Travel Agency: 5 Metrics to Monitor Every Month to Drive Your Business [ABO]

This is the first indicator to watch. The balance on the bank account does not necessarily reflect the cash the agency actually has at its disposal.

Customer deposits can give a misleading sense of financial comfort, while they will need to be used to pay suppliers or finance upcoming services.

Daniel Borja, founder of the Aragor firm, an accounting and audit expert, therefore recommends tracking “the real cash level net of client and supplier advances”. The objective is to distinguish what is actually available from amounts already committed.

A travel agency can show a high level of sales while facing difficulties in meeting its deadlines. Monitoring cash flow helps identify these tensions early enough to anticipate financing needs.

The volume of business, revenue, and margin do not measure the same thing. This distinction is essential to understand the economic performance of an agency.

Revenue volume corresponds to the total value of sales made to clients. The revenue recognized by the agency depends on its business model and the applicable accounting rules. In an intermediation activity, for example, it does not necessarily equal the total value of the trips sold.

Margin represents what the agency retains from its activity after accounting for costs directly linked to sales, according to the chosen calculation method.

« It is important to take into account the difference between margin and revenue in order to clearly understand how the progression of one affects the other », explains Daniel Borja.

A rise in revenue does not automatically translate into improved profitability. « The development of a substantial revenue can improve the margin, but not always, and can have a negative impact on the result if the means to develop it are too great—especially human or technological resources—to reach the targeted threshold », he notes.

Hiring, technological investments or commercial expenses: growth in activity can bring additional costs that offset the expected gains. Revenue must therefore be analyzed in conjunction with the margin and the resources mobilized to develop it.

To measure profitability, the leader must not stop at the projected margin announced at the time of sale. They must also verify what each file actually yields.

« Each file should be comparable between the expected margin and the actual margin achieved », advises Daniel Borja.

This analysis helps identify gaps, understand their origin and adjust commercial practices. The time spent on each file is another element to consider. A sale may show a satisfactory margin on paper, but prove far less profitable if it required many hours of research, revisions and back-and-forth with the client.

« Ideally a tool that would juxtapose the actual margin with the time spent would help optimize actions and steer the agency toward greater profitability », he emphasizes.

Additional products also contribute to forming the margin. « Additional products are a significant element in shaping the margin that should be properly integrated into the reasoning », recalls Daniel Borja. They must therefore be included in the analysis to measure their real weight in the agency’s profitability.

Finally, the calculation must take into account the applicable VAT. « Also, you must consider VAT, which is a subtractive element of the margin since we reason in VAT-inclusive terms first and then subtract VAT according to territorial rules », clarifies the founder of Aragor.

The available margin cannot be assessed from the amounts invoiced to clients alone.

Monthly monitoring only pays off if it leads to decisions. In case of shrinking margin, rising charges or cash-flow strain, Daniel Borja recommends first identifying the causes.

He then advises to “implement corrective actions with the dedicated teams. The leader has every interest in sharing the difficulties with the team: “Communicating about the downturn is also a way to find remedies.”

If the situation requires it, it is also possible to “seek support from lenders to help if needed (bank, partners, shareholders…)”. In the most serious cases, Daniel Borja recommends “drafting a restructuring business plan if appropriate.”

Finally, he suggests “consulting with advisers to validate the decisions (accountant, statutory auditor, lawyer, banker)”.

Regularity remains the key. As Daniel Borja notes, “monitoring all these indicators provides a daily, easy-to-follow steering tool.”

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