How to start a travel agency | Starting a travel agency guide

What is a travel agency?

There can be some confusion around the role of a travel agency and a tour operator. In short, one sells holidays, the other organises them.

A tour operator focuses on the operational aspect of holidays – contracting, booking and packaging together elements such as travel, accommodation and tours. Some tours operators you might know (such as TUI) are customer facing but also sell holidays to a travel agency who act as a middleman. Some tour operators you might not know (such as Gold Medal) are trade only.

Tour operators can only sell the products or services that they offer so are not always impartial.

A travel agency should only sell and administer these packages to clients based on their requirements. Travel agents will liaise with multiple tour operators with complete independence and impartiality to ensure a getaway meets expectations by providing the necessary information and payments on a client’s behalf.

Agents can also sell the individual elements of a holiday such as flights, hotel rooms, tickets and attractions.

Why start a travel agency?

Many argue that the internet has taken away the requirement for travel agencies, as it enables people to book directly with service providers. With the middle person removed, a saving is made. While ABTA’s Holiday Habits Report 2018 states that the preferred method for booking a holiday abroad is directly through a service provider, it also states the next most popular methods are through a holiday booking website (e.g. Booking.com) and a travel company or travel agent.

 The report continues to list the main reasons people book with travel professionals:

• Ease of booking
• Saves them time
• Booking confidence

Even though people are equipped with the means to go direct, a large proportion still turn to the professionals. There is clearly still a place for travel agencies in the travel and tourism industry.

What type of travel agency should I start?

There are a few ways you can run a successful travel agency business. Here are three options worth exploring before deciding your next step:

Independent agency

If your dream is to start your own business where you call all the shots, then starting an independent travel agency is the best option. With this option, you’ll have entire control over who you work with, who you employ, and branding, etc.

You might want to specialise in a particular type of holiday or destination to focus your offering. Being an expert will give customers a reason to trust you. You’ll be able to offer the highest quality service by focusing your knowledge rather than spreading it thin. It will also shape your brand identity and USP, helping you stand out within a competitive industry. Specialisms can include luxury, adventure, cruise, family, wedding and honeymoon, as well as specific destinations.

Travel consortium

Cash is an essential commodity during the first few years as a startup, so you might want to consider joining a travel consortium to cut down on overall costs.

A travel consortium is an organisation made up of independent travel agents and agencies. They collaborate to increase their buying power and commissions. Consortia negotiate with suppliers on behalf of their agents to establish ‘preferred supplier’ relationships that can lead to benefits such as free upgrades, extra room facilities and special promotions that aren’t available to the general public.

Member benefits can include training, knowledge sharing, client referrals, back office support, networking opportunities, technology, access to marketing material, ABTA and ATOL bonding (see below costs). Commonly memberships are charged as a monthly fee, usually a percentage of your turnover or commissions.

For more information, take a look at the following consortium examples:

• Hays Travel’s Independence Group
• The Travel Network Group
• Global Travel Group
• The Advantage Travel Group
• Travel Counsellors

Homeworker

You can start your own travel business but enjoy the flexibility and better work/life balance by working for travel homeworking companies such as InteleTravel, Holiday Franchise Company  and Travel Counsellors. You retain your independence while enjoying the tools, technology and support that homeworking companies offer.

InteleTravel is recognised by every major travel supplier in the world. You don’t have to have experience in the travel industry to qualify – just a passion for travel and the ability to influence people’s travel choices. You can work full-time, part-time or even enjoy it as your hobby. It charges homeworkers a £142 sign-up fee and a £32 monthly charge. Agents keep 70% of the commission paid by suppliers, but this can rise to 80% if sales targets are met.

Homeworking companies such as InteleTravel have raised some eyebrows in the UK for employing staff with no industry experience. They believe this approach devalues the role of a trained and experienced travel agent and some go as far as calling it a pyramid scheme. But 1,800 agents in the UK have already signed up. Notably, InteleTravel was granted ABTA membership in March 2019, meaning it’s now bonded as a retail travel agency in the UK having met ABTA’s financial and regulatory criteria.

If this sounds like an option you’d consider, take a look at a recent interview between President of InteleTravel James Ferrara and Travel Weekly.

Another option is the Holiday Franchise Company. They’re a UK-based travel franchise accredited by both the British Franchise Association and the Approved Franchise Association. They were the first travel franchise to appear on the Elite Franchise top 100 for 2020. Their training program has been accredited by The Institute of Travel & Tourism and are part of the hugely respected Holidaysplease.co.uk.

Travel Counsellors is a consortia made up of travel agents who are homeworkers. People are invited to start their own franchise with them and again – you don’t need to have industry experience to apply. You will become a self-employed franchise holder arranging bespoke travel experiences for your clients. You make money by earning commission on all the travel experiences you sell. The commission is split 60/40 with them (60 for you). ‘For that 40%,’ outlines Travel Counsellors, ‘we’ll provide you with unrivalled support and continuous investment in your business.’ You’ll also receive:

• Financial protection for everything you book for your clients
• Access to their integrated digital platform, which helps you source and book the holidays.

What rules and regulations are there?

You are required by law to provide a bond to reimburse clients if your company fails financially. You can arrange this with a bank or insurance company.

You don’t need any qualifications to become a travel agent, however, joining a trade association will tell both customers and industry that you take your responsibilities seriously. It tells suppliers your business is well supported, while reassuring customers that their money is protected.

The two most well known are ATOL and ABTA. 

Air Travel Organiser’s Licensing (ATOL)

This license allows you to sell airline tickets. Without it, you’d be confined to providing accommodation and ground transport only. Every UK travel company that sells overseas holidays and flights is required to hold a license in the event that a company ceases trading. It will refund consumers if their holiday is cancelled while covering hotel costs and flights home if they’re already abroad. It’s a financial protection scheme designed to reassure consumers that their money is safe.

When you send your customers booking confirmation, it’s a legal requirement to send your ATOL certificate with it. It’s also worth noting that flights booked directly with airlines are not ATOL protected.

You can apply for a small business ATOL license if you intend to send less than 500 passengers a year with £1m or less revenue and intend to keep the numbers at the same level within the first three years.

Read more about ATOL

Association of British Travel Agents (ABTA)

ABTA deals with non-flight based holidays, linked travel arrangements and travel agents. As a member, you must properly protect your package holidays, as required by law. Packages not including a flight e.g. coach, rail, cruise, are covered by ABTA bonding or insurance policies.  

Similar to ATOL, it covers transport and accommodation should a supplier no longer be able to look after them. This protection applies to packages sold in the European Economic Area. 

All travel organisers can apply to be an ABTA Member. You must abide by ABTA’s regularly updated Code of Conduct to become certified – an accolade that most consumers look for when booking a holiday. It also updates its members of any changes to regulations and protects both the consumer and agency should holidays fall through. It is the most widely recognised trade association, so membership comes at a cost. Its high prices might not meet the budget of a startup, so you could also look at…

The Travel Trust Association (TTA)

The TTA offers a more flexible, low-cost option if you’re looking for an alternative to bonding arrangements. Travel companies under this membership offer customers unrivalled financial protection, as all money is secured into your own Trust account and guaranteed by the TTA.

AITO Specialist Travel Agent

You might want to consider the Association of Independent Tour Operators (AITO), as they offer members specialist products from smaller tour operators, as well as financial protection for consumers. When you’re setting up your agency, you could review the companies in this association and then look to sell these type of products, which tend to offer a higher commission than if you worked with traditional tour operations such as TUI and Thomas Cook. 

Read more about becoming an AITO agent

Package Travel and Linked Travel Arrangements Regulations 2018

It is now a legal requirement that holidays worldwide sold by UK companies should be protected. Since July 2018, package holiday protection was extended to cover consumers who choose different suppliers via a single website e.g. online travel agents (OTAs), call centres or a shop. If something goes wrong, holidaymakers who book their holiday online will now be compensated in the same way as someone who booked their holiday via a travel agent. Under the European directive:

“Traders should be required to state clearly and prominently whether they are offering a package or a linked travel arrangement, and provide information on the corresponding level of protection, before the traveller agrees to pay.”

This legislation is under EU rules, so make sure to keep an eye on this and other similar requirements during and post-Brexit. 

Read more about the Package Travel and Linked Travel Arrangements Regulations 2018 

GDPR (General Data Protection Regulation)

A hot topic in recent years, GDPR is important to be aware of if you’re starting a travel agency as you’ll be holding personal data of individuals, as well as (potentially) sensitive data on suppliers. You absolutely can’t afford to get this wrong. Be mindful that data protection laws can vary from country to country.

Employment Law

If you’re hiring staff to work for your agency you need to be fully aware of all elements of employment law. 

What costs are involved?

Specifically for the travel sector, the below costs are worth being mindful of.

Trade association applications and membership

While not essential, it’s important to consider paying for the appropriate licensing and certification to tell your customers that you are a credible, trustworthy business and that their money is protected.

ABTA Certification

Before you can apply, your accounts need to demonstrate that your business has a net current asset surplus of £15k (working capital), net asset surplus of £30k and issued share capital of £30k. The application fee costs £600+VAT, the joining fee is £1,000+VAT and the annual subscription is £1,066, which covers the first £500k of gross turnover. 

Read more about ABTA Certification

ATOL license

You can apply for a small business ATOL for £1,161.

Make sure to check that your business falls within the application criteria before applying. The CAA will also need to assess the finances of your business, which have to fit ATOL’s finance criteria. 

Read more about applying for an ATOL license

Travel Trust Association

There’s a one-off application fee of £150+VAT and fees vary depending on your membership type.

Read more about the Travel Trust Association

AITO Membership

Annual membership runs from September – August and costs £458+VAT for a single branch.

Premises

If you’re targeting the over 65s in your area, investing in premises where your customers can come and discuss their requirements is worth considering.  Office space and premise rentals vary hugely per location. 

Branding and website

If you decide to become an online travel agent (OTA) then a significant amount of your budget will want to go towards a user and device-friendly website. While it would be more affordable to build your own, it would be worth going down the professional route due to the online nature of your business. Professional costs can vary from £400-£10,000 depending on requirements. They will create the right website designs for your brand image, which can help bring in potential customers for your agency. You will also need to create an impressive logo that can be recognised anywhere. Quality graphic design skills will be needed for this, so it might be worth outsourcing a designer.

Software

The right software will help reduce your time spent on processes and administrative tasks.

One of the benefits of becoming part of a consortium or homeworker is the software access you’ll be given, to help you find and book holidays. Even if you were to remain independent, you’d still need to use the websites of the tour operators and travel companies that you were selling packages from to get the information you need. As a result, there are multiple systems you would need to familiarise yourself with.

Accounting software such as Xero and Sage will also help organise and schedule important financial tasks such as payments, payroll and taxes.

Staff

This is a big financial commitment so it’s worth considering whether you need to hire staff at the very beginning. An average travel agent salary is around £21k (Source: Totaljobs).

Subscriptions

Depending on your sector focus, you’ll want to sign up to the associated news sources to stay up-to-date on any developments. For example, if your niche is travel, travel news sites such as Travel Weekly, TTG, Travel Mole and Skift offer free newsletter subscriptions. Additionally, the Financial Times covers most sectors and offers some of the most accurate and reliable financial market information, helping you stay aware of the emerging trends in your industry. An FT subscription starts from £3.99 a week, but there are other packages available that might better fit your business requirements. 

It is also recommended that you open a business bank account, in order to keep track of your expenses without using your personal account. 

To keep track of your starting costs, and any alternatives you may find, you should add them to a business plan. 

Creating a business plan