How does travel agents make money

While some travel agents choose to apply a planning fee, others make a commission from the hotel or resort where the occasion takes place.

Sometimes, a customer may only want information about a particular place and contact a travel agent who is well versed in the area and knows everything about it. In such cases, the agents charge a consultation fee for giving customers the information they need about a place.

They do not reserve the bookings, but only consult the travelers where they should go, where they could stay, and what they could do. Twelve years back, travel agents booked 85 percent of cruises. Therefore when a travel agent books a cruise for customers, they earn a commission.

Some cruises give commission after the vacation is completed, or after the client made the full and final payment. Of course, the commission depends on the cruise booked — whether it is luxury or non-luxury, for what purpose the booking serves, the duration, the number of people, etc.

Usually, travel agents earn around 10 percent to 16 percent commission. It must be noted that a part of the fare, such as taxes, are non-commissionable. For some, traveling is a considerable expense. And it is essential to protect their vacation. Not only is this necessary for travelers, but it is also an avenue for commission for travel agents.

They earn as much as 20 percent to 37 percent in travel insurance commission. So there you have it. These are the avenues via which travel agents make money. However, as a traveler, do you think it makes sense to choose a travel agent? Dealing with an industry insider who has extensive knowledge and connections can ensure that you get a great deal. It also skips the hassle of having to deal with a multitude of people for booking, asking for discounts, planning, choosing which sites to visit, where to stay, how to travel, etc.

A great travel agent provides in-person research of a place, a hotel, and various other activities beforehand. They can also ensure that you get a good cancellation policy. Booking a pre-packaged tour might not be your cup of tea, as you may want to add or delete some of the activities or destinations mentioned in the schedule. Booking with a travel agent would mean that your itinerary tailors to your interests. One travel agency solution to diminishing commissions was to diversify their income and begin charging fees.

This helped agencies steer away from complete reliance on vendor commissions, helping them pad a bottom line that was once cushioned by generous airline and vendor commissions. Along with the loss of airline commissions, travel agents face the challenge of many major cruise lines' non-commissionable fees NCFs.

Yup, it's self-explanatory: They're miscellaneous fees that are not commissionable. Okay, before we go into things, it's important to understand that different sectors of the travel agency field make money in different ways. To make it easier, we've broken down the question of how travel agents make money into 4 main types of travel agencies: corporate, leisure, custom, and 'the big players'. Airline tickets are the lifeblood of corporate agencies.

Not selling airline tickets after commission cuts was out of the question. To offset the lower airline commissions, corporate agencies implemented a service fee when they booked a ticket.

In addition to air, corporate travel agencies earn commissions from booking car and hotel for business travelers. So how much are corporate travel agencies charging? After the commission cuts, many travel agencies shifted to selling high-ticket products that still paid travel agent commissions—essentially, vacation packages and cruises. Nowadays, these are your leisure travel agencies—the ones you probably think of when you think of a travel agent.

Generally, leisure travel agencies' main revenue is from commissions vendors pay on vacation packages, cruises, air and other add-ons. However, consultation fees and service fees are becoming more common as agencies try to diversify income sources to become less dependent on supplier commissions.

If you're wondering how many travel agents make money by charging a fee, you'll want to take a peek at our you can find HAR's complete fee survey archive here! Charging a fee helps agents boost their bottom line and discourage 'tire-kickers' price shoppers. For agents hesitant to charge fees, some agents implement a 'look-to-book' fee—an up-front fee for research, which is applied to the booking when its made.

Some agencies charge a straight up non-refundable fee for consultations. You can see more info on the graph below! Mass market trips like cruises, all-inclusive resorts, or group bus tours around Europe aren't for everyone. When you want an itinerary built just for you, travel agents call that an FIT trip Flexible Independent Travel — in plain-speak, you'd call that a custom itinerary.

But why be simple like that when you could come up with an acronym, right?! Custom itineraries are more time intensive and may involve booking places that don't pay travel agent commissions. FIT travel agents make money not only through the fees mentioned above, but agents may also make money through net pricing mark-ups and commissions from the different vendors they're booking.

There's no one-size-fits-all fee when it comes to custom itineraries. But if you're curious about learning more on what kind of fee would make most sense for your niche, check this out:. Others might charge on an hourly basis, with the fee depending on how much research your itinerary requires.

As such, agents often must be able to prove their mettle to travelers to maintain their businesses. As a rule of thumb, an agent's fees should balance out the cost of what it would have cost you to book on your own, either through lower costs, research or added value, such as room upgrades or free amenities.

Some travel agencies specialize in specific types of travel, such as corporate travel or group travel, and earn money based on their expertise in that area. A corporate travel agency, for example, might provide a company software that allows its employees to book travel or manage their expenses. It might provide consulting services that assist companies in developing travel policies or negotiating discounts with airlines, hotels and other travel vendors. Large agencies such as American Express americanexpress.

Some agencies, particularly online travel agencies, earn money directly from travel vendors by offering premium listing options. Bureau of Labor and Statistics , but according to Pindar, it can actually be much higher. A post shared by Erina Pindar erinapindar. This can vary from agency to agency and also depends on your level of experience.

That means if you get paid 10 percent commission on booking a hotel, 80 percent of that commission goes to your agency, while you keep 20 percent. As an independent agent, you lose the base salary but get to keep your commission. While in the past, travel agents mainly assisted in booking accommodations, a travel adviser helps provide a client with a broader picture of their trip.

A post shared by Lizzo lizzobeeating. Unlike being a real estate agent, where you have to pass a series of tests to prove you know your stuff.