How do travel agents make money? This is accomplished in several ways. Over the past few years, more and more people have been turning to home-based travel agents to earn an income while working remotely from anywhere in the world!
However, many people are curious how the role of a travel agent is still profitable during the age of OTAs (online travel agencies) like Expedia, Hotwire, and Kayak. This article will explore how travel agents make money by examining how commission, service fees, group tours, and individual agencies work.
The Travel Agent Position
Learning how to become a travel agent can seem overwhelming when you don’t know where to start or what the process looks like. You may be wondering how travel agents earn money or why you should use one for your next vacation.
It helps to understand the relevance of this position in our current society to understand the money side of things. In addition, it is important to understand important dynamics that might influence how much they make.
Online travel agencies rule the online world, bringing a level of convenience that didn’t previously exist for travelers. However, the travel agent position still exists in human form for the same reason AI will never fully replace any job that requires human interaction.
The face-to-face meeting with another human brings an element to any situation that is difficult to replicate. Convenience is essential, but as humans, naturally, we crave human interaction.
This is why sales are more manageable in person –feelings and emotions are involved. When we’re in front of another human, we instinctively develop more trust, and our emotions become triggered, leading to a more fulfilling experience.
What Effects a Travel Agent’s Pay?
If you weren’t already aware, travel agents typically work on commission. Because of this type of pay structure, certain elements significantly affect the profits they generate.
For example, if you’re booking an airline ticket as part of a package, most likely, their commissions are higher than with an agency that doesn’t offer plane tickets. Likewise, cruise ship packages work the same.
Companies that offer these types of travel options also offer higher commissions than other organizations that only provide hotels, tours, museum tickets, and other attractions. In addition, travel agents garner higher commissions because the competition in the travel industry is fierce.
Organizations need something special to pull customers their way to earn their money. In this case, that “something special” comes from a talented travel agent who is excellent with people.
So what are the primary duties of a travel agent? What are the perks they offer people who use their services?
What Do Travel Agents Do for Customers?
Travel agents offer the following advantages and services:
- They offer options for cheaper flights because they’re aware of the ins and outs of airfare pricing. This allows them to alert their clients to deals on specific dates or with different connecting flights.
- They help you navigate peak times like holidays and the summer vacation season. Sometimes using a travel agent is cheaper than using an OTA, just because they’re able to factor in more options and discounts and make personal changes that a click-and-pay travel agency can’t do. There’s more room for personalization.
- They can offer you upgrades for a lower price also. Maybe you’re booking coach airline tickets, but for $10 more per ticket, they can get you first-class through a special promotion. They can offer you better accommodations that typically a computer algorithm isn’t programmed to do.
- Travel agents get to know you and understand the things you like. This makes the customization element so unique because it’s a personal relationship.
How Do Travel Agencies Get Paid?
Travel agents generate profits using several different models. At any given time, a travel agent may use one or several of the following profit models to make a paycheck.
1. Commissions Paid by Travel Supplier
If you’re a travel agent and you’ve decided to sell a product from a particular supplier, then that supplier will pay you some commission or sales fee for selling their product. This is usually done through an affiliate program the supplier has set up with various travel agents.
Different organizations pay different percentage amounts and also may work on a sliding scale. For example, Southwest Airlines might pay 10%, and Delta could pay 5%. However, Delta could increase to 15% after a certain amount of tickets sold in one booking, while Southwest remains the same. This gives agents the incentive to upswell and push more volume.
2. Service Fees Paid by Travelers
Service fees are paid directly from the traveler, and they’re typically a percentage of the total cost of travel. These fees are often used to pay for services rendered, but they’re also used to pay for services provided by a travel agent or agency. So, what do these terms mean?
Service fees: A service fee is an amount charged by an individual or company in exchange for providing a service. This can include taxes and postage costs—but it usually refers specifically to travel-related transactions like airline tickets or hotel reservations. Service fees are generally paid at different stages of the process (e.g., when booking flights vs. when checking in), so customers must understand their responsibilities when paying them off before making any purchases through a particular agent.
This may also be called a connection fee or convenience fee.
3. Group Tours Paid by the Company
Group tours are tours where the travel agent works with a company to organize a tour for a group of people. In this case, the money is earned from the tour company. Agents get paid a commission for each person who buys a ticket for their tour. This can be lucrative because if they have 10 people on their tour and each person spends $5,000 on their trip, that’s $50k right there! Of course, that wouldn’t be all the travel agent’s money, but 15-20% is typical. Using this example, the agent would make $20,000.
4. Home-Based Travel Agent Income Opportunities – Paid Through Individual Travel Agencies
Travel agents are also able to work from home. This means that their income opportunities are endless. You can choose between working for an individual travel agency or starting your own business and becoming self-employed. The great thing about this line of work is that home-based travel agent services offer many ways to make money. Agents earn income through:
Travel Agent Service Fees – To become a certified member of any major agency, potential agents must pay an annual fee ranging from $250-USD 400 (or more). This one-time fee gives them access to valuable resources such as listings across multiple platforms and networking events where new clients may be found.
Travel Agent Commission – Each time someone books a trip with their recommendation or via the internet service provided by their company, they pay commission fees based on the length of the guests’ stay at hotels/resorts/beds & breakfasts/etc. These fees range anywhere from 10% up to 30%. Total profits will vary depending on how much effort went into securing this client (advertising spend, website costs, SEO, etc.)
Becoming a home-based travel agent isn’t something that happens overnight; it takes time, dedication, patience, and self-motivation. However, becoming a home-based travel agent can be an incredibly rewarding career path that allows you to have unlimited earning potential while working remotely from anywhere in the world!
Instead of asking, “how do travel agents make money?” the appropriate question would be “how do travel agents earn so much money?” A talented agent will earn up to $500,000 on a good year! Travel agents, in general, have the opportunity to earn a great living. The industry is far from dead, regardless of the boom of the OTA industry. As long as people crave human interaction, the travel agent position will remain alive and well.
How do Travel Agents Make Money FAQs
How do travel agents make their income?
Corporate travel agents earn from service fees, net and private fares, and travel commissions. Commission rates are generally between 5 and 22%.
Do travel agents make a lot of money?
Historical data shows travel agents have a median income of $38,000. However, it’s not unheard of for a talented agent to make six figures yearly.
Do travel agents charge a fee?
If travel agents do charge a fee, it’s normally minimal if anything at all. Most of their profits come from the organizations they connect you with. However, it’s always a good idea to ask about fees upfront.
What percentage do travel agents take?
The average percentage is around 8%. However, it may go as high as 25% depending on the airline, cruise ship company, or agency. Independent travel agents with more experience that require little to no assistance from the host agency can earn up to 80 or 90%.
Do travel agents travel for free?
Many people believe that travel agents get to travel for free and don’t pay for airline tickets or other expenses. However, this couldn’t be further from the truth. They don’t work directly for the airline or other organizations, so they don’t receive any complimentary airfare. In certain situations, they may receive a discount on airfare or travel packages as a part of their commission package.