“Travel agencies were decimated by COVID-19, which prompted an unprecedented drop in travel bookings and cancellations. In 2020 alone, revenue fell over 45.0% in response to diminished travel demand” (IBISWorld).
There’s no doubt that the pandemic significantly hurt the travel agency industry with airlines being one of the most impacted industries. However, “in 2023, operating revenues for Canadian travel agencies reached approximately $2.79 billion, surpassing pre-pandemic levels of $2.5 billion in 2019” (OpenJaw). Furthermore, tourism spending in Canada was $23.6 billion in the third quarter of 2024, and the market size for travel agencies “is projected to grow over the next five years” (IBISWorld).
Since the industry has recovered from the effects of the pandemic, franchise travel agencies are once again an attractive opportunity for aspiring business owners. Not only is the market demand there, but a franchise system provides several benefits including a business model proven to succeed.
The Travel Industry in Canada: Market Overview
Market Size & Growth
In 2023 “the Travel & Tourism sector’s GDP contribution grew by almost 25% year-on-year to reach almost $172BN, representing 6% of Canada’s total economic output, demonstrating the sector’s integral contribution to the national economy…By 2034, the sector is expected to dramatically enhance Canada’s economy, contributing an estimated $248BN and comprising 7.1% of the total economic landscape.” (World Travel & Tourism Council)
A few more statistics that give a picture of Canada’s travel industry include:
- The travel and tourism market volume in Canada is projected to reach US$19.04bn by 2029, a 2.25% annual growth rate.
- Domestic tourism revenue was $69.8 billion CAD in the third quarter of 2024, accounting for 116% of 2019 levels and a 2% increase from the previous year.
- Total tourism revenue in Canada reached $91.9 billion CAD in the third quarter of 2024, representing 111% of 2019 levels and a 3% year-over-year growth.
- Travel agency businesses saw a 3% increase from 2022 to 2023 totalling 4,332 agencies.
Post-Pandemic Rebound
According to Statistics Canada, additional data points pointing to the travel industry’s strong recovery after the pandemic include:
- The “operating revenue for other travel arrangement and reservation services rose by 20.8% year over year to $3.3 billion in 2023, surpassing pre-pandemic levels by 9.0%.”
- The “operating revenue at travel agencies rose 55.5% year over year to $2.8 billion in 2023, exceeding pre-pandemic levels by 11.6%.”
- In 2023, the “profit margin for travel agencies reached 14.8%, the highest profit margin in more than a decade.”
Key Trends in the Canadian Travel Franchise Market
There are various trends prospective franchisees should be aware of if considering buying a travel agency franchise:
- Home-Based & Remote Travel Agencies – There has been a post-pandemic shift towards home-based operations in the travel agency industry partly due to the growth of digital booking platforms allowing travel agents to operate from anywhere. A survey of Canadian travel agents indicated that “43% of the agents surveyed work as employees at a traditional agency, while 54% work as home-based independent consultants (ICs).”
- Luxury & Niche Travel Demand – There is a booming demand for high-end experiences including private jets, exclusive resorts, customized travel experiences, and luxury vacations. In fact, the luxury travel market in Canada generated approximately $62.05 billion USD in revenue in 2023 and is projected to reach $110.55 billion USD by 2030 (Grand View Research, Inc.).
- Adventure & Eco-Tourism Growth – There is a rising interest in sustainable travel, wildlife tours, and immersive experiences. Canada has “wide open spaces and bucket-list adventures, inclusive and welcoming hosts, francophone history and culture, unique Indigenous tourism experiences, and so much more!” and they “…can align Canada’s visitor economy with sustainability and regenerative tourism goals and avoid the social and environmental impacts of over-tourism at certain destinations” (Government of Canada).
- AI & Tech-Driven Booking Solutions – The “use of AI travel tools is up 40% in the past year…” (PR Newswire). Franchises will need to integrate these tools and other available technologies to provide personalized and efficient services.
4 Reasons to Invest in a Travel Agency Franchise?
The effects of the pandemic on the travel sector are in the past, and the industry’s market size is growing. Beyond that, there are several other reasons to invest in a travel agency franchise including:
#1 – Brand Recognition & Trust
Established franchises have strong reputations and loyal customer bases, making it less risky for an individual to start a travel agency franchise versus starting a business from scratch.
#2 – Training & Support
Franchisors provide industry training along with valuable support that includes marketing resources, booking technology, and more.
#3 – Supplier Partnerships & Discounts
Joining an already established franchise will give franchisees access to preferred pricing from airlines, hotels, and tour operators. This improves the quality of service franchise owners can provide to their customers.
#4 – Scalability & Low Overhead
Because many travel franchises are able to operate as home-based or virtual businesses, the overhead costs stay low, giving franchisees an opportunity to scale their business.
Challenges to Consider Before Investing
Of course, every industry has potential challenges to consider as well. For travel agencies, these include:
- Economic Sensitivity – Travel demand fluctuates based on recession, fuel prices, and global events. Businesses across various industries must remain adaptable to these influences to sustain growth and stability.
- Commission-Based Earnings – Because franchisees earn commissions on bookings, their income is likely to vary depending on the season.
- Competition from Online Booking Platforms – Franchisees will need to find ways to stand out with personalized services and niche expertise.
Is a Travel Franchise Right for You?
If you love travel and sales, then a travel agency franchise could be a rewarding business opportunity. FranNet is here to help you explore your options. Our expert franchise consultants will match you with the right franchise brand while answering all of your questions. We’ll guide you through the process from start to finish! Schedule your free consultation today!