Starting a career as a travel advisor can be challenging — and so can switching up the way you operate your travel business. You might wonder if it makes more sense to join a host agency, operate as an independent advisor, work as an employee of an agency or flat-out purchase a franchise.
To help you make the right decision for your business, we’ve compiled a guide to the four travel advisor models, providing need-to-know information and citing the pros and cons for each. The overview is based on an interview with Steph Lee, founder of Host Agency Reviews (HAR), and HAR’s travel advisor reports published toward the end of 2023.
Here’s what to know to find the travel advisor model that’s best for you.
The Hosted Model
At its core, the hosted model is an agency with independent contractors who use the host’s accreditation number. The vast majority of hosted advisors are home-based, which can provide flexibility. Much like a consortium, a host agency can offer economies of scale — everything from the resources of in-house marketing and event teams to proprietary technology.
“A lot of hosted agencies have been building out their own customer relationship management solutions and booking tools, which used to be possible only at the consortia level,” Lee said. “Furthermore, when you're starting a business, you need a mentor — someone who knows what’s going on and has the resources to help you — and you're not going to find that on your own.”
Indeed, host agencies tend to drive growth into the industry because they are more attractive to newbies. In addition to ongoing training, host agencies can offer onboarding programs or “universities” to ensure that new advisors understand the business of selling travel before they even get started.
Hosted agencies also have established relationships with preferred suppliers, which can pay dividends; commission levels are generally higher, because hosted agencies can negotiate with mainstream vendors on behalf of their contractors. The combined sales volume of all the independent contractors in the host network results in higher-commission tiers.
“It's much easier to reach a 16% commission level with just about every major vendor when you're with a host agency that does $300 million in sales annually,” Lee see. “As an independent advisor, that would be extremely difficult unless you’re making multimillion-dollar sales every year.”
It's much easier to reach a 16% commission level with just about every major vendor when you're with a host agency that does $300 million in sales annually.
So, why would advisors leave a model like this one? Some top sellers may feel they’re not receiving recognition and preferred treatment from suppliers — they could be one of a supplier's most prolific sellers, yet because their sales are folded into the host agency’s overall average, they're less visible to the supplier. Host agencies have tried to combat this issue with their own in-house awards programs, but that doesn’t always keep travel planners from wanting to establish their own relationship with suppliers and local BDMs.
It’s also common for the host agency to offer a commission split (host agencies have to make money, too!), while other business models might offer a monthly fee to allow for 100% commission to go back to the agent. Additionally, since advisors working with a host are typically home-based, the hosted model can prove isolating, particularly for newer advisors.
Pros: Higher-commission tiers, mentorship, pre-existing supplier relationships, assistance with marketing and business development.
Cons: Split commission or a monthly fee, challenges in establishing relationships with local business development managers (BDMs), less visibility among suppliers in comparison to other models.
The Independent Model
As opposed to hosted advisors, who sell travel with their host agency’s accreditation number, independent advisors have their own accreditation number. Independent agents tend to bring in a higher income than those who are hosted — 45% more, in fact, according to HAR’s Independent Travel Advisor Report, 2023.
However, several important factors affect this data, including experience level (independent advisors have an average of 15 years of experience), hours worked (hosted advisors are more likely to work part-time) and the fact that independent advisors are more likely to have independent contractors and/or employees working for them.
What tends to inspire many to leave the hosted model and go out on their own, Lee says, is the individual recognition — such as awards — from vendors for their achievements in sales.
“By having your own accreditation, there’s a badge of honor that comes with it,” she said. “There’s a mindset that, ‘I'm my own agency. I don't need a host agency to make things happen.’ A lot of independent advisors I've talked to who aren't big producers don't know what host agencies are, and they would actually benefit from being hosted because their sales haven't reached the point where it makes sense to go off on their own.”
By having your own accreditation, there’s a badge of honor that comes with it. There’s a mindset that, ‘I'm my own agency. I don't need a host agency to make things happen.’
To reach higher tiers of commission, independent advisors have to be laser-focused on certain suppliers. Agents who spread their sales across several different vendors are likely going to find themselves at a lower commission level than at a host agency.
Pros: Being your own boss and keeping 100% of commission, direct relationships with suppliers and eligibility for supplier recognition programs, perks such as a flexible schedule and the ability to work from anywhere.
Cons: Varying commission tiers; commission is generally paid out after the client has taken the trip or after the final deposit has been made; no employer benefits; responsibility for all marketing, training and business development.
Buying a franchise may cost $10,000-$30,000 right off the bat.
Credit: 2024 photon_photo/stock.adobe.comThe Employee Model
In the employee model, an employer might be a leisure agency or a corporate agency, and workers are employees of the agency who receive a W9 and enjoy the security of working a set number of hours per week and earning a base salary. Travel agencies commonly also often offer benefits — 79% of full-time employees receive benefits, according to HAR’s Travel Advisor Employee Report, 2023.
“There are a lot of agencies that are salary or hourly only, no commission,” Lee said. “But there are some styles that are commission-only or that offer a salary plus commission.”
There are a lot of agencies that are salary or hourly only, no commission.
It’s also important to note that the typical employee works for a storefront agency — 55% of employees — and has nine median years of experience, according to HAR’s report. However, since the pandemic, more agencies are embracing flexible schedules with remote or hybrid options.
While employees might help with marketing from time to time, it is the responsibility of the employer to market the agency and bring in new leads. Unlike with other models, employees can focus their attention on one thing. Their job, essentially, is to close the leads that come in, which can be quite satisfying.
“With the employee model, there's likely going to be a top income level you can earn, unless your compensation is salary plus commission,” Lee said. “And if you're a really good salesperson, you could earn more on your own than you could if you were employed.”
Pros: Predictable income, benefits (when offered), onboarding support, training opportunities, potential commission incentives, lead generation.
Cons: A set schedule, possible income caps, lack of agency in business decisions.
The Franchise Model
The franchise model consists of agencies who have purchased a franchise, such as Expedia Cruises, Dream Vacations or Cruise Planners. While sometimes payable in installments, franchises can cost anywhere from $10,000 to upward of $30,000 right off the bat. With that fee comes a turnkey business, including a marketing team that delivers leads directly to the franchisee.
“It’s a business in a box — they’ve already built the brand, have the technology and do a bit of handholding, so it is much easier,” Lee said. “The downside is they are more expensive, as a general rule, especially for a new advisor. If you’re an experienced advisor, they’ll often lower the franchise price based on the sales you’re likely to bring in.”
It’s a business in a box — they’ve already built the brand, have the technology and do a bit of handholding, so it is much easier.
Through HAR’s research, Lee has noticed that a significant amount of franchisees tend to have roots in the military and that there are often promotions geared toward members of the military.
“It might be a good fit for the military mentality, particularly when someone’s transitioning out of the military, because you’re used to a set path and sticking to it,” she said.
While franchisees keep 100% of the commission they earn, they often pay a royalty or fee to their franchisor. This fee might be a flat fee or a sales percentage.
Pros: A pre-existing business model, a recognizable name and branding, keeping 100% of commission, lead generation, an in-house marketing team, white-label marketing assets.
Cons: Costs can run from $10,000 to upward of $30,000, fees or royalties paid to the franchisor.
More Travel Advisor Model Resources
Free summaries of the four agency model reports, as well as detailed reports for purchase are available at HostAgencyReviews.com. The site also offers a robust job board, a podcast and a blog.
Seeking more? Look to Host Week 2024, a free weeklong virtual event for hosted travel advisors that runs Jan. 29 to Feb. 2, 2024. Expect workshops, interviews with host agencies and consortia, supplier presentations and daily keynote speeches.
