Report: Agency Employees Generate Average $150K in Revenue

In one of the few analyses of the retail travel industry in the U.S., a new report from First Research states that the average annual revenue generated by each employee at a traditional agency amounts to more than $150,000. 

However, the report, “Travel Agencies and Services,” states the obvious when it observes that while travel agencies in the U.S. measure their business by sales volume, that figure is not close to the actual revenue generated from commissions paid for their bookings. And, the analysis ignores cruise revenues because the U.S. government does not classify cruises as part of its travel services category, according to a spokesman for First Research, which released the report.

Large companies include Carlson Wagonlit Travel, Expedia, Sabre Holdings (which owns Travelocity) and the travel agency operations of American Express.

First Research told TMR that it conducted its survey in July. A key finding is that the industry is concentrated: the 50 largest companies account for about 50% of industry revenue.

Also, despite automation, the industry remains labor-intensive, states the report.

The profitability of individual companies depends on marketing, and the survey found that large companies have an advantage in being able to provide a wider range of services, especially to corporate customers, and to afford sophisticated Web sites.

Small companies can compete effectively by providing service to a few large customers or by serving a local market, First Research stated.

Two major factors have shaped the industry in recent years: sophisticated pricing schemes developed by the airlines to maximize profitability, and the emergence of the Internet as a widely available information and booking tool.

The survey, which included 15,000 travel agencies in the U.S., found that major services are reservations or tickets for airline flights, tours, hotels, and entertainment. Airline reservations account for about 25% of industry revenue, tours and cruises 15%, and hotel reservations 10%.

The spokesperson for First Research told TMR that the survey did not delve into revenue figures and that cruise vacations are not included in the report’s “major services” section because cruise lines are classified separately from travel agents in the government databases the analysts used for the survey.

The report also states that the U.S. travel service industry includes less than 20,000 companies with combined annual revenue of $40 billion. However, in addition to the 15,000 travel agencies, this figure includes tour operators, convention and visitors bureaus, and other entities, a spokesperson said.