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 9,200 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.

Competition From Alternative Sources

Travel agencies compete with a variety of alternative sources for business.

Sensitive To Economic Conditions

The travel industry is vulnerable to economic change and variability in corporate and consumer spending.

Industry size & Structure

The average travel agency operates out of a single location, employs 7 workers, and generates $3.5 million in annual revenue.

    • The travel agency industry consists of about 9,200 firms that employ about 67,600 workers and generate about $33 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 Carlson Wagonlit Travel (Carlson Holdings). Some large companies have international operations.
    • Large franchises/consortia include Vacation.com, Travelsavers, and Ensemble Travel Group.
    • Leisure travel accounted for 88% of US travel in 2020, while business travel accounted for 12%, according to the US Travel Association.
                                Industry Forecast
                                Travel Agencies Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 1, 2022 - Peak Travel Season Stretches into Fall
                                • US travel activity usually peaks in the summer before tapering off in the fall, but travel participation in September remained strong despite higher prices, according to Skift Research’s US Travel Tracker. In 2021, summer travel peaked in July, but US travel participation in September 2022 was 57%, up four percentage points over July. While Americans continue to spend on travel, 68% said they had experienced higher prices, which has affected their travel plans. About a third of those surveyed said they would spend less while traveling, such as cutbacks on food and activities. Nearly 31% chose a less expensive destination.
                                • Just under half of the consumers surveyed in eight countries said they plan to travel this holiday season to make up for time with family they missed last year due to COVID-19 variants, according to the latest Amex Trendex report by American Express Travel. Among consumers in Australia, Canada, India, Japan, Mexico, the UK, and the US, 48% are planning out-of-town trips this holiday season; 52% plan to stay closer to home in the weeks leading up to the holidays. About 58% of survey respondents said they wanted to start or restart the tradition of holiday traveling. For the 2022 holiday season, beaches are the top destination type, with 35% of US consumers, followed by mountains (29%), city centers (27%), local (27%), and desert (10%).
                                • Global business travel is expected to face a slow recovery to the 2019 spending level of $1.4 trillion. While pandemic-related conditions have improved, macroeconomic conditions have worsened. The Global Business Travel Association (GBTA) recently revised its forecast for business travel’s full return to 2026 from 2024, according to the 2022 GBTA Business Travel Index (BTI) Outlook. The GBTA BTI is an annual study covering growth in 73 countries and 44 industries. The primary obstacles to business travel’s full return to pre-pandemic levels include inflation, high energy prices, continued supply chain disruptions, and labor shortages.
                                • “Affluent” travelers say they plan to take almost twice as many international trips over the next 12 months than they did before the pandemic, according to a recently released Portrait of American International Travelers report by marketing firm MMGY. An “affluent” traveler is defined as one who has a household income of $100,000, has traveled outside of North America over the last three years, and plans to go on at least one trip outside North America over the next year. On average, US travelers plan to spend more than $15,000 on international trips over the coming year, up 16% compared to before the pandemic. Top destinations identified in the MMGY survey included Europe, the Caribbean, the South Pacific, and Canada.
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