Before we get into the various types of travel agents and how much do travel agents make, it is important to understand the parameters of how successful travel agents are making money in the first place. The following video will help you understand the subtleties of the travel agent industry and make the following information more well defined to you.
While the question How Much Do Travel Agents Make? begs an easy answer, nothing could be further from the truth. There are several business models for travel agents and defining which model by category is essential before even uncovering a reasonable answer. So let’s start with the Bureau of Labor Statistics latest figures for the year 2017, the last year that figures are available right now.
|2017 Median Income||$36,990|
|2017 Median Hourly Salary||$17.78|
|Number of Jobs in 2017||$81,700|
|Employment Change 2016 to 2126||(11.62%)|
As you can see this doesn’t seem very motivating. But, where did these figures come from? Here is an excerpt from the BLS travel agent income summary.
“Work Environment: Travel agents typically work in offices, but some work remotely because much of their time is spent on the phone and the computer. Most travel agents work for travel agencies.”
It looks as if these figures apply to employees of travel agents. This is valid information if you intend on becoming a travel agent in your local travel agency and are paid a salary. Generally travel agency employees are paid roughly anywhere from 30% to 45% of their productivity. The balance of their productivity goes to maintain their workstation (rent, automation, communication costs, taxes and so on) and marketing expenses (advertising, promotional, social media, website and such). What little that is left over goes to the agency owner’s profit.
An agent earning $36,990 would generate gross sales between $822,000 and $1,233,000 assuming an average commission on sales of 10%. This is completely consistent with industry standards for travel agency employee salaries. Of course an employee making 45% of sales would possibly be an outside salesperson that doesn’t participate in the overall overhead of the agency thus not affecting its profitability.
There are constantly surveys done on how much travel agents make and they all pretty much walk down the same path. One recent study went so far as to try to come up with the average travel agent income by geographical area and claimed that the average income for a travel agent located on the WestCoast was $32,993. This is absolutely ludicrous. When I found out that the survey was based on only a sampling of 600 responses, all from the same data base, I realized why the numbers were so out of whack. With well over 160,000 “travel agents” the sample represented only .00375% of the total which results in 0 confidence in the results.
In a Forbes.com article entitled “Want To Make Six Figures? How Pay And Perks Are Making This Job A Hot Second Career” it points out what we have uncovered here that industry surveys miss a large percentage of travel professionals. The article points to ASTA’s salary survey missing at least 40% of non-traditional agencies and is limited only to those that belong to ASTA, a legacy association that most modern travel professionals take a pass on as being less relevant now than at any time in the past. Forbes points out that “Virtuoso’s top producers earn over $100,000” and “agency owner Stacy Small’s top producers earn $250,000 to $400,000.”
ZipRecruiter, a job recruiting website, says that as of January 11th, 2019 the average wage for a “work at home” travel agent is $53,358 per year with some agents making up to $130,000.
So why all the disparity? I just want to know how much travel agents make?
The answer is that there are numerous types of travel agents. Here are the various types and what their average income is. Understand that this is not a formal study, but comes from decades of being involved with travel agents on various levels.
The BLS figures shown above are pretty much right on the money since they are taken from government documents. Of course, the figure of $36,990 is the average salary and top producers will make much more and low producers much less, but for the most part this will help you understand what sort of income is available if your intention is to become an employee in a travel agency.
The following travel agent types are representative of the “Independent” travel agent category and are considered Independent Contractors, rather than employees by the Internal Revenue Service. Their income is documented by a 1099 and they generally file a Schedule C-EZ to report their income.
There are hundreds of thousands of people that have joined MLMs in the hope of making easy big money and traveling the world for free. Unfortunately, that is simply not the reality of being a MLM “travel agent”. The easiest way to see what an MLM’s travel agent makes is to divide the MLM’s annual revenue by the number of agents it has and then apply their commission and fee formula to the answer. In most cases the average revenue per agent (not commissions) is less than $2,500. Figuring an average 10% commission on sales at $250, you can see that the vast majority of MLM agents are operating at a loss.
Referral agents make money by simply referring family, friends and business associates to a travel agency. They generally make a 1% to 3% commission on referrals, but for the most part, this type of agent rarely makes more than $1,000 annually.
If your idea is to join a host agency and sell travel part-time to your friends and family you can pretty much guesstimate your income by evaluating what types of travel your friends and family are buying. If they purchase an occasional airline ticket and stay in low priced motels, you probably won’t make a heck of a lot of money. If they are quite wealthy and buy luxury cruises and resorts you might do very well. I would say that for the most part, this group of agents generates sales between $25,000 to $100,000 in annual sales. Again, if you assume an average 10% commission of $2,500 to 10,000 and apply your host agency commission structure and fess you can easily guesstimate your potential income. This usually would generate $1,750 to $7,000 in income at 70% commission.
This agent is generally hosted by a host travel agency and may have a special niche or deal in a geographical location. There are tens of thousands of this type of travel agent and they usually generate between $100,000 and $500,000 in annual revenue. Some that have very specific niches in high volume markets or luxury markets may do substantially better. As an example a part time agent selling river cruise groups on AMA Waterways doing $500,000 could expect to generate $100,000 in commissions and potentially net a large portion of that commission.
While it all depends on what you are selling and in what volume it is being sold, a general benchmark for a travel agent providing general agency sales in a single location (home-based or store front) is that an agent will make between $500,000 to $1,000,000 in gross sales and the commission generated from those sales would be determined by applying the host agency’s overall commission and override program. It is very safe to say that by applying an average 10% commission that the gross revenue from sales would be between $50,000 to $100,000.
A home-based travel agent would actually incur limited overhead so the vast majority of the commissions would stick as net profit. So to answer the question of how much does a full-time individual travel agent make, if you intend to operate as a home-based travel agent you can expect to make these amounts.
Of course once that is said, there are a ton of exceptions. As an example, a friend of ours, Mr. Craig Satterfield, ECCS sold two world cruises in one week and then used the commission to pay cash for a brand new Mustang convertible.
We asked some of host agencies for an example of a successful agent/agency in their network and here are four responses to consider.
Steve Hirshan, Senior Vice President of Sales Support, Avoya Travel shares:
“David and Cindy Locke, owners of Seize the Seas, have owned and operated an Independent Agency in the Avoya Travel Network™ for more than 14 years. Since joining the Avoya Network, they have received numerous accolades for their achievements including Avoya Travel’s highest honor of Chairman’s Club for achieving more than $3 million in annual sales and recognition as an Avoya top producer for Oceania Cruises in 2016 and 2017.
With virtually all of their business coming from Avoya Live Leads™ and referred friends and family, David and Cindy have maintained a lifestyle of success by turning their love of travel into a profitable business. In 2018, their Independent Agency produced more than $6 million in annual sales, which is an extraordinary milestone for their business.
We are very fortunate to have David and Cindy’s Independent Agency in the Avoya Travel Network.”
Jackie Friedman, President, NexionTravel Group, LLC shares:
“There is no question that Travel advisers can make great money in this industry. We have many agents that earn in excess of $100,000 a year.
When you are first starting out, you need to be patient. It is not unusual for the income to come in months after the booking has been made, particularly if you book travel well in advance. Agents need to plan for that.
Over the past few years, it has amazed me to see newcomers to the industry earning over $60,000 in their first year. We have had two agents qualify for our top recognition levels in year 1. They share common attributes. They aggressively get out there and market their business. They have a passion for travel that is contagious. They look for opportunities to build group business which helps them grow their customer base quickly. Finally, they take the time to create a written business and marketing plan and invest in tactical marketing initiatives to help them grow their business.”
Jenn Lee, VP of Sales and Marketing, Travel Planners International shares:
“Effie Walthall, owner of On Deck Travel, is one of those agents that from day one, knew what type of income she wanted to make…and DESERVED to make. Her dogged determination to sniff out the best deals, by combining promos, with our TPI group space, has not only increased her sales, but ensures her clients pass out her business cards every chance they get. She ended 2018 with 1.5 million in sales and has grown 20% year over year the past 3 years!”
Chad Burt, Co-Owner, Outside Agents shares:
“Janet came from the real estate industry 4 years ago and is on track to make nearly half a million dollars this year. Obviously, she’s the exception, not the rule. What makes her exceptional is her tenacity and willingness to get her hands dirty. Go to a chamber meeting? No problem. Hand out business cards to everyone in her housing community? Done. Social media? All over it. Ask for referrals from every sale? No sweat. You name it and she’ll do it if it builds her business. She’s even gotten to the point where she’s somewhat selective about the clients she’ll take which has made her even more popular. She’s amazing!”
I think by now you are starting to see that there really is no set answer to the question How Much Do Travel Agents Make?
Now we are getting into the area that is a little more difficult to determine. First, let’s define the different types of full-time travel agents. There are individuals, families, partnerships, LLCs, LLPs, S Corporations and C corporations among others. There may be this type of organization in the part-time agent environment, as well.
Some of these agent types mays file Schedule Cs, while most will file partnership and corporate tax returns. The move to these types of business structures has more to deal with the federal independent contractor laws than anything else. Recent changes in determining if an agent is an employee or an independent contractor has led the way to the more elaborate business structures.
As one can imagine, it is much more difficult to ascertain the actual productivity of a travel agent when their incomes may be reported as an employee, a sole proprietor, a partnership, LLC or a corporation.
The big difference with this category is that we are no longer talking about individual travel agents, but travel agency entities. This makes up a good portion of the home-based travel agent community as many travel agents that start out as part-time and then go to full-time and subsequently end up with partners, family members or independent contractors (or all three) that work through their agency. This is the natural growth pattern for travel agents.
One example of this type of agency would be a family run agency that specializes in all-inclusive resorts and Hawaii. The agency employs 4 family members and also has 4 full-time independent agents. They produce around $5,000,000 in annual revenue and between commissions and overrides earn about 18% on sales overall. This produces about $900,000 in gross profit and the family’s overall net profit is in excess of $550,000. Since the operation is an S Corporation the profit is paid both in salaries and corporate distribution of profits. Of course, corporate distributions of profits are not taxed at the same rate as salaries, so in this case the salaries are quite low compared the profit taken out as corporate distributions by the family.
The reality of federal, state and local self-employment taxes on travel agents is what has led to the formation of business entities that help reduce their tax burden. This also masks the real income that travel agents are making when travel agent salaries are the only thing being measured.
So, how much do travel agents make?
As you can see, this question is not easily answered. It all depends on your business concept, business and marketing plan and overall execution of your business. The real answer really is, “well, you can make whatever you want and are willing to work hard to make happen!”
If you want to explore starting a travel agency further here are some excellent article / video tutorials that will really make it easy for you. You should be able to come up with a rough estimate of what your income might be when done with these and it will help you through the process.
Long before you invest your first dime in starting your travel business you need to understand what your business is going to do. Having a solid business concept is the first step to success. This article and video tutorial will help you find your travel business concept.
Creating your first business plan does not need to be a robust business document that locks you into years of activity. In fact, it should be completely flexible so that you can make changes to it on a monthly basis to adjust the plan as the reality of your business evolves. This article and video tutorial will help you create your business plan without a lot of nonsense. You business plan is for you and no one else. Here is how to make it.
Like with business plan software, just about all of the marketing plan software programs you will find online are designed for the purpose of supplementing business plans that are intended to attract investors or lenders. But, your marketing plan especially needs to be completely fluid as you try new things and also correct your marketing budget based on results as you evolve your business. This article and video tutorial will help you make your first marketing plan a reality.