The travel industry is just like any other industry: there are lots of theories on the best way to be successful and make money. But to boil it down to its essence there are just two: volume or service. You can either book a lot of trips and make a little money on each (volume), or you can book fewer trips that require more time and make a lot of money on each (service).
There is room for both models in the travel industry. But you have to figure out which one is the right approach for you. And I mean that literally. YOU have to figure out what fits your work style and what will fulfill you. Don’t just copy what someone else is doing.
There are lots of agents who are perfectly happy to make lots of bookings that require them to ask a few questions, do some computer work and then move on to the next project. They don’t want to spend a lot of time interviewing clients about their dream vacation and then crafting the perfect itinerary for them. They would rather have travel bookings that is a more transactional nature. And while that’s great when you are a corporate travel agent, if you are a leisure agent with your own business you have to recognize that your income is determined by how many hours you are willing to work. If you want to make a lot of money, with this model you have to book a lot of trips and that usually means working long days 6 or 7 days a week.
To illustrate this I looked at one year’s worth of bookings on a very popular mass-market cruise line. These bookings ranged from inside cabins to suites, but the average commission generated was $261.38. If you want to put $40,000 a year in your pocket (a modest income) and you are on an 80/20 commission split, you need to make 192 of these bookings in year. Even if you are on a 100% plan, you still need to make 153 of these bookings each year – or at least 3 each week! And this is without considering any other expenses.
If you are booking a popular theme park, the average commission generated on those bookings was $258.40. Again, for an 80/20 commission split that is 193 bookings per year. Or if you are receiving 100% commission, that’s 154 bookings each year.
To hit these numbers you have to have a pretty big client list. And keep in mind that I didn’t consider any other expenses in those calculations. And this is also assuming you are at a high commission level with these suppliers. If you were just sitting at a computer entering these bookings from a booking sheet and the only time involved was reading the sheet and typing in the information, you’d be in great shape! But that’s not the way it works when you are assisting human beings! They have questions. They want to explore options. All that is time. And time is money.
The option at the opposite end of the spectrum is to make less bookings and make more money on each one. Instead of “transactions” you are focused on providing service and sharing your expertise. This is where the demand is in the travel industry! Why? Booking online has lost its appeal for many travelers. They are tired of spending hours searching for options and wondering if they are getting a good price, and then hoping what they saw online is what they will actually get when they arrive. They want someone who is an expert to guide them and have their back.
This is the type of client that will gladly pay a professional fee for your time and expertise. They are accustomed to working with professionals who charge for their services – they do it themselves. They will appreciate your time and what you can do for them. They will refer you to their friends and family and help you grow your business.
Not only are you appreciated by the client, you will be making more money. Sometimes A LOT more. I looked at river cruise bookings over the past year and the average commission is $1,572.49. That’s SIX TIMES the commission generated on that mass-market cruise example I shared earlier.
From Millennials to Baby Boomers, people are looking for agents who have knowledge and expertise who can help them make the most of their vacation budget whether that is $10,000 or $100,000.
So, you have to decide which one you want to be: a transaction-focused travel agent or a service-driven travel advisor. If you accidentally became the first, you can change your business and become the latter.
Want to know more? We are going to take a deep dive into this on our upcoming free webinar series: How to Have a Profitable Travel Business. Click here to register.