How to Start a Travel Agency in the UK

There are three ways to start a travel agency in the UK. You can join a host agency, buy into a franchise or set up your own agency. Each one costs a different amount, puts different legal duties on you and pays you differently.

Almost every guide you will find is written by a host agency, a franchise or a training course looking for recruits. This one is written by a payments adviser with nobody to recruit. It sets out all three options, then covers what going independent really involves, including the part most guides skip: taking card payments.

Three ways to start a travel agency

The three routes differ most on who holds the licences and who takes the customer's money. Everything else, from start-up cost to how much you earn per booking, follows from those two points.

Exact terms vary a great deal between host agencies and between franchises. Read the contract on fees, commission splits and leaving before you sign anything.

A host agency is the quickest way in. You sell under an established company's licences, systems and supplier deals, and earn a share of the commission on what you sell. In practice, most people who start with no travel background start here.

A franchise adds brand and training. You pay for a recognised name, a training programme and support. The trade-off is an upfront fee and ongoing charges that come out of your commission.

Your own agency means your own rules. You keep the margin and choose your products. You also take on the licensing, the protection of customer money and the payments set-up yourself.

Which way suits you

• Little capital and new to travel. A host agency lets you learn the trade and build a client list without funding licences or protection.
• Want a brand and structured support. A franchise suits people who value training and a recognised name enough to pay for them.
• Want your own brand and products. An independent agency suits people with industry experience, some capital and the patience to set up licensing and payments properly.
• Plan to build your own trips. Combining a flight, hotel or other services into a package makes you the organiser. That brings licensing and protection duties, whichever route you start on.

A common pattern is to start with a host agency, then go independent once you have clients, supplier contacts and a clear niche. That path costs less than learning the trade and the compliance at the same time.

Do you need your own ATOL or ABTA?

It depends on the route and on what you sell. Under a host agency or most franchises, the licences are usually held for you. Running your own agency, you need to answer these questions yourself.

• ATOL for anything with a flight. Selling flights or flight-inclusive packages to UK consumers needs ATOL cover. You can hold your own licence, get one through a CAA-approved franchise or Accredited Body, or sell as an agent for an ATOL holder. Our ATOL licence article covers the routes, costs and application.
• Protection for packages without a flight. Under the Package Travel Regulations, the organiser of a package must protect customers' money if the business fails. That means a bond, insurance or a trust account.
• ABTA membership is voluntary. No law requires it. Many customers and suppliers look for it, and members agree to ABTA's code of conduct and its requirements for protecting customer money.
• Selling only other firms' products. If you act purely as an agent for packages someone else organises, the organiser carries the main protection duty. Your agency agreement sets out what you must do.

A "Franchise ATOL" is not a travel franchise. The two get confused all the time. A Franchise ATOL is a way of holding an ATOL through a CAA-approved franchise operator. Buying a travel franchise brand is a business deal, and the licensing behind it depends on that franchise.

What usually happens is that new agencies start as agents and drift into organising. A customer asks for a flight with their hotel, the agency puts it together, and it has become an organiser without arranging the cover an organiser needs.

The rules change in April 2027. Amended Package Travel Regulations apply to contracts made from 6 April 2027. Linked travel arrangements are abolished, and some bookings that are not packages today will become packages. Check how your planned products will be treated before you launch.

What it costs to start a travel agency

Start-up costs range from a few hundred pounds to tens of thousands, depending almost entirely on the route. The figures that matter are the ones recruiters leave out: protection, working capital and payments.

Host agency. Expect joining fees or a monthly fee, plus the share of commission the host keeps. This is the realistic route if you are starting with little or no money.

Franchise. Expect an upfront fee, ongoing fees and sometimes a contribution to group marketing. Ask what is included and what you pay for separately.

Your own agency. The cost lines are longer:

• Company set-up. Registering a limited company is inexpensive. Accountancy and legal advice at the start cost more but save money later.
• ATOL route. Your own Standard or Small Business ATOL needs a bond of at least £50,000, plus fees. A Franchise ATOL or Accredited Body membership avoids the bond but has its own fees.
• Protection for non-flight packages. A bond, insurance or trust account arrangement, each with its own costs and conditions.
• Insurance. Typically public liability and professional indemnity cover, at minimum.
• Booking technology and website. A site that can take bookings, issue documents and handle deposits and balances.
• Payments set-up. Card acquiring with a provider that accepts travel, and possibly a reserve held against your sales.
• Marketing. Getting your first customers, which takes longer than most business plans assume.
• Working capital. Money to pay suppliers before customer funds reach you.

Working capital is the line people underestimate most. Card providers often hold part of a travel business's takings until customers travel, while suppliers want paying on their own schedule. The gap between the two has to be funded from somewhere.

Can you start a travel agency with no money? Through a host agency, nearly. As an independent agency, no. Promises of a free start usually describe a host agency route in different words.

Setting up your own travel agency, step by step

Going independent works best in a set order. Licensing and protection decide what you can sell, and payments depend on both, so neither should be left to the week before launch.

• Choose your niche and what you will sell. Decide whether you will build your own packages or sell other firms' products, since that decides your legal duties.
• Register your company. Most agencies register a limited company with Companies House and register with HMRC for tax.
• Sort out VAT early. The Tour Operators' Margin Scheme can apply when you buy in travel services and resell them in your own name. Take advice from an accountant who knows travel before you set your prices.
• Choose your protection. Settle your ATOL route for anything with a flight, and your bond, insurance or trust arrangement for other packages.
• Open supplier accounts. Set up trade accounts with the hotels, tour operators and local suppliers you plan to use, and agree their payment terms.
• Arrange insurance. Put liability and professional indemnity cover in place before you take your first booking.
• Write your booking terms. Cover deposits, balances, cancellations and refunds, and give customers the information the Package Travel Regulations require for packages.
• Handle data protection. You will hold passport and payment details, so check whether you need to pay the Information Commissioner's Office data protection fee.
• Build the website and booking flow. Make sure it can take deposits and balances and issue the right documents at the right time.
• Set up card payments. Apply to an acquirer that accepts travel, with your licensing and protection already in place or well advanced.

A common issue is doing these steps in reverse: website first, payments last. Agencies that apply for a merchant account a week before launch often find the acquirer wants evidence of protection they have not arranged yet.

How a new travel agency takes card payments

Under a host agency or most franchises, you may never need a merchant account. Customers usually pay the host, the franchise or the supplier directly, and your commission is paid to you afterwards.

Running your own agency changes that. When customers pay you, you need your own card acquiring, and travel is one of the harder sectors to get approved.

Customers pay long before they travel. Card providers call travel a delayed-delivery business. A customer might pay a deposit in January for a holiday in August, and the provider carries the risk of refunding that customer if your business fails before departure.

Refund exposure falls on the provider. Customers who paid by card can ask their card issuer for their money back if a trip is not delivered. If your business cannot cover those refunds, your card provider pays them. That is why banks treat travel as high-risk.

Controls are common. To manage that exposure, providers often hold back a share of your takings as a rolling reserve, delay settlement or release funds only after customers have travelled. The terms vary by provider and by how you trade.

In practice, underwriters looking at a new agency want to see:

• Licensing. Your ATOL route, or your agency agreements if you sell other firms' products.
• Protection. How customer money is protected for packages without flights.
• Lead times. How far ahead customers book, and the longest lead time you plan to sell.
• Deposits and balances. How much customers pay upfront and when the rest is due.
• Forecasts. Realistic volumes and average booking values for your first year.
• Directors. Company details, ownership and the experience of the people running it.

More detail on acquirers, reserves and approval is on our travel merchant account page.

Why an instant-sign-up processor is a risky start

Opening an account with a mainstream processor takes minutes, which makes it tempting for a new agency. The checks happen later, once you are trading.

As forward bookings build up, so does the balance of money for trips that have not happened yet. That pattern is exactly what triggers a review, and reviews can end with funds held or the account closed. Easy to open is not the same as safe to build on.

Getting a merchant account as a new agency

A new agency has no trading history to show, so underwriters lean harder on everything else. We regularly see the same reasons for decline:

• No protection in place. Applying before the ATOL route or the protection for non-flight packages has been sorted.
• Long lead times from day one. Planning to sell trips a year ahead before you have any track record.
• Optimistic forecasts. First-year volumes that nothing in the application supports.
• Unclear booking terms. Missing or vague cancellation and refund terms.
• An unfinished website. No company details, no terms or no clear description of what is being sold.

What improves your chances:

• Arrange protection first. Show exactly how customer money is protected for each type of booking.
• Start with shorter lead times. Selling closer to departure in the first year keeps the provider's exposure lower.
• Keep forecasts realistic. Modest, well-supported numbers are easier to approve and easier to grow from.
• Publish clear terms. Make deposits, balances, cancellations and refunds easy to find.
• Apply where travel is accepted. Many providers do not take travel at all, so applying to them wastes time.

A broker can save you that time. We know which providers are currently accepting new travel businesses and on what terms. No one can guarantee approval, and anyone who promises it is overselling.

How travel agents earn money

Income works differently on each route, and the headline commission rate is only part of the story.

• Supplier commission. Hotels, tour operators and other suppliers pay a commission on what you sell.
• The split. Under a host agency or franchise, you keep a share of that commission and the rest goes to the host or franchise.
• Your own margin. An independent agency keeps all of the commission and can set its own price on packages it builds.
• Service fees. Some agencies charge customers a planning or booking fee on top.

What you earn depends on your niche, your volumes and your average booking value far more than on the route. A specialist selling high-value trips to a loyal client list can out-earn a generalist selling far more bookings.

Running a travel agency from home

Most new agencies start from home, and many stay there. Clients book online or by phone, and very few expect to visit an office.

Employment status. Under a host agency you are usually self-employed, not an employee of the host. That means you handle your own tax and National Insurance.

Keep the business separate. Use a business bank account and keep customer money apart from personal funds. Card providers and protection schemes will both expect it.

Look like a business. A professional website, clear company details and proper booking terms matter more for a home-based agency, because customers cannot see your premises.

Common mistakes new travel agencies make

Becoming an organiser by accident. Adding a flight or hotel to a customer's trip can turn you into the organiser of a package. The protection duties follow automatically.

Taking money before protection is in place. Customer deposits taken before your ATOL route or package protection is sorted leave both you and your customers exposed.

Underestimating working capital. Suppliers want paying on their schedule, card funds arrive on the provider's schedule, and the gap has to be funded.

Building on an instant-sign-up processor. It works until forward bookings trigger a review. Moving providers in a hurry, mid-season, is hard and expensive.

Choosing a route on the lowest fee. The cheapest way in can cost more over time if it limits your products, your margin or your options for growing.

Conclusion

Start with the route that fits your capital and experience. A host agency is the cheapest way in. A franchise adds a brand and training. Your own agency gives you control and margin, along with the licensing, protection and payments set-up that come with it.

If you are going independent, sort your licensing and protection first and your card payments alongside them. That order saves the most time and money.