Travel Agencies
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 7,300 travel agencies in the US provide reservation and travel services to individuals and groups. Travel agencies generate revenue through two models: the merchant model and the retail/agency model. Under the retail/agency model, agencies earn commissions from suppliers based on bookings. Under the merchant model, agencies earn revenue by charging customers more than the negotiated amount paid to travel suppliers.
Economic Sensitivity
The travel industry is vulnerable to downturns in the economy and fluctuations in corporate and consumer spending.
Competition From Alternative Sources
Travel agencies compete with a variety of alternative sources for business.
Industry size & Structure
The average travel agency operates out of a single location, employs 11 workers, and generates $4.8 million in annual revenue.
- The travel agency industry comprises about 7,300 firms, employs about 80,300 workers, and generates about $35.3 billion annually.
- The industry is concentrated at the top; the top 50 companies account for 70% of industry revenue.
- The industry includes national and regional chains, franchises, consortia, and independent operators.
- Large companies include Priceline, Expedia, and CWT (formerly Carlson Wagonlit Travel). Some large companies have international operations.
- Large franchises/consortia include Vacation.com, Travelsavers, and Ensemble Travel.
- Leisure travel accounted for about 66% of US travel spending in 2023, business travel accounted for 22%, and international travel represented 12%, according to the US Travel Association.
- Prior to the pandemic, business travel spending accounted for 26% of US travel spending, compared to just 14% at the end of 2021 and 22% in 2023.
Industry Forecast
Travel Agencies Industry Growth
Recent Developments
Jun 5, 2024 - Hiring and Wages Rising
- According to data from the US Bureau of Labor Statistics, producer prices for travel agencies rose 1.7% in March compared to a year ago after rising 6.2% in the previous annual comparison. Sustained consumer spending and rising quarterly revenue for travel arrangement and reservation services – up 9.6% in the fourth quarter of 2023 vs. Q4 2022 – are supporting the higher prices, although price increases have eased in recent months. Industry employment continues to recover, up 10.2% in March compared to a year ago. Despite the upward trend, employment by travel agencies remains below pre-pandemic levels. Meanwhile, average wages for employees at travel agencies shot up 10.3% in March versus the prior year to a new high of $30.14 per hour, BLS data show.
- Advocates for travelers with disabilities say the FAA funding reauthorization bill passed in May will make flying safer and more comfortable for persons with disabilities, Travel Weekly reports. Aircraft accessibility issues in the bill include training requirements for workers who handle wheelchair stowage or assist flyers who use a wheelchair for boarding. Various accessibility measures in the law require the FAA to begin considering passengers with disabilities as it conducts tests to establish aircraft evacuation procedures and would eventually require airlines to provide appropriate seating for any flyer with a disability, according to TW. The bill requires passenger portals, including airport kiosks and airline and airport websites, be accessible to flyers with varying types of disabilities, such as vision impairment. While many of the requirements won’t take effect immediately, they set the FAA and airline industry moving in the right direction. Disabled travelers are a major underserved segment.
- Travel demand is expected to grow this year, with premium and luxury travel in high demand, according to Travel Agent Central (TAC). A recent survey of travel advisors conducted by the American Marketing Group (AMG) found that 79% of respondents expect their sales to increase in 2024. Of those, 31% foresee significant growth, and 48% believe sales will grow somewhat. Only 5% predicted sales would decline somewhat, with none of the respondents anticipating a significant drop. Another survey conducted by the agency group Travel Experts found that 80% of respondents expected business to increase in 2024, with more than 95% reporting that business was up in 2023. “After so much built-up demand, travelers today are venturing far and wide and spending more on higher-end travel experiences,” said Kathryn Mazza-Burney, chief sales officer for AMG, adding, “Premium and luxury are leading the way again for 2024.”
- The US ranks 17th out of 18 top travel markets in terms of global competitiveness, according to Euromonitor International. Only China performed worse, according to the study released by the US Travel Association in January. The USTA blamed decades of underinvestment and a lack of focus and coordination from federal policymakers for the nation's poor performance. While the US is still the most desired destination for global travelers, it slid to third in total visits (behind Spain and France). In 2023, it’s estimated the US welcomed nearly 67 million international visitors – down from 79 million visitors in 2019, and only 84% recovered from pre-pandemic levels, far behind other competitors’ recovery rates, according to the study. Countries were ranked by national leadership, brand & product, identity, security & facilitation, and travel & connectivity, with the US underperforming in national leadership, identity, and security & facilitation.
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