It’s a typical scenario based on a somewhat limited perspective: A travel
industry neophyte dreams of becoming a travel agent who freely and luxuriously
traverses the globe to exotic adventures while experiencing diverse climes,
cuisines, and cultures. Granted, having the passion and imagination required to
"dream up" and put together extraordinary travel adventures for
clients is beneficial to any travel advisor! However, to build and sustain a
viable business in the travel industry, that dreamer’s passion must run much
deeper and cover much more than the dream trip itself.
When I’m mentoring new travel advisors, they often comment on my
passion, saying it makes them want to hit the ground running! Although they
mean it as a compliment, and I certainly wouldn't be where I am today without
it, I explain how passion for travel is just a part of the picture. I
demonstrate all the ways I capitalize on my passion to drive every aspect of my
success. I believe it’s critical that those new to the industry acquire a
realistic perspective on how they, too, can do this, including not only finding
and pleasing clients with top-notch service but also identifying and applying
best business strategies and practices to support and build their brand and
reputation, as well as identifying and managing inherent risks that could
threaten it all.
Based on my personal experience, this article will help new advisors
adopt a realistic perspective on key risks that often are overlooked and will provide
practical tips for addressing those risks. In addition, it will cover the
essential contracts and tools that every travel agency should have to help
ensure the business is not only passion-driven but also well-protected and
compliant with industry regulations.
Balancing Passion with Practicality and Perseverance
From the start, travel advisors who combine their passion with solid
business sense from the real world and a good work ethic are miles ahead of the
dreamers who think navigating the travel industry will be easy! Why? Because,
to be sustainable, every operation’s leadership must handle the business of the
business, including such areas as understanding and managing legal requirements
and agreements, overseeing the effectiveness of financial and client
relationship management, and ensuring the appropriate systems, processes,
tools, and safeguards are in place.
Focus Your Passion on Risk First
Rather than focusing on the colors of your logo and fretting about
your website, your first step should be to understand the risks and how you can
manage them. And by addressing first things first, not only will you set a
solid foundation for your business and its success, but also you’ll minimize
the risks and maximize the potential for sustaining that success.
Let’s examine three key risks that could cause your business to fail
even before you’ve really gotten your feet wet!
1. Legal Compliance Risk
Legal compliance is a fundamental aspect of running any business, but
in the travel industry, it’s particularly complex. As a travel advisor, you're
not just planning trips—you're managing a company that must adhere to a variety
of legal requirements. This includes basics like proper disclosures and
limitations on liability. A comprehensive suite of contracts and agreements
tailored to your specific operations is vital. NOTE OF WARNING: While it may be
tempting to utilize ChatGPT or other AI tools to DIY your agreements, we’ve
learned that these technologies do not understand the intricacies of the travel
sector, and advisors are often left with glaring gaps in protection. Either use
an attorney or another trusted source to ensure that your contracts are legal
and will hold up in court.
What are the Essential Legal Contracts and Agreements?
- Client
Terms and Conditions: Clearly define the scope of your services,
payment terms, cancellation policies, and liability limitations. These
terms protect you and your clients, ensuring everyone understands their
rights and obligations.
- Website
Terms and Conditions: Your website is often the first point of
contact with potential clients. Ensure it's legally protected with
appropriate terms and conditions that address privacy policies,
disclaimers, and intellectual property rights.
- Travel
Insurance Waivers: To protect your agency from liability,
ensure that clients sign this document to indicate whether they’ve chosen
to purchase travel insurance or not. This signed waiver acknowledges that your
customers understand the coverages and limitations of the plan they have
chosen or if they waive travel insurance, that they have assumed the risks
associated with declining protection.
- Planning
Fee Agreements: As more travel advisors charge fees for
their services, having an explicit agreement that outlines these fees,
what they cover, and the terms of payment protects you and your time with clarity
and transparency.
- Credit Card
Authorizations: Proper credit card authorizations are
critical for protecting your business from chargebacks and fraud. Use
secure tools to collect payment card information and signatures
electronically to maintain a clear audit trail.
- Independent
Contractor Agreements: If you hire independent contractors (ICs),
ensure that you have robust agreements in place that cover the terms of
their work, payment, intellectual property rights, and confidentiality.
- Group
Booking Agreements: When working with group leaders or
organizing group travel, detailed contracts should outline the
responsibilities of each party, payment schedules, and cancellation terms.
SIDEBAR
Travel Industry Solutions CEO Sheila Folk believes that, in addition
to having the proper contracts in place, sound risk management demands that
advisors understand what new regulations mean for their business. “Changes in
data protection laws or recent changes related to airline refunds can
significantly impact how travel advisors operate,” Sheila warns. That’s why her
company takes a holistic approach to providing industry services and guidance.
They not only deliver critical tools and products, including attorney-prepared,
continuously updated contracts, but they also offer advice on what the updates
mean and how they impact a travel advisor’s business. “Advisors need to
understand how changes affect all areas of their business, from client
communication to supplier interactions. They must stay informed about the risks
to stay protected,” she says.
2. Financial Management Risk
While it’s exciting to dive into booking trips and earning
commissions, financial planning is part of your business foundation and is critical
for your long-term success. Without a solid financial plan, your business can
be vulnerable to cash flow problems, debt accumulation, or even failure during
slower seasons or economic downturns.
Actionable Steps:
- Develop a
Comprehensive Financial Plan: Start by outlining your expected
income and expenses, including projections for slow periods and unforeseen
costs. This plan should cover at least the first year of your operations
and be regularly updated as your business grows.
- Implement a
Robust Accounting System: Invest in accounting software that tracks
your income, expenses, and profit margins. This will help you make
informed decisions, identify areas for cost savings, and ensure that your
business remains financially healthy.
- Seek
Specialized Financial Advice: Consider working with an accountant
or financial advisor who understands the travel industry to help you
manage your finances effectively, optimize your tax strategies, and plan
for future growth.
3. Client Management Risk
Client management is at the core of your travel advisory business.
Building strong, lasting relationships with clients requires more than just
good intentions; it demands clear communication, setting expectations,
consistently delivering exceptional service, and an ongoing commitment to
growth.
Actionable Steps:
- Establish
Clear Communication Channels: Ensure your clients know how to
reach you and what response times they expect. Regular updates and
check-ins are essential for preventing misunderstandings and ensuring
clients feel supported throughout the planning process.
- Set
Expectations Early: Earn your client's trust by being transparent
about your services, fees, and the process for making changes or
cancellations from the outset. Explain any additional costs, just like
fees for concierge services, so there will be no misunderstandings. Providing
detailed terms and conditions can help prevent disputes and ensure a
positive experience for both you and your clients.
- Establish
an Effective Onboarding Process: By putting in place a detailed
process for creating a solid client relationship from the very beginning,
you will mitigate many of the potential risks that are inherent when
working with new customers. Such a process will build trust and help
ensure long-term relationships.
- Use CRM
Tools: A Customer Relationship Management (CRM) system is invaluable
for tracking client interactions, preferences, and booking history. By
using an effective CRM, you can personalize your service and build
stronger relationships with your clients, which leads to repeat business.
- Solicit
Feedback and Act on It: Encourage clients to share their
experiences and use their feedback to improve your services. Promptly
addressing any issues that arise shows your commitment to customer
satisfaction and can turn a potentially negative situation into a
trust-building opportunity.
- Invest in Continuous Learning: Ensure that you
stay abreast of the latest travel information so your clients can trust you to
provide the best and most informed advice. Because the industry is constantly
evolving, staying competent and competitive requires a commitment to ongoing
professional development. Attend industry events, participate in training
programs, and network with other travel professionals to stay informed and
enhance your skills.
SIDEBAR: Steps to Protect Your Business
As we’ve discussed throughout this article, it’s essential to take
proactive steps to protect your business from day one. Focusing on the business
of your business—legal compliance, financial planning, and client management—will
help mitigate risks and position you for long-term success.
- Set up Comprehensive Contracts: Ensure you have
all the necessary contracts in place, from client terms and conditions to
waivers and planning fee agreements.
- Implement Secure Tools for Transactions: Use secure
tools for collecting credit card information and signatures to protect your
business from fraud and ensure a proper audit trail, which includes a
timestamp, IP address, and email address for each interaction. This is crucial
for defending against chargebacks or disputes.
- Stay Informed and Compliant: Ensure your
agreements are regularly reviewed and updated by a legal professional to ensure
they comply with the latest industry regulations.
Turn Passion into Sustainable Success
Remember, while passion drives you, good processes will sustain you.
Balancing your passion for travel with a solid business foundation is the key
to long-term success as a travel advisor. By addressing the critical risks of
legal compliance, financial planning, and client management and ensuring you
have all the necessary contracts and tools, you can build a thriving business positioned
to stand the test of time. By integrating the strategies outlined here, you'll
be well on your way to creating a successful travel advisory business.
ABOUT THE AUTHOR
After achieving notable success as a multi-million-dollar travel
advisor and agency owner, Sheila Folk founded Travel Industry Solutions to
provide innovative and comprehensive legal protection and operations tools to
travel professionals. Backed by more than 20 years of experience in technology,
product development, and travel supplier management, Sheila is a sought-after speaker
on such topics as customer attraction and retention, innovative practices, and
business process optimation.
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