Developing a Travel Business Concept

Starting a Travel Agency Begins with a Concept, Here is How to Get Started

While there is still tons of opportunity in the travel business for new entrepreneurs, one must consider the impact of the current COVID pandemic (soon to be in its third year). Certain elements in travel (cruises, all-inclusive resorts and others) have suffered great damage because of the pandemic. While everyone is sure that they will return to their pre-pandemic popularity, you should factor the potential risks into the direction you see your travel business going into.

So, with that said, before you consider entering the travel business, you should have a relatively solid idea of what your travel business will be. In today’s world just having a website and hoping that someone will stumble onto it and book something simply isn’t going to work for you. Or, being a generalist hoping that someone will contact you and book something is not a viable idea either. The traveling public in today’s times are much more sophisticated than that. They are probably going to spend a lot of money on their dream vacation and they seek someone who is going to make it better for them. Someone with specific knowledge of the vacation that they are planning. They could just book it online, but they want an expert to help them plan the perfect vacation.

One of the major benefits that COVID focused on was that having a travel agent representing clients was the very best way to handle disruptions such as we saw during the pandemic. It convinced consumers that having a travel agent in your corner was worth its weight in gold, as they acted as the interface between the consumer and the supplier. Other booking channels were simply not capable of responding to consumers needs and consumers became so distraught with the complete lack of response that they found travel agents worth their weight in gold.

The travel industry offers so many opportunities for new agents it is staggering. One of the most difficult things to do is to focus your efforts in a specific area of opportunity. But, this is what needs to take place. You need to become an expert in your specific travel niche. The good news is that there is so much online training that it isn’t the difficult task that it once was.

At the very beginning of your effort to evolve a viable business concept there must be passion for the niche that you end up pursuing. Without the love and passion for whatever you pursue, you are quite likely to not succeed. As an example, if you love to surf and love to travel to surf, you might want to consider going into the surf travel business. The same is true for skiing, or SCUBA diving. If you absolutely love Brazil, maybe you should become a Brazil specialist. Let’s say that you love Brazil, but also fascinated with the Amazon River’s flora and fauna, perhaps you should package group travel exploring the Amazon. You can see how passion is the most motivating factor in developing a business concept.

The Numbers of the Travel Business: The travel business is actually a very easy business to understand. And, the underlying numbers of the travel business are also very easy to understand.

Yield: The yield of a transaction is determined by the commission embedded in the selling price, or a mark-up on a net rate (sometimes both commission and a fee). The yield in a trisection is important because this would be the gross income generated by the transaction. If you are selling 3-day cruises with an average yield of $24.00 it is going to be much more difficult to make money than if you are selling world cruises with internal yields of $18,000.00. I am sure that you see the importance of yield.

Cost per Transaction: If your operation is fully automated and you can process 3-day cruises for less than $.10 per transaction, perhaps you can make some money selling them. But, if you are offering a high level of in-home service to your client you may burn more than the $24.00 yield on a 3-day cruise in gasoline just getting to and from your client’s home. The cost per transaction is very important when evolving your business concept.

Service and Professional Fees: In addition to the Yield and Cost per Transaction, you should also consider the level of service fees and professional fees that you will charge. As an example, if your niche is established by your expertise in the niche and you are offering information that clients may not be able to obtain easily anywhere else, You may be able to offset a lower yield by balancing it with a professional fee for your knowledge. This is easily done with a “Plan to Go Agreement” and is an excellent way to make sure that your yields are sufficient to maintain the profitability objective in your business plan.

Number of Processed Transaction per (week, month, year): Again, if you are selling 3-day cruises and the yield is $24.00 with a cost of $.10, you will gross $23.90 per transaction. If your objective is to make $10,000.00 per month, you will need to complete roughly 400-transactions per month, or 20 per (working) day. On the other hand if you are selling world cruises and would like to make $10,000.00 per month, you only need to conclude one sale ever couple of months, or so. The bad news is that if your business concept is to sell 3-day cruises with a high level of in-home service, it won’t take to long to go broke.

Your Business Concept: Once you have passion for a particular niche in the travel industry, you should research potential competition and see if your concept might be a viable idea. The elements that you bring to the party that may make you successful beside the mandatory passion are;

Knowledge: How knowledgeable are you regarding your concept. Using the surf travel idea, if you are a novice surfer, I doubt that you are going to be able to sell surf travel to accomplished surfers that want to deal with someone they can trust. You need to either already have, or quickly obtain the necessary knowledge to fulfill your concept’s promise.

Experience: If you have traveled to many surf destinations and know the most popular ones better than most surfers, you are probably going to be successful because your have experienced the destination. You would know just about everything that someone who has not been there would want to know. If you haven’t, you would probably need to start doing so as part of building experience.

Ability: Operating your business once you have evolved a business concept also requires general business knowledge. Accounting, sales and marketing and management skills are all required. If you have never run a business, nor had any business training, perhaps you might want to enroll in some business classes at your local city college. Starting a business with no experience or training is kind of like trying to fly a jet without getting any instruction first.

You can easily see how these various components matter greatly when you are developing a solid business concept for success. Do your homework and make your business choices choosing the business concept that will provide you with the greatest opportunity for success in your travel career.