Top 10 Benefits of Using a Host Agency
For a lot of travel agents starting their own company, it's hard to tell if going with a franchise, consortium, or host agency is the right choice. Why use a host agency? What are the benefits of using a host agency? As a person that specializes in that niche, I can tell you the benefits of using a host agency so you can make the right decision!
Before we start, you need to be aware of what a host agency is. You also need to be aware that there are numerous host agency business models. Some host agencies provide limited services beyond the use of their accreditation number (more on accreditation options for agencies). Other host agencies provide everything but the kitchen sink. Since different travel agents have different needs, it's important to keep in mind there are many ways to be 'hosted'. More on finding the best host agency for you.
If you already know you want to go with a host agency (or if you even suspect that you'll go that route), download our Questions to Ask a Host Agency spreadsheet right here. (Psst! If you don't see it, try refreshing your browser.)
Where can you direct all these great questions? Connecting with host agencies can't be easier! You can go directly to their profile to write them via Host Agency Reviews' Q&A feature. The beauty of this is that tons of agents will also get to learn from your question too!
So, we get that you need to find a host agency that fits the needs of your particular agency, right? The advantages below are based on basic services most host agencies provide. Before you sign up, make sure to confirm your prospective host agency provides these services.
The top Ten Benefits of Using a Host Agency (An Infographic)
We're going to dig into some of biggest reasons we think it's wise to use a host (elaborating on the infographic above)
Keep in mind part of your commission cut is paying for a bookkeeper.
A host agency should play the role of a part-time bookkeeper for your travel agency. Backend bookkeeping is a huge benefit of using a host agency. So keep in mind part of your commission cut is paying for a bookkeeper.
- Run reports on the bookings you've made without you having to purchase any software.
- Issue your commission statements
- Send a 1099 with all your annual earnings. The more advanced hosts should allow you to look up bookings, run reports, etc. as part of what they provide.
What to ask your host about bookkeeping
Here are a few questions we recommend you ask your host about their bookkeeping process.
- Do they provide on-demand reports? If so, is there a fee, and what is it?
- How does the commission system work? If you have no idea what that means, don't worry. All you're really looking to know is how the commission check gets from the vendor, safely into your bank account . . . from when you make the booking, to how it's tagged to you, to what you need to do to get the commission.
If it's a decent-sized host, the combined buying power should give you top commissions on all major suppliers.
A travel agency's commission level is based on its vendor revenue. A big benefit of using a host agency is that all of the home-based agents under that host are seen as one travel agency. If it's a decent-sized host, the combined buying power should give you top commissions on all major suppliers. Find your host agency on our host agency list and open their profiles to get an idea of their revenue.
What to ask your host about commissions
Here's a little detective work you can do in asking hosts about their commission structures and contracts:
- What are their commission levels with your preferred suppliers (vendors you'll be booking the most)? Commission agreements are confidential so don't expect the host to give you their full list of preferred supplier commissions. Instead, ask for your top vendors.
The business development managers (BDMs) that work with travel agencies have large territories. One of the benefits of using a host agency is that hosts have already established relationships with these BDMs. This means that many hosts are most likely a larger account for the BDM. So if you have problems with a booking, the sales volume and long-standing partnership of your host will—if necessary—allow the situation to be escalated through the host agency's channels.
What to ask about their vendor relationships
Here's how you can do some digging to get intel on vendor relationships
- Ask your prospective host agency how long they've been in business and their sales figures. This will help to paint a picture for you. Visit our host agency list to find the host agency details below and more. (See below for an example!)
One of the many benefits of using a host agency is that the top host agencies offer a whole arsenal of technology. Ask if they have a Customer Relationship Management (CRM) tool like TravelJoy, Clientbase or ClientEase. Examples of programs commonly offered—often at a better rate than what you could get on your own—are direct mail programs, consumer website programs, corporate booking engines, etc.
What to ask about Technology and marketing
When looking at a host technology, think about what kind of holes you're trying to fill. For example, if you already have a sweet website up and running, maybe you don't a host with a great web platform. Focus on the tools you know you'll need!
Here's a few questions you can ask about their marketing.
- If you're not sure what you need, ask them what tools they recommend for a new agent.
- What sort of technology and marketing tools are available to their home-based agents?
- What costs are associated with these tools?
Host agencies are top recruiters of the (much needed) new blood in the travel industry. Because of that, many host agencies will not only offer continuing education, but also a training or mentoring program. It's also common to see a host agency offer online training tailored towards new agents.
While it's possible to learn how to be a travel agent without any training, a good training program can hurry you along a steep learning curve and help you start making money quicker. This is one of the major benefits of using a host agency—it's a great gateway into the industry.
For experienced agents, hosts also will often put together their own FAMs for continuing education and may partner with vendors to provide continual continuing education for their agents.
What to ask a host about their education
- What type of educational opportunities are available to new travel agents?
- What type of continuing education is available for established agents?
- What are the costs associated with their programs?
- If possible, see if you can sit in on an online training or if they have a recording training you can listen to.
Being a home-based travel agent has its advantages but one common complaint is social isolation. A host agency that cultivates community can ease the isolation by helping you meet other travel agents. These agents are a great source of knowledge to help you build your business and support you as you grow.
What to ask a host agency about their community-building
If having a work community is important to you, it's key that a host also shares that value. Here's a few questions you can ask hosts to get a sense of their level of community building:
- What types of opportunities are available for you to meet other agents online and in person?
- Do they have a FB group or an online agent forum?
- Do they have regional or national meetings you can attend?
7. Lower Start-Up Costs
Another benefit of using a host agency is that host agencies are typically less expensive than going with a franchise or consortium. It's a great avenue for those new to the business or smaller agencies. Some hosts offer 100% commission plans but typically there is a commission split involved. Even with the split, the advantages of higher commissions and the benefits listed above make it worthwhile for many home-based travel agents.
For instance, consider the $250/yr you would save by using your host agency's seller of travel number vs. having to get your own.
What to ask your host about cost and fees
Just as services provided vary among hosts, so do start-up costs and fees. Here's a few questions you can ask to find a host that fits within your price point
- What is the total cost to sign up?
- Are there any extraneous fees to expect if you were to sign on with them?
Word of warning: If the host is paying 100% commission and barely charging a fee, be skeptical. Host agencies are a business and they need to make money somewhere beyond the back-end overrides. Giving everything away for free is not a sustainable business model—buyer beware.
8. Air Ticketing Support
Ticketing air-only travel is not as simple as it seems, and most new travel agencies can't afford the cost or risk of using the Global Distribution System (GDS) to book air-only travel. (Read up more on the GDS here!). Some (not all) host agencies offer airline ticketing support through their ticketing desks and consolidators.
What to ask about air ticketing support
99% of leisure travel advisors don't need the GDS. However, If you know you want to have access to GDS or a ticketing desk, you'll need to first make sure that your host agency provides those tools. Beyond that here's a few other questions you can ask:
- What are the requirements for advisors to use a host's GDS?
- If the host offers a ticketing desk, what fees are attached to the service?
9. Seller of Travel
Navigating Seller of Travel (SOT) laws isn't exactly a walk in a park. There's legalese, red tape, and the cost of getting licensing for SOT if your agency is located in (or you sell to residents of) CA, HI, WA, and FL.
If you go with a host agency already registered for SOT under those states, they may be able to extend that licensing to you. Score! This cuts down on red tape and provides more real estate in your brain for other issues—like building a client base or planning a group trip.
What to ask your Host About Seller of Travel
If you don't need SOT, then you can skip this! But if you live in CA, HI, WA, or FL, here's a few questions you can ask
- Does the host agency have an SOT for in the states your agency requires it?
- If so, will you as an IC be covered under their SOT licensing, and what it the process to ensure you're listed under their license?
10. Errors and Omissions (E&O) Insurance
Some host agencies will extend E&O coverage to their ICs. This is coverage to protect agents from costly lawsuits in case a client holds you (the travel agent) responsible for something that goes horribly awry with the trip or booking.
Curious to know which hosts offer E&O coverage? You can use our handy dandy filter on the host list to figure out which host agencies provide this type of support!
What to ask your Host About E&O
If you're interested in finding a host with E&O here's a few things to consider:
- Will you be covered under their E&O policy?
- How much coverage would you be afforded under their policy?
- What are the costs associated if not wrapped into the startup or monthly fees?
- Will you need to purchase additional E&O insurance?
Still Not Sure if a Host Agency Is the Right Path for You?
There sooooooo much to consider when starting an agency. If you're feeling information overload, HAR's The Complete Guide to Starting a Travel Agency can help.
The course is written and taught by yours truly and Bridget Lee professional educator with deep roots in the travel industry. Maybe you notice a last name similarity? We're sisters and we both came up in a family that is deeply rooted in the industry. Check it out!
Editor's Note: This article was originally published in Jan. 2021! We updated and republished it on publish date listed above!