'How do travel agents make money?' This is a question I hear often. Usually the people asking are either those who are interested in becoming a travel agent or it's coming from those who find out I work in the travel industry and they can't believe travel agencies are even still around! (Um, they are, and they're the new darlings of the time-starved, information-overloaded travelers of today!)

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I'll go more in-depth in just a second, but here's the basic step-by-step of how most travel agents make money:

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A traveler works with a travel agent and finalizes their itinerary.
The travel agent books the various vendors (air, hotel, car, tours, cruises, etc) used in the traveler's itinerary through a special travel agent portal or by calling the vendor and giving their accreditation number. Depending on the booking type and the agency, the agent may also charge the traveler a separate consultation or service fee.
The vendor recognizes the travel agency through their accreditation number. Using the accreditation number, the vendor pulls up information about the agency, including the travel agency's commission level and the address where the commission check is to be sent.
The travel agent makes the booking and is credited with the booking via their accreditation number.
The commission is paid to the travel agent. For most trips, the vendor pays commission to the travel agent after the client has traveled. For most cruises, the travel agent is paid their commission afterfinal payment (typically about 60-90 days before the sailing).

Now, if you're looking for how travel agents make money that are employees of an agency, that falls more into the territory of travel agent salaries. You're at the right site, just the wrong article. :) Here's our article that deep dives into travel agent salaries.

A Short History

To give you an answer on how travel agents make money, it's important to know a little history. I promise to keep it short—it's actually pretty fascinating how the industry has changed over the years.

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In the good 'ol days, a large portion of travel agency income came from airline commissions. Since tickets were expensive, in demand, and could only be ticketed by agents or the airlines, they were the bread and butter of any agency.

What about commissions from tours, hotels, cruise lines? Those were just icing on the cake.

They were travel agents in every sense of the word because they were agents of travel vendors. Their revenue came from the commissions earned from selling travel products. However, when airline commissions were cut and capped in the 1990s — sad face! — the main revenue base for travel agents disappeared. It hurt. A lot.

Airlines cut their commission because they could now reach travelers via the web and online travel agencies (OTAs) like Expedia and Booking.com. Travel agents, who were once wined and dined by airlines, were left out in the cold. Ouch.

With this rapidly changing travel landscape, travel agents needed to find a new way to make money.. and fast. And that's where our modern day story of 'How Do Travel Agents Make Money?' begins.

A Shift in Business Models

With commission cuts and clients' ability to book on their own, agencies needed to adjust to the new environment. The travel agency community was, quite honestly, devastated by this. Many agencies that didn't adapt quickly enough had to close their doors.

Okay, okay. Before you blow through a whole box of tissues, I want to assure you that the ending is a happier one. Stick with me. :) While smaller than in its glory days, the travel agent community has found an equilibrium.

From Storefront to Home Based

Starting around 2013, travel agents started to see their numbers increase. Where there was once a worry that there wouldn't be any travel agents to fill the shoes of those that were retiring, we now have an influx of new blood, eager to take advantage of the flexibility and travel opportunities a travel agent career provides.

Check out these industry stats:

In 2013, according to the American Society of Travel Advisors (ASTA),nearly 70% of the agency workforce was older than 55, and the percentage of agents over age 65 had nearly doubled, from 17% to 32%, in the past decade.
Year after year, stats from our HAR's income surveys indicate that the average age of an agent lands in early to mid 50s, with the majority working from home.

Did you catch that?!? We went from 70% of the workforce being over 55 in 2013, to 80% of the workforce being younger than 60 in 2018! While ASTA and HAR do tend to attract different demographics — ASTA was traditionally larger, retail storefronts and HAR is typically smaller, non-storefront agencies — but even so, the trend is clear. Travel agents are no longer in danger of going extinct. (HUZZAH!!!)

A big reason for this new influx? The rise of the agent that works remotely. Call them solopreneurs/home-based/location-independent — whatever hip term you want to use. They may be harder to see without a storefront, but this new segment of the industry is now a force to be reckoned with!

By and large, the most popular agency model has switched from the storefront agencies of the past, to the remote agencies of today.

Think it's too good to be true? Read up on a travel agent career outlook which has the data to back it up!

Moving to Diversify Income

The travel agency business model (both corporate and leisure) is moving to become less dependent on commissions. Why the change? The easy answer is that commissions from airlines and other vendors are lower than in the past. They're not gonna catch agencies off guard again!

So how do travel agents make money in a world where their commissions are lower? One travel agency solution to diminishing commissions was to diversify their income and begin charging fees. This helped agencies steer away from complete reliance on vendor commissions, helping them pad a bottom line that was once cushioned by generous airline and vendor commissions.

Along with the loss of airline commissions, travel agents face the challenge of

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