Most home-based travel agents work with at least one “host agency.” Host agencies are bonded, accredited ARC/IATAN agencies through which the home-based agent makes bookings.
Home-based travel agents are not employees of their host agency, although many home-based travel agents seem to think they are and many host agencies treat them just that way. The home-based travel agent is an independent contractor, a separate business, just like the host agency. The home-based travel agent and the host agency are two, theoretically equal, businesses that join forces to accomplish goals that neither would be able to accomplish alone.
The primary reason (but by no means the only reason) a home-based travel agent works with a host agency is to collect commissions that he or she otherwise would not be able to collect.
Also, working through a host agency makes it easier to collect commissions, since many travel suppliers have long used the ARC and/or IATAN numbers of travel agencies to track who is owed what commissions. That’s changing and many home-based travel agents have direct relationships with many travel suppliers. Still, a surprising number of home-based travel agents simply funnel all their business through their host agencies whether they “need to” or not.
The challenge for home-based travel agents is to balance their business between bookings that must be shared with the host agency and bookings that they can keep all to themselves. Sometimes it’s not obvious. If you get a 70% split from your host agency and could get the entire commission directly from the supplier, that might seem like a no brainer. But what if the host agency has a “preferred supplier” relationship with the supplier and gets a 15% commission, while you, as an independent home-based travel agent, could only get 10%? Do the math and you’ll realize that going through the host agency earns you more money in this case.
I don’t recommend that beginners try to establish direct relationships with suppliers until they have learned the ropes — paid their dues, so to speak. That’s what host agencies are for. But established home-based travel agents should carefully examine their business to see if they are “giving away” commissions to their host agency that they could put directly into their own pocket.