When I first started my own home-based travel business selling travel to Africa, I took a leap of faith and left a great paying career to pursue my passion – travel…well really planning travel. Little did I know I was going to need an equal amount of passion for entrepreneurship. Luckily, I found it. But it wasn’t instantaneous.
One of the earliest decisions I had to make as I dove into my new travel business was choosing the right host agency, a decision that required quite a bit of business owner savvy – but I hadn’t developed it yet. I know this happens with a lot of people. They are brand new to the travel business. They don’t know what they don’t know. The endless options confuse them. They are not sure how to choose the right host agency, so they choose a host agency that isn’t always the best one FOR THEM.
It’s easy to understand why. There are thousands of host agency options – not to mention the additional options of purchasing a franchise or getting one’s own travel agency credentials independently. Every single one of them is throwing lists of benefits at them. It’s a LOT of information. When I was in this position, I really didn’t know how to chose the right host agency, but I needed to choose one. So I did. Admittedly, I chose wrong. Multiple times.
I think it’s pretty common to make a bad decision here. The good news, is that you can change your mind, relatively easy. The bad news is that a LOT of people are reluctant to move. They don’t like change. They feel loyal to their first host. Some invested a substantial amount in their first host or franchise. Others just don’t know they aren’t with the right host. In this article, I hope to illuminate what you didn’t know you didn’t know so you can determine if you are with the right host travel agency.
#1 Consideration: Maximize Your Business Profitability
Hands down, the number 1 consideration should be whether your current host agency situation maximizes your business’ profitability. I believe this consideration should account for approximately 75% of your decision – so that’s a pretty big priority. And this is where a passion for entrepreneurship comes into play. There are hundreds of “accidental hobbyists” selling travel. In other words, they have a business selling travel, they want to make money, but they aren’t. The reason why is that they are excellent at travel planning, but not so good at being a savvy business owner. They haven’t learned to put on the hat of CFO in their business.
So ask yourself, is my current host agency option maximizing my business’ profitability? Unfortunately answering this question isn’t as easy as it may seem. Every host and/or franchise offers different commission splits and fees, while each host organization negotiates their own commission payouts by the suppliers, making it difficult to do an apples to apples comparison.
But when you put your CFO hat on, you CAN do an apples to apples analysis. Bottom line – what is your total annual host agency or franchise expense? Include every annual fee, every monthly fee, the total dollar amount of commission kept by your host or franchise. Once you know that, look to see if there are other host agencies that would give you a reduced end amount.
For example, if your total annual host agency expense is $16,600 and you are on a 75%/25% commission split, a good starting point would be to look for host agencies that offer an 80%, 90% or even 100% commission split. But don’t stop at the commission split. Include everything and total up your annual host agency expense.
In our example, the agent’s current host is on a 75/25 commission split, with no monthly fee, but a $250 annual fee. She found a prospect host agency that offers a 90/10 commission split with a monthly fee of $50, annual fee of $350, and a $50 monthly fee for access to a GDS. The other difference is that she sells a lot of Sandals and her current host gets 16% while the prospect host only gets 15%. All other suppliers have comparable commissions.
As you can see in the host agency cost analysis – even though the prospect host gets a lower commission on Sandals bookings, charges a monthly fee for the higher commission split, charges a monthly fee for the GDS, and has a higher annual fee, the annual host agency expense with the prospect host would have been $8,200 lower than the current host agency expense.
That’s a HUGE difference!!! This person could have pocketed an extra $8,200 in 2015 by doing no extra work – just being with the right host agency. What would you do with an extra $8,200 in your pocket for no extra work?
It can be easy to overlook these important differences because there is no apples to apples comparisons. Long story short, do the math. All of it. Then do your apples to apples comparison. If the prospect host agency comes out more expensive, stay with your current host. But if the prospect host agency comes out a lot less expensive, then move on to the other important considerations.
Marketing Programs: Are You Using Them?
A lot of host agencies proudly promote excellent marketing programs. But if you are not actively building your list and effectively using the programs, their fancy marketing programs are futile for you. And if they are super fancy – you are paying for them, whether you realize it or not. Most likely in a commission split. Be honest with yourself. If the marketing programs are positively serving your business, then it might be worth it to stick around and stay. But if you are not using them, it’s an expensive benefit.
Individual Branding: Can You Establish and Market Your Own Brand?
Another common mistake made by the “accidental hobbyists” is that they don’t specialize. But picking the right specialty should be based upon you, your passions, your experience, your wisdom and your brilliance…NOT on what your host agency wants you to sell. If your host agency encourages you to blindly brand yourself with their brand and you have no passion for it, then it’s time to consider a move. If your host agency encourages you to brand yourself with their brand and you have a ton of passion for it – you are probably in a good place. And if your host agency allows you to market your own brand – also a good sign.
Collaborative Community: Can You Tap Into People Resources?
Entrepreneurship doesn’t have to be a lonely place. In fact, we weren’t meant to do anything alone. There ARE some great collaborative communities within the host agency options. If your host doesn’t have a great community, find one that does. There are LOTS that do.
Leads Program: Is It a Good Fit for Your Business?
I know how enticing a leads program can sound, but in reality, most of them are big traps that turn you into a sucker, not a savvy business owner. Rather than go on a tirade here, just read my other article “Why Leads Programs Can Be Traps.”
In summary – there are a lot of important considerations when choosing the right host agency that can be overshadowed by big bells and whistles. Be a savvy business owner. Consider all 5 of the things included in this article and you are bound to make a good decision for yourself.