travel agency model definition

Travel Agency Business Model: What It Is and How it Works

In 1758, Cox & Kings became the first travel agency in modern history. Since then, the traditional travel agency model has grown and evolved into a $149 billion industry while the new online traveling agency model generates over $400 billion. It’s clear that this is a business model that has withstood the test of time. Let’s take a look at this business model , its advantages and disadvantages, how it makes money, and a few examples.

The Travel Agency Business Model

The travel agency business model is a framework that travel agencies use to provide travel-related services to customers. At its core, this model involves acting as an intermediary between clients and various travel service providers, such as airlines, hotels, and tour operators.

Travel agencies understand customer needs, preferences, and budgets to create personalized travel experiences. They leverage their expertise and industry connections to access information and deals not readily available to the public. Typically, travel agencies earn their income through commissions from the service providers they book with, service fees charged to clients, or a combination of both.

However, technology has expanded how this model works and how it generates revenue. No longer are commissions the only method by which agencies make money. As the world has changed, so has this model and its income-generating capabilities. Let’s take a look at a few different ways to make money from this model.

How Travel Agencies Make Money

Traditionally, the way travel agents generate revenue is the same way other businesses using the agency model make their money: through commissions. When an agent or agency recommends a hotel, cruise, or airline, they receive a commission from those entities. The size of the commission usually depends on the type of service purchased. For example, hotels typically offer a 10% commission per booking. 

On the other hand, c ruises offer up to 18% commission to agencies for vacation packages sold. 

• Commission from bookings : Earn a percentage from bookings for hotels, airlines, cruise lines, and tour operators.
• Service fees: Charge for personalized services like itinerary planning, booking assistance, and on-trip support.
• Travel insurance: Sale of travel insurance to clients for additional income and enhanced customer service.
• Exclusive tours and packages: Organizing and selling their own tours and packages for higher profit margins.
• Travel-related merchandise: Selling merchandise related to travel.
• Strategic partnerships: Leveraging partnerships for mutual promotions and additional revenue.

Types of Travel Agencies

Traditional brick-and-mortar agencies.

Traditional brick-and-mortar travel agencies are physical establishments where clients can walk in and consult with travel agents face-to-face. These agencies offer a personal touch, with experienced agents providing customized travel planning services.

They are particularly valuable for complex travel arrangements, like multi-destination trips, cruises, or group travel. Traditional agencies often build strong local customer bases and can provide a level of detail and customer care that is hard to match online. They are ideal for customers who prefer in-person interactions and seek expert guidance and reassurance throughout the booking process.

Online Travel Agencies (OTAs)

Online Travel Agencies, or OTAs, operate strictly on the internet. Travelweb.com and Expedia were among the first online travel agencies that helped visitors find hotels and flights without working with a human agent. Sites like Travelocity and Orbitz soon followed. Eventually, those agencies were acquired by Expedia Group. 

OTAs provide the advantage of easy comparison shopping, allowing customers to quickly compare prices and options for flights, hotels, car rentals, and more. They often offer competitive pricing and are accessible 24/7. However, they may offer less personalized service compared to traditional agencies. OTAs often make money using different pricing models.

Here are some examples of the different pricing models used by OTAs:

• Airbnb – Peer-to-Peer Model
• TripAdvisor – Advertising Model
• Booking.com – Agency and Merchant Model
• Travelocity – Merchant Model

Airbnb, which was once known as a rental company has pivoted into a travel agency. 

Specialty Travel Agencies

Specialty travel agencies focus on particular types of travel or destinations. These agencies create a unique selling point by offering expert knowledge and specialized services. This category includes agencies that specialize in areas like luxury travel, adventure tours, eco-tourism, or specific regions of the world.

They cater to niche markets and provide in-depth knowledge and unique experiences tailored to their clients’ interests. For example, an agency specializing in safari tours would have detailed knowledge about various African destinations. They would also know the best times to visit and any unique accommodations. These agencies are ideal for travelers with specific interests or who are seeking an extraordinary travel experience.

Corporate Travel Agencies

Corporate travel agencies specialize in handling the travel needs of businesses and organizations. They manage business trips, conferences, and other travel-related needs for companies. These agencies are adept at navigating the complexities of business travel, such as corporate rates, expense management, and travel policy compliance.

They offer services like 24/7 support, travel risk management, and detailed reporting. Corporate travel agencies are essential for companies looking to streamline their travel processes, ensure the safety and comfort of their traveling employees, and control travel-related expenses. AMEX GBT and TravelBank are a few examples of the leading corporate travel agencies out there.

Pros of the Travel Agency Business Model

The travel agency business model, despite its challenges, offers several advantages that make it a viable and often preferred choice for many travelers. These benefits not only help travel agencies attract and retain customers but also provide them with unique opportunities to stand out in a competitive market.

Personalized Customer Service

One of the primary strengths of travel agencies is their ability to offer personalized customer service. However, this is true for brick-and-mortar agencies. OTAs have very few personalized services other than those recommendations offered by the site’s algorithms or targeting cookies.

Unlike online booking platforms, retail travel agents can provide a high level of personal attention. They understand that individuals have different preferences, needs, and budgets.

This personal touch allows them to craft travel experiences that are tailored specifically to each client. This can be particularly valuable for complex itineraries, special occasions, or for travelers with specific needs. The ability to offer bespoke travel planning and problem-solving during trips creates a customer experience that automated services simply cannot match.

 Diverse Revenue Streams

One of the major advantages of the travel agency business model is the potential for diverse revenue streams. Travel agencies can earn income through various channels such as commissions from travel providers (like airlines, hotels, and tour operators), service fees for specialized itinerary planning, and the sale of travel insurance. This diversification allows agencies to maintain a steady income even if one particular source declines.

High Client Retention Rate

Travel agencies often enjoy a high client retention rate. In the hospitality and travel sectors, the typical client retention percentage ranges around 55%. By providing personalized service, expert advice, and hassle-free travel planning, agencies can build a loyal client base. Satisfied customers are likely to return for future travel needs and recommend the agency to others, which is invaluable for long-term business growth.

Scalability in the Travel Agency Business

Scalability is a standout advantage in the travel agency business model. Initially, a travel agency can start small, focusing on a niche market or a specific type of travel service. As the business gains a foothold, it can incrementally expand what it has to offer. This could include adding new destinations, diverse travel packages such as luxury tours, budget trips, or adventure travel, and broadening the range of services including corporate or group travel management.

Importantly, the scalability of a travel agency does not necessarily require a proportional increase in overhead or resources. This aspect allows for sustainable growth. As a result, travel agencies can scale up (or down) in response to market trends or economic conditions. This also means that they can pivot because of consumer preferences. 

For example, in the 1990s Acapulco was a highly desired destination. However, in the 2020s travelers are flocking to Dubai for their getaways. Travel agencies can quickly pivot in order to give clients travel options while not needing to change their business operations.

Cons of the Travel Agency Business Model

Increased competition.

One of the most formidable challenges facing travel agencies today is the heightened level of competition. With the advent of online booking platforms, such as Expedia and Booking.com, and direct booking options offered by airlines and hotels, traditional travel agencies find themselves competing in an increasingly crowded market.

These online platforms often provide customers with a convenient way to compare prices and book travel services directly, bypassing the need for an intermediary. Additionally, they are typically available 24/7, offering a level of convenience that traditional agencies struggle to match.

This shift has not only squeezed the market share of traditional travel agencies but also put downward pressure on their pricing and service fees.

Dependence on External Factors

One notable disadvantage of this model is the high level of exposure to external factors. Their operations and profitability are closely tied to global and regional dynamics. As most know, these can be unpredictable and highly impactful. Geopolitical events, such as political unrest, terrorism, or diplomatic tensions, can abruptly make destinations less appealing or even inaccessible. When these things happen, it can lead to a significant drop in bookings and revenue. Similarly, economic downturns can quickly change travel patterns, with people cutting back on discretionary spending like vacations, directly affecting travel agency sales.

Natural disasters, health pandemics, and environmental concerns also play a major role in influencing travel decisions. For example, during the first year of the COVID-19 pandemic, global road travel and commercial flight activity decreased by 50 percent and 60 percent . 

Also, currency fluctuations and changing visa regulations can impact international travel trends. A strong currency in a key market can deter travelers. On top of that, stricter visa regulations can reduce the number of inbound tourists. These elements make planning and forecasting exceptionally challenging for travel agencies, requiring them to be adaptable and resilient in the face of constant change.

Low-Profit Margins

The travel agency business is characterized by relatively low profit margins, a significant con in its operational model. This challenge stems from several factors, including intense competition with online travel platforms and direct booking options offered by airlines and hotels, which often feature lower prices and more direct control over the customer experience. In order to remain competitive, traditional travel agencies are often compelled to offer compelling deals, which can further compress their profit margins.

Commission-based income, which is a primary revenue source for many travel agencies, presents its own set of challenges. These commissions, often a percentage of the total booking cost, can be modest, especially with suppliers increasingly reducing commission rates. Furthermore, the growing trend of suppliers offering the same or lower rates directly to consumers further exacerbates the pressure on profit margins.

Time-Intensive Operations

The operation of a travel agency is often a time-intensive endeavor, which can be a significant downside of this business model. Crafting personalized travel experiences, which is a key selling point for many agencies, requires meticulous planning, extensive research, and constant communication with clients and suppliers. This level of customization and attention to detail is labor-intensive and time-consuming, especially when catering to clients with specific or complex travel needs.

Furthermore, the nature of the travel industry demands that agencies remain responsive to client needs around the clock, especially for clients who are actively traveling. Dealing with last-minute changes, addressing travel disruptions, and providing support across different time zones can be demanding and reduce the time available for other business activities.

For small or independent travel agencies, where resources are limited, this time commitment can be particularly challenging. Balancing the need to provide high-quality, personalized service to existing clients while simultaneously engaging in marketing efforts, business development, and administrative tasks can stretch resources thin. This time pressure can limit the agency’s ability to scale up, as acquiring new clients and expanding services requires additional time and effort that may not be readily available.

As we mentioned before, it appears that this is a business model that is here to stay. The travel agency model has many traditional elements of a successful business model but has also integrated modern methods with the advancement of technology. Entrepreneurs and business owners considering this model should take the time to understand the benefits as well as the risks involved.

The High Touch Business Model and How it Works

10 Examples of the (B2C) Business-to-Consumer Model

Business Model for Staffing Agency Explained

Like this article? Get updates by email and get our eBook for FREE

GET PREMIUM CONTENT AND UPDATES FOR FREE !

Ralph is the Managing Editor at StartUp Mindset. The StartUp Mindset team consists of dedicated individuals and is designed to help new, seasoned, and aspiring entrepreneurs succeed.

Recent Posts

Understanding the Amazon Marketplace Ecosystem & Strategies for Amazon Sellers

6 Things I Wish I Knew Before Starting a Business

Tailored Software Solutions: A Guide to Choosing the Right Fit for Your Business

5 Instagram Marketing Goals to Set for Your Business

How shortening links can benefit digital storytelling, related posts, popular posts.

21 Different Types of Business Models With Examples

100 Best Business Ideas that You Can Start this Year

7 goals of digital marketing, how to ask friends to support your business.

Pingback: Travel Agency Business Model: What It Is and How it Works – Austin Rotter

• Grow Your Business
• Leading Your Team
• Find Your Way
• Business Models
• Social Media
• Entrepreneurial Lifestyle
• Your Mindset
• Our Writing Team
• Get “The Fast Growing Startup” Ebook Free
• Advertise With StartUp Mindset
• The Part-Time Entrepreneur

Travel Agency

A travel agent is a person who has full knowledge of tourist product – destinations, modes of travel, climate, accommodation, and other areas of the service sector. He acts on the behalf of product providers/principles and in return gets a commission. Technically, a travel agent is an owner or manage r of an agency, but other employees are responsible for advising tourists and selling packages tours/individual components of travel products.

A travel agent may be an individual /firm or corporation which is commonly known as a travel agency . An agency means the office of travel agent or organization where all travel goods and services are assembled and coordinated for the smooth conduct of travel agency business.

Travel agency is one of the most important organizations in the tourism private sector which plays a significant and crucial role in the entire process of developing and promoting tourism in the country or at a destination. It is a travel agency which packages and processes all the attractions, accesses, amenities and ancillary services of a country and present them to tourists. That’s why travel agency is known as ‘ image builder ‘ of a country.

A prospective travel agency is one which makes arrangements of travel tickets (air, rail, road, and sea); travel documents (passports, visa and other documents required to travel); accommodation, entertainment, and other travel-related services from principle suppliers. It may also secure travel insurance, foreign currency for traveling people.

History of Travel Agency

The first Travel Agency of the world was established by Thomas Cook in 1845 in England. The use of the term travel trade dates back from the early years of the 19th century, but this should not obscure the fact that what we today describe as travel trade (travel agency and tour operation business) was taking place much earlier in history.

Throughout history, there was travel middleman who helped the merchants traveling for trade and others who traveled for religious purposes.

In 1841 a fortunate day comes in the history of travel trade when Thomas Cook , as secretary of South Midland Temperance Association, organized a trip by a train for 570 members for his association to the distance of 22 miles. He bought railway tickets in bulk to sell them to people.

The experiment was successful and everybody was exultant. Mr. Cook had done his job on a no-profit basis. But, incidentally, It gave him a new idea and turned it into a tour business.

Four years later in 1845 , he set up a ‘ World’s First Travel Agency ‘ to organize excursions.  Due to this innovative approach, Mr. Thomas Cook is known as the Father of Travel Agency Business . He co-ordinated railway and steamship excursions throughout England, Scotland and Europe.

However, the railways only gave him a 5% commission which was not enough to meet his overheads, so he decided to diversify this business into tour operation .

In 1855 Mr. Cook started operating package tours . He conducted the world’s first international tour from England to Paris.

Types of Travel Agency

Travel agencies are basically categorized into two types-: Retail Travel Agenc y and Wholesale Travel Agency .

Retail Travel Agency

A retail travel agency sells tourists products directly to the public on the behalf of the products suppliers and in return get commissions. Some package tour is sold in two ways i.e., on a commission basis and mark up the price.

When a travel agency sells a tour on the marked-up price it means that first, it markup the cost of the tour and then sell it at a higher rate. The markup price is the difference between retail price and wholesale cost.

Definitions of Retail Travel Agency

According to Airlines Reporting Corporation (ARC) a retail travel agency is defined as ” a business that performs the following functions: quotes fares, rates, make reservations, arrange travel tickets and accommodation, arrange travel insurance, foreign currency, documents and accepts payments.”

According to SARC (1967), ” retail travel agency business consists of the activities involved in selling tourism products/services directly to the tourists and performs normal functions such as issuing air tickets, making accommodation and transportation reservation, providing specialized services, and accepting and making payments.”

The main source of the revenue for the travel agency is the commission received from the vendors. However, the rate of the commission differs from organization to organization an travel component to the travel component.

A travel agency receives appx. 95% of their revenue from the commission, and the remaining 5% from consultancy services and others.

Wholesale Travel Agency

These agencies are specialized in organizing package tours, which are marketed to the customers/tourists through the network of a retail travel agency or directly to the prospective clients ( if wholesale travel agency has a retail division). A wholesale travel agency purchases tourists’ product components in the bulk and designs tour packages.

Sometimes, a wholesale travel agency buys travel components from the vendor in bulk and resell them to other travel business originations.

Wholesale travel agencies assemble package holidays and sell them to clients through retail travel agencies. A typical package tour includes – air tickets, accommodation, and something other services may also be included in it such as entertainment, sightseeing, and sports activities, etc.

These packages are referred to as ‘package tours’ most of these tours include the services of escorts but a few are sold to people who wish to travel independently.

Now a question arises – How a wholesale travel agency generates profits?

Generally, a wholesaler receives volume discounts from the principal suppliers because a wholesaler might agree to purchase a large number of seats from a particular airline or reserve a large number of rooms at a particular hotel or resort.

Practically, a wholesaler who sells package vacations/tours is called a Tour Operator .  However, technically there is a difference between a wholesaler and a tour operator. A wholesaler who sells tourists products individually without assembling them into a package tour is called a Consolidator .

Mostly, these are specialized in particular product components such as air tickets, accommodation, and conferences, and conventions, etc.

Difference between Wholesale Travel Agencies and Tour operators

The wholesale travel agencies may offer or operate the package tours or may specialize in developing tours for inbound as well as outbound travelers. They are often referred to as tour operators , but these two essentially different:

• Wholesale travel agency does not sell directly to the public, while tour operators do sell directly to clients.
• A wholesale travel agency usually combines, assembles and contacts for existing travel services to formulate a new travel product she has his own one or more components of travel product i.e. ‘ inclusive tours.’
• Wholesale travel agencies are less inclined than tour operators to perform ground services i.e. handling agency or ground operators.
• A wholesale travel agency may deal with one component of travel product while a tour operator offers a variety of tour programmes.
• The size of the business is large in the case of tour operators in comparison to a wholesale travel agency.

Features and Importance of the Travel Agency

Travel agency plays an important role in the travel sector business. Some most important features and importance of the travel agency business are following as:-

• An important link between the clients and principal suppliers.
• Image-Builder.
• Ensures rapid travel services.
• Provider of authentic and reliable travel information.
• A social a continuous process.
• Establishes a good relationship with clients and vendors.

These are the most important features of the Travel Agency Business.

Functions and Services of Travel Agency

Today, Travel Agencies have been recognized as a vital component of travel and tourism and have become an integral part of the travel and tourism industry at globally. They account for more than 90% of international and 70% of domestic tourist traffic

Further, more than 60%  of all travel agency revenues are derived from business travel. Most travel agencies sell both commercial and leisure travel but there are many travel agencies that only specialized in one sector or the other.

The operation of each travel agency is based on the scope of its activities and organizational size. Here we discuss the functions of a large scale travel agency that performs all types of activities such as Retail travel agency, wholesaling and tour operations, etc. The main function of a large-scale travel agency are:

Travel Information

Whatever the size of a travel agency, it has to provide necessary travel information to tourists. A travel agency must give up-to-date, accurate, and timely information regarding destinations mode of travel, accommodation, sight-seeing, shopping, immigration, passport, visa, customs clearance and procedure, health and security rules, and various permits required to travel in particular areas, etc.

Itinerary Preparation

The term tourists itinerary is used to identify the origin, destination and all the stopping points in a traveler’s tours. It is a composition of various elements and designed after a detailed study of the market. Travel agencies prepare an itinerary for tour packages.

Airline Ticketing and Reservation

A travel agency sells a variety of tourism products. Airline ticketing and reservation is still a major source of revenue. Travel agencies perform a function of airline ticketing and reservation on behalf of various airlines.

Tour Packaging and Costing

Travel agencies prepare a tour package and sell them to tourists. The coasting and pricing of tour packages depend to a large extent on the ability of travel agents as to how effectively he is able to negotiate with the principal suppliers.

Reservation

It is a very important function of all types of travel agencies. A travel agency consistently makes linkage with the accommodation sector, transport sector and other entertainment organizations to reserve rooms, and seats in the cultural programs and transportation.

Travel Insurance

Some large-scale travel agencies perform additional functions to serve their clients. Travel insurance protects travelers against the person as well as baggage losses resulting from a wide range of travel-related happenings and problems.

Currency Services

Approved travel agency authorized by Govt. body provides currency exchange services to tourists.

Organization of Conference/Conventions

Large-scale travel agencies offer a complete convention/conference package which includes registration of the participants at the venue to be picked up for dropped to the airport/hotel, overhead projectors, slide projectors, TV, VCR, information counter, sightseeing, etc.

Travel Agency Linkages and Integration

Basically, a travel agency serves two types of clients: business travelers and leisure travelers. Incidentally, the requirements of these tourists are different and an agency has to assemble or purchase-related components from the principal suppliers to cater to their needs.

Essentially, travel agencies maintain close ties with Airlines, hotels, car rentals, banks, insurance companies, railways, government, trade associations, foreign tour operators and travel agents, ground operators, cruise companies, and tourism educational institutes.

Travel agency and tour operation

• Living reference work entry
• First Online: 01 January 2015
• Cite this living reference work entry

• Zongqing Zhou 3  

1219 Accesses

Travel agencies and tour operators are two related but can be independent business models that operate as intermediaries between suppliers and tourists. In many cases, travel agencies are also tour operators and vice versa, particularly in countries other than the United States . This is understandable considering the history of their evolution in different countries.

Structure and history

Travel agencies can be defined as a sector that books, sells, and arranges travel , tour , and accommodation services provided by suppliers of the industry (Bhatia 2013 ). Some are primarily engaged in making travel arrangements and reservation services. These agencies include online-only booking systems such as Expedia.com. Others offer their own packages and thus act as tour operators.

Tour operators are businesses that plan, package, market, and sell multiple vacation elements, including air or surface transportation and accommodations (USTOA 2014 ). Package tours are generally sold through travel...

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Institutional subscriptions

Bhatia, A. 2013 The Business of Travel Agency and Tour Operations Management. New Delhi: Sterling Publishers.

Google Scholar  

Meyer, J., and C. Oster 1987 Deregulation and the Future of Intercity Passenger Travel. Boston: MIT Press.

Stevens, L. 1990 Guide to Starting and Operating a Successful Travel Agency. Clifton Park: Cengage Learning.

USTOA 2014 United States Tour Operators Association www.ustoa.com (20 April).

Zhou, Z. 2004 E-commerce and Information Technology in Hospitality and Tourism. New York: Delmar.

Zhou, Z., and L. Lin 2000 The Impact of the Internet on the Use of the Print Brochure. Proceedings of the CHRIE’s Annual Conference, 19-22 July, New Orleans, Louisiana.

Download references

Author information

Authors and affiliations.

College of Hospitality and Tourism Management, Niagara University, 5795 Lewiston Rd, New York, 14109, USA

Zongqing Zhou

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Zongqing Zhou .

Editor information

Editors and affiliations.

School of Hospitality Leadership, University of Wisconsin-Stout, Menomonie, Wisconsin, USA

Jafar Jafari

School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong, Hong Kong SAR

Honggen Xiao

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer International Publishing Switzerland

About this entry

Cite this entry.

Zhou, Z. (2014). Travel agency and tour operation. In: Jafari, J., Xiao, H. (eds) Encyclopedia of Tourism. Springer, Cham. https://doi.org/10.1007/978-3-319-01669-6_206-1

Download citation

DOI : https://doi.org/10.1007/978-3-319-01669-6_206-1

Received : 08 December 2014

Accepted : 08 December 2014

Published : 25 September 2015

Publisher Name : Springer, Cham

Online ISBN : 978-3-319-01669-6

eBook Packages : Springer Reference Business and Management Reference Module Humanities and Social Sciences Reference Module Business, Economics and Social Sciences

• Publish with us

Policies and ethics

• Find a journal
• Track your research

• Travel, Tourism & Hospitality

Travel agency industry - statistics & facts

The biggest players of the ota market, the travel agency and tour operator retail market, key insights.

Detailed statistics

Online travel market size worldwide 2017-2028

U.S. travel agency industry market size 2012-2022

U.S. tour operator industry market size 2012-2022

Editor’s Picks Current statistics on this topic

Current statistics on this topic.

Tour Operators & Travel Agencies

Market size of the travel agency services industry worldwide 2011-2024

Online Travel Market

Revenue of leading OTAs worldwide 2019-2022

Related topics

• Online travel market
• Mobile travel trends
• Impact of technology on travel and tourism
• Artificial intelligence (AI) use in travel and tourism

Online travel companies

• Booking Holdings Inc.
• Expedia Group, Inc.
• Tripadvisor

Travel agency and tour operator market

• Travel agencies in the United Kingdom (UK)
• Package travel in Japan

Recommended statistics

Industry overview.

• Premium Statistic Market size of the tourism sector worldwide 2011-2024
• Premium Statistic Online travel market size worldwide 2017-2028
• Premium Statistic Key information on the global travel agency industry January 2024
• Basic Statistic Market cap of leading online travel companies worldwide 2023
• Premium Statistic Leading travel companies worldwide 2022, by sales
• Premium Statistic Number of employees at leading travel companies worldwide 2022

Market size of the tourism sector worldwide 2011-2024

Market size of the tourism sector worldwide from 2011 to 2023, with a forecast for 2024 (in trillion U.S. dollars)

Online travel market size worldwide from 2017 to 2023, with a forecast until 2028 (in billion U.S. dollars)

Key information on the global travel agency industry January 2024

Key data on the travel agency industry worldwide as of January 2024

Market cap of leading online travel companies worldwide 2023

Market cap of leading online travel companies worldwide as of September 2023 (in million U.S. dollars)

Leading travel companies worldwide 2022, by sales

Leading travel companies worldwide in 2022, by gross sales (in billion U.S. dollars)

Number of employees at leading travel companies worldwide 2022

Number of employees at selected leading travel companies worldwide in 2022

Online travel agencies (OTAs)

• Premium Statistic Revenue of leading OTAs worldwide 2019-2022
• Premium Statistic Marketing expenses of leading OTAs worldwide 2019-2022
• Premium Statistic Marketing/revenue ratio of leading OTAs worldwide 2019-2022
• Basic Statistic Revenue of Booking Holdings worldwide 2007-2023
• Premium Statistic Revenue of Expedia Group, Inc. worldwide 2007-2023
• Premium Statistic Airbnb revenue worldwide 2017-2023
• Premium Statistic Total revenue of Trip.com Group 2012-2022
• Premium Statistic Revenue of Tripadvisor worldwide 2008-2023
• Premium Statistic Despegar: revenue 2015-2022

Leading online travel agencies (OTAs) worldwide from 2019 to 2022, by revenue (in million U.S. dollars)

Marketing expenses of leading OTAs worldwide 2019-2022

Marketing expenses of leading online travel agencies (OTAs) worldwide from 2019 to 2022 (in million U.S. dollars)

Marketing/revenue ratio of leading OTAs worldwide 2019-2022

Marketing to revenue ratio of leading online travel agencies (OTAs) worldwide from 2019 to 2022

Revenue of Booking Holdings worldwide 2007-2023

Revenue of Booking Holdings worldwide from 2007 to 2023 (in billion U.S. dollars)

Revenue of Expedia Group, Inc. worldwide 2007-2023

Revenue of Expedia Group, Inc. worldwide from 2007 to 2023 (in billion U.S. dollars)

Airbnb revenue worldwide 2017-2023

Revenue of Airbnb worldwide from 2017 to 2023 (in billion U.S. dollars)

Total revenue of Trip.com Group 2012-2022

Total revenue of Trip.com Group Ltd. in China from 2012 to 2022 (in billion yuan)

Revenue of Tripadvisor worldwide 2008-2023

Revenue of Tripadvisor, Inc. worldwide from 2008 to 2023 (in million U.S. dollars)

Despegar: revenue 2015-2022

Revenue of Despegar.com, Corp. from 2015 to 2022 (in million U.S. dollars)

Travel websites and apps

• Premium Statistic Most popular travel and tourism websites worldwide 2024
• Premium Statistic Total visits to travel and tourism website booking.com worldwide 2021-2024
• Premium Statistic Total visits to travel and tourism website tripadvisor.com worldwide 2020-2024
• Premium Statistic ACSI - U.S. customer satisfaction with online travel websites as of 2024
• Premium Statistic Number of aggregated downloads of leading online travel agency apps worldwide 2023
• Premium Statistic Number of aggregated downloads of leading online travel agency apps in the U.S. 2023
• Premium Statistic Leading travel apps in the U.S. 2022, by market share
• Premium Statistic Leading travel apps in Europe 2022, by market share

Most popular travel and tourism websites worldwide 2024

Most visited travel and tourism websites worldwide as of April 2024 (in million visits)

Total visits to travel and tourism website booking.com worldwide 2021-2024

Estimated total number of visits to the travel and tourism website booking.com worldwide from December 2021 to March 2024 (in millions)

Total visits to travel and tourism website tripadvisor.com worldwide 2020-2024

Estimated total number of visits to the travel and tourism website tripadvisor.com worldwide from August 2020 to March 2024 (in millions)

ACSI - U.S. customer satisfaction with online travel websites as of 2024

U.S. customer satisfaction with online travel websites from 2000 to 2024 (index score)

Number of aggregated downloads of leading online travel agency apps worldwide 2023

Number of aggregated downloads of selected leading online travel agency apps worldwide in 2023 (in millions)

Number of aggregated downloads of leading online travel agency apps in the U.S. 2023

Number of aggregated downloads of selected leading online travel agency apps in the United States in 2023 (in millions)

Leading travel apps in the U.S. 2022, by market share

Market share of leading travel apps in the United States in 2022

Leading travel apps in Europe 2022, by market share

Market share of leading travel apps in Europe in 2022

Travel agencies and tour operators

• Premium Statistic U.S. travel agency industry market size 2012-2022
• Premium Statistic U.S. tour operator industry market size 2012-2022
• Premium Statistic Revenue of TUI AG worldwide 2004-2023
• Premium Statistic Leading travel agents ranked by number of outlets in the UK 2024
• Premium Statistic Leading ATOL-licensed tour operators in the UK 2024, by passengers licensed
• Premium Statistic Turnover of Hays Travel Limited in the UK 2008-2023

Market size of the travel agency sector in the United States from 2012 to 2022 (in billion U.S. dollars)

Market size of the tour operator sector in the United States from 2012 to 2022 (in billion U.S. dollars)

Revenue of TUI AG worldwide 2004-2023

Revenue of TUI AG worldwide from 2004 to 2023 (in billion euros)

Leading travel agents ranked by number of outlets in the UK 2024

Leading travel agencies in the United Kingdom (UK) as of February 2024, by number of travel shops

Leading ATOL-licensed tour operators in the UK 2024, by passengers licensed

Leading ATOL-licensed tour operators in the United Kingdom as of February 2024, ranked by number of passengers licensed

Turnover of Hays Travel Limited in the UK 2008-2023

Turnover of Hays Travel Limited in the United Kingdom from 2008 to 2023 (in million GBP)

Cruise companies

• Premium Statistic Worldwide cruise company market share 2022
• Premium Statistic Revenue of Carnival Corporation & plc worldwide 2008-2023
• Premium Statistic Revenue of Royal Caribbean Cruises worldwide 1988-2023
• Premium Statistic Revenue of Norwegian Cruise Line worldwide 2011-2023
• Premium Statistic TUI cruise brand revenue worldwide 2015-2023, by brand
• Premium Statistic Percentage change in revenue of leading cruise companies worldwide 2020-2023

Worldwide cruise company market share 2022

Worldwide market share of leading cruise companies in 2022

Revenue of Carnival Corporation & plc worldwide 2008-2023

Revenue of Carnival Corporation & plc worldwide from 2008 to 2023 (in billion U.S. dollars)

Revenue of Royal Caribbean Cruises worldwide 1988-2023

Revenue of Royal Caribbean Cruises Ltd. worldwide from 1988 to 2023 (in billion U.S. dollars)

Revenue of Norwegian Cruise Line worldwide 2011-2023

Revenue of Norwegian Cruise Line Holdings Ltd. worldwide from 2011 to 2023 (in billion U.S. dollars)

TUI cruise brand revenue worldwide 2015-2023, by brand

Revenue of TUI cruise brands worldwide from 2015 to 2023, by brand (in million euros)

Percentage change in revenue of leading cruise companies worldwide 2020-2023

Percentage change in revenue of leading cruise companies worldwide from 2020 to 2023 (compared to 2019)

Further reports Get the best reports to understand your industry

Get the best reports to understand your industry.

Mon - Fri, 9am - 6pm (EST)

Mon - Fri, 9am - 5pm (SGT)

Mon - Fri, 10:00am - 6:00pm (JST)

Mon - Fri, 9:30am - 5pm (GMT)

Host Agency 101: What Travel Agencies Should Know

Navigating the industry of travel can be exciting and difficult, especially for new agencies. A Host Agency is a great partner, providing valuable resources and support. This week, we will be discussing the basics of a Host Agency, its benefits, and how it can help you grow your Travel Agency.

What is a Host Agency and how does it work? A Host Agency, an established travel agency that partners with independent agents and travel agencies to offer a variety of support and services, is an established organization. Travel Agencies who partner with a Host Agency can gain valuable resources such as technology solutions and marketing tools. They also benefit from the industry knowledge and reputation of the Host Agency.

The Key Benefits of Partnering With a Host Agency

Exclusive deals and commissions: When you join a Host Agency you have access to their relationships with suppliers. This allows your Travel Agency to offer clients special rates and other benefits. This partnership also allows for higher commissions, which can increase your agency's overall revenues.

Lower overhead costs. Running a Travel Agency is expensive. You will need office space, software and insurance. Host Agency partnerships help reduce overhead costs. They offer shared resources like booking and CRM systems and group insurance plans. This allows you to concentrate on growing your business.

Expert support and guidance. Host Agencies are well-versed in the industry and can offer invaluable support and guidance to their partnered Travel Agencies. These include ongoing training and professional development, as well as access to a community of industry professionals and fellow agents.

Host Agencies provide marketing and branding support to help Travel Agencies develop and implement effective marketing strategies. These include customizable marketing materials, email marketing solutions and social media support that can help increase visibility of your agency and bring in new clients.

Your credibility can be increased by partnering with a well-respected Host Agency. A well-respected Host Agency can help clients feel more comfortable booking with them. Suppliers are more likely to work with agencies with strong industry backing.

Travel Agencies need to understand the Host Agency model in order to grow and compete in the highly competitive travel industry. Travel Agencies who partner with a Host Agency can get exclusive deals, lower overhead costs, expert guidance, and increase their client satisfaction. You can compare different Host Travel Agency options to find the best fit for you and your agency if you are a travel agent looking for reliable Host Travel Agency.

Recent Posts

Achieve Financial Freedom: A Guide to Earning High Commissions as a Travel Agent

Unlocking the Best Supplier Rates: Partner with a Reliable Host Agency

How to Choose the Perfect Host Agency for a Thriving Travel Business

Agency business model

The agency business model entails creating a team of specialized experts who can solve clients’ issues. Agencies do not sell products; instead, they provide services and charge a fee for them. 

In the B2B scenario, clients hire an agency to outsource non-core business activities such as marketing, advertising, HR, branding, etc. In the case of a B2C operation, agencies offer individuals services in the fields of finance, real estate, taxes, etc. The agency business model generally falls into the category of service business models, as opposed to manufacturing, retail, eCommerce, and franchise.

In the travel industry, the agency model is contrasted to the merchant model . Multiple businesses can operate on the agency model, including

• both brick-and-mortar and online travel agencies , 
• destination management companies , 
• tour operators , 
• travel management companies , etc.

Travel companies operating on the agency model act as agents between the customer and the service provider (e.g., hotel, airline). They facilitate the booking and collect a commission from the service providers after the customer pays.

Recommended content for you

How to get iata accreditation for travel business: options, steps, iata certification cost, managing an online travel agency: how an ota's back office system works, marketing for travel agencies: understanding and surviving in the online travel industry, ota rates and building commission engine: best practices and lessons learned, revenue model types in software business: examples and model choice.

Our website uses cookies to ensure you get the best experience. By browsing the website you agree to our use of cookies. Please note, we don’t collect sensitive data and child data.

To learn more and adjust your preferences click Cookie Policy and Privacy Policy . Withdraw your consent or delete cookies whenever you want here .

Get in Touch

Yes, I understand and agree to the Privacy Policy

7 types of travel agents around the world

Disclaimer: Some posts on Tourism Teacher may contain affiliate links. If you appreciate this content, you can show your support by making a purchase through these links or by buying me a coffee . Thank you for your support!

Travel agents are an important part of the tourism industry. There are several different types of travel agents. The different types of travel agents vary according to the service they provide and the products that they offer. In this article I will teach you about the different types of travel agents and provide some examples too.

What’s a travel agent?

High street travel agents, business travel agents, call centre travel agents, internet travel agents, independent travel agents, multiple travel agents, miniple travel agents, types of travel agents: to conclude, further reading .

A travel agency is a private retailer that sells travel-related products and services to consumers. This includes package holidays as well as individual holiday elements such as hotel rooms, flight tickets and travel insurance.

Travel agents typically use global distribution systems (GDS). These systems enable to travel agent staff to receive real-time updates on availability and prices and to make bookings.

Travel agencies typically take a percentage of the overall fee that a consumer pays, known as commission. Commission rates vary depending on the product and/or service that is sold. It is for this reason that consumers will sometimes pay more for a holiday booked through a travel agency than they would if they booked it directly with the suppliers.

Did you know that you can set up your own travel agency business and earn from your sofa? Find out how here!

The different types of travel agents

There are four main types of travel agents in the travel and tourism industry: high street, business, callcentre and Internet. I will explain how each of these types of travel agents work below. BUT before you read on, hit play on my new YouTube video below!

High street travel agents have been around for a long time. Up until only a few years ago, high street travel agents were the most popular and themes common types of travel agents.

High street travel agents are typically found in major shopping areas, such as local high streets or in shopping malls.

High street travel agents typically have an area where holiday brochures are displayed and desks for consumers to sit at and talk than travel agent. Travel agent staff are generally very knowledgeable about the products and services thatchy are selling and offer high standards of customer service.

Many people continue to prefer house high street travel agents because they enjoy the face-to-face interaction.However, fewer and fewer people have been using travel agents in recent years. This has led to the closure of many high street travel agents.

High street travel agent examples: TUI, Hays Travel, Cooperative Travel

Business travel agents specialise in planning and booking travel for business purposes. Business tourism is one of the largest types of tourism . As such, this is an important type of travel agent.

Business travel agents do not always have a visible high street presence. Instead, they may be tucked away in office blocks or in quiet locations.This is because they do not tend to have walk-in business.

Business travel agents typically work with companies to organise business travel. Stays tend to be shorter than ordinary holidays. Business travel agents are popular because they help to save organisations timed money, given that they are able to quickly plan itineraries and book travel the best prices.

Business travel agent examples: Crystal Corporate, Click Travel, Kanoo Corporate

A call centre travel agent is a travel agent which is based in a call centre.

Call centre travel agents provide advice and guidance on booking your holiday via the telephone. Many major travel agencies will have call centres as wells high street shops.

Call centres have lower overheads than high street retailers because they do not have to pay premium prices for their offices- they have the flexibility to be based anywhere.

Some companies even choose to base their callcentres in developing countries, where wages and overhead costs are lower. However, this has been known to have a detrimental impact on the service offered due to language barriers and cultural differences.

Call centre travel agent examples: Flight Centre, Virgin Holidays

Internet travel agents are travel agents theatre based the Internet. This includes major travel companies as wells independent travel agents who are working from home.

Internet travel agents are the most popular types of travel agents nowadays. Many people prefer to book online.

Just like high street travel agents, Internet travel agents take a commission from the money paid by the consumer.

The rise of the Internet travel agent has been so significant in recent years that there is now a lot of competition in the marketplace. This helps to drive down prices and to make holidays more affordable to customers.

Internet travel agent examples: Expedia, Booking.com, Agoda

Types of travel agent businesses

The types of travel agents can also be distinguished by their business model. There are three major business models that are used: independent, multiple, miniple. I will explain what each of these are below.

An independent travel agent is an agent is a unique company. There is only one branch and it is not associated with any other travel agency stores or companies.

Independent travel agents are commonly found in small towns and villages. They are usually locally-run businesses. Because of scales of economy, independent travel agents are often not able to compete with the lower prices offered by larger types of travel agents.

Independent travel agents do not necessarily need to have physical travel agency. There are many people who are running their own, successful travel agency businesses from home. These are Internet travel agents who are operating on an independent basis.

Since COVID-19, many organisations have reduced their business travel requirements, opting instead for Zoom calls and webinars facilitated by the shut-in economy . It is predicted that this change will be irreversible and therefore that the need for business travel agents will be permanently reduced.

A multiple travel agent is one which has a chain of branches. They are typically large organisations with a strong high street presence.

Multiple travel agents did have a monopoly of the market for many years. However, they have struggled to compete with the Internet travel agents, who have fewer overheads and are more conveniently located- on a consumer’s computer/smart device!

Miniple travel agents are travel agents that have several branches. These are usually mid-sized companies. They are often regional.

As you can see, the travel agency market has changed a lot in recent years. We have moved away from the traditional multiple on the high street towards an Internet-based approach when researching and booking our holidays. Nonetheless, there does continue to be a desire for travel agents, albeit largely online.

If you’re studying travel and tourism then I highly recommend the following texts to support your learning:

• The 10 Major Types of Events
• The 8 Major Types of Cruise
• 150 types of tourism! The ultimate tourism glossary
• 20 Popular Types of Hotels Around The World
• 21 Types of Tourists Around The World

Liked this article? Click to share!

ColorWhistle

Digital Web Design Agency India

Explore our Market-Fit Services

We ensure to establish websites with the latest trends as we believe that, products whose value satisfies the needs of the market and its potential customers can be efficiently successful.

Quick Links

• About Us – ColorWhistle
• Engagement Models
• Testimonials
• Case Studies
• Agency Services
• Web Development
• Web App Development
• Digital Marketing
• Travel Website Development Services Company
• Real Estate Website Development Services Company
• Education Website Development Services Company
• Healthcare Website Development Services Company
• Hotel and Restaurant Website Development Services

Category: Travel

Date: October 20, 2023

Online Travel Agencies – A Brief Introduction

The role of an online travel agency (OTA) is becoming increasingly important in the accommodation industry as they provide a convenient way for travelers to arrange their stay. From the comfort of their home, travelers can compare hotel prices and book them over the internet. 

In this blog, we are going to discuss what an OTA is, the best OTA platforms, travel website development and how to do it right, and more.

Ready? Let’s go.

What Are Online Travel Agencies?

An online travel agency (OTA) arranges and sells accommodations, tours, transportation and trips on an online platform for travelers. They are third parties who sell services on behalf of other companies.

Usually, these OTAs offer many benefits with added convenience with more of a self-service approach. They also include a built-in booking system which allows instant bookings.

How Do Online Travel Agencies Work?

OTAs generally work on two models. They are,

1. Merchant Model

In this model, hotels sell rooms to OTAs at a discounted or wholesale price. Then, the OTA sells them to the customer at a markup price

2. Agency Model

This is a commission-based model where OTAs acts as a distribution partner. OTAs receive full commission after the stay has taken place. The hotel directly receives the payment from the end customer and does not wait for the payment transfer from third-party distributors.

What Are the Benefits of Partnering with Online Travel Agencies?

In one word – exposure! Online travel agents get thousands of website visitors from all over the world. Plus, they have positioned themselves as an authority on everything related to travel. So, people trust the recommendation they receive from OTAs.

By listing in OTAs, accommodation businesses like hotels not only reach a vast set of audience but will also find their service among many other reputable sources of information.

In addition, hotels that are listed on OTAs can also benefit from what is referred to as the ‘billboard effect’. This means that OTAs provide a form of advertising for service providers such as hotels on their platforms. Once the user gains this awareness, they may even go to the website of that particular hotel to make a direct booking.

What Are the Advantages and Disadvantages of Selling Through Online Travel Agents?

Accommodation businesses like hotels and B&Bs have pros and cons of getting listed in OTAs. Let’s take a look at them.

Advantages Of Online Travel Agents

• Low-cost method of selling accommodation services
• Reduced online marketing spend as OTAs invest in advertising to attract potential customers
• Impartial reviews give customers the confidence to book
• Users can easily compare various accommodation costs at one place

Disadvantages Of Online Travel Agents

• Commission rates are charged on every sale. It can range between 10-15% of the gross cost
• Restrictive cancellation terms
• Even if accommodation businesses use OTAs, the need for their own website and booking engine does not go away
• Investment in a balanced multi-channel strategy may be needed to boost sales

Even though OTAs can help to fill your rooms, accommodation businesses must try to maximize revenue through their own website. Consistent work on search engine optimization tactics and other digital marketing techniques is a must. Accommodation businesses must focus on customer retention techniques and directly target their existing customers through emails and direct marketing.

How To Start An Online Travel Agency?

Travel agencies no longer inform customers about the availability of flights and rooms. They issue rooms and get a commission from the respective accommodation businesses. That is why most of the new travel businesses follow the OTA model.

If you plan to enter the OTA arena, you can specialize in pilgrimages, leisure travel, business travel or any niche. But, focusing on how effectively you offer things is the key to success.

Here Are Some Points You Have To Consider When Starting An Online Travel Agency.

• Register the name of your agency and if applicable, take a license as per your local laws
• Try to get a membership in IATA or any other reputed travel organization
• Gain more knowledge about the travel industry and particularly the nice you want to concentrate
• Get your travel website designed by a professional company like ColorWhistle
• Offer deals that focus on a specific geography. Focusing on a particular niche will also bring more success
• Publicize your business in the online space
• Utilize the power of blogging
• Create a good social media presence

Why Do People Use Online Travel Agencies?

 here are some of the main reasons they prefer ota’s..

• Few OTAs offer reward programs which can be used for future travel needs
• Special rates which cannot be found elsewhere
• Some OTAs may have generous cancellation policies. For example, Priceline does not offer any penalty if the user cancels the ticket until the end of the next business day
• Most users may not have an idea on where to book other than an OTA
• OTAs make it easy to compare different rates

Who Are the Top Online Travel Agents?

1. booking.com.

Booking.com is one of the largest accommodations websites which has now expanded to smaller markets such as family-operated bed and breakfast, vacation rentals and self-catering apartments.

Interesting statistics

• Every day, 1,550,000 nights are booked
• 68% of nights booked came from families and couples
• 42% of nights booked came from unique places such as homes and apartments
• 38% of reviews are given by guests which are useful for other travelers
• 75% of nights booked come from guests who booked more than 5 times

2. Expedia’s Hotels.com

Expedia’s Hotels.com is a popular brand which has a global audience and attracts diverse travelers. The company gained more power in the industry by acquiring Travelocity.

• Gets over 675 million monthly site visits
• Operates in 70+ countries and 40+ languages
• Attracts 75 million monthly flight shoppers

Airbnb revolutionized the travel accommodation industry by introducing home-sharing. The website has diverse listings and travelers get a sense of safety as they can know their guest’s identity.

• 2.9 million hosts are present on Airbnb
• Average of 800k stays each night
• 14k new hosts join every month

Apart from these major OTAs, there are many small ones such as OneTravel, Vayama, Tripsta, TravelMerry, ExploreTrip, Kiss&Fly, Webjet, GoToGate, Travelgenio, Bookairfare, Fareboom, Skybooker, Travel2be, OneTwoTrip!, and eBookers.

Drive Conversions and Boost your Business with Expert Travel Website Development.

What the future holds for online travel agencies.

It is clear that, in the near future, accommodation businesses are not about to back down from OTAs. They are enjoying the billboard effect and trying their best to retain website visitors and convert them into direct booking. 

Sure, there is a cost involved. The upside of this is that accommodation businesses are working hard to create a loyal customer base that will continue to seek direct bookings.

The chances of OTAs suffering in the long run are pretty slim. Smaller accommodation businesses have a lot to gain from the exposure they receive through OTAs. Plus, a large portion of the younger generation prefers OTAs. So their market will continue to grow.

If you need any help to design, develop or market an OTA website, contact our travel web design and development experts at ColorWhistle . 

We can create an amazing website with beautiful designs combined with dynamic content such as live rates and special offers. Contact us today for your free business analysis and consultation.

In quest of the Perfect Travel Tech Solutions Buddy?

Be unrestricted to click the other trendy writes under this title that suits your needs the best!

• Travel Meta Search Engine
• GDS Travel Agency Guide
• GDS OTA Travel Meta Searchengines
• Travel Aggregator Website
• Best Travel Websites Inspiration
• Travel Website Features
• Top WordPress Travel Website Themes

Related Posts

How Predictive Maintenance Can Help the Travel Industry

Exploring the World Through AI and VR in the Travel Industry

How AI-based Travel Booking Applications Can be Developed?

About the Author - Anjana

Anjana is a full-time Copywriter at ColorWhistle managing content-related projects. She writes about website technologies, digital marketing, and industries such as travel. Plus, she has an unhealthy addiction towards online marketing, watching crime shows, and chocolates.

View Our Services

Have an idea? Request a quote

Share This Blog

its a good website i love it

i think it is a great website i love it so much but i need more information about what am looking for. thanks

It is a good website and I need more information for learning

I learned a lot through this web.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Ready to get started?

Let’s craft your next digital story

Sure thing, leave us your details and one of our representatives will be happy to call you back!

Eg: John Doe

Eg: United States

Eg: [email protected]

More the details, speeder the process :)

22 Types of Travel Agencies Based on 4 Key Criteria

Travel agency definition

How many types of travel agencies exist.

The best way to understand the intricate design of the tourism industry is to observe the businesses that operate within it . Travel agencies are the cogs that keep travel machinery moving forward. However, not all travel agencies operate in the same way. Plus, these businesses often tend to go through operational and managerial changes driven by technology implementations and shifts in the best practices.

If you are planning to work with or in an agency, you need to know more about travel agencies in general. Staying tuned to the latest developments can be challenging. That’s why we decided to help you answer the ultimate question – “How many types of travel agencies exist?”  

Let’s start with the travel agency definition to lay a foundation for the information that’s to come.

The best way to understand a travel agency is to look at it as a private retailer . It is a business that specializes in selling travel products and services. At the core of travel agencies, we have a global distribution system (GDS). This commonly used agency software system plays a vital role in enabling agencies to check the availability and prices of accommodation and travel arrangements.

Two most commonly used travel agency definitions come from Airlines Reporting Corporation and SARC . The first one goes along the following lines:

“Travel agency is a business with the following functions: makes reservations, quotes fares, rates, arranges travel insurance, arranges travel tickets and accommodation, accepts payments, foreign currency, and documents.”

Here is the definition by SARC:

“Travel agency is a business that specializes in selling tourism products and tourism-related services to tourists and performs arranging transportation and accommodation, air ticket issuing, accepting payments, and providing additional specialized services.”

Travel agencies often work with vendors from whom they source travel products and enable direct, over-the-phone, or online booking for their customers. Their primary source of income comes from the commission rates the vendors give them. Without going into great detail, the commission rates are not uniform and depend on several factors. However, as you will see, some travel agencies act as intermediaries between vendors and other travel agencies. The primary source of income of these agencies is the services they provide to other agencies.

Travel agencies also differ in terms of the distribution channels they use. There are three main distribution channels available to travel agencies: online channels, strategic partnerships, and offline channels . To stay competitive, many agencies use more than one channel, often all three at the same time.

Now let’s see how many unique types of travel agencies are there.

There are dozens of types of travel agencies out there. The best way to understand each type is to have a classification system. That’s exactly what we decided to do. 

Below you can find different types of travel agencies based on the business model, business size, services, geographical coverage, number of outlets, level of specialization, distribution chain, type of vacations they offer, agency functions, and tourism flows.

Let’s start with some of the most basic classifications, including business model and size.

🧑🏻‍🤝‍🧑🏿 Travel agency types based on the number of travelers

Travel products don’t only differ in terms of destination and available amenities in the location. Some travel agencies prefer catering to individual travel needs, while others facilitate group travel. There are, of course, those that offer individual and group travel arrangements. There are three travel agency types based on the number of travelers.

FIT travel agencies

FIT stands for “foreign independent travel” or, a more modern term, “flexible, independent travel.” This is the most common type of agency you can find both online and offline . While they offer regular products, they also include tailor-made travel experiences to accommodate travelers’ individual needs and interests . The examples include:

• https://vacations.united.com/
• https://www.redtag.ca/

Group travel agencies

Group travel agencies, as the name suggests, specialize in group travel. They offer a number of group travel packages. The travel products they offer are often tailored for ten or more travelers. The agencies negotiate their travel products according to the size of the group . Some of them enable booking online. However, the majority offer services offline because some hotels tend to cancel the bookings if they detect a group . Here are a couple of examples:

• https://www.contiki.com/en-eu
• https://www.solresor.se/

FIT & Group travel agencies

FIT & Group travel agencies work with a wide range of travelers, including those who are interested in tailor-made experiences and those who prefer group travel. Their travel product portfolio is often quite big and diverse. The noteworthy examples include:

• https://www.appleleisuregroup.com/

🛒 Travel agency types based on the type of market

The famous question from Hollywood movies: “Business or pleasure?” brings us to our next travel agency classification. All travel agencies can be divided into two groups based on whether they sell leisure or business travel packages.

Leisure travel agency

As its name implies, a leisure travel agency specializes in selling holidays and leisure trips. They cater to the needs of customers interested in having fun, rest, and relaxation. Their itineraries can also include various activities ranging from excursions to local sightseeing. Here is an example:

• https://travel.aaa.com/

Business travel agency

Business travel agencies offer custom-tailored trip experiences to businesses. They help streamline sales presentations, conferences, and meetings, whether scheduled in a state or abroad. They cater to passengers traveling for working purposes and facilitate MICE and incentive travels . The two examples include:

• https://www.bcdtravel.com/
• https://www.amexglobalbusinesstravel.com/

🚛 Travel agency types based on the type of distribution

All travel agencies can be categorized into two big groups based on the type of distribution. There are those who source and cater their products toward businesses, so-called wholesalers, or B2B travel agencies. The other type of travel agency encompasses travel companies focused on B2C markets.

Wholesalers or B2B travel agencies

Wholesalers of B2B travel agencies distribute their products through other agencies . Their primary source of income is commission rates. They can either source products from other B2B travel agencies or create travel products of their own. There are several types of wholesalers depending on how they choose to do business.

Tour Operators

Tour operators are companies that specialize in creating complete travel products . Their products often include hotel rooms, transportation, and activities at the location, such as excursions. Tour operators exclusively distribute their products through agencies. Here are the examples:

• https://teamamericany.com/index.php/home/start
• https://www.gocollette.com/en

Bedbanks are companies that focus on distributing hotel inventory through different channels . However, over time their scope of services kept growing. Today, Bedbanks also offer transfers and various services in destinations . Here are a couple of examples so you better understand what Bedbanks are:

• https://www.hotelbeds.com/home
• https://www.webbeds.com/

DMC stands for a destination management company. As the name suggests, these are inbound travel companies . They create inbound travel products for specific destinations and distribute them across various B2B channels . The examples include:

• https://www.alliedtpro.com/
• https://galaxyvacations.com/

Wholesalers

Wholesalers operate similarly to tour operators. However, they don’t create travel products themselves . Instead, they source products from multiple Bedbanks, tour operators, and DMCs, and distribute them through B2B channels, mainly travel agencies . The examples of wholesalers include:

• https://www.jumbotours.com/
• https://www.bonotel.com/  

Travel networks

Travel networks are quite specific travel agencies. Their primary focus is on creating big travel agencies and travel advisor networks. Once the network is up and running, these travel agencies will provide all types of travel products to their partners and affiliates under exclusive terms and conditions. The examples include:

• https://www.travelleaders.com/
• https://www.allstar.travel/  

Retail travel agencies are the newest addition to the big family of different agency types. It is a new way of B2B distribution generated by Bedbanks . The goal is to provide products and services directly to travel agencies without the need to be a travel network . Here are some examples:

• https://www.bedsonline.com/home/en-df
• https://www.tboholidays.com/

Travel agencies or B2C travel agencies

Travel agencies or B2C travel agencies offer travel products and services directly to consumers. There are different travel agency types based on how they set up their business in terms of distribution channels, location, and dependency. Let’s see the most common types of B2C travel agencies.

OTA or an online travel agency is not every agency you can use to book travel packages online . These are big companies that sell directly to consumers . They offer a wide range of travel products, including hotels, air tickets, car rentals, tickets for shows, travel insurance, tours, and all kinds of land transportation. We are sure that you are familiar with the following two examples of OTAs:

• www.expedia.com  
• www.booking.com 
• www.edreams.com  
• www.despegar.com  

Physical offline travel agency

Physical offline travel agencies offer their services in person to consumers . Due to the shift to the online business model, the number of physical offline travel agencies continues to decrease . These agencies are mainly focused on providing personalized travel experiences to consumers. They provide advice regarding the best location to visit according to the travelers’ unique needs and expectations. Their offer also includes tailor-made itineraries and excursions. The examples include:

• www.pangea.com

Physical + online travel agency

Physical + online travel agency is a new type of business . These agencies offer most of their services online . However, they still have offices, so they can work with travelers in person, answer questions, or provide advice . The examples include:

• www.cvcviagens.com  
• www.viajesfalabella.com 
• www.almundo.com

Independent travel advisor

Independent travel advisors work as independent travel professionals . They don’t align with any particular company or work for one. Their number continues to increase worldwide, especially in the US market. Independent travel advisors provide personalized service to travelers. The examples include:

• https://www.asta.org/

Implants are travel professionals located within another company that has significant travel requirements . They often have a desk or entire office setup so they can meet the company’s travel demands and provide better services . The most noteworthy implants include:

Direct travel agencies

Due to the harsh competition and volatile markets, some businesses in the travel industry decided to offer their travel products directly to consumers through B2C channels . Such is the case with many hotels and airlines . Here are a couple of examples:

• https://www.deltavacations.com/
• https://www.latamairlines.com/
• https://www.wyndhamdestinations.com/
• https://www.viajaconviaja.com/

🛎️ Travel agency types based on the type of services

Finally, we come to a more specific classification of travel agencies. If you take a look at travel agencies only taking into account the type of services they offer , you can see that there are a number of different companies . With this in mind, we give you travel agency types based on the type of services they offer.

Regular services

Most commonly, travel agencies are focused on selling pre-designed products and services . They can sell those products and services on a regular or more exclusive basis . Here are two examples of travel agencies that provide regular services:

• https://www.grayline.com/
• https://www.gct.com/

Tailor-made

Tailor-made travel agencies develop specific itineraries travelers can’t find anywhere else . They often enable clients to create completely custom products and make their own itineraries. Tailor-made travel agencies are either contracting directly or via DMCs. The two examples include:

• https://www.intrepidtravel.com/
• https://www.evaneos.com/

Niche travel companies

Niche travel companies are focused on very specific demographics . They tend to study the particular needs and expectations of consumers in a demographic segment and create itineraries and experiences that reflect those needs. 

LGBT travel agencies specialize in LGBT travel and tailor-made vacations. They carefully create travel experiences to only include supplies that welcome everyone . These agencies also offer advice and adhere to the highest travel quality standards . Here are two examples:

• https://www.protravelinc.com/luxury-vacations/lgbtq-travel

There are also travel agencies that specialize in offering products tailored for students . They enable students and youth to experience the world. These agencies often offer exclusive travel deals emphasizing cheap hotels, tours, and flights . Here are two examples:

• https://acis.com/
• https://www.yes-trips.com/

Seniors have enough experience to know how to make the best use of the travel time. Travel agencies for seniors offer travel tours specifically tailored to the needs of seniors ensuring they are freed up of all their worries so they can enjoy the destination they choose. Here are some examples:

• https://www.goaheadtours.com/escorted-tours/senior-travel
• https://nationalseniorstravel.com.au/

Backpackers

Travel agencies for backpackers offer tailor-made backpacking travel experiences to people who enjoy this particular way of experiencing destinations. The examples include:

• https://www.backpackingtours.com/
• https://www.backandpack.com/

Travel Adventure

Travel agencies can specialize in travel adventures as well. They carefully source their products to ensure they pack enough adrenaline and that “wow” factor so they can attract consumers who prefer their travel to resemble an adventure. Here are examples:

• https://www.exodustravels.com/
• https://www.oattravel.com/

Ski travel agencies specialize in customizing ski and snowboard vacation travel packages . They are often focused on creating or sourcing packages in one specific location. The examples include:

• https://www.esquiades.com/
• https://www.skican.com/

Luxury travel agencies specialize in offering exclusive destinations, hotels, and activities. Their focus is on a rich clientele that reflects their product portfolio. They often offer tailor-made holidays and have special honeymoon offers. Here are a couple of examples:

• https://www.abercrombiekent.co.uk/
• https://www.virtuoso.com/travel  

When it comes to the travel agency types based on the type of service they sell, there can be many unique variations . 

Travel agencies can operate in many ways and play different roles in the distribution chain of travel products and services. To answer your initial question: 

“How many types of travel agencies exist?” There are more than 25 unique travel agency types depending on the segmentation you choose. 

However, it’s practically impossible for an agency to be of only one type. For instance, it can be an inbound, leisure, niche travel agency. Hopefully, our ultimate guide to travel agency types will help you better understand these companies in terms of how they operate and their role in the travel industry.

Subscribe to our newsletter

Yay you are now subscribed to our newsletter.

Cristóbal Reali, VP of Global Sales at Mize, with over 20 years of experience, has led high-performance teams in major companies in the tourism industry, as well as in the public sector. He has successfully undertaken ventures, including a DMO and technology transformation consulting. In his role at Mize, he stands out not only for his analytical and strategic ability but also for effective leadership. He speaks English, Spanish, Portuguese, and Italian. He holds a degree in Economics from UBA, complementing his professional training at Harvard Business School Online.

Mize is the leading hotel booking optimization solution in the world. With over 170 partners using our fintech products, Mize creates new extra profit for the hotel booking industry using its fully automated proprietary technology and has generated hundreds of millions of dollars in revenue across its suite of products for its partners. Mize was founded in 2016 with its headquarters in Tel Aviv and offices worldwide.

Related Posts

Unveiling the 13 Hottest Travel Trends of 2024

13 min. No one knows better than you how dynamic the realm of travel is. Dynamic shifts brought by technological strides, ever-changing traveler priorities, and global events are the new normal in 2024.  How do you navigate this landscape that keeps transforming? You should familiarize yourself with the very travel trends that shape the world […]

30 Most Important Travel Industry Events for 2024

30 min. Many travel industry experts believe that travel industry events play a pivotal role in shaping the future of the travel industry. Why is this so?  It’s because these events foster collaboration, networking, and innovation among key stakeholders in this vertical. As a platform for sharing best practices, trends, and insights, travel industry events […]

Empowering Equality: Mize Leads the Way in Travel Technology

7 min. Are we all equal? Are we all equally represented in the business world? In some professional sectors, there might still be some under-representation of women, minorities, and the LGBTQIA+ community. The tech sphere is no different, but is the travel tech sector a spark of hope? As the business world becomes more diverse, […]

Item added to your cart

The swot of a travel agency (with examples).

Get a watermark-free, fully customizable SWOT analysis in our business plan for a travel agency

We've drafted tons of business plans for travel agencies and, far too often, business owners neglect to dedicate time and thought to crafting a strategic vision for their new project.

It's mainly because they lack the right tools and frameworks. The SWOT analysis is one of them.

What is it? Should you make a SWOT for your travel agency?

A SWOT analysis is an invaluable tool for travel agencies to navigate the complexities of the tourism industry. It stands for Strengths, Weaknesses, Opportunities, and Threats.

Developed as a framework for strategic planning, SWOT analysis helps businesses like travel agencies to dissect their internal dynamics and the external environment. The travel industry, with its ever-changing trends and customer preferences, makes this tool particularly relevant.

If you're running or considering starting a travel agency , a SWOT analysis is a crucial step. It enables you to pinpoint what you excel at (strengths), areas needing improvement (weaknesses), potential avenues for growth (opportunities), and external challenges (threats).

For example, your travel agency's strengths might include specialized travel packages or excellent customer service, while weaknesses might be a limited online presence or dependency on seasonal tourism. Opportunities could emerge from trends like eco-tourism or wellness travel, whereas threats might include economic downturns or travel restrictions.

Travel agency owners often undertake a SWOT analysis when launching new services, responding to market shifts, or facing operational hurdles. It provides a structured way to assess both the business and the broader travel landscape.

Understanding these four aspects can lead to better strategic decisions, helping prioritize efforts and develop plans that leverage your strengths and mitigate your weaknesses.

For anyone embarking on a new travel agency venture, a SWOT analysis is not just beneficial; it's a strategic necessity. It assists in recognizing your agency's unique selling points, areas requiring more investment or improvement, and external factors to watch out for.

While a SWOT analysis doesn't assure success, it dramatically increases your chances by offering a clear, strategic direction for your travel agency.

How do you write a SWOT analysis for your travel agency?

Filling out a SWOT analysis for your travel agency can seem daunting, particularly when you're attempting to foresee potential strengths, weaknesses, opportunities, and threats in the dynamic travel industry.

Engaging in comprehensive market research and perusing travel industry reports is crucial. These resources offer valuable insights into travel trends, customer preferences, and competitive dynamics.

Interacting with other travel agency owners or travel experts is also advantageous. Their practical experiences and insights can provide perspectives that are not always evident in industry reports.

Remember, the essence of a SWOT analysis is not to predict the future with absolute certainty but to equip you with a strategic approach to face it.

Reflect on the unique elements your travel agency brings to the industry.

Perhaps you specialize in exotic destinations that are not mainstream, or you have strong partnerships with reputable travel providers. Your strength might be in an experienced team with deep knowledge of travel planning, or you may offer innovative travel packages that stand out in the market.

These are internal factors that can set your travel agency apart from others.

Identifying weaknesses demands honesty and introspection.

You might face limitations in marketing budgets, affecting your ability to reach a broader audience. Lack of experience in certain types of travel, high competition in your chosen niche, or dependency on a specific market segment could be potential weaknesses.

These areas may require strategic planning, additional resources, or diversification of your services.

Opportunities

Opportunities are external elements that your travel agency can capitalize on.

For example, a rising trend in eco-tourism or adventure travel could be an opportunity. Collaborating with local businesses for travel packages, or exploiting a gap in the market, like offering unique cultural experiences, can be advantageous. Additionally, technological advancements in booking systems or virtual travel experiences could open new avenues for your business.

Threats are external challenges that could impact your travel agency.

These might include changes in travel regulations, economic downturns affecting travel spending, increased competition, especially from online travel platforms, or shifts in travel preferences due to global events like pandemics or climate change.

Examples of Strengths, Weaknesses, Opportunities and Threats for the SWOT of a travel agency

These strengths and opportunities can be leveraged to improve the profitability of your travel agency .

More SWOT analysis examples for a travel agency

If you're creating your own SWOT analysis, these examples should be useful. For more in-depth information, you can access and download our business plan for a travel agency .

A SWOT Analysis for a Luxury Travel Agency

A luxury travel agency specializes in providing exclusive, personalized travel experiences. Its strengths include access to high-end accommodations and unique, once-in-a-lifetime activities. The agency benefits from a knowledgeable team that offers expert advice and tailors travel plans to individual preferences. Strong relationships with premium service providers ensure a high level of quality and exclusivity in its offerings.

One weakness may be the high cost of luxury travel, which can limit the agency's client base to a relatively affluent demographic. Dependence on a small, high-income market segment makes the business vulnerable to economic fluctuations. Additionally, the complexity of organizing bespoke travel experiences can be labor-intensive and time-consuming.

Expanding into emerging luxury markets, such as eco-tourism or wellness retreats, can attract new clients. Collaborating with influencers in the luxury travel sphere can enhance brand visibility. Leveraging technology to provide virtual tours or augmented reality experiences can enhance the planning process and attract tech-savvy travelers.

Economic downturns can significantly impact the luxury travel market. Competition from online travel platforms offering luxury experiences at competitive prices is a growing threat. Additionally, global events such as pandemics or political instability in popular destinations can disrupt travel plans and affect business.

A SWOT Analysis for an Adventure Travel Agency

An adventure travel agency stands out with its wide array of adrenaline-pumping activities like hiking, diving, and mountain climbing. Its strengths include expert guides, access to remote and exotic locations, and tailored adventure packages. The agency's focus on sustainable tourism practices appeals to environmentally conscious travelers.

The niche nature of adventure travel limits its appeal to a specific client base, primarily younger and physically active individuals. The risks associated with adventure activities require comprehensive safety measures and insurance, adding to operational costs. Seasonal variations in weather can impact the availability of certain activities.

Developing partnerships with local communities can create unique, authentic experiences and foster sustainable tourism. Expanding the range of activities to include less intense options can attract a broader audience. Utilizing social media to showcase thrilling travel experiences can increase brand visibility and appeal to younger demographics.

Changes in environmental conditions and natural disasters can disrupt travel plans and destinations. The rise of DIY adventure planning through online resources is a competitive challenge. Additionally, fluctuations in travel regulations and global health concerns can significantly impact the adventure travel sector.

A SWOT Analysis for a Budget Travel Agency

A budget travel agency's primary strength lies in its affordability, appealing to cost-conscious travelers. It offers a variety of budget-friendly packages, including low-cost flights, accommodations, and tours. The agency benefits from strong negotiation skills to secure deals and discounts for its clients.

The focus on low-cost options may limit the quality of travel experiences offered. The agency faces intense competition from online booking platforms and other budget travel agencies. Limited profit margins on budget travel packages can challenge the financial sustainability of the business.

Expanding services to include budget-friendly, off-the-beaten-path destinations can attract travelers looking for unique experiences. Collaborating with budget airlines and hostels for exclusive deals can enhance package attractiveness. Embracing digital marketing and online booking platforms can streamline operations and reach a wider audience.

Economic downturns can lead to reduced travel spending, even among budget-conscious travelers. The rapid change in travel trends and consumer preferences requires constant adaptation. Competition from self-booking options and travel apps offering low-cost solutions is significant.

• Choosing a selection results in a full page refresh.
• Opens in a new window.

• More from M-W
• To save this word, you'll need to log in. Log In

travel agency

Definition of travel agency

called also travel bureau

Examples of travel agency in a Sentence

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'travel agency.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

1898, in the meaning defined above

Articles Related to travel agency

Is it ‘traveling’ or...

Is it ‘traveling’ or ‘travelling’?

A tale of two variants

Dictionary Entries Near travel agency

travel agent

Cite this Entry

“Travel agency.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/travel%20agency. Accessed 30 Apr. 2024.

Kids Definition

Kids definition of travel agency, more from merriam-webster on travel agency.

Britannica.com: Encyclopedia article about travel agency

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

Can you solve 4 words at once?

Word of the day.

See Definitions and Examples »

Get Word of the Day daily email!

Popular in Grammar & Usage

More commonly misspelled words, commonly misspelled words, how to use em dashes (—), en dashes (–) , and hyphens (-), absent letters that are heard anyway, how to use accents and diacritical marks, popular in wordplay, the words of the week - apr. 26, 9 superb owl words, 'gaslighting,' 'woke,' 'democracy,' and other top lookups, 10 words for lesser-known games and sports, your favorite band is in the dictionary, games & quizzes.

• Revenue Management
• Hotel Consulting
• Operations Management
• Asset Management
• Pre-Opening
• Owner Representation
• Turnaround Management
• About Xotels
• Merchant Model

What is the meaning / definition of OTA Merchant Model in the hospitality industry ?

In hotel revenue management when talking about a Merchant Model , we are referring to the commercial model of an OTA ( online travel agency ). The main characteristic of a Merchant Model OTA is that the guest pays the OTA at the time of booking a room, and the OTA afterwards pays the hotel when the actual stay occurs.

In this case hotels give the OTA a net rate , to which a mark-up is applied to determine the sell rate to the end consumers. Generally the mark-up or margin for the OTA is determined in the distribution partnership agreement between the hotel and the OTA .

Third party websites that use the OTA Merchant Model , or merchant rate program , include Expedia, Priceline, Agoda and Getaroom.com. On these websites the hotels obtain a so-called preferred (direct) listing, and the hotel property is placed above product sources from other providers.

Beside the BAR ( best available rate ) Merchant Model OTA also offer additional promotional rate levels, for hotels to attract more demand . Examples are discounts for dynamic packages, allowing the OTA to bundle the hotel room together with a flight or car rental, creating competitive offers.

Another pricing option are Opaque rates which are a type of undisclosed rates where the end consumer can see the offer, with the hotel star rating and approximate location, but not the hotel name. This option gives the hotel the ability to target a segment at a lower price without jeopardizing the standard pricing structure, and unload distressed inventory .

Advantage of the merchant model for hotels, is that cancellation ratios tend to be lower than with other OTA models. This is because some travelers prefer to pay for their travel at time of booking so they can plan / budget more effectively. At the same time they may feel their booking is more secure when they pay in advance, and are less inclined to cancel

• Agency Model
• Opaque Sites
• Merchant Rate

Share This Story, Choose Your Platform!

About the author:.

• Cambridge Dictionary +Plus

Meaning of travel agency in English

Your browser doesn't support HTML5 audio

• air corridor
• amenity kit
• caravanning
• high season
• phrase book
• post-holiday
• put something up
• ranger station
• tourist trap
• trailer park

You can also find related words, phrases, and synonyms in the topics:

travel agency | Intermediate English

Travel agency | business english, examples of travel agency, translations of travel agency.

Get a quick, free translation!

Word of the Day

not a living soul

Dead ringers and peas in pods (Talking about similarities, Part 2)

Learn more with +Plus

• Recent and Recommended {{#preferredDictionaries}} {{name}} {{/preferredDictionaries}}
• Definitions Clear explanations of natural written and spoken English English Learner’s Dictionary Essential British English Essential American English
• Grammar and thesaurus Usage explanations of natural written and spoken English Grammar Thesaurus
• Pronunciation British and American pronunciations with audio English Pronunciation
• English–Chinese (Simplified) Chinese (Simplified)–English
• English–Chinese (Traditional) Chinese (Traditional)–English
• English–Dutch Dutch–English
• English–French French–English
• English–German German–English
• English–Indonesian Indonesian–English
• English–Italian Italian–English
• English–Japanese Japanese–English
• English–Norwegian Norwegian–English
• English–Polish Polish–English
• English–Portuguese Portuguese–English
• English–Spanish Spanish–English
• English–Swedish Swedish–English
• Dictionary +Plus Word Lists
• English    Noun
• Intermediate    Noun
• Business    Noun
• Translations
• All translations

To add travel agency to a word list please sign up or log in.

Add travel agency to one of your lists below, or create a new one.

{{message}}

Something went wrong.

There was a problem sending your report.

An official website of the United States government Here's how you know

Official websites use .gov A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS A lock ( Lock A locked padlock ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

Biden-Harris Administration Announces Final Rule Requiring Automatic Refunds of Airline Tickets and Ancillary Service Fees

Rule makes it easy to get money back for cancelled or significantly changed flights, significantly delayed checked bags, and additional services not provided  

WASHINGTON – The Biden-Harris Administration today announced that the U.S. Department of Transportation (DOT) has issued a final rule that requires airlines to promptly provide passengers with automatic cash refunds when owed. The new rule makes it easy for passengers to obtain refunds when airlines cancel or significantly change their flights, significantly delay their checked bags, or fail to provide the extra services they purchased.

“Passengers deserve to get their money back when an airline owes them - without headaches or haggling,” said U.S. Transportation Secretary Pete Buttigieg . “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”  

The final rule creates certainty for consumers by defining the specific circumstances in which airlines must provide refunds. Prior to this rule, airlines were permitted to set their own standards for what kind of flight changes warranted a refund. As a result, refund policies differed from airline to airline, which made it difficult for passengers to know or assert their refund rights. DOT also received complaints of some airlines revising and applying less consumer-friendly refund policies during spikes in flight cancellations and changes. 

Under the rule, passengers are entitled to a refund for:

• Canceled or significantly changed flights: Passengers will be entitled to a refund if their flight is canceled or significantly changed, and they do not accept alternative transportation or travel credits offered. For the first time, the rule defines “significant change.” Significant changes to a flight include departure or arrival times that are more than 3 hours domestically and 6 hours internationally; departures or arrivals from a different airport; increases in the number of connections; instances where passengers are downgraded to a lower class of service; or connections at different airports or flights on different planes that are less accessible or accommodating to a person with a disability.  
• Significantly delayed baggage return: Passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if it is not delivered within 12 hours of their domestic flight arriving at the gate, or 15-30 hours of their international flight arriving at the gate, depending on the length of the flight.  
• Extra services not provided: Passengers will be entitled to a refund for the fee they paid for an extra service — such as Wi-Fi, seat selection, or inflight entertainment — if an airline fails to provide this service.

DOT’s final rule also makes it simple and straightforward for passengers to receive the money they are owed. Without this rule, consumers have to navigate a patchwork of cumbersome processes to request and receive a refund — searching through airline websites to figure out how make the request, filling out extra “digital paperwork,” or at times waiting for hours on the phone. In addition, passengers would receive a travel credit or voucher by default from some airlines instead of getting their money back, so they could not use their refund to rebook on another airline when their flight was changed or cancelled without navigating a cumbersome request process.  

The final rule improves the passenger experience by requiring refunds to be:

• Automatic: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops.   
• Prompt: Airlines and ticket agents must issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.  
• Cash or original form of payment: Airlines and ticket agents must provide refunds in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.    
• Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees, regardless of whether the taxes or fees are refundable to airlines.

The final rule also requires airlines to provide prompt notifications to consumers affected by a cancelled or significantly changed flight of their right to a refund of the ticket and extra service fees, as well as any related policies.

In addition, in instances where consumers are restricted by a government or advised by a medical professional not to travel to, from, or within the United States due to a serious communicable disease, the final rule requires that airlines must provide travel credits or vouchers. Consumers may be required to provide documentary evidence to support their request. Travel vouchers or credits provided by airlines must be transferrable and valid for at least five years from the date of issuance.

The Department received a significant number of complaints against airlines and ticket agents for refusing to provide a refund or for delaying processing of refunds during and after the COVID-19 pandemic. At the height of the pandemic in 2020, refund complaints peaked at 87 percent of all air travel service complaints received by DOT. Refund problems continue to make up a substantial share of the complaints that DOT receives.

DOT’s Historic Record of Consumer Protection Under the Biden-Harris Administration

Under the Biden-Harris Administration and Secretary Buttigieg, DOT has advanced the largest expansion of airline passenger rights, issued the biggest fines against airlines for failing consumers, and returned more money to passengers in refunds and reimbursements than ever before in the Department’s history.

• Thanks to pressure from Secretary Buttigieg and DOT’s flightrights.gov dashboard, all 10 major U.S. airlines guarantee free rebooking and meals, and nine guarantee hotel accommodations when an airline issue causes a significant delay or cancellation. These are new commitments the airlines added to their customer service plans that DOT can legally ensure they adhere to and are displayed on flightrights.gov .  
• Since President Biden took office, DOT has helped return more than $3 billion in refunds and reimbursements owed to airline passengers – including over $600 million to passengers affected by the Southwest Airlines holiday meltdown in 2022.   
• Under Secretary Buttigieg, DOT has issued over $164 million in penalties against airlines for consumer protection violations. Between 1996 and 2020, DOT collectively issued less than $71 million in penalties against airlines for consumer protection violations.  
• DOT recently launched a new partnership with a bipartisan group of state attorneys general to fast-track the review of consumer complaints, hold airlines accountable, and protect the rights of the traveling public.  
• In 2023, the flight cancellation rate in the U.S. was a record low at under 1.2% — the lowest rate of flight cancellations in over 10 years despite a record amount of air travel.  
• DOT is undertaking its first ever industry-wide review of airline privacy practices and its first review of airline loyalty programs.

In addition to finalizing the rules to require automatic refunds and protect against surprise fees, DOT is also pursuing rulemakings that would:

• Propose to ban family seating junk fees and guarantee that parents can sit with their children for no extra charge when they fly. Before President Biden and Secretary Buttigieg pressed airlines last year, no airline committed to guaranteeing fee-free family seating. Now, four airlines guarantee fee-free family seating, and the Department is working on its family seating junk fee ban proposal.  
• Propose to make passenger compensation and amenities mandatory so that travelers are taken care of when airlines cause flight delays or cancellations.   
• Expand the rights for passengers who use wheelchairs and ensure that they can travel safely and with dignity . The comment period on this proposed rule closes on May 13, 2024.

The final rule on refunds can be found at https://www.transportation.gov/airconsumer/latest-news and at regulations.gov , docket number DOT-OST-2022-0089. There are different implementation periods in this final rule ranging from six months for airlines to provide automatic refunds when owed to 12 months for airlines to provide transferable travel vouchers or credits when consumers are unable to travel for reasons related to a serious communicable disease. 

Information about airline passenger rights, as well as DOT’s rules, guidance and orders, can be found at   https://www.transportation.gov/airconsumer .

An official website of the United States government

Here’s how you know

The .gov means it’s official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

The site is secure. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Take action

• Report an antitrust violation
• File adjudicative documents
• Find banned debt collectors
• View competition guidance
• Competition Matters Blog

New HSR thresholds and filing fees for 2024

View all Competition Matters Blog posts

We work to advance government policies that protect consumers and promote competition.

View Policy

Search or browse the Legal Library

Find legal resources and guidance to understand your business responsibilities and comply with the law.

Browse legal resources

• Find policy statements
• Submit a public comment

Vision and Priorities

Memo from Chair Lina M. Khan to commission staff and commissioners regarding the vision and priorities for the FTC.

Technology Blog

Consumer facing applications: a quote book from the tech summit on ai.

View all Technology Blog posts

Advice and Guidance

Learn more about your rights as a consumer and how to spot and avoid scams. Find the resources you need to understand how consumer protection law impacts your business.

• Report fraud
• Report identity theft
• Register for Do Not Call
• Sign up for consumer alerts
• Get Business Blog updates
• Get your free credit report
• Find refund cases
• Order bulk publications
• Consumer Advice
• Shopping and Donating
• Credit, Loans, and Debt
• Jobs and Making Money
• Unwanted Calls, Emails, and Texts
• Identity Theft and Online Security
• Business Guidance
• Advertising and Marketing
• Credit and Finance
• Privacy and Security
• By Industry
• For Small Businesses
• Browse Business Guidance Resources
• Business Blog

Servicemembers: Your tool for financial readiness

Visit militaryconsumer.gov

Get consumer protection basics, plain and simple

Visit consumer.gov

Learn how the FTC protects free enterprise and consumers

Visit Competition Counts

Looking for competition guidance?

• Competition Guidance

News and Events

Latest news, ftc expands patent listing challenges, targeting more than 300 junk listings for diabetes, weight loss, asthma and copd drugs.

View News and Events

Upcoming Event

Older adults and fraud: what you need to know.

View more Events

Sign up for the latest news

Follow us on social media

-->   -->   -->   -->   -->  

Playing it Safe: Explore the FTC's Top Video Game Cases

Learn about the FTC's notable video game cases and what our agency is doing to keep the public safe.

Latest Data Visualization

FTC Refunds to Consumers

Explore refund statistics including where refunds were sent and the dollar amounts refunded with this visualization.

About the FTC

Our mission is protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.

Learn more about the FTC

Meet the Chair

Lina M. Khan was sworn in as Chair of the Federal Trade Commission on June 15, 2021.

Chair Lina M. Khan

Looking for legal documents or records? Search the Legal Library instead.

• Cases and Proceedings
• Premerger Notification Program
• Merger Review
• Anticompetitive Practices
• Competition and Consumer Protection Guidance Documents
• Warning Letters
• Consumer Sentinel Network
• Criminal Liaison Unit
• FTC Refund Programs
• Notices of Penalty Offenses
• Advocacy and Research
• Advisory Opinions
• Cooperation Agreements
• Federal Register Notices
• Public Comments
• Policy Statements
• International
• Office of Technology Blog
• Military Consumer
• Consumer.gov
• Bulk Publications
• Data and Visualizations
• Stay Connected
• Commissioners and Staff
• Bureaus and Offices
• Budget and Strategy
• Office of Inspector General
• Careers at the FTC

Fact Sheet on FTC’s Proposed Final Noncompete Rule

• Competition
• Office of Policy Planning
• Bureau of Competition

The following outline provides a high-level overview of the FTC’s proposed final rule :

• Specifically, the final rule provides that it is an unfair method of competition—and therefore a violation of Section 5 of the FTC Act—for employers to enter into noncompetes with workers after the effective date.
• Fewer than 1% of workers are estimated to be senior executives under the final rule.
• Specifically, the final rule defines the term “senior executive” to refer to workers earning more than $151,164 annually who are in a “policy-making position.”
• Reduced health care costs: $74-$194 billion in reduced spending on physician services over the next decade.
• New business formation: 2.7% increase in the rate of new firm formation, resulting in over 8,500 additional new businesses created each year.
• This reflects an estimated increase of about 3,000 to 5,000 new patents in the first year noncompetes are banned, rising to about 30,000-53,000 in the tenth year.
• This represents an estimated increase of 11-19% annually over a ten-year period.
• The average worker’s earnings will rise an estimated extra $524 per year. 

The Federal Trade Commission develops policy initiatives on issues that affect competition, consumers, and the U.S. economy. The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize. Follow the  FTC on social media , read  consumer alerts  and the  business blog , and  sign up to get the latest FTC news and alerts .

Press Release Reference

Contact information, media contact.

Victoria Graham Office of Public Affairs 415-848-5121