Travel Agency

Business
What is
Travel
Agency?
• A travel agency is a business that operates as
the intermediary between the travel industry
(supplier) and the traveller (purchaser). Part of
the role of the travel agency is to market pre
packaged travel tours and holidays to potential
travellers. The agency can further function as a
broker between the traveller and hotels, car
rentals, and tour companies (Goeldner &
Ritchie, 2003).
• A travel agent is the direct point of contact for
a traveller who is researching and intending to
purchase packages and experiences through an
agency. 
• A prospective travel agency is one
which makes arrangements of travel
tickets (air, rail, road, and sea);
travel documents (passports, visa
and other documents required to
travel); accommodation,
entertainment, and other travel-
related services from principle
suppliers.
• It may also secure travel insurance,
foreign currency for traveling
people.
Scope of Travel Agency
• A travel agency’s main function is to act as an agent, selling travel products and services on behalf
of a supplier.
• In addition to dealing with ordinary tourists, most travel agencies have a separate department
devoted to making travel arrangements for business travellers some travel agencies specialize in
commercial and business travel only. 
• It is a service which is provided by a government to people living within its jurisdiction, either
directly (through the public sector) or by financing provision of services. The term is associated
with a social consensus (usually expressed through democratic elections) that certain services
should be available to all, regardless of income, physical ability or mental acuity. Even where
public services are neither publicly provided nor publicly financed, for social and political reasons
they are usually subject to regulation going beyond that applying to most economic sectors.
 Functions and Services of Travel Agency

The main function of a Airline Ticketing and

Travel Information Itinerary Preparation
large-scale travel agency are Reservation

Tour Packaging and Costing Reservation Travel Insurance Currency Services

Organization of
Conference/Conventions
 • Travel agencies are basically categorized into
two types-: 
Types of Travel
Agencies
FULL-SERVICE COMMERCIAL
AGENCY TRAVEL AGENCY

IMPLANT ONLINE TRAVEL

TRAVEL AGENCY AGENCY
Source of Revenue
• Retail Travel Agency
• Retailer gets commission from the gross sale
of hotel rooms, airline, train, bus and cruise
tickets, insurance, foreign exchange, etc.
Commission is the primary source of its
revenues. 
• A two-way selling method, that a large travel
agent practices, includes commission and
mark-up price. A mark-up price refers to mark
up cost of tour. It is sold on a higher price.
Further, mark-up price is obtained from the
difference between retail price and the
wholesale cost.
• Wholesale travel agency
• A wholesaler receives volume discounts from
the principal suppliers because a wholesaler
might agree to purchase a large number of
seats from a particular airline or reserve a
large number of rooms at a particular hotel or
resort.
History of Travel Trade
and Travel agency business

• Self Study
External factors affecting travel agency

• Mergers and acquisitions • Expensive car rentals  

• Scarcity of trained and qualified • Online booking
manpower • Service tax on foreign exchange
• New search engines: A nightmare payments  
• Self managed individual tour • Staff poaching
• zero per cent commission
• Huge initial investment for running an
IATA accredited agency
Roles and responsibilities of travel agents

• It ensures horizontal integration for the

purpose of achieving bumper sale.
• It follows tour itinerary and it does not
have anything to do with itinerary.
• Travel agents also provide destinations
transfer services to the clients as per the
tour itinerary
• It sorts out problems as per the
directions of tour wholesalers
• It negotiates the terms and conditions
for commission with principal suppliers.
• It recruits trained manpower from time to time
• It subscribes publications like TIM for travel
documentations
• It arranges the vehicle in a systematic manner.
• It collects feedback from suppliers and
consumers
• It shares information and knowledge
• It is an intermediary between tour operators and
tourists in terms of selling package tours in case
of outbound tours and conducting sightseeing
tours in case of inbound tours
Tour Operations
• Holloway (1992) stated that tour operations undertake a distinct
function in the tourism industry, they purchase separate elements of
tourism products/services and combine them into a package tour
which they sell directly or indirectly to the tourists
• Poyther (1993) defines, “tour operator is  one who has the
responsibility of putting the tour ingredients together, marketing it,
making reservations and handling actual operation.”
• Tour operator is an organization, firm, or
company who buys individual travel
components, separately from their suppliers
and combines them into a package tour,
which is sold with their own price tag to the
public directly or through middlemen, is
called a Tour Operator.
Types of Tour Operators
Functions PLANNING A
TOUR
MAKING TOUR
PACKAGE
ARRANGING A
TOUR
RESERVATION

of Tour
Operation
TRAVEL EVALUATE THE PROMOTION TAKING CARE OF
MANAGEMENT OPTION GLITCH
AVAILABLE
Challenges to
Tour
Operators
Duplicate data Dealing with many Knowing Clients’
Costly mistake
entries enquiries Requirements 

Liability of not
Building Maintaining own
Wasted time knowing your
Credibility & Trust Service Standard 
client requirements

Make Booking
Expense Maintaining Cash
Procedure more
Management  Flow
Convenient 
 Travel Distribution System

The travel distribution system is a complex, global network of independent

businesses.

This network includes a series of distributors or intermediaries, who play a

specific role in the development, promotion and purchasing process of
tourism experiences.

It is fundamentally an exchange of information about the promise of a

service to be delivered in the future – a flight, an accommodation, an
experience to enjoy, an expectation to fulfil.
There are two types of distribution: direct
and intermediated.

Direct distribution is when suppliers, or

owners of the product (airlines, hotels,
etc.), sell their products directly to
consumers, whether on the phone, in
person, or over the Internet.
• In 1962 American Airlines introduced
SABRE (Semi-Automated Business
Research Environment) the first
commercial CRS, developed by IBM,
that was used for:
• The GDSs defined electronic travel
distribution and served as a central nexus of
supply (thousands of travel suppliers) and
demand (hundreds of thousands of travel
agents).