How to Start a Travel Agency Business in India [Detailed Procedure]

To start a travel agency business in India you need to have a legal business entity with goods and service tax registration. You’ll also need a government approved travel agency license to become a verified IATA agent.

Travel agency business in India

Travel and tourism is a vast stretch industry not only in India but all around the globe. It is considered as one of the main industries for employment and revenue generation. Being a travel agent is not an easy job. You need to be updated at all times regarding the latest travel information. Let us help you by providing a detailed procedure for starting your travel agency

The travel industry is huge. The main perk of such industry is that it never goes out of fashion neither the industry goes in recession. In recent years the travel industry has flourished phenomenally not only in India but around the globe. It is considered as one of the main industries for employment and revenue generation.

Setting up a travel agency of your own comes with its own sets of struggles and vying. It covers various parameters like hotel booking flight bookings, transportation, travel agencies, destination management companies, theme parks, online travel agencies and other support businesses.

Not just in cases of emergency, people now travel for various reasons that can be :

  • Honeymoons

  • Retirement trips

  • Family vacation

  • Couple vacation

  • Business travelling

  • Summer break travelling

Let alone chasing travelling as a passion, people have started turning travelling as their profession; thus, paving the way for the travel industry to proliferate.

Detailed procedure to start with your own travel business:

Step-1: Market research

The key feature before starting anything is to be through with your homework. You should be aware of what you are getting yourself into before taking any further step. It helps you to follow the right track and keep you more focused. As market research will help you calculate your competition in the industry. With the advancement of internet, people tend to use online portals for their day to day travel needs which call for tough competition for travel agencies to pitch their audience as to why their services stand out. Thus before starting any business, you should be aware of your competition and status in the industry.

Step-2: Target your Clients

Before diving into any new business venture, one should have a clear insight into the type of business he’s getting into and his target audience. Having the right set of clients automatically boost up your business. It is advisable not to jump and start getting involved in everything. One should know their specialisation and start finding your niche in the market. As the business, you are investing into is a new venture it is okay if your expertise in a particular field in the beginning. For example, if you have complete knowledge about the hilly areas in a country, then you should be pitching clients who are more interested in travelling to such places. These people can fall into a certain category like :

  • College trip
  • Honeymoon couple
  • Photographers
  • School trip
  • Summer holiday for a family

Thus it is important to understand the needs of your clients and to satisfy them with exactly what they need to maintain a healthy relationship.

Step-3: Choosing your Business Entity

To start any new business, one needs to decide what type of business entity they need to own. According to the size and investment a person can choose between a:

  • Private Limited Company (PVT): A private limited company is an attractive business model as it is a company with a minimum paid-up share capital of 1 lakh. For incorporation, the company requires a minimum of 2 directors. However, the company's share is held privately by individuals and cannot be traded publically.
  • One Person Company (OPC): One Person Company is a single director company introduced for aspiring entrepreneurs. As the name suggests ‘One Person Company means a company which has only one member' as defined in the Companies Act 2013.
  • Limited Liability Partnership (LLP): LLP is a hybrid corporation that provides the benefit of a company and the flexibility of a partnership. This type of organisation has liability shield and tax pass flexibility. Similar to the partnership firm, LLP also has an LLP agreement which contains the rules and regulation of an LLP.

Entrepreneurs mostly opt for a Private Limited Company as it is widely used and recognised forms of business offering multiple benefits.

Step-4: Find a suitable name

The next procedure to be followed is to choose an ideal name for your company. Name of a company is something which needs to be unique, desirable and one of its kinds to make it stand out from the rest.

Step-5: Set up an office

After deciding the name of your company, the next step is to find your company a registered office. Choosing the right location for your office can help in successfully running a business. Choose a location which is easily accessible to people. A renowned locality helps in generating trust amongst the clients. Also, the size of the office should be big enough to fit in all the employees.

Step-6: Cover all the legal aspects

After deciding the preferred legal entity, one needs to register the company legally. This can be done by registering for Goods and Service Tax and obtaining company GST no. Moreover, PAN no. All taxable travel agencies need to obtain a GST registration except small scale travel agencies which falls below the minimum slab wherein travel agencies with an annual turnover of fewer than ten lakhs will be exempted from paying the GST as it is collected on the total amount of service provided by the agency.

Step-7: Calculate cash flow.

One should keep in mind all the expenses, financial obligations, insurance premiums, business licensure, and applicable taxes. All these expenses should be taken into account with your monthly income which should be based on current travel market data and the presence of your local target demographic. Make sure you are through with your project, so you don't overestimate your likely earning.

Step-8: Registering as a government approved travel agent

The next step is to register their agency with the government. To be recognised as a government approved travel agency one needs to comply with requirements laid down by the government such as the amount of capital invested, no. of people working under you and registered office space. An application is sent to the Ministry of Tourism for government approval. The registration process is not mandatory but is advised to define company standards through the services offered by the agency.

Step-9: Register as an IATA agent

IATA stands for The International Air Transport Association, a trade association for world airlines. IATA offers professional development services and a variety of discounts for travel agents. Registering yourself as an IATA agent is a very important step as it is recognised worldwide. Therefore, one must register to avail all the benefits and also helps in the growth of the business

Step-10: Branding your Business

Branding your business, in other words, means to get yourself out in the market. It is important for every startup to get their name out. One can register for a trademark. A trademark act as the 'face' of a business which ultimately helps in increasing your business and the brand value of your company. It is important to stand out in the market as the travel business is becoming very competitive. Thus trademarking your brand will not only help you outshine but will also safeguard your company’s name from other people using your company’s goodwill for their benefit.

Along with trademarking and providing good client servicing, one needs to promote their business through a digital platform. Reach out for social media as you will find the majority of your clients there. It’s better to start with creating a social media page for your firm and keeping it up to date. The page design should be unique yet user-friendly and also cater to the heavy discounts and services you offer to attract people

Step-11: Strong customer relation

To retain customers in the long run one needs to build a relationship of loyalty and trust with their existing clientage. One can engage their clients by offering personalised services. One needs to go through the needs and wants of the customer and try to sell them the exact product they are looking for. This will not only develop trust but also help in generating more clients as they will refer your services to people they know and are looking for the same.

Pros and cons of starting a new business

Starting any business entity is not an easy task. It comes both with its advantages and disadvantages

  1. Ownership

As you are starting a new entity, you will be thrilled to be ruling under no one commands. It is a different experience altogether, but it comes with its disadvantages as the travel business is assessed on performances. It would help if you were up to date and competitive enough not to let your business go down. You’ll be solely responsible for the growth or the failure of your company.

  1. Location freedom

There is no restriction for you to come to the office daily as most of your business is handled online; you have the liability to work from home or any other place you want. However, in case you are operating a legal business entity you need to follow the rules and regulations laid down by the board of members.

  1. Profits

Apart from facing many challenges the most important is the ongoing competition. To lead the pact, you need to know your competition and work harder than the rest. It is not as easy as it may seem.
Travel business although a very profitable industry, but its benefits can only be availed if you are ready to work hard to be at the number one position in your industry.

  1. Contacts

Such business offers you heavy discounts or even free trips for you and your family. All you need is to game up by making extensive contacts which may help you and benefit your business. Travel agents receive discounts, and complimentary stays at hotels around the world as Hotels and hospitality chains extend discounts to agents with the hope that they will enjoy their stay and recommend it to their customers.

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