UNIT 3 - Travel agencies

Introduction to the subject

Travel agency is one of the most important organization in the tourism private sector which plays a significant and crucial
role in the entire process of developing and promoting tourism in the country or at a destination. It is a travel agency
which packages and processes all the attractions, accesses, amenities and ancillary services of a country and present them
to tourists. That’s why travel agency is known as image builder of a country.

Travel agencies: Functions

• To organize.
• To act as consultant to.
• To intercede.
1. Provision of Travel Information
2. Preparation of Itineraries.
3. Liaison with provider of services.
4. Planning and Costing Tours.
5. Ticketing
6. Provision of Foreign Currency.
7. Insurance

Features and importance of the travel agency

• An important link between the clients and principal suppliers.
• Image-Builder.
• Ensures rapid travel services.
• Provider of an authentic and reliable travel information.
• A social and continuous process.
• Establishes a good relationship with clients and vendors.

Wholesale travel agency vs. Tour Operator

• Wholesale travel agency does not sell directly to the public, while tour operators do sell directly to clients.
• A whole travel agency usually combines, assembles and contacts for existing travel services to formulate a new travel
product she has his own one or more components of travel product. Ex.: inclusive tours.
• Wholesale travel agencies are less inclined than tour operators to perform ground services. Ex.: Handling agency or
ground operators.
• A wholesale travel agency may deal with one component of travel product while a tour operator offers a variety of
tour programs.
• The size of the business is large in the case of tour operators in comparison to a wholesale travel agency.

Structure and Internal Organization

AREAS OF ACTIVITY
1. Technical or product area.
• Design and organization of package travels.
• Contracting accommodation or transport services.
• Contracting secondary services such as tourists guides, luggage transfers…
• CRS and GDS

2. Marketing or commercial.
• Marketing and promotion of the travel packages.

3. Administrative and financial.

• Administration and legal support.
• Financial management.
• Generation of revenues.
 Organization chart

Wholesale agency Retail agency

Generic Organization Chart

Management Technicians Assistants Specific Organization Chart
- Agent. Wholesaler Retailer
- General Manager.
- Junior travel agent. - Transferred. - General manager.
- Management areas director or - Office/Agency director.
- Senior travel agent. - Secretary. - Product director.
territorial division. - Salesman or agent.
- Forfait travel agent. - Administrative. - Commercial director.
- Office/subsidiary director. - Assistant.
- Commercial developer. - Debt collector. - Commercial area.
Agency manager/departmental - Trainees.
- Tour coordinator. - Messenger. - Administrative area.
supervisor.
- Driver.

An example of business structure for travel agency

• Chief Executive Officer.
• Travels and Tours Consultant.
• Admin and HR Manager.
• Marketing and Sales Executive.
• Accountant.
• Customer Care Executive / Front Desk Officer.

OMNI-CHANNEL
Why the travel industry needs to embrace and OMNI-CHANNEL strategy?
The MULTI-CHANNEL experience is what most businesses invest in today. They have a website, blog, Facebook and
Twitter. They use each of these platforms to engage and connect with customers. However, in most cases, the customer
still lacks a seamless experience and consistent messaging across each of these channels.
An OMNI-CHANNEL experience, on the other hand, accounts for each platform and device a customer will use to interact
with the company. That knowledge is then used to deliver them and integrated experience. Companies using this
technique align their messaging, goals, objectives, and design across each channel and device.

TIPS
• Train contact center agents to communicate using a tone of voice that’s consistent with your brand identify.
Regardless of which agent they get the nest time they call or text.
• Prioritize a positive narrative and informed customer exchange to win consumers’ attention and loyalty.
• Connect your channels for easier navigation.
• Monitor how customers engage with each channel. Analytical insights can be used to make improvements like
increasing staff during your busiest hours or tweaking the user experience in response to trends in customer
behavior.
• Try to be available to your customers through their preferred form of communication.
Stores Sales direct 225% optimization (2018)

Software
A global distribution system (GDS) is a computerizes network system owned or operated by a company that enables
transactions between travel industry services providers, mainly airlines, hotels, car rental companies, and travel
agencies.
There are 3 major GDS; Sabres, Travelport (Galileo, Apollo and Worldspan) and Amadeus
A computer reservation system or central reservation system (CRS) is a computerized system used to stores and
retrieve information and conduct transactions related to air travel, hotels, car rental, or other activities. Originally
designed and operated by airlines, CRSs where later extended for the use of travel agencies. Most airlines have
outsourced their CRs, to GDS companies, which also enable consumer access through Internet gateways.
Modern GDS’s typically allows users to book hotel rooms, rental cars, airline tickets as well as other activities
tours.

Travel Smartpoint is the ultimate travel technology for today’s connected digital age. It puts the world’s travel
content at your fingertips and is packed with features that power better performance and enable you to create the
perfect personalized services for your customers.
The AMADEUS GDS was created as an innovative solution to a common industry problem: the need for efficient
sales and travel distribution. Thanks to our technology, substantial investment and our people we’ve developed the
largest network of travel provers and sellers. We have evolved from being a GDS to create a Live Travel Space with
the Amadeus Travel Platform at its core.
Voucher
Vouchers are used in the tourism sector primarily as proof of a named customer’s right to take a service at a specific
time and place. Service providers collect them to return to the tour operator or travel agent that has sent that
customer, to prove they have given the service. So, the life of a voucher is as below:
• Customer receives vouchers from tour operator or travel agent for the services purchased.
• Customer goes to vacation site and forwards the voucher to related provider and askes for the service to be
provided.
• Provider sends collected vouchers to the agent or operator that sends customers from time to time and asks for
payment for those services.
• Uncollected vouchers do not deserve payment.

Why you still need a travel agent?

Today, travelers have the option of researching and booking everything they need oline without the help of a travel
agent. As technology and the internet are increasingly being used to market destinations, people can now choose to
book tour with a particular agency or agent, or they can be FULLY INDEPENDENT TRAVELLERS (FITs), creating their own
itineraries.

Metasearch vs. (Online) Travel Agency

• Travel agents basically earn their living by the commissions we earn from our sales of hotel stays, cruises,
sightseeing and rental cars. The airlines haven’t paid commissions to travel agents since the mid 1990’s
• Travel agents are privy to special flights prices, special hotel and cruise cabin rates that consumers will never find
online themselves.
• Travel Agents are well versed in travel rules, terms and conditions.
• The right travel insurance.
• Travel Agents have specialized expertise.
• Affordable payment plans.

The future travel agencies

• Benchmarking (Offer and demand).
• Market tendencies.
• News market segments.
• Social media.
• Traveler: Multimotivational.
• Traveler: Policonsumer.

Segmentation
• Adventure and sports. • Seniors.
• Cruises. • Scholar.s
• Cultural Travels. • LGTBIQ Tourism.
• Luxury. • Youth.
• Exotic. • Singles
• Ecoturism. • Drinks (Dual income, no kids).
• Health and beauty. • Families.

New distribution channels

• QR codes. • Metrics
• Virtual reality. o Search Marketing.
• Augmented reality. o Social Media.
• On-line sale. o Media buying.
• Social media. o SEO (Search engine optimization).
• Mobile marketing. o CPA & Direct Response (cost-per-acquisition).

New trends
1. Last minute bookings are increasing.
2. But advance booking is preferred for multi-days tours.
3. Travelers are visiting new destinations.
4. And requesting new experiences.
5. Ecological and educational tours are in demand.
6. Skip the line tours.
7. Travelers enjoy a local experience.
8. With history and culture.
9. What hasn’t changed is their love for adventure.

Online Travel Agents (OTAS)

Companies that aggregate accommodations and transportation options and allows users to choose one or many
components of their trip based on price or other incentives.
OTAs are gaining popularity with the travelling public
Some ideas:
• Online travel agencies work by plugging into a global distribution system.
• OTA is the middleman, connecting customers with airlines or hotels and taking a small commission from the
companies in the process.
• OTA’s commissions.
• Accreditation number.
• In general, the vendor pays commission to the travel agent after the client has traveled.

OTAs US commissions model

Commission is paid to a travel agent for a big sales volume.

Marketing & Financial Strategies

Must-know hotel and travel agencies metasearch marketing terms

Key hotel technology and online distribution terms

• Property management system (PMS) is a
software that helps hotels manage their
operational functions, such as bookings, front
office, and financial reporting.
• Channel manager is a software that automates
the distribution of rates and inventory to various
bookings channels. This makes it easier to
manage rooms from one centralized place and
avoid overbookings.
• Hotel metasearch helps travelers compare hotel deals on various bookings sites. When they select a deal, they’re
redirected to the bookings channels advertising that deals to make a reservation.
• Online travel agency (OTA) is third-party booking site that offers travel-related products, as well as displays guest
ratings and reviews.
• Booking channel refers to a distribution channel that enables travelers to make their room reservation.
• Connectivity provider provides software products (ex.: an IBE, and channel manager) to hoteliers. These types of
companies also partner with hotel metasearch platforms like trivago, so that hoteliers can advertise their website
rates directly to travelers.
• Internet booking engine (IBE) facilitates a traveler’s direct booking process on a hotel website and is available
through a connectivity provider.

Essential online marketing terms

• Click-through rate (CTR)
indicates the percentage of
people who clicked on a link in a
n email or marketing campaign t
research a web page. It also
reflects how effective the
promoted content was by
measuring the desired action
taken (ex.: making a booking).
• Cost-per-acquisition (CPA) is a
commission-based model OTAs
used to charge for each booking
a traveler makes.
• Cost-per-click (CPC) is a method used to charge or every traveler click on an advertisement.
• Cost-per-mille (CPM) is a pricing model used to charge for every 1,000 times an advertisement is displayed to
travelers.
• Search engine results pages (SERPs) display the results of someone’s search query and sorts those by relevance.
• Search advertising (Paid search) is a model advertisers use to have their ads displayed when they match keywords
entered in search engine queries.
• Search engine optimization (SEO) is an aspect of SEM without the paid advertising. SEO focuses on the managing of
website content and links to the website in order to improve placement in search results organically.

Must-know hotel and metasearch marketing terms

• Locale is a market that has its
own domain on a hotel listing
website, for example, trivago.fr,
trvago.it, trivago.jp.
• Search volume reflechts the
number of online searches for
something specific withi a certain
period of time (ex.: hotels during
summer).
• Parther share is the percentaje of
clicks on a property’s hotel deals
that went to the OTA advertising
that deal.
• Conversion rate is the
percentage of the total number of visitors who completed a desired goal. For example, a website has a booking
conversation rate of 25%. That means 25% of the total visitors made a booking.
• Tracking pixel is an HTML code used to count the number of travelers’ clicks on a link to visit a website or complete
a booking there.
• Rate parity is t oensure that hoteliers give the same rates for the same rooms on all booking channels they use.
• Rate comptetiveness refers to how competitive your property’s direct rates are in comparison to your advertised
rates on other booking channels.
• Imperssion refers to the time when your hotel listing is shown on a search result page. Although, this doesn’t mean
that a traveler has clicked on the listing.

Financial strategies for travel agencies

Pricing factors
• Seasonality. Changes depending on the season.
• Operating Costs. The Higher the operating costs, the more expensive your prices will need to be so that you cover
all expenses.
• Competition. There is no point pricing your product out of the marketplace.
• Demand. People will pay more if there is a high demand in a region but they will pay less if there is an abundance of
choice.

Taxes
21% VAT (IVA) Special Regime for Travel Agencies
10% VAT (IVS) Hotels & Restaurants
As of 1 January 2015, the separate provison for output VAT is removed if the business client requests this, but they can
opt for the genral regime.
- The gross tax base will be the gross margin of the travel agency.
Input VAT on acquisitions of goods and services:
- It will not be deductible when it corresponds with acquisitions of goods and services executed to carry out the trip,
which are of a direct benefit to the travelers.
- The rest of the input VAT is deductible.
Gross tax base = Price of trip (excluding VAT) – Acquisitions of goods and services fo rthe customer’s benefit (taxes
includes)

Profit Margin
Average: 10% - 20% for Tour Operators and Whole Sealers.

Fixed Costs vs. Variable Costs

The agency
• The fixed costs include rent, building maintenance, any machinery and insurances.
• Variable costs include wages, energy, repairs, petrol, uniforms, bank fees, promotional and travel costs.

The product
Example: Charter flight 250 seats = 135.000€
135.000/250 = 540€ (100% ideal occupancy)
Let’s be more realistic: 95% occupancy is 250/95 = 237,5 seats (238 seats).
135.000/238 = 567,5 (568€)
In order to cover the fixed costs: 568€ per person.

Rates
• Rack rate.
• Confidential rate.
• Group rate.