Organizational Structure of Travel – meaning and definition

An organisational structure of a travel agency is a collective set up

to pursue specific missions, goals and objectives. It is a rational

coordination of various activities of functional department-Ticketing, tour

planning, tour costing & pricing, tour reservation, Documentation, and

other services for the achievement of some well defined aims through

division of labour, functions, and through a hierarchy of authority and

responsibility. Today, organizational structure is not a mere chart. It is a

mechanism through which travel agency management plans, organizes,

directs, coordinates and controls, the travel agency tour operation

business activities. It is indeed the foundation of sound management. In

fact, organisational structure is the backbone of management, without it

management cannot perform its functions smoothly. If the organisational

structure is ill planed/designed, if it is merely a makeshift arrangement,

then the management is rendered difficult and ineffective. If on the other

hand, it is logical, clear cut and streamlined to meet present and future

requirements, then the first requisite of sound management is achieved.

The organisation of a travel agency \ tour operator business largely

depends upon the size and type of business handled by it. Generally, in a

small and medium scale travel agency business, one will find a simple

organisation structure being limited in terms of operation, size, market,

division of labour and so forth. Where as in large-scale travel agency or

tour operation chains, such as Kuoni, SOTC, Thomas cook, Cox and

Kings and Orbit etc the organisation structure is more formal.

The travel agencies or tour companies having poor organisational

structure, seeking financial and operational development cannot hope to

success unless they set up a great variety and number of formal

organizations and master the know-how for operating them effectively.

The tourism researches have indicated that every travel agency

organisation has to economies and control its costs and enhance revenues,

because of the limited resources. They have to develop resource

acquisition strategies, face competition in some form or the other and

therefore develop survival and growth strategies, decide whether to

employ staff or contract services from outside, and decide how to develop

and promote new product(s) and service(s). In this process, travel agency

organizations tend to develop a variety of management practice, systems,

and strategies.

Principles of Organisational Structure

The concept of organisational structure of a travel agency/tour

operator is somewhat abstract and illusive. Organisational structure may

be defined as the established pattern of relationships among various parts

or positions of an organisation directed towards accomplishment of aims.

The principles of a good organisational structure are as follows:

I. Clear line of authority: There must be clear line, of authority

moving from top to the bottom of the organisation. This clarity

may be achieved by delegation of authority from highest manager

to lowest level employees by steps. Lack of clarity results in

misunderstanding and poor performance.

II. Adequate delegation of authority: Every employee must have

adequate authority to deal with the situation. Sometimes managers

fall to delegate authority adequately which results in delayed

decision-making and implementation, more pressure on higher

level and less motivation to subordinates.

III. Principle of ultimate responsibility: The responsibility of higher

level for the acts of his subordinates is absolute; the superior

cannot be relieved of the responsibility for the activities which he

has assigned to his subordinates. This means that a manager cannot

dissociate himself from the acts of his subordinates.

IV. Minimum managerial levels: To be successful in operation and

management organisation must think about the number of

managerial levels and these should be kept minimum as far as

 possible. The higher the number of levels, the longer it takes the

information to flow up and down in the organisation.

V. Unity of command: One employee in the organisation should be

accountable to and get instructions from one person. Otherwise

there would be confusion and sometimes even contradictory orders

may be received by the employee.

VI. Span of control: It refers to the number of people one manager can

directly supervise. The span is dependent upon several factors e.g.

nature of work, nature of superior and subordinate, degree of

supervision etc.

VII. Simple structure: the principle of simple structure indicates that the

organisational structure should be kept as simple as possible.

Provision of various networks is essential but it should not lead to

confusion and ambiguity.

VIII. Flexibility: Flexibility is the futuristic vision. The organizational

structure is designed not for a particular point of time but for a long

future too. It should be framed in such a manner that it may be

expanded/modified so as to adapt to future needs easily.

Major organisational structures of Travel Agency

Like other businesses, the travel agency will operate most

effectively and efficiently if an explicit organizational structure exists.

This formal structure should specify the role that each member in the

organization plays and how each role relates to others through a reporting

and decision-making communication network. This network will support

the agency’s goals and objectives and give each member an

understanding of his or her responsibilities toward achieving those goals

and objectives.

Based on the business functions to be handled within the

agency, the number of possible job classifications needed to do the work

would soon surpass the modest number of staff employed in the average-

sized travel agency, In all agencies but the smallest, staff must be

available to assume duties and responsibilities f or such specialized

activities or functions as :

 Ticketing

 Documentations

 Managing the enterprise and making business decisions and

policies

 Marketing the agency

 Selling the products represented by the agency

 Accounting for the profitability of the agency

 Book-keeping daily transactions

 Providing travel counselling to retail clients

  Handling commercial clients

 Dealing with specialized products and services

 Handling automation and clerical functions

 For the average agency with fewer than seven employees, it

is not possible

to create a title and position to fit every specialized function. The reality

is that employees must be flexible and willing to perform a wide variety

of tasks ranging from those that require a great deal of experience or skill

to those that are routine in nature.

Some of the more common job classifications and titles identified

to the travel agency business include agency manager, marketing

manager, sales representative, ticketing clerk, travel consultant, travel

counsellor.

No scientific method exists for designing the optimal organizational

chart. The most effective structure will depend upon such variables as

size and age of the agency, business concentration (commercial, vacation,

incentive travel, group travel, and so on), span of management control,

delegation of authority, and quality of personnel presently employed.

It is the mid-size travel agency that is currently experiencing a

decline in numbers as well as in the percentage of business handled.

Smaller agencies survive on the basis of low overhead, personalized

service, and specialization, but deregulation tends to favour the larger

agencies. However, adequate staffing and other resources are needed to

produce volume business. As expected mega agencies continue to acquire

smaller independent agencies to increase their overall efficiency through

economies of scale and an enlarged distribution network.

Smaller agencies have responded to the problem of size by joining

coops, consortiums, or franchise chains in an effort to achieve some of

the benefits of the larger agencies. By doing so, agencies are able to pool

their resources to support educational programmes, computer and

telecommunication systems, advertising and promotions, and joint

marketing programmes. Today, nearly half of the smaller agencies in the

United States belong to some type of co-op, consortium, or franchise to

meet the new business challenges imposed by de regulation and

increasing competition.

In designing the organizational structure, a travel agency is free to

use any means of Departmentation that is appropriate to its volume of

business, the types of clients it serves, or the specific functions it must

carry out to conduct agency business. The following methods of

Departmentation have their basis in general principles of organizational

design.
Organizational Growth

Under the economy-of-scale premise that larger agencies can

operate more efficiently, an owner of a smaller agency may at some point

over the life cycle of his or her business plan for expansion and growth or

consider joining one of the many co-ops or consortiums. It bears

repeating that a larger agency does not necessarily ensure more efficient

operations or improvements to the bottom line ( see figure 3 large scale

travel agency \ tour operator). Growth, if desired, requires a strategy on

the part of management. The effects of growth must be planned and

monitored closely, with the necessary organizational and operational

changes made, if there is to be any benefit from expansion.

Organisational structure of large scale travel agency

In planning for growth, the strategy may include any of the following

options either singly or in combination:

 Restructuring the organization with specialized staff

 Expanding the current operation with additional products and/or

staff

 Setting up branch operations

 Merging with other agencies

 Acquiring existing agencies

  Setting up a form of partnership or joint venture with one or more

agencies

 Joining or forming a cooperative or consortium

 Joining a franchise.

Benefits of good organisational structure

A well-defined and designed organisational structure of a travel

company brings following benefits to the hotel business:

 Develop and promote sound management practices, systems and

strategies;

 Growth and diversification of operational dimension;

 Enhancement of managerial efficiency,

 Develop effective leadership;

 Adoption of technological improvement

 Better human relations

 Optimum use of resources

 Stimulates creativity

 Promote and develop effective co-ordination among various

departments.

SUMMATION
 The organisational structure of a travel agency is the formal or

quasi-formal network of reporting or controlling relationship, the powers

and duties associated with each role in this network. The network of

reporting relationships is commonly depicted through an organisational

chart. But there are many travel agencies, mostly small and medium, in

which the structure is implicit. However, it has been observed that a

travel agency will operate functions most effectively and efficiently if an

explicit organisational structure is designed or adopted. Practically,

organisational charts do not exist nor does the role description yet, if one

views around, students can find a hierarchy of authority, some division of

work, some specialization in function, some role specialization and so

forth, which are the hallmarks of an organisational structure. In this

module students have described the different travel agency organisational

structure and the benefits of a well designed organisational structure

besides principles of efficient organisational structure.

 FUNCTIONS OF A TRAVEL AGENCY

Now, when a tourist has brought these tours, everything is taken

care of by the travel agent. He is provided with a rail and air ticket, he is

met on arrival, taken to the hotel in a car or coach, provided with hotel

accommodation with meals, sight-seeing with guide, and at the end of his

stay, taken to the airport for his departure. This is how a tourist who has

prepaid his arrangements travels from city to city and from country to

country.
 The retail travel agent, obviously sells the tours marketed by the

wholesaler, but it is possible he may have a client who does not want to

buy any of the tours marketed by the wholesaler. Many of these retail

agents are equipped to prepare a tour for such clients according to their

requirements. Some agents submit the programme to wholesalers for

execution, if they themselves are unable to operate it. But there are many

agents who could sell only the tours marketed by the wholesalers and

usually they sell holidays to nearby places as they run their offices with a

very small staff.

The travel agency or tour operator's business has two departments

as for as tourism is concerned. This is so with large organisations only.

They have a department for the outgoing traffic and they have another

department for the incoming traffic.

The outgoing department deals with the tourists going out of the

country. This department does all the planning of tours, promotion,

selling and contacting foreign agents for the services.

The incoming department handles the tourists who come into the

country from outside. This department arranges for hotels and

transportation and other services normally required by the tourists. There

are travel agencies which have only one or both departments. Either they

deal with the outgoing traffic or the incoming traffic. Very few agencies

have both the departments. In the normal travel agency business, there are

other departments such as Freight or Cargo Department, Rail Department

or Shipping Department. Take for instance SITA. They have both

incoming and outgoing departments. The outgoing department makes

travel arrangements for people travelling abroad and of course, the

incoming department that provides services to the tourists coming to

India. A few agencies handle only the incoming business and do not deal

with any outgoing traffic. Agencies like Mercury Travels, Orient Express,

Travel Corporation of India deal with both incoming and outgoing

business.
 The travel agent is one of the most important elements of the travel

trade. The other elements include the airlines, steamship companies,

railway, hoteliers, transporters and tourist organisations.

The main functions of travel agency could be summarised as follows:

1. Advisory: The agency advises potential travellers on resorts,

carriers, travel companions and travel facts worldwide.

2. Reservation: The agency makes reservations for all travel

requirements.

3. Planning: It plans itineraries of all kinds including complex multi-

stopover independent tours.

4. Computation: It computes accurate airline and other fares and does

costing of tours and ticketing.

5. Correspondence: It correspondences by telephone, letter, telex, fax,

etc. with travel principals and customers.

6. Records: It maintains accurate files on reservations.

7. Travel Brochure: It maintains and displays stock of travel

brochures.

8. Complaint Handling: It intercedes with principals in the event of

customer's complaints.

9. Insurance: It arranges insurance facilities for the customers.

10.Liaison: It maintains liaison with providers of tourist services.

 11.Foreign Exchange: It provides foreign exchange facilities for

customers.

12.Miscellaneous: It arranges any other special services ordered/

required by the customer.

RIGHTS AND DUTIES

In many countries, the activities of travel agencies are authorised,

controlled and limited by the state. Such regulations have often been

enacted for protecting customers and guaranteeing professional standards.

Thus a travel agency:

1. Must look after the rights and interests of its customers;

2. Must hand them a dated and stamped ticket;

3. Must see to it that the customer complies with frontier

regulations, such as personal documents, passport, visas,

customs declarations etc.;

4. May terminate the contract in certain cases and in certain

conditions stipulated before hand in which case the customer

may be entitled to manage up to a certain amount;

5. Recognise the travellers' right to terminate the contract

provided he pays the agency for all the expenses incurred

and waive the deposits made in advance,

The public resorts to the services of a travel agency in the following.

cases, in particular:

1. For taking part in tours with an involved programme where there

are numerous stages and various means of transport are used;

2. For stays in highly popular tourist resorts where it is difficult to

book rooms;

3. For prolonged stays for which the tourist wishes to leave nothing to

change and td profit from lower rates;

4. For taking part in certain types of tourism which are not available

otherwise (curious, safaris etc.).

In order to protect the occupation of a travel agent and to ensure that

unqualified persons do not operate as such, several countries like France,

Morocco etc. have introduced a Travel Agents' Licence. The licence is

awarded for a fixed period with a fee only to persons with certain

qualifications and high moral standard.

PLANNING OF SIGHT-SEEING

One of the jobs of a travel agency is to plan sight-seeing visits.

Sight-seeing is a visit to a place of importance of local, national or

international level. This can be a local city tour or in an area around a

city. There are places of varied interest to different people and travel
agent has to choose the location according to interest of the tourist. There

is of course a general city sight-seeing tour that every tourist likes. Large

majority of the tourists are interested in the antiquity of the country, its

cultural and historical background and the places connected with it.

Others have professional interest in visiting the factories, laboratories,

institutions and yet others may be interested in wildlife or flower or

mountains. The travel agent prepares programmes, giving full

information on places to be visited according to the interest of the

tourists.

A tourist wants to see the maximum. Normally a half-day sight-

seeing tour should last from TA hours to three hours. During this period a

number of places are included. They may not belong to a particular

period or in a chronological order as far as the historic date is concerned,

because in using the transportation for a sight-seeing, one has to follow a

route pattern allowing minimum time and cost of transportation.

In planning the sight-seeing, routing of the tour should therefore be

borne in mind. It should provide, drive through colourful and picturesque

streets, and areas, having buildings or sites of importance in the life of the

local people. Cleanliness of the route should also be borne in mind.

Driving through poor areas should be avoided. All tourists want to see the

typical characteristics of a city or country and they are always interested

in the local markets and bazars where they can see the natives of the place

in the pursuit of their daily life.

The antiquity of places is of interest to a tourist. He should,

therefore, be told the correct year of a construction of a monument or a

temple or the years or an era of a particular dynasty or kingdom. He may

not remember the dates, but he would like to know them anyway. Some

tourists are particular about these things and even take down notes. The

sights visited by a tourist lingers for a long time in this memory, as the

human nature is to remember for long what is shown to him rather than

what is taught to him.

SHOPPING

India is a paradise for the souvenir and treasure hunters. Both

expensive and inexpensive objects of utility produced all over the

country, present an unending variety of skill, colour and imaginations.

There are embroidered woollen shawls from Kashmir, brocades from

Banaras and jewellery from Jaipur, ivory carvings, paper mache, art clay,

silk and stoles, printed textiles with Indian motifs and hundreds of other

articles which draw the attention of the tourists. Every tourist must buy

some souvenirs from the country he visits and there is no doubt India

offers very attractive shopping to the foreigners, particularly in

handicrafts because in the West handicrafts are almost non-existent. The

mechanisation in those countries, has reached a stage when anything

made by hands is so expensive that one cannot afford it. We are fortunate

that the government has revived the handicrafts in India and this has not

only provided livelihood to many workmen, but it has also placed India

on the world tourist map, because Indian handicrafts today are popular all

over the world. The Department of Tourism has brought out a list of

shops in the major cities throughout India and the names printed in it

should be well-recommended. The easiest to recommend is of course the

Government Emporium in almost all major cities of India where the

tourists can have a wide choice under one roof.

A shopping establishment is to be recommended in the same

manner as we would provide information on any particular place.

Recommendation of a shop by way of information to the tourist will not

at all give him a feeling that we are particularly interested in a shop

because you may be getting commission from the shopkeeper. If a tourist

asks a tourist guide where he could buy this or that, he may most

certainly be given this information.

On many occasions, complaints are received from tourists about

their shopping in India, that about goods ordered by them had not been

received or what they had ordered was not faithfully supplied. This brings

a bad name to the country as a whole. Only tourist worthy shops most be
recommended. Both the tourist guides as well as those in travel agencies

or airlines responsible for recommending names of shops, owe a

responsibility to the country and should take full care in this regard.

Travel agency
A travel agency is a private retailer or public service that provides travel

and tourism-related services to the general public on behalf of

accommodation or travel suppliers to offer different kinds of travelling

packages for each destination. Travel agencies can provide outdoor

recreation activities, airlines, car, rentals, cruise lines, hotels, railways,

travel insurance, package tours, insurance, guide books, VIP airport

lounge access, arranging logistics for luggage and medical items delivery

for travellers upon request, public transport timetables, car rentals, and

bureau de change services. Travel agencies can also serve as general sales

agents for airlines that do not have offices in a specific region. A travel

agency's main function is to act as an agent, selling travel products and

services on behalf of a supplier. They are also called Travel Advisors.

They do not keep inventory in-hand unless they have pre-booked hotel

rooms or cabins on a cruise ship for a group travel event such as a

wedding, honeymoon, or other group event.

BUSINESS MODEL
Travel agencies often receive commissions and other benefits and

incentives from providers or may charge a fee to the end users.[1] Hotel

owners and tour operators typically pay a higher commission rate to

travel agencies, whereas airlines typically pay a low commission. [2] The

customer is normally not made aware of how much the travel agent is

earning in commissions and other benefits.[3] A 2016 survey of 1,193

travel agents in the United States found that on average 78% of their

revenue was from commissions and 22% was generated from fees.

TRAVEL TECHNOLOGY

Travel agencies use the services of the major computer reservations

systems, also known as global distribution systems (GDS), including:

Amadeus CRS, Galileo GDS, Sabre, and Worldspan, which is a

subsidiary of Travelport, which allow for comparison and sorting of hotel

and flight rates with multiple companies. [5] Bookings made via travel

agents, including online travel agents, may or may not be confirmed

instantly. Unlike online travel agencies, metasearch engines and scraper

sites, such as Skyscanner, Kayak.com, Rome2rio, and TripAdvisor, may

or may not have their own booking engine, and instead provide results for

search queries and then divert traffic to service providers or online travel

agencies for booking. Travel agents may also work with airline

consolidators.
TYPES OF AGENCIES

Booking Holdings and Expedia Group, both online travel agencies, are

the largest travel agencies on the list of top earning travel companies.[12]

Travel agencies can be multinational companies, referred to as

"multiples" in the United Kingdom. They can also be medium-sized

organizations, referred to as "miniples" in the United Kingdom, or can be

independent, small companies. They can be structured as a limited

liability company, a sole proprietorship, or can be set up as a host,

franchising, or consortium structure, such as in the case of CWT. A

traditional travel agent may work for a travel agency or work freelance.[13]
[14][15][16]
Helloworld Travel is an example of a franchised travel agency,

giving agents access to internal systems for product and bookings. [17]

While most point-to-point travel is now booked online, traditional agents

specialize in niche markets such as corporate travel, luxury travel,

cruises, complicated and important trips, and specialty trips.[18] Other

niche markets include travelers with disabilities, travelers over the age of

60, women traveling alone, LGBT tourism,[19] the needs of residents in an

upmarket commuter town or suburb, or a particular group interested in a

similar activity, such as a sport.[20][21][22] Examples include

StudentUniverse and STA Travel, which specialize in youth travel, or

CWT, which caters to corporate travel. Many use remote work to reduce
overhead or provide concierge services. Agents can act as "travel

consultants" with extensive knowledge of destination regions and

specialize in topics like nautical tourism or cultural tourism.[23] Many

traditional agents prefer the term "travel advisor" as opposed to "travel

agent" to emphasize their advice, expertise, and connections that are of

great value.[24] There are also direct-to-local booking agencies that

connect users with travel experts in the country they plan to visit instead

of their travel agents in their country of residence. [25][26][27]

Outbound

travel agencies offer multi-destinations; inbound travel agencies are based

in the destination and deliver an expertise on that location.

LICENSING

In many countries, all travel agencies are required to be licensed by the

International Air Transport Association (IATA).[29] Many are also bonded

and represented by IATA, and, for those that issue air tickets, the Air

Travel Organisers' Licensing (ATOL) in the United Kingdom, and the

Airlines Reporting Corporation in the United States also serve those

purposes.[30] ABTA – The Travel Association the Association of

Canadian Travel Agencies (ACTA) The American Society of Travel

Advisors (ASTA), represent travel agencies in the United Kingdom,

Canada, and the United States respectively.

HISTORY
In 1758, Cox & Kings became the first travel agency in modern history.

In 1840, the Abreu Agency was established in Porto by Bernardo Abreu,

becoming the world's first agency to open its services to the public.

Thomas Cook travel agency in the United Kingdom, which ceased

operating in 2019.

In 1841, Thomas Cook, a Baptist preacher who believed that alcohol was

to blame for social problems, reached an agreement with the Midland

Railway to organize the transportation of 500 members of his temperance

movement from the Leicester Campbell Street railway station to a rally in

Loughborough in exchange for a commission.[35][36] He formed Thomas

Cook & Son, which later became The Thomas Cook Group. It filed

bankruptcy and underwent liquidation in 2019.[37]

In 1871, Dean and Dawson was founded in the United Kingdom and in

the 1950s, it was acquired by Thomas Cook.[38]

In 1870, the Polytechnic Touring Association was founded in the United

Kingdom.

In 1887, Walter T. Brownell established Brownell Travel, the first travel

agency in the United States, and led 10 travelers on a European tour

setting sail from New York on the SS Devonia.[39]

In 1895, Baldwins Travel was founded by Alfred K Baldwin, originally a

printer, bookbinder and publisher in Tunbridge Wells. Baldwins begins

selling railway tickets and helping friends to travel to Europe and beyond.

News spreads and the former printers slowly build a strong side-line in

travel at the back of the Baldwins Stationery shop at 27 Grosvenor Road.

[40]

Originally, travel agencies largely catered to middle and upper-class

customers but they became more commonplace with the development of

commercial aviation.

In 1923, after being treated badly by a British travel agency, K. P. Chen

formed what became the China Travel Service, the first travel agency in

China.[41]

The industry suffered during World War II. However, the Post–World

War II economic expansion in mass-market package tours resulted in the

proliferation of travel agencies catering to the working class.[42]

In 1905, Nippon Travel Agency became the first travel agency in Japan.
[43]

In 1929, Intourist was formed as the official state travel agency of the

Soviet Union, with the goal of convincing outsiders to visit the country.[44]
During the Cold War, travel agents were used by people from Western

countries to travel behind the Iron Curtain.[45]

In 1951, the precursor to Helloworld Travel became one of the first travel

agencies in Australia.

In 1955, Henderson Travel Service became the first black-owned travel

company and the first to take large groups of black tourists to Africa.[46][47]

A Keihäsmatkat advertisement from Rhodes in 1971.

In the early 1980s, American Airlines' Sabre unit created a direct-to-

consumer booking tool for flights, hotels and cars called eAAsySabre.[48]

In 1989, with the liberalization of travel for South Koreans, Mode Tour

became the first travel agency in the country.[49]

In 1991, Hotel Reservations Network, the precursor of Hotels.com, was

founded. At first, hotels did not pay much in commissions.[48]

With the advent of the internet, travel agencies migrated online and

underwent disintermediation by the reduction in costs caused by

removing layers from the package holiday distribution network.[50]

In 1994, Travelweb.com launched as the first online directory of hotels.[51]

In 1995, Internet Travel Network sold the first airline ticket via the World

Wide Web.[51]
In October 1996, Expedia.com, funded with hundreds of millions of

dollars by Microsoft launched as the first large online travel agency.[48]

At the same time, Cheapflights started as a listing service for flight deals

from consolidators.[48]

In 1998, Lastminute.com was founded in the United Kingdom.[51]

In 1999, European airlines began eliminating or reducing commissions, [52]

while Singapore Airlines did so in parts of Asia. In 2002, several airlines

in the United States did the same, which led to an unsuccessful lawsuit

alleging collusion among the airlines, that was decided on appeal in 2009.
[53][54]

In 2007, the launch of the iPhone and related mobile apps increased travel

bookings made online.[51]

In 2008, the launch of Airbnb created an online marketplace for spare

bedrooms and apartments.[51]

In 2011, the launch of HotelTonight highlighted instantaneous same-day

hotel room booking.[51]

In 2021, travel agency Baldwins Travel Group, which was founded in

1895 was bought by business group[55] Inc & Co.

OUTLOOK
According to the United States Bureau of Labor Statistics, in 2019, there

were 82,000 people who worked as travel agents for their full-time jobs.

That number is projected to decrease by 26% over the next 10 years.

However, job prospects should be best for travel agents who specialize in

specific destinations or particular types of travelers. In 2019, the median

salary was $40,660 per year, compared to the median annual wage for all

workers which was $39,810.

Several reports show that the number of people using travel agents to

book travel has been increasing.

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