Category :
Business Strategy & OperationsHow Do Travel Agents and Agencies Make Money?
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There are plenty of ways for travel agents and agencies to make money, but the two primary revenue sources for travel agencies:
Customer-paid professional fees:
Advisors charge for their services, similar to attorneys or accountants.
- Fees may be based on a particular transaction type, such as a price for issuing an air ticket or cruise ticket.
- Fees may also be in the form of a cost charged for managing, planning and booking the trip.
- Fees may be in the form of a consulting retainer or charged by the hour.
Supplier-paid compensation:
- Commissions earned at the time of the transaction, processed by the supplier either at the traveler's final payment or once the travel takes place.
- Overrides, typically paid periodically (quarterly, semi-annually or annually), based on the agency's ability to achieve pre-set sales goals.
An advisor may earn a commission from a supplier as well as a professional fee from the traveler in connection with the same transaction. While almost all agencies earn revenue from both sources, the agency's business model often dictates the primary source of revenue.
Historically, travel agencies focused on selling leisure travel typically received most of their revenues from suppliers through commissions, overrides or incentives. However, this mix continues to change. Travel agencies that focus solely on corporate travel and airline ticketing are very dependent on customer-paid accounts, often called transaction or professional fees and supplier incentives. For both types of agencies, there continues to be a mix of revenue sources when it comes to selling travel.
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