MAKING TOUGH
BUSINESS DECISIONS
Indispensable Research for Measuring
Travel Agency Success
Presented by
2014 Benchmarking Research Highlights
December 2014
Table of CONTENTS
1. Introduction: GROWING Your Bottom Line in 2015
Successful travel agents have always been passionate about their
work. But today’s climate demands more than passion. To thrive in
2015, retail travel professionals need to make tough business
decisions based in up-to-the-minute business intelligence.
2. The Bottom Line: PROFITABILITY
3. The PRODUCTIVITY Equation
4. Sales Focus: Where’s your SWEET SPOT?
5. GETTING PAID By Suppliers
6. GETTING SMART About Fees
7. Is SOCIAL MEDIA paying off?
8. Making Money ONLINE: Travel Agency Sales via the Web
9. The COSTS of Doing Business
10. Getting Paid: HOW MUCH Do Agents Earn?
11. GDS Trends: USAGE & REVENUES
12. DEFINITIONS & Methodology
Introduction: GROWING Your Bottom Line in 2015
To support travel agents in their success, Travel Market Report has partnered with ASTA to deliver the
agency industry’s latest, most-relevant research.
We have what no one else has: exclusive, must-have data on what you need to know to be successful.
This report details 10 key business metrics drawn from ASTA’s 2014 Travel Agency Benchmarking Series.
Each benchmark sheds light on a critical aspect of travel agency profitability, including:
1
Agency profit margins
6
Social media ROI
2
Frontline agent productivity
7
Online sales
3
Sales by segment
8
Operating expenses
4
Supplier commission levels
9
Agent compensation
5
Trends in service fees
10
GDS usage and costs
In the pages that follow, you’ll also find links to ASTA tools and resources, along with links to Travel
Market Report stories providing the kind of news and commentary, advice and analysis that you won’t
find anywhere else.
It’s all designed to give travel agents the indispensable tools, insights and information they need to grow
their profits in 2015.
Like most industries today, the travel agency business is dynamic, fast-moving and subject to external
and internal forces that can feel overwhelming.
In this environment, the pathway to continued success is to adopt an eyes-wide-open stance, stay open
to change and maintain a keen focus on the business basics that will drive profits and keep your
customers coming back for more. The information in this report promises to guide you along the way.
Voice of the Travel Professional
About
The Research
A NOTE ABOUT ASTA’S BENCHMARKING SERIES
ASTA’s Travel Agency Benchmarking Series is a collection of detailed
research-based reports available as a benefit of membership. The benchmarking
reports give ASTA agents access to key data that they can use to measure their
business practices and results against those of their peers.
1
The Bottom Line: PROFITABILITY
Average Agency Profits by Business Model: 2012-2015
10%
10%
8%
10%
9%
8%
10%
7%
7%
8%
8%
All
Agencies
6%
8%
7%
7%
8%
Independent
Agent (incl. ICs)
Retail Leisure
Agency (70%+)
Corporate
Agency (70%+)
2015
Forecast
2014
Projected
2013
Revised
2012
More travel agencies enjoyed solid profit margins in 2014 than in recent
memory. Nearly nine in ten––88%––expect to register a profit when
they crunch the year’s numbers. And most anticipate stronger returns
in 2015. But while agents’ average profit margin will be a healthy 9% in
2014, many agencies still exist on the
edges of profitability. What will you do
“Most travel agencies have successfully
in 2015 to grow your agency’s margins
evaluated their product mix over the past
and secure your future?
few years, determined where they excel,
and adjusted their sales focus to maintain
long-term profitability. ASTA members
are bullish about a continued increase in
profits for 2015.”
Zane Kerby, ASTA
Learn
More
ASTA
Agency Sales & Revenue Trends
Travel Market Report
A Business Action Plan for Your Agency
8 Tips for Building a Profitable Niche
2
The PRODUCTIVITY Equation
Average Sales & Revenues* per Frontline Agent
$1,119,155
Avg Annual Sales
$714,077
per Fulltime Agent
Avg Annual Revenue
$388,684
per Fulltime Agent
$90,717
$90,713
$47,502
Independent Agent (incl. ICs)
Retail Leisure Agency (70%+)
Corporate Agency (70%+)
Running a profitable travel agency requires keeping close tabs on
your sales-to-revenue ratio in addition to total volume. While the
productivity of frontline agents is obviously
key, other factors come into play. In managed
“In today’s highly competitive
corporate travel, high technology expenses
retail travel arena, success
coupled with the need to contain clients’
means much more than simply
travel costs exert downward pressure on
making the sale. Top travel
agencies’ bottom lines. For leisure agencies, a
professionals must have a solid
focus on customer service affects agents’
grasp of the business-profit
sales productivity, making it essential to
angle behind every transaction.”
charge appropriate service fees.
Libbie Rice, Ensemble Travel Group
Footnotes
* Revenues include: commissions, overrides, markups, transaction or service fees, GDS incentives and “other.”
Learn
More
ASTA
Travel Agent's Management Toolkit
Travel Market Report
Want To Boost Sales? Take a Tip from Improv Theater
Restaurants Offer Valuable Lessons on Profitability
3
Sales Focus: Where’s your SWEET SPOT?
Share of Sales per Segment in 2014
Overall
23%
26%
11%
3%
33%
5%
Independent Agent (incl. ICs)
16%
27%
13%
4%
35%
6%
Retail Leisure Agency (70%+)
19%
29%
8%
3%
37%
5%
Corporate Agency (70%+)
61%
Airline
Cruise
8%
Hotel
Car rental
15%
Tour/Packages
6%
9%
1%
Other*
Ever since leisure travel agents stopped focusing on selling air travel,
tours and packages have been their single largest product segment,
followed by cruise. Tour and package sales first surpassed air sales as
a percentage of leisure agents’ business in 2005. For corporate
agents, airlines sales still predominate. The most
successful agencies are deliberate about their
“Cruise has always been my
sales focus. They weigh factors such as consumer
bread and butter, but recently
demand, changing supplier distribution tactics
tours have jumped from 5% to
and their own passions, then write a business plan
30% of my business. There’s
and review it annually. Is your product mix the
an explosion of people
most profitable it could be? If not, perhaps it’s
wanting in-depth experiences.”
time to update your business plan.
Michelle Duncan, Odyssey Travel
Footnotes
*Other includes travel insurance, services such as passport photos, and merchandising, such as luggage
sales, etc.
Percentages are averages, based on agents’ projected sales for 2014.
Learn
More
ASTA
Business Plans
Sales and Marketing Course
Travel Market Report
Surf Or Turf? Move Into Selling Tours
Cruise Agents Embrace All-Inclusives
4
GETTING PAID By Suppliers
Commisson Levels by Segment
21%
Average
20%
Commission
Median
15%
Commission
15%
12%
12%
% of Agencies That
10%
Report Receiving
Commissions
10%
8%
7%
6%
5%
5%
5%
5%
4%
86%
90%
95%
90%
Travel Insurance
Cruises
Tours
Hotel
36%
37%
Air-Corporate Agencies Air-Leisure Agencies
81%
56%
Car Rental
Rail
As supplier commission levels fluctuate, agents need to track the
trends, paying close attention to their own commission earnings as
well as to the big picture. What products and services are likely to
yield the highest returns over the long-term? Are certain segments or
suppliers pulling away from the travel agency
distribution channel? Is it time to redirect your
“Advisors will choose the
sales efforts? As Nolan Burris of Future Proof
products they represent and
Travel Solutions says, “Agencies must take charge
sell more than ever before.
of their own financial future and not place it in the
Suppliers are taking note of
hands of a disinterested group of shareholders.”
that. We are advisors, rather
than agents, and that
distinction grows every day.”
Colleen Gillette, New Paltz Travel
ASTA
Commission Resources in ASTA’s E-Library
Learn
More
Travel Market Report
Selling Cruises: Does It Still Pay?
How to Boost Your Commissions on Cruise Sales
Selling Travel Insurance: A Missed Opportunity for Agents?
5
GETTING SMART About Fees
Average Fee by Travel Type
$118
% of Agencies that Charge a Fee
61%
Trip planning (FIT)
$54
23%
Tour packages
$53
42%
Air-inclusive packages
$41
Cruises
$39
21%
70%
Air- corporate
$38
88%
Air-leisure
$33
Shore excursions
$31
20%
45%
Accommodations only
$28
Rail tickets
$28
Booking ancillary services
$20
Car only
64%
16%
36%
Most travel agents stopped giving away their services years ago.
Today the majority of ASTA agents charge fees when booking air and
rail travel and when planning FIT vacations. More than four in ten
charge for hotel-only bookings and for air-inclusive packages. The
most striking recent development is a trend
toward charging fees when booking cruises. More
“Do something worth paying for
than one in five agents (21%) now charges an
and charge for it. If you have
average of $41 to plan a cruise, and the number of
taken the time to get to know
agents who charge for cruise is growing.
someone as a person—their
Agents have steadily increased the dollar amount
likes, dislikes, desires, dreams,
they charge too—up from a median fee of $25 for
the reasons behind their
air bookings in 2005 to $38 in 2013.
Agents reserve their highest fees for their FIT
trip-planning services, charging an average $118.
Their lowest average fee is $20 for
car-only bookings.
trip—you’re doing much more
for them than the booking. Fees
are for all the wonderful things
you do for your customers.”
Nolan Burris, Future Proof Travel Solutions
Learn
More
ASTA
Travel Agency Consultancy Fee Course
Travel Market Report
To Reduce Your Risk, Charge Fees
Don’t Gamble With Your Bottom Line
6
Is SOCIAL MEDIA paying off?
% of Agencies Using Social Media
68%
55%
74%
72%
80%
76%
79%
53%
Use
Social Media
47%
45%
32%
2007
2008
28%
2009
26%
2010
2011
24%
2012
% of Revenue Derived from Social Media
20%
21%
2013
2014
29%
2%
Do Not Use
Social Media
13%
Agency
Breakdown
0%
Revenue
1-4%
Revenue
5-10%
Revenue
10-15%
Revenue
20+%
Revenue
26%
30%
Are you wasting time on social media? Despite steady growth in
travel agents’ social media presence, it’s still tough to see a tangible
ROI. Fully 30% of agents active on social media say they derive zero
revenue from their efforts, and 80% say their time online yields just
five or fewer new client leads monthly. But a
growing number are finding a payoff. For 13%,
“People naturally want to buy
social media activity now generates upwards of
from people they trust. Online
20% of revenues. You need to have a plan, commit
you build trust by answering
to spending the time, follow through, then track
questions, networking and
your results.
offering valuable information
to your target customers.”
Sophie Bujold, social media strategist
ASTA
Social Media Webinars
Learn
More
Travel Market Report
4 Ways to Avoid Sabotaging Your Social Media Efforts
3 Keys to Measuring ROI on Social Media Marketing
Is Social Media Pulling You Off-Course?
7
Making Money ONLINE: Travel Agency Sales via the Web
Agency Revenue Earned via Online Tools*
Online Customer Requests for Assistance
27%
12% of
22%
Total Revenue
18%
16%
16%
9% of
Corporate Agency (70%+)
8%
Total Revenue
Retail Leisure Agency (70%+)
12% of
Independent Agent
(incl. ICs)
Total Revenue
Retail Leisure Agency
Corporate Agency
(70%+)
% of Total Requests via Agency Website
% of Total Revenue Generated From Online
Requests for Assistance
Independent Agent (incl. ICs)
Sales booked via travel agency websites have risen slowly but remain
relatively low. For the 34% of travel agencies that offer an online
booking tool, those tools generate an average 10% of revenues.
Corporate agencies earn the most via
online tools. For service-oriented
"For most agents, online bookings are
leisure agencies and independent
not necessarily a big factor, but online
agents, branded websites are more
shopping is critical. Website content is
effective at spurring online requests
key. A combination of unique content
for assistance, which agents then
about the agency’s expertise and value,
service directly and convert to sales.
plus supplier content and an easy call to
These online requests yield 18% of
action, provides a robust, content-rich
revenues for independent agents and
shopping experience. This is proving to
16% for retail leisure agencies.
Footnotes
*Base: Agencies with online booking tools
be a highly successful online and offline
sales scenario."
Marilyn Macallair, Passport Online
Learn
More
ASTA
Sales and Marketing Course
Travel Market Report
Building Agency Websites That Work in a 2.0 World
8
The COSTS of Doing Business
Average % of Operating Expenses
7%
10%
4%
10%
2%
2%
2%
5%
2%
r*
he
Ot
5%
13%
17%
11%
Offi
s
ce
s
pl i e
up
e
an d
ent
ipm
qu
x, In
e , fa
phon
Tele
t
terne
10%
60%
All Respondents
7%
15%
5%
40%
tertainment
Travel and en
Independent Agent (incl. ICs)
2%
2%
7%
2%
2%
1%
2%
2%
2%
12%
Advertising
11%
Ren
t/mo
rtga
g
Ou
tsid
ec
55%
Retail Leisure Agency (70%+)
74%
Sa
la r
Corporate Agency (70%+)
ies
an
d
on
tra
c to
be
ne
fit
s
(e
m
and promot
ion
e
rs
(tr
ave
l
pl
ag
en
ts)
oy
ee
s/
For all types of travel agencies, labor costs are the single largest
m
an
ag
operating expense by far, accounting for 70% of costs. Rent or
em
en
t)
mortgage payments constitute agencies’ second-largest expense.
Other categories of expenditures vary by type of agency. For instance,
leisure agencies and independent agents spend more on advertising
and promotion than corporate agencies, while corporate agencies
spend more on salaries. Independent agents spend a significantly
bigger chunk on travel and
entertainment, presumably because
“In good times and bad, the travel
they do not enjoy the supplier perks
agencies that survive and prosper are
available to higher-volume agencies.
those that are tenacious about routing
For all agencies, keeping a watchful eye
out unnecessary expenditures.”
on operating costs is critical.
Dr. Robert W. Joselyn, CTC, TAMS
Footnotes
*Other includes non-travel contractors, training, utilities, dues & fees, automotive, insurance, rebates, GDS
payments, postage, agent error, bad debt, etc.
ASTA
Travel Agent's Management Toolkit
Learn
More
Travel Market Report
5 Business Lessons We Learned in 2013
Put Outsourcing to Work for Your Home-Based Agency
9
Getting Paid: HOW MUCH Do Agents Earn?
Travel Agent Compensation*
Agent Pay Packages
$175,000
13%
Travel agent
Starting travel agent with
limited experience
$137,527
Managerial position with
sales responsibilities
$115,000
Commission Only
30%
Salary and Commission Mix
58%
Salary Only
Managerial position without
sales responsibilities
$63,671
$56,753
$34,012
$44,970
$42,629
$40,000
$42,026
$32,771
$21,906
$21,915
AVERAGE
All Respondents
MAXIMUM
All Respondents
$45,157
$40,528
AVERAGE
Retail Leisure Agency
$25,643
AVERAGE
Corporate Agency
Paying competitive salaries has long been a challenge in the travel
agency industry, making it difficult to attract and retain talented travel
sellers. With profit margins thin, owners and managers need to get
creative, providing non-monetary rewards and perks that show
employees they are valued while giving
them opportunities to grow. Some
“Compensation is important, but it is not
agencies find that paying a mix of
the only factor in finding the right balance
salary and commission is the best solution.
for employees. Young talent coming into
the industry value flexibility in work
schedules and having access to a strong
mentor. More seasoned talent value work
flexibility more than compensation.”
Footnotes
*Compensation includes salaries, commissions
and bonuses for fulltime agents
Nicole Mazza, TRAVELSAVERS
ASTA
Salary Tool
Learn
More
Travel Market Report
How to Avoid a Staffing Crisis
6 Tips for Attracting & Retaining Top Leisure Agents
Finding & Keeping Young Agents
10
GDS Trends: USAGE & REVENUES
GDS: Cost Center or Revenue Source?
15%
t
en
nd
43%
27%
Co
rpo
rat
e
Ag
en
cy
(7
5%
Overall
9%
Overall
67%
+)
0%
In
de
pe
)
ICs
cl.
(in
t
en
Ag
Agency GDS Usage
in 2014
Independent Agent (incl. ICs)
10%
14%
33%
42%
58%
16%
Retail Leisure Agency (70%+)
6%
80%
20%
29%
17%
8%
Corporate Agency (70%+)
50%
100%
14%
Use a GDS
39%
Do not use a GDS
6%
7%
4%
4%
25%
Net Impact*on Agency: GDS Costs & Incentives
$20,000 or more
$5,000 - $9,999
$10,000 - $19,999
$1-$4,999
$0
54%
Ret
ail Le
isure
)
0%+
Agency (7
-$1 or less (owe money)
Travel agency usage of GDSs has dropped steadily in the last 15 years,
with much of that decline linked to the growth of independent agents
and ICs. Fully 80% of retail leisure agencies still rely on GDSs, and 100%
of corporate agencies do so. But it’s primarily high-volume corporate
agencies that make money from GDS
incentive payments. For many leisure
“The shift away from the GDSs to various
agencies, GDSs are an expense. Agents
online and app-derived solutions is
should take a hard look at their GDS
clearly seen in the booking trends.”
contracts, negotiate aggressively and
consider all their options.
Richard Eastman, The Eastman Group
Footnotes
Base: GDS Users
*Net equals GDS credits/incentive income minus GDS fees/charges.
ASTA
ASTA’s E-Library Content on GDS
Learn
More
Travel Market Report:
GDSs Support New DOT Rules
Looking Back With Travel Market Report, Technology
11
DEFINITIONS & Methodology
This report differentiates among three types of agencies:
•
Independent Agent (Including ICs): One-person agency has no employees and may or may not
be hosted.
•
Retail Leisure Agency: Agency has employees and derives 70% or more of its sales volume from
leisure travel.
•
Corporate Agency: Agency has employees and derives 70% or more of its sales volume from
corporate travel.
The data in this report are drawn from ASTA’s Travel Agency Benchmarking Series, including:
•
ASTA Agency – Demographics of ASTA members including sales and type of agents.
•
Financial Benchmarking Report – Benchmarking data on sales, revenue sources, revenue by
type of travel, and operational expenses.
•
GDS Report – Trends in GDS usage, contract lengths, contract negotiations, and
incentives/penalties and information on non-GDS users.
•
Labor and Compensation Report – Detailed data on compensation and benefits by region and
agency size and type, plus turnover rates and hiring practices.
•
Service Fee Report – Data on average service fees by travel type, service fee policies, service
fee collections, service fee revenue and consulting fees.
•
Supplier-Travel Agent Relationship Marketing Report – Analysis of preferred supplier
relationships, booking channels and effectiveness of incentive programs.
•
Technology and Web Usage Report – Examines business practices related to agencies’ Internet
usage, technology usage, agency websites and online bookings.
The Travel Agency Benchmarking reports are based on survey data collected through the ASTA
Research Family. The ASTA Research Family is a panel comprised of a representative sample of ASTA
member travel agency owners and managers. The Research Family reflects ASTA members in key
agency demographics including sales volume, leisure/business mix, number of part-time and full-time
employees and geographic location.
The size of the Research Family ranges from 300 to 465 responses per survey. Survey size varies due to
non-response, agency closings, mergers, and changes in membership status, but is designed to yield a
response representative of all ASTA agency members.
Learn
More
Additional research resources can be found on ASTA’s Research Program page.
Custom breakouts of data are available as a custom research request.
For further information, contact Melissa Teates, Director of Research at ASTA, at
[email protected].
12
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