By Tom Ogg
One of the first questions most new agents have is about the potential income that can be generated by a home based travel agent. Industry resources show relatively low incomes for agents at an average of around $37,000 per year and this is because many home based travel agents only work part time and do not have the expectation of generating large incomes. Many are retired from other carriers and have pensions and investments they depend on and enjoy the benefits of being in the travel industry as their primary motivation. Other agents sell travel to family and friends part time and also maintain a full time career in another industry. So, while the numbers seem depressed, be assured that there are a good number of home based travel agents making excellent incomes from their business. So the question becomes “How can I make a substantial income as a home based travel agent”.
And, the answer is certainly much more complex than the question. Before we get too far into the subject, you should read the tutorial “Developing a Travel Business Concept” to understand some of the basic elements that will affect your ability to make a substantial profit from your business.
In its most simplistic form, profits are generated by the payment of a commission from the supplier to the agent. Commissions are paid for handling the sale on behalf of the supplier and virtually every supplier has different remuneration programs.
Suppliers may also pay “overrides” or additional commission based on the total productivity of an agent. Many suppliers offer override programs based on the total volume of business the agent books with the supplier. As an example, a supplier may pay a 10% commission to an agent for the first booking, but then have a sliding scale of overrides that may stretch from 1% to even 6 or 8% on top of the base commission.
To make matters even more confusing, a supplier may also have money to invest in promotions and promotional materials on top of the commission and overrides that are paid to the agent. The trick is to access these base commissions, overrides and promotional cooperative funds to generate the highest possible yield in your revenue. This is accomplished by focusing your business in a highly productive and complex niche where the rewards are substantial.
So let’s explore the various types of travel products that are likely to generate a substantial income once you become expert at selling them.
Cruises: While most mass-market cruise lines (Carnival, Royal Caribbean, NCL, etc) pay a 10% commission, the question is 10% of what? NCFs (Non Commissionable Fares) have increased dramatically thereby reducing the overall percentage of commission on selling mass-market cruises. For more information on selling mass market cruises be sure to read “How to Make Money Selling Mass Market Cruises” and also watch the video tutorial. Both the luxury cruise market and niche cruise markets pay a true 10% base commission and can be highly lucrative niches. The River Cruise market is extremely popular right now and also quite competitive among river cruise companies and represents an excellent opportunity to earn very attractive margins. All cruise lines have override programs and also money to invest in well thought out promotions with productive agents.
Tours: Packaged and FIT (Free Independent Travel, or independent tours) pay at least a 10% commission. There are many tour companies that serve individual destinations or niches that one may evolve a special relationship with that could far exceed 10%. There are also many tour companies such as Globus that offer worldwide tours to virtually every destination around the world. Virtually all tour operators offer well defined override programs and also have cooperative promotional and advertising funds available for agents. Specializing in complex FIT and Escorted international tours is an excellent way to generate a large income.
All-Inclusive Resorts: The demand for all inclusive resorts has exploded and has become an excellent market to specialize in. I know of one agent who specializes in luxury all inclusive resorts and is generating over five million in sales annually between he and his wife and three independent agents. By focusing the bookings with operators that handle all inclusives such as FunJet and Apple, they gain considerable overrides and other benefits. You can focus your attention on a certain level of all inclusive, or on a particular destination. However, you must be able to add expert value to the client booking with you to really capture the market.
Groups: Groups can be highly profitable, especially if you are packaging complex international groups and adding specific value that the client finds invaluable. While many agents use tour operators to package the group and work on a commission basis, the real profits come from negotiating net rates with the suppliers that you will be using and marking up the group so that you earn a 25% to as high as 40% commission from operating it. The more complex and niche specific with a substantial value add by you is the way to go. You can operate the same itinerary multiple times and generate huge profits. Look for a niche that you have special knowledge of and also are connected to for an obvious opportunity to package and market special groups.
Niche Travel: Specializing in a specific travel niche is a wonderful way to generate an excellent income. However, the niche needs to be complex and your value add is your expert status within the niche. Niches including international travel and special knowledge or talents to plan the travel is what you should look for. Many times an agent’s passion for a certain type of travel is what leads to establishing their niche.
While there are several other categories of travel that could result in a rewarding income, If your objective is to make profits in the six-figures as a home based travel entrepreneur you need to follow these ideals in a way that will create your ability to conclude complex and high yielding transactions with a minimum of time invested. Once you have achieved this objective you will find yourself amply rewarded with an excellent income,