How to start a travel agency business

Travel can be an exciting industry, with diverse niches and industries.

The UK travel market has largely recovered from the impact of Covid on global travel, with the travel and tourism industry’s contribution to the UK’s GDP totalled nearly £240 billion in 2023.

Despite the increase in online bookings, people still value expert advice – especially for complex, tailor made, cruise, family, or premium trips.

That’s where a modern travel agency business shines: you combine trusted guidance with robust financial protection and easy digital service.

Why start a travel agency business?

Starting a travel agency could be a rewarding move if you love helping others plan memorable trips.

You can choose a model that fits your goals and shape a varied, creative role around tailor made itineraries, group trips, cruise, adventure, or premium travel.

Initially, you might choose a low-cost home or online business model with minimal overheads, or opt for a high-street location to attract walk-in customers.

As a travel agent, you could earn money from booking fees, commissions, and repeat clients by delivering excellent service.

However, it’s essential to remember that starting a business like this can present its own challenges.

Compliance is significant – you may need to navigate the Package Travel Regulations, ATOL, data protection, and wider consumer law.

Card payments bring chargeback and fraud risk, and seasonality can strain cash flow due to deposit timings, supplier schedules, and cancellations.

Profits can be squeezed by online rivals and constantly changing prices, and when flights are disrupted, weather is bad, or strikes happen, you’ll need clear plans and regular updates to look after customers.

What type of travel agency should I start?

There are several ways to start a business in the travel industry, including buying a franchise, working under a host agency, or starting from scratch.

Franchises

A franchise allows you to operate under a well-established brand with pre-existing training, systems, and supplier agreements.

While it may be quicker to start, you’ll need to pay fees and adhere to the franchisor’s rules, which could limit your creative and professional freedom.

Host agencies

A host agency gives you access to systems, licences, commission deals, and support, while you trade under your own brand.

Host models could offer flexibility and lower set-up costs, but you may have to share commissions and rely on the host’s platform.

Independent agency – launching your own brand

Launching a travel agency business from scratch could offer you full control, your own licenses, and the ability to keep all profits.

However, establishing it may take longer and incur higher costs.

You would also need to decide whether you want to work in person, online, or a combination of both.

Talking face-to-face with your customers could build brand trust and credibility faster, but this may come with associated costs, such as travel and premises overheads.

An online travel agency run from home could be more cost-effective, open 24/7, and scalable beyond your local area.

However, you may face intense competition and struggle to establish customer trust quickly.

You might consider a hybrid model that involves a small studio or pop-up presence, complemented by a strong online set-up.

This could help you keep costs down while still giving clients a place to meet you and feel assured.

Decide on your niche

Travel agencies come in various shapes and sizes, largely determined by their niche.

For instance, you may decide to specialise in honeymoons, adventure holidays, corporate trips, cruises, solo tours, or family breaks.

Alternatively, you might choose a smaller niche, such as luxury, accessible travel, pet-friendly, or a single destination.

Specialisms could improve margins and make your marketing more efficient.

It could also help you develop deep expertise to improve your services and work more efficiently.

However, the benefits of choosing a niche may mean you need to trade off for a smaller pool of target customers.

You could also find that your business is affected by seasonality and changing customer behaviour.

Write your travel agency’s business plan

A business plan could be essential for bringing your travel agency dreams to life.

It may help to keep your business on track and could include key information like:

• proposition and niche – what you sell and to whom
• operating model – host/franchise/independent
• revenue model – such as commissions or service fees
• target customer details
• competitor analysis
• start-up costs
• cash flow forecasts
• marketing strategies.

Having a detailed business plan could also help you secure funding to start your travel agency.

Download our free business plan template.

Business structure and registrations

Choosing the right business structure

Begin by selecting the appropriate business structure for your travel agency, as it will significantly impact your operations and tax obligations.

Setting up as a sole trader is the simplest and has the lowest admin.

You’ll be personally liable for business debts – and this is a common route for homeworking or hosted agents trading primarily as agents.

If you want to minimise personal risk, you could opt to set up a limited liability company.

This structure is a separate legal entity that protects your personal assets; it is often preferred for organising your own packages or dealing with corporate clients.

It may appear more professional to customers and stakeholders, but it involves additional administration, including accounts, filings, payroll, and directors’ duties.

You may also choose a partnership structure if you plan on setting up a business with others.

Each partner pays income tax through Self Assessment on their share of profit, and admin includes a partnership tax return and returns for each partner.

A limited liability partnership (LLP) is a separate legal entity that provides its members with limited liability while functioning similarly to a partnership.

It may also present a more professional image.

Registration and bookkeeping

If you operate as a sole trader, you will need to register with HMRC for Self Assessment and a UTR.

General partnerships must also register with HMRC (both the partnerships and partners), but if you opt for an LLP, you will need to register with Companies House first for a company number, then inform HMRC about Corporation Tax within three months of trading.

You will also need to file an annual HMRC partnership return.

Limited companies must also register with Companies House.

You will also need to register for PAYE if you pay yourself or anyone else a salary, and then register for VAT when you pass the threshold or if it makes commercial sense.

Opening a business bank account may help you organise your professional finances.

You can use online accounting tools to automate invoicing, match bank transactions, and save digital receipts for each booking.

Follow Making Tax Digital guidelines using compatible software for VAT – mandatory for all VAT-registered businesses – and for Income Tax, which will be required from April 2026 for sole traders and landlords with qualifying income over £50,000.

Insurance

You may want to consider purchasing small business insurance to protect yourself, your team, and your business.

Professional indemnity insurance helps to protect you against errors in advice or services, while public liability insurance covers injury or property damage claims involving the public.

Once you hire employees, employers’ liability insurance is a legal requirement.

You may also want to consider getting cyber insurance to cover data breaches, fraud, and system attacks.

Licensing, legal, and financial protection essentials

When setting up a travel agency business, several legal considerations must be taken into account.

Package Travel and Linked Travel Regulations (PRTs) – If you sell packages or linked travel arrangements to UK consumers, PTRs set your duties, including the information you provide, organiser liability, and insolvency protection

ATOL (Air Travel Organisers’ Licence) – usually required if you sell flight inclusive packages as the organiser to UK consumers or sell certain flight only seats. If you act as an agent for an ATOL holder, ensure you issue the correct ATOL Certificate

ABTA membership – optional, but it helps build consumer trust in your business, and provides guidance useful guidance

IATA/BSP accreditation – allows you to issue airline tickets directly; however, you can also use consolidators or a host agency to reduce costs

insolvency protection – ATOL for flight packages; for non flight packages, use a bond, trust account, or insurance. Clear protection wording should be given on confirmations, and ATOL Certificates should be issued immediately where required.

travel insurance – if you plan to sell travel insurance, you must be FCA authorised or an appointed representative of an authorised firm. Provide compliant documents and ensure staff understand insurance details

payment handling – consider using reputable payment system providers, following SCA/3-D Secure rules, and maintaining strong records to reduce chargebacks. You could safeguard client money with ATOL and trust account rules, using separate accounts where needed

consumer protection – comply with the Consumer Rights Act and consumer protection rights by providing clear, honest information, fair terms, and transparent pricing. Follow Package Travel and Linked Travel Arrangements Regulations, including organiser liability and cancellation rights

dispute resolution – offer or signpost Alternative Dispute Resolution (ADR) via ABTA

data protection – as you will be handling personal customer data, follow UK GDPR and get consent for marketing, as well as actively protect sensitive data, such as passport details. Consider registering with the ICO and paying the data protection fee, which most travel agencies do.

Funding your travel agency business

There are several ways you could fund your travel agency business, including personal savings, crowdfunding, bank loans, government business grants, or a loan from friends and family.

Franchises sometimes offer payment plans or onboarding finance that could lower your set-up costs.

Read about how to fund your franchise.

You might also consider a Start Up Loan, which could provide you with a government-backed personal loan to help fund or scale up your business.

Discover more about Start Up Loans.

How to market and grow your travel agency

Effectively marketing your travel agency could help it grow into a successful business.

You might do this by:

• creating a professional website
• optimising your website for SEO – discover six ways to boost your website’s visibility
• using social media marketing to build brand awareness
• partnering with other local businesses
• attending trade events
• networking within your industry
• sponsoring local events
• creating a monthly or bi-weekly newsletter

You may also want to complete a Google Business Profile to help people find you in search and on Google Maps.

Some marketing ideas may require more budget than others, so you may want to test the more cost-effective options and measure their results before investing in more costly activities.