What kind of travel agency can I start?

Are you planning to start a travel agency? Did you know that there are three type of travel agencies that you could start up. Each of them has its pro and cons. One will cost more than the other and one gives you a better start compare to the other.

The three type of travel agency businesses that you can start

If you are reading this you might think what kind of travel agency you want to start. I can tell you that your choice should depend on a few criteria. First of all what are the three types of travel agencies? The three types are:

  1. Home based travel agency
  2. Office based travel agency
  3. Store front travel agency

Lets take an indept view. What is the real difference between each of them?

Home based travel agency, the pros and cons

If you start a home based travel agency, you can consider your own house as the office. This means that you do not need to pay any additional rent because you only pay rent for your house or you own it. I strongly recommend people who start out with a travel agency to have a home based travel agency. The main reason is you do not have to pay for many things because they are already available.

The biggest pro for a home based travel agency is the financial investment that is needed. It is truly wonderful to know that you can start a business with only 10k or less. Because you do not pay for the rent, the internet connection, your utility bill or anything else. If you are on a very tight budget, do consider this option. It is the easiest the start with and you just cannot go bankrupt because you have not monthly payments to pay.

One big downside of a home based travel agency is accepting customers. Some times you will have a customer that wants to pay in your “office”. This means that they will visit your house and meet up. This is fine but it might also scare the customer and reconsider to purchase. They visit your house and might say “ow I was expecting a real office”. This can give them a shock, and at that moment you must have  your official documents ready to proof you are an official and registered travel agency.

The best solution for this is meeting your customer at an easy to find location. Also try to suggest a “Jollibee” or a shopping mall in the area. That will be far better because you meet up and they do not see your house. This is truly recommended if you have many kids running around your house.

Office based travel agency, the pros and cons

An office based travel agency is useful for multiple reasons. Most offices are affordable in comparison with a store front travel agency. An office space can cost you between the P 4.000 to P 10.000 a month. It might be much but it is decent for a few reasons. You office is usually located in an office building. This basically means that you will meet many other business owners in the office building. You can network and talk and hope to sell some travel packages to the business owners in the office. This at least will justify the rent for your office.

Having an office will also give you something else. You are able to accept OJT`s and employees easily compare to an home based travel agency. You have a professional office and hiring staff during the peak seasons will be no problem at all. Besides, having an OJT on the floor can save you some money. Most of the OJT`s are hard working and willing to learn. That is what you want to have. It will save you time and perhaps you can absorb the person to become a real staff member.

Store front travel agency, the pros and cons

A store front travel agency is probably one of the most expensive option to start with. It is perfectly fine to do so. However, you must know your craft before considering this. You must know what you are doing and have a firm understanding of the location. Not every location is the right location.

One of the best places to be located is in a high foot traffic area such as a shopping mall. A shopping mall attracts buyers and many people will oftenly shop around and see your store. A large amount of foot traffic means you will always have people walking by to inquire about your travel packages. So, paying a large amount of rent should be justified if and only if you are located in a high foot traffic area.

This is really important because in some shopping malls you are located quite hidden. Locations like those does not have too much value. Especially if people hardly can spot your office. Some travel agency owners try to place their store close to the high way or national road. This can be good but you must have parking space ready. If you store is visible but there is no parking space available the person will pass you by. because it is a huge hassle to find a parking space.

Understand the why and the ROI of your choice of location!

What you decide to choice should always depend on a specific reason. You always have to understand why and what the expected ROI will give you. ROI is based on what you expect to earn on your investment. This is called Return On Investment. This might sound very advanced but it is basic business principles.

Let me explain. The travel agency you select will need some investment. For a home based travel agency you do not pay any kind of rent or utility. For an office based travel agency you will pay between the P 4.000 and the P 10.000 a month on rent. A prime store front travel agency will easily pay between P 25.000 to P 50.000 a month. All of them have their own advanced.

If you expect to do start in a shopping mall with a store front travel agency. And you rent will be P 25.000 a month. In that case you should at least make sure that you have enough foot traffic in the area that covers at the monthly rent. You should invision the rent as your marketing budget. It is promotion and that is the reason you pay a huge premium for your location. if you notice that the location is not that busy, it means that you need to search for another location that is more suitable.

What this all means is that an expensive location is only justified by the amount of ROI is makes. If you find a location that costs P 10.000 a month and the foot traffic is great that you could make P 20.000 on foot traffic alone, it means that this location is a wise investment.

What about a home based travel agency. Imagine you are a travel agency. You do not pay any rent and you do not have any foot traffic. What will you do than? In this case you need to switch yourpoint of view. Because you do not pay any rent you can afford to invest that money in marketing. Just give your travel agency an imaginary rental fee of P 2.000 a month. And use that money to promote or find ways to promote for free.  This method will give you a forcing system to promote because a home based travel agency is usually hidden. No foot traffic at all, so you must put alot of effort in promotion.

What is really the best travel agency to start?

This is a question I cannot answer objectively. All I can say is my experience. Starting a home based travel agency was the best way for me to get started. Without any background I learned the craft myself and practiced. I started with a very small amount. I had to be flexible but also affordable. A home based travel agency was the best at the time and I enjoy the benefits from it every single day.

The best of a home based travel agency is the freedom to choose. I notice that I can always switch to a store front or office based travel agency. Remember, with a home based travel agency you are not bound by a contract. You can move to a new location anytime. The opposite is true for an office based or store front travel agency. Once you signed the contract you need to stay there untill you completed your contract. Or else you lose your initial deposit.

Many starters, they choose for a home based travel agency. The flexibility and freedom is something that attracts many people. I truly recommend you to start small, think big and gradually grow big!

Do you want to start you own travel agency? Starting your own (home based) travel agency is fun. Discover how you can start your own (home based) travel agency and how we can help you.

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