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Questions about starting a travel agency

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Rather than a blog this week, I’m going to post some questions I’ve answered recently. So if you’re researching starting a travel agency, you’ll find these very helpful!

Q. What is the cost of the franchise?

For people that are new to the travel industry, our franchise fee starts at £13,745 + VAT. This includes everything you need to start your own online travel agency from scratch, from one-to-one tailored training, your own website and brand, commercial agreements, systems, knowledge, ongoing support, your own ABTA number, ATOL protection etc

We do have another package that offers more structured support for your business through online marketing reviews and business development calls which will bring down your marketing costs and increase your conversion, bringing you more profit. This package, The Holiday Designer Plus is £15,795

We also have a package for Travel Professionals, which is for people who have 4 years or more customer-facing, travel sales experience. Travel Professionals receive less training as they’ll already know a lot about the industry, but importantly we’ll help build their own brand and market it, filling in gaps in knowledge. This package is available from £4,500

Q. Do you have any payment plans?

We need the franchise fee before you start training. The sheer investment in time from us in your business with one to one training and support means that we need the commitment from you first. The franchise fee is broken down into two payments, the first is a £500 deposit for a business planning meeting, the second is the remaining franchise fee which will vary depending on which package you go for.

We have franchise partners at HSBC, NatWest, and Lloyds who know our proposition and will be happy to help. We have also had a couple of franchisees gain finding through the government start-up loan scheme, of which there are a few affiliates. 

Q. Which is the most popular package?

This is a hard question to answer because it all depends on how you’re going to run your business, and what experience you have.

If you’re going to run online marketing in your business and you’re not experienced in this, I would highly recommend the Holiday Designer Plus. These sessions (there are 6 sessions included) will bring down your cost per click and therefore cost per booking. They’ll also ensure that the quality of enquiry is higher.

If this is a business you’re going to be running through word of mouth and referrals, and you feel you won’t need that much support in this area, the Holiday Designer will be perfect for you.

Most people that start with us, run their business using online marketing. This is because this is a brand that can be advertised all over the UK, focusing on the specific areas you’re interested in selling meaning it’s a business with huge potential and not tied to a postcode, this is one of the most exciting points of our franchise model.

Q. Do you have links with preferred travel insurance companies and car rentals? 
For example, if a client wanted to book a total package with me which includes car rental and travel insurance, will that be something I would be able to do?

Yes, we’re able to build full packages that include everything from motorhome/car hire, day trip, hotel, cruise, airport hotels, and lounges. 

You’ll be able to refer to our partner for travel insurance and you’ll receive a commission from customers using the link but you won’t be able to sell it directly as you need a qualification to do this. 

Q. Do you help with creating a business plan to take to banks etc for funding?

We help with creating a P&L (profit and loss) forecast based on your markets and actual figures which can be used as part of a business plan. We’ll also talk to you about the commercial viability of your plan in the business planning meeting which will enable you to create a full plan if needed. 

Q. The commission payments are 2% of the overall holiday sale?

Yes, it’s on the gross cost of the holiday. So, on a holiday that costs £5,000 we’d only take £100. If you’re making a 10% commission on a holiday (£500), which should be the worst case, you’d make £400 and we’d make £100. If you sell higher-value holidays, which are generally either the more complex of higher-end luxury holidays you’ll make more commission, usually 15%+.

Using this same example, on a £5,000 holiday with 15% commission included (£750), you’d keep £650 and we’d still only take £100.

Of course, if it goes the other way and you’re selling holidays for less than 10% commission, the scales swing in our favour, but you need to ask yourself if you’re aiming to sell for less than 10%, are you really picking the right markets to enter?

Q. How long does it take to break even?

We would expect someone doing this full time, and new to travel to break even in month 10 or 11.

Using £5,000 as an average sale value, and £12% as average commission, and after our 2% fee you’ll make £500 per booking.

Our Holiday Designer package is £13,745. If you make 28 bookings (one booking every 2 weeks in the first year), your commission would be £14,000.

Obviously, there will be other costs to your business such as marketing but I’d hope that you’re making more than a booking every two weeks.

We would expect around between 50 and 60 bookings in the first year, starting off slowly with 1 or 2 in the first couple of months, scaling up to around 7-10 in month 12.

After year one, when you’re more experienced and have honed your skills your conversations will be higher and you’ll make even more.

Hopefully, this shows the potential of the business

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