TRAVEL AGENCY AND TOUR OPERATORS

Definition Functions Characteristics Sales and Revenue Types and Criteria

TRAVEL AGENCY
“A travel and tour agency is an entity engaged in the business of extending to individuals or groups, travel services and assistance to include documentation; arrangements, handling and/or conduct of tours within or outside the Philippines, whether or not for a fee, commission or any form of monetary consideration.’’
-Article 243 of the Tourism Code of 1980

TRAVEL AGENCY
“A commercial enterprise where a traveler can secure information and expertise, get impartial counseling, and make arrangements to travel by air, sea or land, to any point in the world.”

TRAVEL AGENCY
“Acts as an agent of the different suppliers in the tourism industry namely: the transportation companies, hotels/resorts, car rental companies, tour operators and sightseeing companies.”

FUNCTIONS OF A TRAVEL AGENCY
1. It provides information and expertise. 2. Recommends destinations, products and services best suited to the needs of the client. Provides assistance in securing travel documents, such as passports and visas, and immigration clearances.

3.

FUNCTIONS OF A TRAVEL AGENCY
4. It processes travel arrangements by placing reservations, obtaining confirmations and issuing corresponding tickets or tour vouchers in behalf of the suppliers.
5. It assists in cases of refunds and cancellations.

SOURCES OF SALES AND REVENUES
1. Fixed commissions or a reasonable markup on a net fare 2. Commissions from other suppliers of travel services 3. Service fees for ancillary services 4. Production incentives and rebates from suppliers

CHARACTERISTICS OF A TRAVEL AGENCY
1. Retailers. Normally transact business and sell directly only to the traveler; 2. Acts as counselor to the end-user, and is an agent for the suppliers

CHARACTERISTICS OF A TRAVEL AGENCY
3. Derives a fixed income from pre-determined commission schemes dictated by the suppliers of travel components 4. Charges fees for ancillary service 5. Is limited to direct selling to end-users

TOUR OPERATOR
• Tour operator contracts and purchases the separate travel components (suppliers or vendors) and assembles them into one package

• Tour operators are wholesalers since they transact business with the travel agents (retailers). • Tour operators are travel agents who act as middlemen and assembler of services.

TOUR OPERATOR
Tour operator is a travel entity or company that operates assembled tour packages, made up of transportation services, accommodations and meals, guided tours or tour escort services.

TOUR OPERATOR
TOURS DEPARTMENT - tasked to assemble the various travel components into a tour package, and sells the resulting package as one product - develops and assembles well-made tour packages that are offered to the travelers through other travel agencies

TOUR OPERATOR
PRODUCT DEVELOPMENT
- constantly on the look-out for new destinations, attractions and activities - conducts research on the travel trends of the market, and often consults the travel agents for relevant inputs

FUNCTIONS OF A TOUR OPERATOR
1. Plans and develops tour packages that meet the needs of the various markets 2. Assembles the various travel components as an integral part or component of a single tour package 3. Delivers the tour package by operating worry-free and secured programs and/or itineraries that are cheaper than when each service is purchased individually

SOURCES OF INCOME OF TOUR OPERATOR
1. Variable mark-up based on contracted rates from the suppliers 2. Cost savers and concessions 3. Sale of optional tours, excursions and extensions 4. Shopping commission on sales generated 5. Direct sales to end-users

CHARACTERISTICS OF A TOUR OPERATOR
1. A wholesaler who transacts business primarily with, and protects the interest of the retail travel agents.

2. Acts as an intermediary to and a middleman of suppliers. 3. Has variable but limited profit margins. Capitalizes on favorable terms, conditions and concessions.

CHARACTERISTICS OF A TOUR OPERATOR
4. Generates additional revenues by selling optional tours, excursions and extensions. 5. Can, but should not, by-pass the retailers, and sell direct to the end-users.

Basic Differences Between Travel Agents and Tour Operators

TRAVEL AGENTS
1. Retailers. Transact business directly with the travelers. 2. Act as counselors/advisers to the travelers and are agents for the supplier. 3. Revenues are fixed and predetermined by the suppliers/vendors. 4. Charge fees for documentation and ancillary services. 5. Are agents of the suppliers/vendors.

TOUR OPERATORS
1. Wholesalers. Deals primarily with the retailers (travel agents). 2. Act as middlemen to the suppliers/vendors. 3. Have variable but limited revenues income and profit margins. 4. Sells optional products and services and makes use of deposits. 5. Capitalize on favorable terms.

TYPES OF TOUR OPERATORS
LOCAL TOUR OPERATOR (LTO)
services Filipino and/or foreign traffic to national destination by way of regular sightseeing tours or tour packages taking into consideration the popularity of the destination

TYPES OF TOUR OPERATORS
DOMESTIC TOUR OPERATOR (DTO)
services Filipino traffic to national destination, on an ad-hoc basis, as and when contracted, by providing itineraries/programs tailor-made to the needs of the client

TYPES OF TOUR OPERATORS
INBOUND TOUR OPERATOR (ITO)
services Filipino traffic to national destinations, on an ad-hoc and regular package basis, taking into consideration the specific requirements of the contracting party abroad. Its source of traffic is mainly foreign tour operators.

TYPES OF TOUR OPERATORS
OUTBOUND TOUR OPERATOR (OTO)
designs and assembles tour packages for residents of the Philippines, either foreign or local, to foreign destinations

CRITERIA IN IDENTIFYING THE TYPES OF TOUR OPERATORS
1. 2. 3. 4. Area of operations Nationality of travelers Market or source of tariff Types of tour package operated Regular sightseeing or tour packages Ad Hoc sightseeing or tour packages

Classifications of TO
Basis Area of Operation Local Wherever the operator is situated Filipinos/ foreigners Domestic Any Philippine destination Filipinos living and working in the PH PH Adhoc and Regular Inbound Any Philippine destination Foreigners living and working abroad Abroad Adhoc and Regular Outbound Any destination abroad Filipinos and foreigners living and working in PH PH Adhoc and Regular

Nationality of Travelers

Market Source Package Operated

PH and abroad Regular

TRAVEL TERMS
Supplier – a provider of tourism services or tour package components. Voucher - a written communication between one set of accounts and another. Tariff – a supplier’s published list of rates, fares, and services.

TRAVEL TERMS
Ad Hoc Tour Package – a tour put together according to the specifications of a client. Regular Tour Package- a tour put together according to the demands of the market to a popular tourist attraction or destination. Expatriate – citizen of a country who resides in another country