July 14, 2016 #AskMeredith

If you’ve found this article, it’s safe to say that you have already begun to research how to become a travel agent. To understand the answer to the question, what is a host agency for travel agents, it requires us to take a little walk back in time.

A Little Back Story

During the late 1990’s, the world wide web became a platform for a new breed of travel agency – the online booking engine. The onset of this new distribution channel happened incredibly quickly and took a lion’s share of business from the traditional brick and mortar travel agency. No longer did a traveler need to pick up the phone or walk into a travel agency to research fares, schedules or book travel. The negative repercussions to the storefront travel agency was crippling for many. As such many went out of business.

At the time, the traditional travel agency business contained an owner and, depending on the size, a number of desk agents who were employees. When many of these travel agencies closed their doors and went out of business, the desk agent lost his or her job. But a new opportunity opened at the exact same time, again thanks to the internet. The opportunity was for the newly unemployed desk agents to continue to book travel for their clients, but from home, without the overhead of an office. Another important difference was that the desk agent would be working for him or herself, no longer an employee.

Enter the host agency for travel agents. The newly found independent contractor working from home needed travel agency credentials to collect commissions (IATA, ARC, CLIA) as well as back office support. Before the host agency came along, their only option was to get the travel agency credentials themselves. That involved a large monetary investment in a bond and proof of 5 years experience selling travel, which filtered out quite a few. And even those that were able to get the credentials themselves, settled for the lowest commissions from suppliers, got little support from suppliers and had to deal with complicated back office procedures.

The demand for the host agency developed quickly and its popularity took off like wildfire. Today, the host agency ranges in size from small brick and mortar agencies that have a handful of “outside” independent contractors to large host agencies with thousands of independent contractors.

What IS a Host Agency?

In its simplest form, a host agency is a travel agency entity that provides travel agency credentials (IATA number) to its entire network of independent contractors. One of the biggest benefits the host agency offers is higher commissions negotiated by the host agency team. With multiple I.C.’s booking their travel through the same IATA number, the sales volume with each supplier will be far higher than if the I.C. were to book on his/her own, giving the host agency negotiating power. A host agency can offer many other benefits too – back office support, developing a good relationship with the suppliers, a community for their home based I.C.s, CRM and marketing, etc.

The host agency gets compensated for providing these benefits. The most typical form of compensation is a commission sharing agreement between the host agency and independent contractor. Commission splits usually range between 70/30 – 80/20 with the higher percentage going to the IC and the lower percentage kept by the host agency. However, there are many different ways to commission share and some even offer up to 100% commission to the IC in exchange for a monthly fee.

Finding a Host Agency

There is a large sea of options when it comes to finding a host agency. The best place to start is to establish your business’ priorities. If you plan to grow your business to the extent it’s a full-time commitment and you want to make enough money to support yourself, then you will need to be selling a minimum of $500,000 per year and your focus for a host agency should be the best commission share possible (and one that negotiates the highest commission payouts with suppliers). I highly recommend looking for a host that offers a 100% commission share with a fixed, monthly fee so that your host agency expenses are fixed. (Check out www.giftedtravelnetwork.com) As you grow your business, you grow your revenue and you keep 100% of the growth.

If you plan to sell travel on a more part-time basis, with no need to make enough money to support yourself, then look to a host agency that offers a great community, top commissions with suppliers and a great, supportive environment. (Check out www.giftedtravelnetwork.com)

A fantastic resource for researching the sea of options in host agencies is www.hostagencyreviews.com

In summary, contracting with a host agency is most often the better path than getting your credentials on your own, but it really does depend upon your specific situation. Do what’s best for you, then find the right host and don’t be afraid to move if you find you chose wrong.
By Meredith Hill