We hear a lot of questions from beginner travel agents, here is a list of commonly asked questions and our best attempts at answering them. If you have additional travel agent questions please send them to firstname.lastname@example.org
Should I become a travel agent?
I am not one to deter dreams but I will say that if you want to become a travel agent, you better be willing to work hard. The average travel agent makes close to $30,000 per year. You have to love travel and be willing to devote yourself to the topic. At one point in time most travel agencies had physical locations and were growing and fruitful. Due to industry trends and the rise of online travel sales, the travel agent industry has been stagnant. The only growing category in the travel industry is the work at home travel agent. This happened because 1.) airlines stopped giving out set commissions which drastically reduced the amount that travel agencies could make and 2.) host agencies grew which allowed independent travel agents to collectively bargain with suppliers for competitive commissions. This led to the rise of work at home travel agents.
If you read the previous paragraph and you are still interested in becoming a travel agent, great!
The number one characteristic which will help you as a travel agent will be your ability to sell. The second best characteristic is your passion for travel and your ability to describe this passion to other people. The rise of online travel websites has made the landscape extremely competitive with pricing being the biggest differentiator of a trip. Those who are able to work locally and use relationships to sell products are the most successful. New travel agents should definitely figure out a niche which they cater to. This niche can be friends in their geographic location, if their isn’t another travel agent, it can be business travel, liesure, cruises, Cancun, family travel or a variety of other niches. If you are going into a niche, you really need to be the most knowledgeable at this niche.
How do I become a travel agent?
So you made it past the first question and you are still here! Ok, welcome to the wonderful world of becoming a travel agent. Unfortunately there isn’t one path for all travel agents. There are several different paths each one with benefits and downsides.
The most risk averse way to become a travel agent is to join an existing travel agency. If you want to learn how to become a travel agent, why not learn on someone else’s dime? Building up a book of clients is going to take some time and it would be nice to be paid while you are doing this. If you want to become a travel agent the first thing to do is to start looking through job listings.
If you aren’t looking to become a full-time travel agent, the best possible route for a work at home, independent or part-time travel agent is to find a host agency to join. Host agencies are typically a pay to play type of organization. You pay them a monthly fee and in exchange they provide educational materials, promotional materials and they help negotiate commissions using the number of travel agents in their organization as leverage. Many host agencies will take a commission split with the agents in the organization. The benefit to joining a host agency is that you don’t need to pay high license fees that IATA and ARC charge for member organizations. The downfall to host agencies are that you don’t get the full commission. If you are a work at home agent who begins to get a lot of business, you might want to go out on your own.
Who pays travel agents?
As a travel agent the simplest way to get paid is to work directly with a tour operator or host agency who in turn works with a large number of suppliers. When you book with the tour operator they provide you with the commissions so that all of the tracking, payments and reporting is done in one place instead of tracking down the different suppliers to get your commissions. For this ease of one stop shopping, the tour operator or host agency may take some of the commissions off of the top, but it makes the life of a travel agent easier.
Travel agents generate commissions from hotels, car rental companies and excursion companies. They also may generate commissions from airlines but typically not on domestic flights and not directly from the airline. Travel agents don’t get commissions direct from the airline, instead travel agents typically earn air commissions from a wholesaler or tour operator who has negotiated rates and promised to sell a certain amount of seats on the airline.
How do travel agents make money on airline tickets?
Travel agents do not make commissions directly from airlines. Early on, travel agents did get commissions for flights. When the airlines stopped paying out commission in the early 2000’s many travel agents took a large hit and still more went out of business. At one time, Airlines made up 50% – 70% of a travel agents revenue.
There are three ways in which a travel agent might get commission for selling flights.
Consolidators are Wholesalers of airlines to travel agents. They specialize in air and have private contracts with the airlines. Travel agents can get airline commissions with these contracts or they can have access to net rates and/or private fares that they can then mark up.
Airline Contracts: Your host agency or consortium/franchise/co-op will most likely have private air contracts that allow for commissions on certain airlines. Not every international ticket is going to be commissionable, it depends on things like city pairs, class of service, the carrier, etc.
Tour operators selling charter seats. Certain travel operators with a network of travel agents may pre-purchase charter flights and sell seats through travel agents. Often these operators will provide commission incentive for selling the airline seats.
What is Risk Inventory?
Tour operators with a broad reach of distribution will often enter into a contract with a supplier to pre-purchase inventory at a discounted rate and then sell through their distribution network. There are risk airline seats, risk hotel blocks and even risk tickets. The reason that the term risk is used is because entering into an agreement is a risk to tour operator. One type of risk is a charter flight purchase. If the plane flys out and the seat is empty the tour operator could be losing money.
What is a travel agent commission split?
A travel agent commission split typically happens between a travel agent and their host agency. The split amount is agreed in advance.
How do travel agents earn commission on hotels (see similar: How do travel agents make money on cruises?)
The way most hotel and cruise suppliers are set up, there is a commission baked into the price of the offering. After a travel agent books the hotel room, they will get a commission from the hotel. Again, commissions are not a one size fits all proposition. It all depends on the type of travel agency you work for and your affiliations.
Let’s do an example. If the hotel is $100 per night and the hotel offers a 10% commission, the travel agent will get $10 for the sale. Many of the hotels in Cancun have worked hard to hold the line on pricing instead of offering certain rates to OTAs and other rates to travel agents. If you are looking to book a cruise or book to Mexico, you should be able to find the same rate no matter where you are looking. This helps preserve the travel agent model and commission structure. The reason hotels hold the line on pricing is what happened to Las Vegas. Many hotels undercut each other leveraging OTAs to sell their products until they were making limited profits.
The hotel will have a system to send out commissions on a monthly basis (after the client) has traveled.
What is an airline credit?
Some hotels will use airline credit in their marketing. From my understanding of it, it’s just a clever way to advertise a package price (which includes airfare) and allow the purchaser to believe that there is some sort of special pricing that they are receiving. I have not seen any airfare credits which are attributed outside of the deal itself. The air credits are only valid on the package price and the price you see had already been incorporated. The hotels that run air credit sales are typically running different types of sales all year long. As always do the math and look at the final price before making your decision. The air credits will always be incorporated into the final price that you see. You did not get additional money back after the purchase.
If you are a non travel agent reading this, please don’t under any circumstances use this information to try and negotiate with travel agents. While they are making a commission on the sale, the work of a travel agent is hard and often, they are not making nearly as much as other industry professionals with experience. Once you add up all of the hours of research and booking and comparisons and travel assistance…