, and leveraging technology to streamline operations. With careful planning, dedication to customer satisfaction, and strategic marketing, a travel agency can thrive in an ever-evolving industry.
Running a travel agency business is both challenging and rewarding, as it allows entrepreneurs to be part of clients’ travel journeys. By following these steps, aspiring travel agents can create a foundation for a profitable and sustainable business, enabling them to share their passion for travel with others.
Key takeaways
- Success in the travel agency industry often relies on selecting a niche, such as luxury travel or eco-tourism, to stand out in a competitive market.
- A well-structured business plan outlining objectives, target market, and financial projections is essential for establishing a strong foundation.
- Choosing the right business structure and obtaining necessary licences, such as ABTA or IATA, are crucial for operating legally and professionally.
- Building a user-friendly website, optimising for SEO, and using social media are effective ways to reach potential clients and promote travel packages.
- Establishing partnerships with airlines, hotels, and other service providers enables agencies to offer competitive deals and grow their client base.
- Integrating travel management software and keeping up with industry trends, such as VR and AI, enhances customer service and operational efficiency.
Himani Verma is a seasoned content writer and SEO expert, with experience in digital media. She has held various senior writing positions at enterprises like CloudTDMS (Synthetic Data Factory), Barrownz Group, and ATZA. Himani has also been Editorial Writer at Hindustan Time, a leading Indian English language news platform. She excels in content creation, proofreading, and editing, ensuring that every piece is polished and impactful. Her expertise in crafting SEO-friendly content for multiple verticals of businesses, including technology, healthcare, finance, sports, innovation, and more.
