Disclosure: We earn a commission on qualifying purchases made through backlinks at no extra cost to you. We are also a participant in the Amazon Services LLC Associates Program. Please read our privacy policy for how we use your data and GDPR.

Last updated on November 13th, 2022


Though this article holds true, the travel industry, like many others, has taken a financial hit due to COVID-19, resulting in less income for travel agents and several other professions.


How do travel agents make money? After all, because of the internet, we can book our tickets at the tap of an icon, research different hotels, and choose the best one depending on the reviews it receives on, say, Tripadvisor or Expedia. 

Before we get into the nitty-gritty of how they make money today — and indeed who uses them today — it would be helpful to get some historical context on this career.

A Brief History

The psychology of travel is good for our health and well-being, but before the invention of the internet, planning a trip was burdensome.

A person had to stand in line to buy tickets, and who knew the hotel quality of a booking if a friend recommended it. 

How could you even know where to go?

To make things simpler, travel agents appeared on the scene. They had contacts everywhere to book airline tickets, hotel rooms, tours, or cruises.

The most significant commission they received was from airlines. It made a sizeable chunk of their total income.

But after the Dotcom boom and proliferation of the internet, things changed and not for the better for travel agents. Airlines canceled the commissions because travelers could book their own tickets.

Potential tourists could also book hotels online, thanks to online travel agencies cropping up everywhere. Now, they can carefully scrutinize the hotels, compare prices and reviews, and choose the best rate.

All this meant that travel agents would be left in the lurch.

It didn’t take time for experts to predict the demise of travel agencies.

In 2000, an industry survey showed how bad it was: only 14 percent of travel agents said they would encourage their friends and family to get into their profession. It was dying.

airplane silhouette with sun

The Comeback

But that was not to be.

The travel agent profession made a comeback, but how?

A Forbes article showed how sought after this is as a “hot second career” if you want to “make six figures.”

Why is that?

There are several reasons for it, not least because of the internet. 

First, more internet connectivity means that you’re working longer hours. 

Work does not end the minute you step out of your office, but instead, follows you home in a little portable device. When both partners are out working long hours, it translates to having less time to relax and plan the vacation. Especially with the information overload today — best offers, best discounts, best rates, cheapest flights, best-rated tours — research can be a daunting task.

Second, there is more emphasis nowadays on experiential travel: you would have to know (a) what’s available, and (b) which experiences you would like to be involved in. It’s not as simple as checking the best rates or the cheapest airline ticket.

Third, today’s social media is all about the visual. If it’s not on social media, it didn’t happen. Therefore, you’d want to show off gorgeous locales and off-the-radar locations that are not very well known.

Who can provide such detailed information? Travel Agents.

Fourth, personal touch. Internet is convenient, yes. But being a travel agent is about eliciting trust and managing relationships. They provide a security net. When things go south, you can be reassured that there’s a real person you can contact. It’s more appealing than being on hold, waiting for a customer rep of a faceless online company to come on call, and having to explain your ordeal to them.

Fifth, it’s an overwhelming task to do all the planning and booking for a big group of people, whether for a large family or corporate outings.

For all these reasons and more, many travelers prefer outsourcing most of the planning to the experts.

How Do Travel Agents Make Money?

Travel agents have reestablished themselves and made a fashionable comeback, but how does a travel agent make money? The most important thing to remember is that they have multiple sources of income. 

travel agent average salaries in USD

Commissions

As mentioned above, before the internet, travel agents would earn the most significant chunk of their commission from airline ticketing. This was drastically cut in the late 1990s. Today, the agents receive a tiny, negligible commission for flight ticketing.

However, they still receive their commissions from certain avenues, such as hotel room bookings. Seeing as how there are innumerable options today, hotels pay commission to agents for booking rooms in their hotel without the cost passed on to travelers. This is the travel agent commission or TAC, and many agents earn their income from this. Needless to say, the bigger the bookings, the fatter the commissions.

Planning Fee

A lot of effort goes into researching, planning, and customizing each customer’s requirements. And so, for their services, travel agents have started to charge a flat fee. This is similar to the fee charged by accountants for filing your income tax.

Niches and Expertise

Today, a few top travel agents choose their niche, becoming experts in their respective areas.

There are specialized travel agents such as destination wedding planners, honeymoon specialists, proposal vacations, anniversary vacations, bachelors’ and bachelorettes’ vacations, adventure specialists. The list goes on.

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

Travel agents also earn commission on tours, sightseeing, limousine services, etc.

Consultations

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.

Cruise Incentives

Cruises are all the rage, with several corporations having their shindigs on water.

Twelve years back, travel agents booked 85 percent of cruises. This is because the agents know the cruise companies, the policies, what’s allowed and what’s not (some cruises do not allow children), what you can expect, and whether you can get a little something extra.

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. Say, for instance, the client charges a customer $1,000. Of this amount, $280 is in taxes. In this case, the commission will be earned only in the remaining amount, which is $720. 

Travel Insurance

For some, traveling is a considerable expense. After all, if customers have the money, they wouldn’t mind spending it on a memorable vacation. 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. Bob Chambers, vice president of operations at CSA Travel Protection, said in an interview“A lot of travel agents realize this, but a lot of them may not — travel insurance is one of the highest-commission products that they can sell.”

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?

Let’s look at some pros and cons:

Pros

If the thought of researching and trawling through data is anxiety-inducing, it’s probably because questions like “Is this the best deal available?”, “What if I find another better deal after I have booked my vacation?”, “What if I want to modify a part of my booking after it’s done?” keep floating around in your head.

These doubts become that much louder when you’re responsible for booking for a large group of people — whether it is for a corporate or a large family. 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.

The second advantage of booking through a travel agent is getting a personalized itinerary.

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.

An article on Forbes quotes a travel agent as saying, “We’re like a matchmaker. Each trip is almost like setting your client up on a date, so really knowing the hotel and cruise products, and different styles, to know it’s for right them, is critical”.

The third is the travel perks. Travel agents are all about building relationships and this extends both ways. Not only do they maintain good relations with clients, but they also have a friendly rapport with vendors such as transport companies or hotels.

This translates into the possibility of you getting a little something extra — say a seat or a room upgrade, or a fee waiver — at no additional cost.

And while travel agents may not get you the cheapest deal, they positively can give you the vacation experience you want.

Fourth, of course, is their expertise. Travel agents are pros with specialized knowledge of a particular country or an event such as destination wedding or honeymoon vacations. They’ll help you get the best possible deals while ensuring your life event stays a fun, memorable experience.

And if things go wrong, you have a one-person contact who will have the necessary resources to make your problems right. 

Cons

Booking with a travel agent sounds like a great idea. Is there a reason you shouldn’t?

Turns out, yes! For instance, it can be challenging to find the right travel agent that suits you. And getting the wrong travel agent is the best way to waste both your time and your money. Or there could be travel agents who do the bare minimum — and by this, we mean things you can do yourself — and charge you a fee.

There have been instances where a person hired a travel agent, and after the vacation, felt the services could have been better performed by themself.

Sometimes, you can find a better deal by conducting research yourself. Especially if you’re a frugal traveler, chances are you’ll get better deals if you go deeper into the internet rabbit hole.

Conclusion

Now you know how travel agents make their money, and the pros and cons of using them.

And contrary to what the experts predicted, travel agents are doing pretty well for themselves. As this Forbes article says, it’s an attractive second career for people from diverse professional backgrounds: “Lawyers, accountants, mortgage brokers, pharmaceutical sales reps, real estate agents, journalists, TV reporters, and even hotel and airline executives are becoming travel advisors, buying travel agencies, and taking up senior positions with agency groups.” The same article mentions that in one agency, as of 2016, the top agents earned a whopping amount of $250,000 to $500,000 a year. While travel agents can be part of big travel agencies, some run the show themselves. Then there are smart travel agents who use social media to increase their followers and, consequently, generate bookings.

There’s no doubt that the internet has made the world a smaller place. Today, everyone can dream of traveling abroad and vacationing in beautiful places. And information on all this and more is available online. But at the same time, this travel-boom also led to an explosion of choices: best airfare, best hotel, best activities, best deal, best everything.

With information and options overload, it can be easy to freeze and experience a choice paralysis. Some are better than the others in weeding out the options quickly. For those who experience choice paralysis, they can always hire a travel agent.

Whatever your choice, it all boils down to one thing: your passion for travel. What matters, in the end, is that you get an experience you remember for a lifetime.

by Apuurva S. 



Frequently Asked Questions

How much does a travel agent make?

A travel agent earns an average salary of $39,000 per year in the United States. However, it is possible to make more than $100,000 annually if you specialize in a particular niche, operate your own agency, or sell luxury travel.

How does a travel agent make money?

Travel agents earn income through fees charged, commission, consultations, niche specialties, upselling travel insurance and tours, etc.

Do travel agents make good money?

Though junior travel agents earn a low starting salary, it is highly possible to make good money in excess of six figures. Operating your own travel agency from home or working with a luxury travel agency has the potential of earning a higher salary.

Aperlust
About the Author: Aperlust

Get Travel Tips, Improve Your Photography, and Receive the Best Last-Minute Vacations Deals

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!

Pin It on Pinterest

Share This