U.S. Travel Agencies Expect to Be Profitable Again in 2007, 2008

The second annual Financial Benchmarking Report, the results of which provide travel agencies with data that can be used to pinpoint areas of excellence, as well as areas which can be improved was released by ASTA. Among the key findings, the report discovered that of those surveyed, the majority (75.6 percent) were profitable in 2006 and similarly expect to be profitable again in 2007 and 2008.

The average profit (as defined by percentage of revenue) reported for 2006 was 7.1 percent, and forecasts for 2007 and 2008 show stronger profits are expected. The study, which Premium members receive as part of their membership package, is the only industry report of its kind to specifically examine travel agency financial benchmarks, including revenue sources and annual travel agent revenue

Not surprisingly, the study found that labor and rent are the two largest areas of operating expenditures. Employee salaries and benefits alone represent 49.6 percent of operating expenses, although that percentage varied, anywhere from 41.5 percent to 59.0 percent depending on the responding agency’s regional location.

As such, rent and labor represent the two best options for agencies looking to improve their financial situation, either by cutting expenses or, as in the case of labor, increasing revenue through increased productivity.