We live in the startup era, where budding entrepreneurs are passionate about turning their dream project into a lucrative business. Launching a travel agency business can be equally rewarding and intimidating in this booming entrepreneurial era. According to a study, 71% of businesses fail within 10 years of their operation. Turning your business idea into a travel company and getting it off the ground might seem challenging. But it would be best to start with proper planning, make appropriate financial and legal decisions, and much more to keep it operational.
Online travel agencies or OTAs are the most dominant players in the travel market, with a share of $561 billion in 2021. OTAs are one-stop-shop to search and book everything from flights and accommodations to excursions, making it hassle-free for travelers to book for their upcoming trips. A new research by Statista predicts that by 2025, the OTA market is expected to reach $833.5 billion.
7 Steps to Start an Online Travel Agency Business
Owning an OTA business in 2022 is lucrative as 81% of travelers heavily rely on OTAs to search and book for their upcoming trips. Let’s now dive into the top 7 steps that you need to take to start your travel agency business. This post can be a blueprint for launching your online travel agency.
1. Develop a Business Plan
Your online travel agency business plan will be a roadmap for establishing your idea. The document will showcase every aspect of your business- company goals, vision, business strategy, financial plan, products or services, your target audience, marketing strategy and strategic partners: These can be suppliers and tech as well. Developing a business plan will keep you on track with your vision. Also, to stay competitive in the constantly evolving travel market, you need to revise your business plan constantly.
2. Identify your Niche Market
Since the travel industry is highly dynamic and competitive, you need to identify and choose which travel market do you want to target. Start with market research to understand your potential customer needs. In this step, you must focus on:
- Target audience travel behavior and preference
- Types of travel products such as hotels, flights, excursions, cruises, etc. to sell
- Finding niche travel markets
Why is it essential to find your niche to start an OTA business?
Well, the competition is fierce with brands like Booking.com, Tripadvisor, Kayak, Expedia, and much more. You need to stand out and compete efficiently in the travel market. And this can be possible by being an expert in your niche and answering every trip-related question the modern traveler asks.
According to a research some of the booming travel niches that your business can dive into are:
- Bleisure travel
- Adventure travel
- Healthcare tourism
- Eco-friendly or sustainable tourism
- Gastronomy tourism
- Wellness and spiritual tourism
- Heritage and cultural tourism
3. Find the Right Mix of Partners and Inventory Suppliers
The next step is to develop fortifying partnerships that can help your business grow. During the early stage of your startup, you need to work with multiple suppliers or providers to sell your travel products and make money through commissions.
Let’s say your niche is heritage and cultural tourism in Italy. To sell your travel products and grow effectively, you must connect with a wholesaler with the largest hotel inventory, airlines, and other travel services. Talk to various providers, suppliers, compare their prices, services, and the commissions you might earn and then decide on the partnership.
4. Organize your Tech Platform
With a business plan, niche and partners in place, it’s time to build a technology platform. Focus on these five main tech platforms:
- Search engine for customers to book
- Booking engine for automation of OTA workflow
- Back office for business operations
- Commission engine
- Recommendation engine to enhance customer experience
It is difficult to work independently, and that’s why it’s ideal to integrate booking engine and other third-party APIs (flight search, hotel booking by suppliers, NDC, hotel mapping, car rental booking, payment gateways, CRMs) to your website for a hassle-free user experience.
5. Register your Online Travel Agency Business
This is a crucial part of your business. With major tasks off your plate, it’s time to make your travel business legal by registering with the government.
Here is the checklist to do so:
- Choose your business name
- Apply for licenses and permits as per your local laws
- Apply for business insurance
Invest in accounting software
6. Gain Accreditation
Accreditation will make your travel agency business credible. Obtain accreditation from IATA, ARC or any other reputed travel organization, contracts from GDS. This accreditation will review your industry experience, finances and even provide training and support to flourish successfully.
7. Financial Plan
To successfully start your online travel business, you will need sufficient capital.
There are different ways of funding capital. Some of them are:
- Personal savings
- Credit cards
- Money from family and friends
- Venture capital
- Angel investors
- Small business loans and grants
A combination of these funding sources can help you get off the ground. To secure this capital, you need to have a financial plan of how much money you need to raise and how your business will make a profit.
You are now set to take off your online travel agency business with these essential steps. It can be daunting initially, and your startup might have roadblocks, but stay dedicated and remember these steps to start and grow your new business seamlessly.
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