8 Mistakes to Avoid When Setting Up Your Travel Agency

Mistakes to Avoid When Setting Up Travel Agency

Deciding to take the plunge into a travel agency, whether it’s your own or a consortium, is an exciting time for any advisor. But building a successful and effective agency is dependent upon much more than registering for an LLC and calling it a day.

The following are some common blunders that travel agents might make when starting out. Read on to not only identify these mistakes but how to remedy them. The result is an opportunity to strengthen the foundation of any travel agency.

Choosing the wrong business name

Creativity is such a vital asset in any profession, and especially when owning a business. However, when it comes to naming your travel agency, reign in the compulsion to make it too cutesy or complicated.

“Too often, agents overthink the name,” says Sheila Folk, CEO of Travel Industry Solutions. “Unless you are 100 percent certain that you will only do group singles travel, it’s always better to stay broad and simple.” Folk suggests keeping the company name clean and straightforward, incorporating your own name — Doris Day’s Travel Agency — if it’s not too difficult to spell.

“New agents don’t consider how many times they will have to spell out their name and email address each day for suppliers and other third parties,” Folk says. “Short, sweet and without slang is best.”

Additionally, it’s important to ensure that the name you ultimately choose isn’t being used elsewhere. Double-check that you aren’t infringing on a trademarked name before making your final decision and printing those business cards.

Not researching licenses

Understanding licenses and regulations is integral to running any law-abiding travel agency. You don’t need a business degree, but you will need to check into local, state and federal regulations to determine which license, if any, applies to your travel business. For example, this could include a local business license or state-specific travel seller license.

Within the U.S., there are just four states that require a seller of travel (SOT) license requirement: Florida, California, Washington and Hawaii. Compliance with these licenses also means you must comply with each state’s specific business regulations.

It’s also vital to choose the proper business structure, whether that’s sole propriety, an LLC or a corporation. Do some research and speak to other business owners to better understand what each business type provides in terms of tax benefits and personal liability protection.

Overlooking the correct insurance policy

Obtaining the proper insurance for your business is absolutely essential. At the bare minimum, you will need an Errors and Omissions (E&O) policy. This type of policy protects companies and their workers against claims of inadequate work or negligence.

If you plan to have team offsites or other activities that expose you to risk, a broader insurance policy might be needed. Protecting yourself early can help avoid major legal or financial woes in the future. Insurance for travel agencies can cover expenses related to a lawsuit over a canceled reservation or even a data breach that exposes client information.

The needs of each agency differ depending on size and scope, so it’s best to speak to an insurance agent to determine the best fit for you and your business.

Staying too niche

Specializing in a specific form of travel, like cruising, is definitely a great way to differentiate yourself as a travel advisor or agency. Oftentimes, some of the first advice passed along to agents is to choose a niche. So why are we telling you to proceed with caution?

“It’s great to start with what you love and perhaps know,” says Folk. “However, it’s important to remember that your agency will evolve over time, and the most important thing is that you are an expert in your client, and an expert at researching and choosing suppliers.”

Folk insists that focusing on a travel segment like beachy all-inclusive resorts might serve you initially, but to remember that it’s better to invest in knowing your clients than just one type of vacation. Eventually that client might be interested in a luxury property in Europe or expanding into family travel. Be sure that you’re ready to grow along with them and their preferences.

Becoming too highly specialized could isolate potential repeat clients. Consider tailoring your knowledge toward your client base rather than one type of property or travel segment.

Mixing business with personal finance

It might be tempting to jumpstart your travel agency by working from a personal bank account or streamlining income and expenses. Never do this. Before depositing your first commission, be sure that you have a separate bank account for your business, preferably with a small business-oriented credit card.

It’s not only important to keep your cash flow separate for tax purposes, but credit cards like Ink Business Unlimited provide perks including introductory cash bonuses, no annual fee and cashback rewards on every purchase. You can even choose a business card that provides points for travel miles.

Secondly, consider hiring an accountant. Not everyone is skilled at money management, and having a dedicated person tasked to manage expenses or payroll (if you have employees) could relieve a lot of sleepless nights.

Regardless of whether you go with an in-person accountant or computer software, have an organized system in place for tracking all income and expenses. Conduct a regular review (quarterly is best) of all financial records.

Not reading the legal fine print

Before you book or promote your business, make sure your legal ducks are in a row. What does that mean? Long gone are the days of a firm handshake to cement a business dealing. Today, running a travel agency means paperwork, and beyond that you will have to become intimately familiar with a multitude of legal contracts and obligations.

Like insurance, you will want to make sure your agency’s legal policies are airtight before embarking on any transactions. These legal contracts —often digital — include binding agreements between you and your client, so be sure to include the correct terms and conditions.

Additionally, you will need to secure a travel insurance waiver and list fine print on your agency’s website such as terms of use, privacy policies and disclosures. Failing to pay attention to data privacy laws can lead to significant penalties for your business.

Another important aspect of any travel agency’s legal dealings is “duty of care.” This term, used in tort law, indicates a legal obligation to adhere to a reasonable standard of care to avoid careless acts that could harm others or result in an act of negligence. In short, as a travel advisor, clients are relying on you to deliver a seamless vacation experience. Of all your duties, customer service skills and ethical practices are paramount.

It’s imperative to understand what you should or should not say to a client, what you should convey in writing and what activities you should handle for any client. Not understanding these limitations is not only unprofessional but could result in a legal dispute.

Ignoring the importance of an online and social media presence

Maybe you don’t personally enjoy using Facebook or can’t keep up with whether it’s called Twitter or “X.” But a strong online presence is mandatory for your business to thrive in the 21st century.

Begin by creating a website with clear, easy-to-find information about your services. (Very few people have the skills to do this singlehandedly, so consider hiring a professional to build or update your site.) In addition to being pleasant to look at and straightforward to search, be sure that your website features a privacy policy and any other required legal disclosures as mentioned above.

Also consider your strategy for social media and other online marketing. There are consultants with degrees in social media management if you’re serious about getting the message out through platforms like Pinterest or TikTok. But the easiest way to begin is simply to create your own Instagram handle and consider registering it as a business account. Visuals resonate, especially when it comes to travel, and posting dreamy photos of potential destinations is an easy tactic to rope in potential clients who might save the images to a wish list. Don’t forget to list any social media handles on your website, as well.

As a reminder, Folk encourages agents not to forget about the personal relationships upon which the travel industry depends. “You can’t rely on digital marketing to bring you customers overnight. Building a business and a reputation is a multi-pronged approach and relationships and customer service are at the heart of any successful venture.” If someone posts a comment or sends your account a DM (direct message), be sure to engage with them in a meaningful way.

Going independent before considering a host agency

Not every travel advisor is equipped or ready to break out on their own with an independent agency. As noted above, there are a lot of steps to consider before opening your proverbial doors to clients. Before you take any kneejerk actions, strongly consider the option of joining a host agency.

Especially well-suited for new agents, an established travel agency or consortia can provide the foundations you might be seeking to get started in the industry. Even if it’s a small agency, having built-in support and training opportunities can head you in the right direction without the liabilities of owning your own business out of the gate.

Still, consider your own personality, your ability to financially commit to a business and the possibility of higher commissions. Starting your own travel agency might make the most sense for you and where you are in your life and career.

Regardless of the direction you take on your journey to become a travel advisor, Folk offers this final piece of advice: “If you want to succeed, you need to have grit, drive and curiosity.”

If these potential roadblocks are any indication, there are a lot of aspects to consider when joining or setting up your own travel agency. Successful agents need systems to improve efficiency and avoid mistakes. Travel Industry Solutions (TIS) can provide travel advisors with the tools they need tackle any legal or operational hurdles. Protect yourself and grow your business with the comprehensive TIS framework of contracts, training, and guidance.

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