Selling or Buying Travel Agencies

Travel agencies trade between 1.70x and 3.70x SDE. In addition to size, loyal customers, corporate accounts, and speciality all enhance an agencies valuation.

George Wellmer

July 28, 2025

The U.S. travel agency industry has rebounded strongly in the wake of the COVID-19 pandemic. Industry revenue was estimated at $42.7 billion in 2023, reflecting 7.7% growth that year. In terms of total travel booked, agencies facilitated about $109.7 billion in bookings in 2023, a 28% surge over the prior year as pent-up travel demand was unleashed. This boom has pushed agency volumes back above pre-2019 levels. Looking ahead, growth is expected to normalize to single digits – projections call for roughly 9% annual sales growth in both 2024 and 2025 as the rebound moderates. By 2025 the market size (agency revenue) is forecast around $46–47 billion, marking a full recovery. Key drivers of this expansion include consumers’ return to leisure travel (especially high-end vacations and cruises) and a steady revival of business travel budgets. Elevated travel prices (airfares, hotels, etc.) have also inflated booking values, contributing to revenue growth.

Key Industry Trends: Several trends are shaping the market:

• Leisure Demand & Cruise Boom – Leisure travel remains the largest revenue segment, making up roughly 65% of total agency sales. High-end vacation bookings, tours, and cruises have led the charge – notably, cruise bookings through agencies surged 152% in 2023, with agencies booking about two-thirds of all cruises. This highlights how important travel advisors are for complex leisure products like cruises and tours.
• Corporate Travel Recovery – Corporate and business travel (about 35% of agency sales) is climbing back as companies resume conferences and in-person meetings. While not yet at pre-pandemic volumes, corporate bookings are rising and expected to continue growing in 2024 and 2025 (high single-digit annual growth). Corporate travel’s rebound is boosting weekday and year-round revenue for agencies, providing more stability alongside the seasonal leisure peak.
• Shift to Independent Advisors – The industry’s workforce and business models are evolving. A younger generation of travel advisors has entered the field, often operating as home-based independent contractors affiliated with host agencies. These independent agents leverage online tools and social networks rather than traditional storefronts. At the same time, some traditional brick-and-mortar agencies are consolidating or closing. As a result, the number of agency businesses has declined (~7,200 firms in 2025, down ~2.4% from the prior year) as the industry shifts toward fewer employer firms and more independent agents working under networks.
• Digital Marketing & Tech Adoption – Travel agencies have increasingly embraced digital marketing to reach clients. Email newsletters, Facebook and Instagram campaigns are common tools for agencies to keep in touch with customers and promote offers. New platforms like TikTok are emerging but still used by a minority of agents. On the operations side, agencies use Global Distribution Systems (GDS) and online booking software extensively, though AI adoption remains limited so far. There is an opportunity for agencies to leverage emerging tech (chatbots, AI trip planning tools) to enhance efficiency and client service in the future.
• Optimistic Outlook – Despite economic uncertainties (e.g. inflation in travel costs), agent sentiment is largely positive. Surveys indicate 72% of travel advisors are optimistic about future business. Industry analysts project that travel agencies (including both traditional and online intermediaries) will represent about one-quarter of all U.S. travel bookings by 2027, underscoring that agents remain a crucial distribution channel in the travel market. The overall picture is one of a resilient industry, adapting through specialization and technology while demand for expert travel planning stays strong.

Valuation Benchmarks & Recent Transaction Multiples

Travel agencies are typically valued based on earnings metrics (either the owner’s cash flow or EBITDA) rather than just revenue, given the relatively thin margins on gross bookings. Recent transaction data shows the following average valuation multiples for travel agencies:

• Seller’s Discretionary Earnings (SDE) Multiples: Median is 2.2× - High 3.70x is a typical transactional range for small to mid-sized agencies.
• EBITDA Multiples: On an EBITDA basis (suitable for larger agencies with management teams), agencies tend to trade around 3.0× to 4.2× EBITDA. These multiples indicate buyer willingness to pay roughly 3–4 years’ profit for an established agency’s cash flow.

These benchmarks are industry averages – actual multiples vary widely with the quality of the business. Size, segment focus, stability of clientele, and growth prospects heavily influence valuation. Notably, agencies with recurring corporate client contracts or specialized luxury niches often justify premium multiples, whereas agencies that are small, owner-dependent, or volatile may trade at lower multiples. Recent analyses show that an agency’s service mix (leisure vs. corporate) is one of the biggest drivers of its valuation multiple, as discussed next.

Leisure vs. Corporate Travel Segments

Travel agencies generally serve a mix of leisure and corporate clients, and the balance between these segments profoundly affects business dynamics. Each segment has distinct characteristics:

• Leisure Travel Agencies: These focus on vacation travel – holiday packages, family trips, cruises, tours, destination weddings, etc. Leisure travel is largely discretionary spending, so demand can ebb and flow with consumer confidence and seasonality. Peak seasons (summer, holidays) bring spikes in bookings, while shoulder seasons are slower. Leisure agencies rely heavily on consumer trust and reputation – word-of-mouth referrals, online reviews, and brand recognition are critical for attracting clients. Clients often seek a personal touch and expert advice for complex or upscale trips. Price sensitivity is higher in leisure: travelers may shop around for deals or added value. As a result, leisure agencies often cross-sell add-ons (travel insurance, tours, upgrades) to boost commissions. The upside of leisure segment is the opportunity to earn high margins on specialty travel (e.g. luxury or adventure packages) and cultivate loyal repeat travelers in niche markets. However, leisure-focused businesses can be volatile, with income closely tied to travel trends and economic conditions. An unexpected event (pandemic, recession, airline strike) can quickly dampen vacation bookings. For a buyer, a pure leisure agency may appear riskier unless it has a strong niche or loyal clientele to provide some stability.
• Corporate Travel Agencies: These serve business travelers, corporate accounts, and group clients traveling for work or events. Corporate travel tends to provide more consistent, year-round revenue, since business trips occur in every season regardless of holidays. Companies often have ongoing travel needs – e.g. for conferences, sales meetings, client visits – which translates into repeat bookings and recurring service contracts for the agency. In fact, corporate agencies typically negotiate agreements to manage a company’s travel, yielding steady fees or commissions. This means lower customer churn – corporate clients are likely to stick with a chosen agency for the long term, as long as service levels and pricing remain competitive. Another advantage is that corporate bookings are less price-sensitive on a per-trip basis; when a trip is business-critical, companies prioritize reliable service and convenient scheduling over finding the absolute cheapest fare. Thus, corporate agencies can charge service fees and still retain clients who value efficiency. Operating in this segment often requires a high level of service: experienced staff who can handle complex itineraries, last-minute changes, and 24/7 support for travelers. Corporate agencies also invest in integration with corporate online booking tools, reporting systems, and policy compliance. From a buyer’s perspective, an agency portfolio weighted toward corporate travel is attractive because of its stability and predictability. The trade-off is that margins per booking might be thinner (airline commissions on corporate tickets are low to nil, so revenue comes from fees or volume-based incentives). Still, buyers tend to pay a premium for corporate-focused agencies given their sticky client relationships and resilient demand. Indeed, businesses with mostly corporate travel command higher valuation multiples (e.g. an agency 70%+ corporate might sell for ~5–6× SDE) compared to mostly leisure agencies (~3–4× SDE).

Which Segment is More Attractive? In general, corporate-focused agencies are more sought after by buyers due to their stable cash flows and B2B contracts. An acquisition of a corporate travel agency comes with built-in recurring revenue streams and often long-term client agreements – a lower-risk profile. Leisure agencies can certainly be valuable as well, especially if they dominate a profitable niche (for example, a luxury travel specialist with a loyal affluent client base). Such agencies can have high margins and strong repeat business from their niche customers, making them attractive targets despite being “leisure.” However, a broad-based, non-niche leisure agency serving mass-market tourists is typically viewed as a riskier investment (more competition from online booking sites, more sensitivity to economic swings). In short, buyers often pay up for corporate or diversified agencies, while pure leisure agencies need to demonstrate unique value (loyal customer base, niche expertise, or superior margins) to command a top valuation. Many agencies strive for a balanced mix – serving both corporate and leisure clients – to enjoy the benefits of each and mitigate risks. This diversification can make a business more resilient and appealing, as it smooths out seasonal revenue and broadens the market opportunity.

Performance Benchmarks: Top-Performing vs. Average Agencies

Travel agencies vary widely in scale and performance. It’s useful to compare top-performing agencies (which often are larger or have optimized operations) versus average smaller agencies on key metrics:

• Annual Revenue: The top agencies generate multi-million dollar revenues per year. For instance, a large corporate or luxury-leisure agency might bring in $5–$20+ million in gross revenue annually. By contrast, a typical independent agency or small storefront may only have a few hundred thousand in annual sales. (In fact, many solo travel advisors earn under $100K in revenue; one source notes small agencies often make around $84,000 per year on average, though this figure can vary widely). Mid-sized agencies fall in between, with $600K–$2.4M annual revenue being common for a well-established local agency. This gap illustrates the scale difference – top performers might be 10×+ the size of an average player in revenue terms.
• Profit Margins: Profitability improves with scale and efficiency. Top-performing agencies can achieve 20–30% net profit margins (after all expenses). These firms have higher productivity, better commission overrides from suppliers, and optimized cost structures (often via automation and volume discounts). In contrast, the average small agency operates around 10–15% net margin in many cases. Smaller agencies face higher per-unit costs, lower commission rates, and often must reinvest heavily in marketing, which keeps margins modest. For example, a small agency making $84K in revenue might only net $8–16K profit (10–20%), whereas a $1M revenue agency could net $150–250K (15–25%). Top performers turn a larger share of revenue into profit.
• Repeat Business & Client Loyalty: High-performing agencies tend to have a much larger portion of their bookings from repeat clients (or long-term corporate contracts). For example, an agency with strong corporate accounts or a loyal luxury clientele might get 70–80% of its annual bookings from repeat customers and referrals. This leads to more predictable sales each year. An average agency, by comparison, might rely far more on new customer acquisition, with perhaps only ~30–50% repeat business. In a scenario described by one industry guide, a less diversified leisure agency lacked “substantial repeat corporate accounts” and was left dependent on one-off tourist customers and seasonal demand. Such agencies must spend more on marketing to continually fill the pipeline. Customer retention is a key differentiator: top agencies invest in loyalty – keeping clients returning every year – while weaker ones struggle to build that repeat base. Buyers evaluating agencies will look closely at what percent of revenue comes from repeat vs. new customers, as a high repeat rate signals goodwill and stability.
• Booking Volume: In terms of workload, top agencies handle far greater booking volumes which ties to their scale. A large corporate agency or online-focused agency can process thousands of bookings per year (often 10,000+ transactions). Even a single experienced agent at a top agency might manage dozens of bookings a week using advanced tools. Meanwhile, a small traditional agency may only facilitate a few hundred bookings a year total. For instance, data shows a “small” agency might handle roughly 500–600 bookings annually (around 45–50 per month). The best agencies not only handle more bookings, but often achieve higher revenue per booking by focusing on larger trips or higher-end clientele. A mid-sized agency’s average transaction value might be $2,500–$5,000, whereas a luxury-focused agency could see $10,000+ per booking. Volume and quality of bookings drive the top-line differences described above.
• Operational Excellence: Top performers distinguish themselves in operational metrics as well. They typically leverage technology and have standardized processes that allow them to scale service without proportional cost increases. In a comparison example, a “Company A” agency that had a dedicated sales manager, clear standard operating procedures, and advanced booking systems was able to grow and diversify, yielding a higher valuation multiple. In contrast, an average “Company B” agency was owner-led with minimal delegation and limited online presence, which constrained its growth and made it less valuable. The top agency had a plan to expand (partnerships in luxury travel) and robust systems, whereas the average agency had no defined growth plan and outdated marketing. These operational differences translate into better financial performance for the top firm and a more attractive profile to buyers.

Overall, the gap between top and average agencies is significant. Top-performing agencies enjoy higher sales, fatter margins, more loyal customers, and higher valuations. For example, in the scenario above, the top agency was valued at approximately 5–6× SDE, compared to just ~2.0–2.5× SDE for the smaller agency. This means the owner of the high-performing agency could command a price nearly twice as high, relative to earnings, as the owner of the smaller agency. For current owners, this underscores the value of improving operations and client retention. For buyers, it emphasizes the premium placed on agencies with scale, efficiency, and stable revenue streams.

Strategic Recommendations for Owners and Buyers

In light of the above insights, here are strategic recommendations for travel agency owners looking to boost profitability and prepare for a sale, as well as for buyers seeking valuable acquisitions:

• Focus on Profitability Levers: Work on improving margins and bottom-line performance. One tactic is to upsell high-margin add-ons like travel insurance, tours, and premium packages – these products can carry commission rates of 20–30%+ and significantly increase profit. Training your agents to systematically offer travel insurance or upgrades can directly boost earnings. Simultaneously, manage costs through automation and efficiency. Adopting modern booking and back-office software can cut operational costs by 20–30% via automation of routine tasks. For example, use online booking tools that integrate with CRM, automatic ticketing and invoicing, and chatbots for initial inquiries. Reducing manual work not only saves money but also improves accuracy and customer response time. Owners should also monitor their expense ratios (e.g. keep marketing and payroll spend in line with revenue) to inch margins upward into the 20%+ range if possible. Higher profitability not only means more cash flow now, but also makes the business much more attractive to buyers (who often evaluate deals based on earnings).
• Leverage Technology & Online Presence: In today’s market, a strong digital strategy is essential. Agencies should ensure they have an easy-to-use website with online inquiry/booking capabilities, active social media profiles for marketing, and data-driven marketing campaigns (email newsletters, targeting past customers with new offers, etc.). Embracing technology also means staying aware of emerging tools – for example, AI-based trip planning assistants or personalization engines. While industry adoption of AI is still nascent, experimenting early could provide a competitive edge (e.g. using an AI chatbot to answer basic client questions 24/7, or AI to analyze customer preferences and suggest itineraries). For corporate agencies, invest in integrations (APIs) that link your system with clients’ expense management or HR systems to streamline bookings. Buyers will look for agencies that aren’t stuck in the past – a modern tech stack and strong online lead generation funnel can set an agency apart. In short, become as tech-enabled as possible without losing the personal touch. This will increase operational scalability and the overall value of the business.
• Build a Loyal Client Base: Whether leisure or corporate, customer loyalty drives value. Owners should implement strategies to maximize repeat business: for leisure, consider a client loyalty program or VIP perks for frequent bookers; for corporate, strive to secure multi-year travel management contracts. High repeat/referral rates signal that an agency has a defensible client base. Tactics to increase loyalty include sending personalized trip recommendations or check-in notes during trips, remembering client preferences, and providing excellent problem-resolution service when issues arise. Some agencies create hosted group trips or exclusive events for top clients to deepen relationships. The goal is to elevate your agency from a one-time transaction vendor to a trusted travel partner for your customers. This not only boosts revenues (repeat customers spend 67% more by their third year with a provider, according to Bain & Co.) but also commands a valuation premium, since buyers love businesses with sticky, recurring revenue. If you can demonstrate that a large percentage of your sales comes from returning clients (and not expensive advertising), it will instill confidence in the business’s longevity.
• Diversify and/or Specialize Strategically: This may sound like a contradiction, but agency owners should evaluate their market position and consider either diversifying their service mix or deepening a profitable niche (or both in some balance). If you are heavily leisure-focused, adding some corporate accounts can smooth out seasonality and increase year-round revenue stability. Even a handful of small business clients or group travel contracts can make a difference. Conversely, if you are mostly corporate, see if there are leisure opportunities (bleisure travel, family trips for execs) that you could service to expand wallet share. On the other hand, carving out a niche specialty can be a winning strategy – for example, luxury honeymoons, adventure travel, faith-based tours, destination weddings, sports travel, etc. Niche agencies often can command higher fees and margins due to their unique expertise, and they build reputations that lead to referrals within the niche community. Specialized agencies have been known to achieve 25–40% higher profit margins than generalists by differentiating themselves. From a buyer’s perspective, a well-diversified agency or a clearly dominant niche player are both attractive profiles. What’s less appealing is an undifferentiated agency with no clear specialty and no balance in clientele. Thus, owners should identify their strengths and make sure the business either covers a broad customer base (multiple segments, multiple revenue streams) or owns a strong niche – anything to avoid over-reliance on a single source of income.
• Prepare for Acquisition Early: If you anticipate selling your agency in the next few years, start preparations now to maximize its value. First, reduce owner dependence in the business’s day-to-day operations. Develop a solid management team or at least train a senior agent to handle key clients, and document all key processes (SOPs) for consistency. A business that “runs itself” (to a degree) is far more attractive to buyers than one that seemingly only the owner can operate. Next, clean up your financials – keep accurate, transparent records that separate personal expenses, and ideally have at least 2-3 years of clean tax returns and financial statements to show. Buyers will pay more for a business with trustworthy financials and upward trends in sales and profit. It’s also wise to secure long-term contracts or vendor agreements if possible (for example, locking in a favorable consortium commission rate, or a 3-year corporate client agreement) – these transferable contracts become assets in a sale. Furthermore, identify and start executing on growth opportunities that you can tout to buyers: perhaps there is an untapped market (like targeting a new demographic via social media), or a plan to launch your own hosted tour products. Showing a credible path for future growth can justify a higher valuation multiple because the buyer sees upside. According to industry consultants, agencies that can articulate a growth story and demonstrate diverse revenue and a stable team “typically command higher valuation multiples”. In summary, run your agency as if you’re a prospective buyer scrutinizing it – shore up any weak spots in client concentration, operations, or finances before you go to market.

For potential buyers evaluating travel agency acquisitions, much of the above advice serves as a checklist of what to look for. Prioritize targets that have strong financial performance (healthy margins, solid revenue growth), a loyal customer base (high repeat business or contract clients), and modern operations (good use of technology and low owner dependency). Also consider segment focus: if you value stability, a corporate-heavy or balanced agency might suit you best; if you have expertise in a particular niche, acquiring a niche leisure agency could yield high returns. Pay attention to how well the agency is leveraging online channels and whether it has a positive brand reputation, as these will be crucial for future growth. Lastly, use industry benchmarks as reference but evaluate each opportunity on its unique merits – for example, an agency might have below-average revenue but an exceptionally high margin niche, which could be grown significantly under your ownership.

Conclusion

The U.S. travel agency industry is in a dynamic state, with robust opportunities as well as challenges. Business owners who adapt – by embracing technology, focusing on customer loyalty, and optimizing their operations – are reaping the rewards in higher profits and business value. Buyers remain eager for agencies that demonstrate resilience, whether through a steady corporate client base or a thriving specialty. By understanding market trends, valuation norms, and the drivers of success in both leisure and corporate segments, stakeholders can make informed decisions. The travel agency model has proven its resilience in recent years, and with strategic management, these businesses can continue to thrive and command strong valuations in the marketplace. Every agency’s situation is unique, but the common thread for success is to build a business that delivers consistent value – to clients and, ultimately, to a future owner. With travel demand high and evolving, now is the time for agency owners to strengthen their operations, and for astute buyers to invest in this recovering, vibrant industry.