Travel Agency Startup Costs and Earnings: What to Expect
How much does it cost to start a travel agency? This is the burning question you’re probably asking, and the one this article will address. That is unless you’re Jeff Bezos looking for a new career and you have a fruitful money tree orchard at your disposal. But if you’re here, reading this article, you’re probably not JB. I digress.
If I were to tell you that travel agency startup costs run between $0-$20,000, that wouldn’t be the most helpful. This vast range illustrates just how many factors impact how much it costs to start a travel agency.
This article is going to look at the latest data for travel agency startup costs for hosted travel agents, independent travel agents, and travel agent franchisees.
This resource offers a run-through of what you can expect budget-wise for four different types of travel agency models.
Now, if you’re thinking, “Hold the phone. I didn’t realize there were so many different travel agency options and I don’t even know what route I want to take yet.” Don’t worry, we’ve got you covered with our 7 Day Setup Travel Agency Challenge. It will help you decide which model is best for you!
In the meantime, this resource offers a run-through of what you can expect budget-wise for four different types of travel agency models. In each category, we’ll look at startup costs in four different ways (*gasp*), and look at what you can expect to invest in if you choose that route. (Already know what kind of agency you want? You can fast forward to different sections below.)
⭐️ HAR Article Highlights: ⭐️
- Startup Costs for all Travel Agents
- Startup Costs for Hosted Travel Agents
- Startup Costs for Travel Agency Franchises
- Startup Costs for Independent Travel Agents
Travel Agency Startup Costs: The Big Picture
If you balked at the massive range of startup costs ($0-$20,000), you’re not alone. Why is there such a disparity in how much travel agents invest?
If you forced me to give a bottom line, shoe-string budget number on how much you’d invest at minimum to register your travel and access an accreditation number to book travel, I’d say the bargain basement budget startup cost would run around $300 at a bare minimum.
Frankly, when folks say they start an agency for nothing, I don’t know how they do it. If you’re one of those people, give me a holler. I want to know your secret! I’m thinking it’s likely they’re not factoring in the cost of registering their business, investing in their accreditation number, or purchasing a website domain. Those costs seem negligible individually but can start to add up.
We're going to look at startup costs in a bunch of different ways. How do we do this with any amount of confidence or accuracy? I'm so glad you ask! We pull new agent data from HAR's ridiculously comprehensive annual travel agent income survey results.
1. Range: The range is the lowest and highest reported startup costs. This helps give a sense of how much it can vary and will guide you in making a budget that works for you.
2. Average: The average is the total sum of startup costs divided by the number of agents who responded to the survey. I like to think of average as the “ballpark figure.” A lot of time, the average is a “middle value,” but when you have some folks invest $20 bucks and some invest $20K, sometimes these averages aren’t the best representation of what you can expect to spend.
3. Median: Median is the true middle startup cost. It’s the startup cost entry with an equal number of higher and lower-cost entries. And because we like to go big rather than go home, we’ll also look at . . .
4. Mode Startup Cost: The mode is where it becomes a popularity contest: it’s the startup cost is the value that travel agents reported most frequently.
Startup Costs for All Travel Agents:
This section offers a broad view of startup costs for all different kinds of travel agents (hosted travel agents, independent travel agents, and travel agent franchisees). All data is taken from HAR's 2020 travel agent income survey.
1. Range of Travel Agency Startup Cost for all Travel Agents in 2021: $0-$100,000
2. Average Travel Agency Startup Cost for all Travel Agents in 2021: $3,982
3. Median Travel Agency Startup Cost for all Travel Agents in 2021: $2,000
4. Mode Travel Agency Startup Cost for all Travel Agents in 2021: $1,000
I'm not going to spend much time looking at all travel agents because frankly, it doesn't offer a very clear picture of what you can expect to invest. The investment will really depend on what type of agency you want to start!
Just getting started and not sure where to begin? Check out HAR's 7-Day Setup Travel Agency Challenge. We'll walk you through of steps of setting up daily emails for a week, and it will help you decide what agency model is best for you.
Travel Agency Startup Costs for Hosted Agents:
Host agencies are a great option for new travel agents who want to start their own business, but don’t have the time/resources/people power to research and invest in every nook and cranny of the backend of running an agency (accreditation number, E&O insurance, Seller of Travel, CRM . . . the list goes on) and are looking for higher commissions.
It will come as no surprise to you that we’re fans of host agencies, and we recommend it to 99% of folks who are new to the industry and want to start their travel agency business and brand.
Hosts provide that administrative framework so you can focus on developing your travel agency brand identity and focus on selling travel. (You can read more on the benefits of using a host agency here.)
If you’re starting a travel agency with a host agency, here’s how much you can expect to invest in your startup cost:
1. Range of Travel Agency Startup Cost for Hosted Agents in 2021: $0-$100,000
2. Average Travel Agency Startup Cost for Hosted Agents in 2021: $4,290
3. Median Startup Cost for Hosted Agents in 2021: $2,000
4. Mode Startup Cost for Hosted Agents in 2021: $1,000
Now, you may be thinking: Wow. Those 2020 numbers look almost exactly like the numbers above for all travel agents. And you’d be right. The average is slightly lower compared to all travel agents. This is because the (typically) higher franchise startup costs pull the average up for all travel agents.
That brings us to . . . .
Travel Agency Startup Costs for Travel Franchises:
Above, I mentioned that hosts are a great option for those who want backend support but still want to develop their brand. If you want to run your travel agency, but do not want to spend time creating a brand identity from scratch, a travel agency franchise is a great option.
With a travel franchise, you get to use the franchisor’s established branding. The benefit of this is that, rather than starting your brand identity from the ground up, you get to hit the ground running with a brand identity that has already been established for years. (In industry lingo, they call this a turnkey travel business.) Is that up to your alley? You can learn about travel franchises here!
1. Range of Travel Agency Startup Cost for Travel Agent Franchisees in 2020: $162-$15,000
2. Average Travel Agency Franchise Startup Cost in 2020: $5,690
3. Median Travel Agency Franchise Startup Cost in 2020: $9,250
4. Mode Travel Agency Franchise Startup Cost Mode for Franchisees in 2020: $2,000
Startup Costs for Independent Travel Agents:
When we say independent agent, what we mean is a travel agent who gets their accreditation (rather than going through a host agency or purchasing a travel franchise).
Independent travel agents are on the opposite end of the spectrum from franchisees. Whereas travel franchisees (typically) have their entire business setup from backend to branding, and hosted agents typically receive backend structural support, independent agents do it all on their own.
They get their accreditation, their seller of travel, join their consortia, forge their relationships with suppliers (etc.)
It’s pretty uncommon for new travel agents to go this route from the get-go. We know this because our new travel agent data indicates as much.
Why? We guess that an agent or agency is more likely to go independent after they’ve cut their teeth with a host agency. (Next year we’ll be testing our hypothesis by asking a question about it in our annual survey!)
In our survey, we only ask about startup costs for agents with 0-2 years of experience. Because of this, we don’t have enough data on startup costs for independent agents to provide reliable data. Sad face.
If you’re a newbie independent agent, we’d love to hear from you! Let us know in the comments below if you’re willing to share how many coins you dropped! But most importantly, take our survey so we can offer great more great data in the independent segment!
Travel Agent Earnings: What You Can Expect in the First 3 Years
Now that you have an idea of approximately what you can expect to spend, let’s talk about how much you can expect to earn.
I’m not going to sugarcoat this: There is a really good chance it will take you a few years to recoup your startup investment. Why? There are a few reasons:
Here are a few reasons why it can take time (typically 3-5 years) to generate a steady income as a travel agent:
- It takes a while to build a client base and develop your brand.
- Even when you do make your first bookings, you're often not paid commission until after your client completes their travel (or after final payment for some vendors). So, if you make seven bookings in January but the clients aren't traveling until November, you might not get paid until the next calendar year. Let's just say, if you're wanting to walk off your current job, thinking that the big bucks will roll in the next month, you might want to reconsider your strategy. 😉
- (Leisure) travel is something most people only do 1-2 times a year. Even with referrals and repeat clients, it can take a lot longer to build a steady business compared to a new restaurant or other service industries like a hairstylist.
Now let’s talk about moolah.
Income for Travel Agency Startups: The Big Picture
We have loads and loads of in-depth travel agent reports that focus on newly hosted travel agents with 0-3 years of experience. You can find all our new agent income reports here.
I’ll offer you a brief overview of new travel agent income data, plus show you how it’s trended over time.
The Latest and Greatest New Travel Agent Data:
Median income was only $200 for new hosted advisors during the first year of the pandemic.
The latest information on new hosted travel agent income is from our 2021 report. This report reviewed income from the 2020 pandemic year when the median income was only $200 for new hosted advisors.
What does income look like in a more typical year? Between 2018 and 2019, the average reported income increased 76% (from $1,817 to $3,250) for first-year advisors and 27% (from $9,845 to $12,492) for advisors in their second year. Before the pandemic, income was on the rise for advisors at any stage in their careers. Advisors were also likely to earn more with experience, and the newest advisors were no exception to this.
Our upcoming 2022 survey will begin to reveal income recovery for new advisors. Do successful agents have a secret sauce? Let’s take a moment to look at these ingredients for a successful travel business.
What Factors Lead to More Income For Travel Agents?
The secret sauce to earning a higher income as a travel agent is not a well-kept secret. We’ve been collecting data on travel agent income for five years now and here’s what we’ve seen:
Income potential increases when you belong to a travel association if you
But that’s only part of it.
Investing in travel agent startup resources is step one. Leveraging those resources is step two.
What I’m about to say is going to sound extremely obvious, but hey, it’s what leads to earning more money: Investing in these resources is step one. Leveraging resources is step two.
Getting to a point of income stability is about so much more than investing dollars in a fancy website, joining a host agency or getting an accreditation, or ticking off boxes for travel certifications. It’s just as much about taking advantage of the tools and resources that are available to you through your host or consortium.
How do you know? You can find more details than you ever wanted in our travel agent income survey archive. (Psst, if you click on that link and get a little scared by the sheer volume of data, a good start is to check out our latest longitudinal travel agent income report.)
Ready to Get Started?
Not only are travel agency startup costs affordable, but there are also plenty of free resources (ahem, especially our free Travel Agency 7 Day Setup: A Travel Agency Challenge ) if you just want to dip your toes into the waters to see if it’s for you.
If you’re wanting to learn the ropes, HAR founder, Steph Lee, also created a travel agency startup course with ASTA called “The Roadmap to Becoming a Travel Advisor.”
This is a great primer for those who want to get a feel for the industry. (Think 240+ pages of focused content on starting up with an industry overview, video tutorials, tips on booking, and more goodies . . . we’re not messing around.) ASTA offers this course to HAR readers for $149.
Once you hit your stride as a travel advisor, our travel agent income data shows that earnings trend upward with experience, time investment, and industry engagement.
We'd love to hear from you—new and experienced agents alike! How long did it take for your agency to become sustainable? Did you find your travel agency startup costs were similar to those in the article? For agents with a few years under your belts, what do you wish you did differently? For new agents, where are you feeling the need for additional support?
Let us know in the comment section below or email us!
*Editor's Note: This post was originally published on July 17th, 2018. We updated the information to reflect current income trends. (You can find the original article here.)