Why is a travel agency not valued on total sales?
Agencies often talk in total transaction value: everything travellers pay for flights, hotels, tours and cruises booked through the agency. Most of that money passes straight to airlines, hotels and cruise lines. The agency's own income is what it keeps: booking income paid by suppliers, service and booking fees charged to clients, and supplier and override income paid for reaching volume or preferred-supplier targets.
A multiple of total sales can flatter an agency and is hard to support. The valuer starts from the agency's own income, separates it by type and segment, and builds normalised earnings from there.
How durable is supplier and override income?
Override income is paid for reaching targets, and targets and rates are usually renegotiated regularly. A valuer looks at how much of the agency's profit depends on overrides, whether they were earned consistently, and how close the agency came to each threshold.
Ownership matters too. Many preferred-supplier deals are made through a network, franchise or buying group rather than with the agency itself. That income depends on staying a member, and the membership agreement often contains change-of-control or transfer terms. Income that needs a third party's consent to continue after a sale is less certain than income the agency controls, and the valuation reflects that. Your lawyer confirms what a particular agreement requires.
How are corporate and leisure income treated differently?
Corporate travel management income, earned under contracts with transaction fees or management fees, is the closest the industry comes to recurring revenue. The valuer reads contract terms and expiry dates, tender cycles and client concentration: a corporate book where one client provides a large share of fees carries more risk than many smaller accounts.
Leisure income varies more. Walk-in bookings compete with travellers booking direct online, while groups, cruises and complex itineraries can carry better margins and bookings taken well ahead. The mix between segments can move two agencies with the same earnings to different values.
Which trading years are representative?
Travel agencies have had unusual runs of results: years disrupted by border closures and the rebound that followed. A plain average of the last three years can include both distortions and represent neither. The ATO lists inappropriate use of averaging among the common issues it sees in valuations.
The valuer works from monthly results where they exist, states which periods carry weight and why, and looks for structural evidence: which corporate clients stayed, how each segment has recovered, and whether forward bookings point to a steady level or a temporary peak. Government support received in disrupted years is identified so it is not mistaken for trading income.
Why is an agency's bank balance misleading?
Because much of it belongs to someone else. Money received from clients for future travel is owed to suppliers or clients until the travel happens, so it is not surplus cash to add to value. Forward deposits are evidence of future income and an obligation to deliver at the same time.
Illustration only, not a market multiple. The hypothetical, rounded figures below show the gap between what flows through an agency and what it earns and owns.
| Line | Hypothetical agency | Note |
|---|---|---|
| Total value of travel booked | $12,000,000 | Mostly passed to airlines, hotels and cruise lines |
| Booking income and service fees | $1,100,000 | The agency's own income |
| Supplier override income | $200,000 | Paid for reaching volume targets |
| Of which earned through a network deal needing consent on a sale | $120,000 | Durability tested separately |
| Client money in the bank for future travel | $900,000 | Owed to suppliers or clients: not surplus cash |
What do we need from you?
Exports from your booking and accounting systems are usually enough to start.
- ·Five years of monthly results where available, split by corporate, leisure, groups and cruise
- ·Income by type: booking income, service fees, and supplier and override income
- ·Corporate client contracts, fee schedules and expiry dates
- ·Your network, franchise or buying group agreement
- ·Client money held, forward bookings and deposits at the valuation date
- ·Any government support received in disrupted years
- ·Industry accreditation and airline ticketing arrangements, if you hold them
What does a travel agency valuation cost?
Every valuation is a fixed fee, agreed in writing before work starts, and it does not change with the value concluded. For a whole agency, or shares or units in it, the band is set by the agency's total annual turnover, excluding GST. Exactly $3 million is Medium; exactly $10 million is Large.
Add-ons are $495 per retrospective (past) valuation date and $795 per additional entity. Delivery time starts once payment and all required information have been received.
| Package | Annual revenue of what is valued | Fee | Delivery |
|---|---|---|---|
| Small Business Valuation | under $2 million | $1,495 + GST | 2 business days |
| Medium Business Valuation | $2 million to $3 million | $2,495 + GST | 3 business days |
| Large Business Valuation | $3 million to $10 million | $3,495 + GST | 3 business days |
| Over $10 million | above $10 million | quoted in writing before work starts | delivery date agreed before commencement |
| Expert report (dispute or court) | any size | $4,495 + GST | delivery date agreed before commencement |