Travel Agency Start-Up Costs
So, you're considering starting a travel agency? Congratulations! It's important to understand that a travel agency and a host travel agency are two distinct businesses. Starting a host travel agency can be challenging and often requires six-figure budgets for proper insurance, accreditation, and licensing, such as seller of travel licenses in states like California, Florida, Hawaii, and Washington State. However, a travel agency can operate under a host agency, thus avoiding hefty start-up costs. Here is a breakdown of the costs to consider when launching your own travel agency.
Creating Your Business Entity
If you're starting your own company, you'll need an LLC or another business entity. The costs for this vary by state and sometimes city. Be sure to conduct thorough research and include any filing fees in your budget. For instance, in Florida, you can file for an LLC for as low as $125. However, in places like Chicago, you'll not only need to pay for your LLC but also other local business-related fees.
Host Agency Costs
Unless you plan on being your own host, you'll need to join a host agency. Some host agencies charge substantial fees, while others, like us, offer free membership. All host agencies, however, will take a percentage of your commissions, similar to a real estate broker. Most hosts start their agents on a 70/30 or 60/40 split, meaning they take 30-40% of your commissions. Our split is 80/20, which increases to 90/10 after your first $100,000 in earnings.
Suggested Article: How to Select the Best Host Travel Agent for Your Business
If you're new to the industry, you'll need training. We provide free comprehensive travel agent training, but we've heard of hosts charging over $6,000 for subpar training. You might also consider travel agent schools, which operate separately from hosts.
Suggested Article: How Much Does Travel Agent Training Cost?
Brand Development Costs
This part of your budget can range from nothing to thousands of dollars. Consider the cost of:
Logo Creation ($50 - $1,000+)
Website Creation and Maintenance ($50/Month - $2,500+)
Trademark Costs (varies by the number of categories and whether you prioritize getting a trademark as soon as possible)
Other Material Creation as Needed (this could be business cards, flyers, or other promotional materials)
With online logo generators and WYSIWYG website editors, you can achieve this on a budget. However, if you're unfamiliar with these tools, you may need to hire a professional, which could cost thousands of dollars for your website and logo alone.
Suggested Article: Things to Consider When Launching Your Travel Brand
Client Acquisition Costs
This could also range from nothing to thousands of dollars. If you have an extensive network of clients or potential clients, you may not need any paid advertising. However, if you're starting from scratch and plan on investing in advertising, expect to invest in Facebook Ads, Google Ads, and lead management software. You may also need to invest in events that put you in the networks you want to penetrate. For example, we started as an exotic car rally, which attracted high-net-worth individuals who love to travel. While expensive, such events can be a great networking investment if managed correctly.
Suggested Article: How to Sell Yourself as a Travel Agent
Other Costs to Consider
If you join a host with inefficient accounting processes or if you offer concierge support to VIP clients, you may need to hire your own staff. Administrative tasks like commission collections and invoicing can accumulate over time and reduce the amount of time you can spend selling. Therefore, including an assistant in your multi-year budget is advisable if you plan on generating volume.
Do I Need to Start a Travel Agency to Sell Travel?
This is a crucial question. You can be a travel agent under a host agency for nearly zero cost. However, creating an entire agency implies that you're creating your own brand. If you're new to the industry, we strongly recommend considering being an agent under a host with a credible brand reputation. This approach can save you a significant amount of money and allow you to make smart investment decisions. For example, instead of creating "Awesome Travel", you could be a Travel Agent with LuxRally Travel. Of course, as you grow, if you plan on running ads or doing SEO work, creating your own travel brand and website would make sense. However, for most people, using their host's brand is more than sufficient to get started.
Conclusion: If You Create Your Own Agency, Have a Purpose
We've seen many agents, including some of our own, invest substantial amounts of time, money, and energy in developing a brand only to be disappointed by the return on investment. Building a website and creating a logo won't necessarily increase your revenue; you'll need a marketing strategy to drive traffic to your agency website, which can be costly. If you have a digital marketing background, this could be a viable and intelligent path to winning leads. However, we find that the most successful agents are those who focus on developing personal relationships, communicating with clients via text and Facebook Messenger. This approach requires time, and when you spend time developing a brand, you have less time for these interactions, which could result in lower earnings.
Suggested Article: How Much Do Travel Agents Make?
If you want to learn more about becoming a travel agent while minimizing your start-up costs, check out our free travel agent training and the perks our host agency provides to newcomers in the industry. Our support extends beyond training. We cover your licensing, errors and omissions insurance, minimize the cost of supplying a concierge to your VIP clients, and provide various continuing education opportunities, including one-on-one sessions with our CMO, who can help you with lead generation with little to no investment.