For most trips, the provider pays a commission to the travel agent after the customer has traveled. A travel agency earns money by charging fees for different elements of the trip. Instead of charging a commission for booking tickets with airlines or hotel rooms, travel agents make money by charging a service fee for each part booked. With fees ruled out, many travel agencies earn most of their revenue through fares.
Some may charge you a fixed fee for a basic plane ticket and more for complex itineraries. Others may charge by the hour, and the rate will depend on the amount of research your itinerary requires. As such, agents must often be able to prove themselves to travelers in order to maintain their business. During the coronavirus pandemic, advisors worked overtime canceling trips, doing everything possible to get their customers home safe and sound.
They spent a lot of time keeping up to date with constantly changing travel regulations and changing travel bookings, even though commissions stopped. Some travel agencies specialize in specific types of trips, such as corporate trips or group trips, and earn money based on their experience in that area. Travel agencies can also pay their employees a commission or additional payment, depending on the number of businesses booked by the travel agency. In general, the main revenues of leisure travel agencies come from the commissions that sellers pay for vacation packages, cruises, flights and other add-ons.
Airlines, in particular, have stopped giving agents a commission for bookings, as the Internet era has made it very easy for travelers to book their own flights. For example, hoteliers may pay more to have photos and a more detailed description of their property appear while travelers search. Airline tickets are the lifeblood of corporate agencies (also known as TMC or travel management companies). In addition to air travel, corporate travel agencies earn commissions when booking cars and hotels for business travelers.
So, if the travel agency or agent charges a fixed fee, the end result for the traveler is still a ticket with a lower price. Before the 1990s, a large part of travel agencies' revenues came from fees for tickets booked with airlines and hotel bookings. Some agencies, in particular online travel agencies, make money directly from travel providers by offering premium accommodation options. I come from a lineage of travel agents and I love hearing stories from my father and my late grandfather about travel agencies of yesteryear.
Nowadays, if you're looking at how travel agencies that are employed by an agency make money, that falls more into the territory of travel agency salaries. When you want an itinerary designed just for you - what we call an F-I-T trip in simple language - you would call it a personalized itinerary. Nowadays, these are your leisure travel agencies (which you probably think of as a travel agency).
