Cutting Through the Perplexity: Eight Critical Items for New Travel Advisor Businesses

On August 20, I wrote about seven critical actions that new travel advisors should take to properly establish themselves in business. Many of those points also apply to existing businesses that may have overlooked them in their early days. It’s never too late to catch up.

Today, we will add to the list of critical items that every new advisor business should at least consider and, in most cases, should do. Some of these points have been discussed in earlier Travel Market Report articles, so I will only summarize those here. Many are essential elements in a business plan, which was the first of the seven earlier recommendations.

1. Decide how and when you will disclose your role
This is the question whether, in any given transaction, you are acting as a principal or an agent. Unless you are creating tour packages yourself and taking “inventory risk” if the packages don’t sell, you will be and want to be an “agent at law,” because that status protects you to the greatest extent in the event a supplier fails to perform its obligations to your customers.

Since this disclosure may have negative connotations to some people, the language used and the placement of the notice are important. It’s a disclosure, not a “warning.” It must be presented in a way that a reasonable person would see and understand it, but it doesn’t have to slap the customer in the face with, “I’m not responsible!” So, don’t bury this notice in the fine print.

It is reasonable to make the disclosure on preliminary documents, such as draft itineraries, as well as booking confirmations. Use plain English to state that your agency is not the provider of the services being sold; you are an agent of the supplier and not a principal. Consult your attorney about the precise language that will work in your jurisdiction, but try to avoid too much legalese.

Also, reread the article “Are You an Agent for a Supplier or Fiduciary for the Client?”

2. Decide where you will “do business;” file required registrations & create necessary escrows
You will want to be sure you have registered and otherwise complied with regulatory requirements in all states where you “do business.” Generally, if you are selling to consumers in jurisdiction X, you are “doing business” there even if your office is elsewhere. Advertising in a particular jurisdiction likewise will be treated as “doing business” there. The concept of “doing business” is complicated and should be discussed with your legal counsel.

Remember that this requirement is about more than just registering with the state as a foreign entity operating there. Some states, like California and Florida, have elaborate regulations that require annual fees, use of an official identification number, escrow accounts, and more. You should not expose yourself to state enforcement by overlooking these requirements.

3. Decide what name the business will have and any variations you may want to use
Just because you have chosen a fanciful name to brand yourself does not mean someone else does not have prior rights. Many travel retailers have similar or identical business names that may or may not correspond with the technical legal name of the entity they have formed to conduct the business. You should check appropriate state resources to be sure you can use a name without infringing a prior user’s rights in the name. Usually you can register a fictitious name and you should be sure to include any “doing business as” or “dba” names that differ from the corporate or other formal name you use.

4. Decide how you will vet others in the business
If you will have someone else involved in the business — for example, a sales person, bookkeeper or manager — establish in writing a formal procedure for vetting such people. Then, follow the procedure in every case. Write the policy down as a series of steps; this will force you to think through carefully what must be done to be sure you can trust the person.

If it’s someone who will have access to the firm’s bank accounts, always require double signatures on checks; do not give new employees or independent contractors access to the firm’s electronic systems until the vetting has been completed and you are completely satisfied with the results. If in doubt, don’t. And seriously consider a fidelity bond for any employee or contractor who has access to the agency’s bank accounts.

5. Create a professional-looking website with proper terms and conditions
Most people do not normally read the lengthy “terms and conditions” on websites they visit. Nevertheless, it is important to have an appropriate set somewhere with a link to them that can reasonably be found.

The degree of complexity on a website is a personal business decision you must make, but it is clear that a poorly presented site will cost you business.

A related point is to have a professional photograph taken for use on websites and other promotional material. Think through how you want to present yourself to the world, including suppliers as well as consumers. Rely on the old saw about first impressions lasting. Take a look at the advice of super agents Geoff and Sharon Millar, reported in an excellent article.

6. Establish policies to control the proper use of photographs and other images on your website and in printed materials
I have written about this before. See “Copyright Abuse Of Photography Is Serious Business.” Controlling the use of photography is indeed serious business.

I won’t repeat the article here, but I will emphasize that this is one of those “no excuses” principles. You are responsible for determining that you have permission to use photographs and other images collected from the internet, and defending against a claim of abuse can be very expensive. Sophisticated companies owning many millions of images use software to scan the internet for unauthorized copies of their image inventory.

7. Discuss Errors & Omissions insurance with a broker; arrange to distribute travel insurance opportunities for all client transactions
Agencies sometimes resist consideration of insurance because it is complicated, seen as costly and, after all, what could go wrong? Regardless, evaluation of insurance needs should be a central element of any new business plan. Plenty of professional help is available from brokers and from insurance companies.

The cost of E&O insurance should be included in the initial capital requirements for the business, especially if you have employees or contractors who will work for you. Agencies that are under-insured often end up regretting the decision to forego this protection.

Some important related advice on this subject can be found at “Travel Agents Should Not ‘Sell’ Travel Insurance.”

8. Develop a business continuity plan
Resistance to this recommendation is not uncommon because there is a tendency to believe that it takes a lot of work and may never be used. If they taught us nothing else, the spate of catastrophic hurricanes over the past several years, affecting states well away from the initial landfall, should make everyone aware of how serious and unpredictable the risks can be. Once these events materialize and affect an unprepared agency, the business can easily be destroyed. And, of course, the risks come from more than just weather events, fires being among them. Much rarer are terrorism incidents, but those do occur and can close an entire section of a city for some period.

Business continuity is complicated because it requires that you think through virtually every detail of how your business functions, how your various people and tools interact, and what you can do to keep the business going when, for example, you lose physical access to the site for an extended period. Planning of this type requires deep thinking about how you can continue to operate from off-site locations. Having hard copies of all your electronic files won’t help much if they are in a box under a table that has been inundated with flood waters from a hurricane.

If you have employees, partners or others involved in the business, you should engage them in the planning process. You may want to include some family members as well, since the type of impacts we’re considering could affect them or call for their help when the chips are down. Many resources about continuity planning can be found by searching the internet. One interesting checklist I found is from Canada.

There are many others, but they likely will not be specific to travel agency businesses. Adaptation is necessary. Many continuity planners recommend testing the plan. This is a good idea, as well.