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Travel agents handle every aspect of their customers’ travel needs, from booking airline tickets to accommodation and tours at their destination. As a travel agent, you can sell to consumers or retailers. This choice will influence your entry requirements into the industry. You can get your travel agency off the ground with minimal resources and you can even operate it from home. However, this industry is highly competitive in New Zealand, which may be your highest barrier to entry. It is essential to create a business plan to inform and guide your decisions. This article will discuss:

  • the steps to establish a travel agency in New Zealand;
  • some of your legal and tax obligations; and
  • how to promote your business online to attract more customers.

Plan Your Business

Travel agents can operate at a retail or wholesale level. A wholesaler sells airline tickets, accommodation and tours to retail travel agents. Retailers have no specific entry requirements in New Zealand. Wholesalers, on the other hand, generally need a qualification such as a degree or National Certificate in Travel. They also need relevant retail experience. 

In a competitive industry like travel, it is crucial to define how you will differentiate yourself from your competitors. You can do this by finding a niche in the marketplace and narrowing down your: 

  • service offering; and 
  • target segment. 

Once you test and settle on a winning idea, it is good practice to explain your value proposition in a business plan. This document: 

  • allows you to demonstrate the financial feasibility of your business to potential investors; and 
  • helps you make strategic management decisions. 

The essential sections of a travel agency business plan should include:

  • your service offering;
  • an analysis of the market and the segments you will target;
  • your business strategy and implementation;
  • management and operation strategy for key functional areas; 
  • your employment needs; and
  • financial forecasts for a minimum period of twelve months (projected cash flow and profit and loss, sales forecasts, break-even analysis and business ratios). 

Choose Your Business Model and Structure 

Starting a travel agency can be relatively inexpensive. You can get your business off the ground with limited staff and capital. For instance, your larger setup expenses will be on market research and branding and marketing. 

This means that you can choose to structure your business as a sole trader to keep things simple. However, if you have plans to grow your agency in the near future, it may be a good idea to consider a more financially secure structure such as a company. There are various considerations to keep in mind when you make this decision.

Given the competitive nature of the industry, you can maximise your chances of success by joining a franchise network. This will give you access to an established brand, processes and booking system.

Choose a Location for Your Travel Agency

If you operate an online travel agency with limited staff, you can save on startup costs by operating your business from home. For example, you can reduce your tax liability at the end of the year. However, you may need to comply with local zoning regulations. Further, if you employ staff, you must fulfil your legal obligations towards your employees, relating to: 

  • employment; and 
  • health and safety.

If you decide to operate a retail business from an office location, it is important to analyse your catchment area before committing to a lease. A catchment analysis allows you to identify: 

  • the socio-demographics of the people who live within the vicinity of this location; 
  • how far your potential customers are prepared to travel; and 
  • pricing and promotions that will help you drive foot traffic.

Set Up Your Business 

There are a number of key steps that you need to take when setting up a business in New Zealand. These include: 

  • choosing your business name; 
  • protecting your intellectual property;
  • registering your business and get an NZBN number;
  • getting insurance for your business;
  • getting an IRD number for your business; 
  • registering for GST;
  • understanding your employment obligations; and 
  • designing health and safety policies. 

Promote Your Business Online

When planning their travel, your potential clients will do most of their research online, unless you are planning to target an older demographic. Therefore, you will need to develop a strong online presence for your travel agency. The first step is to understand who your potential clients are and how they behave throughout their purchase journey. 

For example, if you are targeting a wide range of potential customers in the travel industry, you may want to break your customers up into smaller segments, such as: 

  • uni students; 
  • young professionals;
  • families; and
  • couples without kids. 

You need to gather sufficient data about your buyer personas, because this will guide your online marketing strategy, from your choice of channels to how you communicate with them. 

Your Marketing Strategy and Technology

To promote your travel agency online you need a website with a reliable booking system that clearly outlines your service offering and makes it easy for your potential customers to get the information they are looking for. If you have a local business, it is also beneficial to set up a Google My Business listing that indexes your business contact details and includes a link to your website. 

You should budget for 5% to 15% of your total revenue towards your marketing activities every year. A significant part of this spend often goes towards attracting potential customers to your website. To do this successfully, you will need to produce high-quality content and invest in paid advertising.

Depending on your target audience demographics, your marketing channel mix should include at least: 

  • a blog; 
  • an Instagram and Facebook account; and 
  • a customer relationship manager (CRM). 

Your blog, for example, should answer the most common questions your potential customers research throughout their buyer journey. You could also offer:

  • a wide range of travel tips; or
  • outline the perfect itinerary for your readers.

On the other hand, your Instagram account could provide your audience with visual content, such as travel inspiration and beautiful images of the destinations they would like to visit.

You should record your key information about your leads and customers in your CRM. This allows you to analyse their demographics and purchase behaviour, as well as communicate with them (if they give you permission to do so) throughout their buyer journey. 

For example, your email comms strategy should include at least: 

  • a welcome email; 
  • a monthly newsletter; 
  • an abandoned cart or quote reminder; and 
  • personalised offers. 

Know Your Legal Rights and Obligations   

There are several legal considerations you need to think about before opening the doors of your travel agency, including:

  • that your payment terms should balance your clients’ and your business needs, for example, customers pay a 15% deposit upfront, with the balance due in 30 to 60 days prior to departure;
  • the need to inform your customers of how you will collect, use, disclose and store their personal information and have a privacy policy in place;
  • asking your customers to provide you with a copy of their insurance policy if they want to organise it themselves;
  • whether your cancellation policy will allow you to minimise your losses without affecting your customers’ satisfaction; and 
  • whether to include disclaimers and limitations of liability in your terms and conditions, such as limiting your responsibility for any immigration issues.

Key Takeaways

From creating a business plan to developing your marketing strategy, there are a number of key startup tasks to complete before opening the doors of your travel agency. These include: 

  • creating a business plan to help you validate your business idea; 
  • choosing your business model and location; 
  • deciding on a business structure and registering your business;
  • getting an IRD number for your business and determining your tax obligations; and
  • understanding your legal rights and obligations. 

Most of these tasks are relatively easy and you can do many of them online using the New Zealand Government’s tools. However, it is important to get these steps right so that you do not violate your legal obligations. If you need help with the legalities of getting your travel agency off the ground, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

How do I start my own travel agency?

To start your own travel agency, start by selecting a service offering, narrowing your target segment and planning your business strategy. Then, you’ll need to choose your business structure and register your business with an NZBN and IRD number.

How should I promote my travel agency?

One of the best places to promote your business is online, through digital marketing. This is because the majority of your potential customers will research their trip on the internet. You should create a blog to write about travel experiences and post on social media to promote desirable travel destinations. Think about ways to differentiate yourself. Will you offer great service and the best options for travel? Or perhaps you can provide the best deals on tour packages in the south pacific?

How much does it cost to start up a travel agency?

There are a range of startup costs associated with opening a travel agency. However, you can reduce your costs by operating your business from home. This is a viable option for new, online agencies with a small team. Depending on your business plans and marketing strategies, your startup costs for a small agency may range from $4,000-$25,000.

What legal obligations should I be aware of when starting a travel agency?

When you start your travel agency, you will need to consider your business registration, employment contracts and service agreements with your customers. Importantly, you must think about your payment terms, collection and use of personal information, insurance, cancellation policies and disclaimers of liability.

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