Travel Agency

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Travel agent is a person who has a full knowledge about tourists

product – destinations, modes of travel, climate, accommodation
and other areas of the service sector. He acts on the behalf of
product providers/principles and in return get a commission.
Technically, a travel agent is an owner or manager of an agency,
but other employees are responsible for advising tourists and selling
packages tours/individual components of travel products.
A travel agent may be an individual /firm or corporation which is
commonly known as a travel agency. An agency means the office
of travel agent or organization where all travel goods and services
are assembled and coordinated for the smooth conduct of travel
agency business.
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.
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.

History of Travel Agency

The first Travel Agency of the world was established by Thomas
Cook in 1845 in England. The use of the term travel trade dates
back from the early years of the 19th century, but this should not
obscure the fact that what we today describe as travel trade (travel
agency and tour operation business) was taking place much earlier
in history.
Throughout the history, there was travel middleman who helped the
merchants traveling for trade and other who traveled for religious
purposes.

In 1841 a fortunate day comes in the history of travel trade

when Thomas Cook, as secretary of South Midland Temperance
Association, organized a trip by a train for 570 members for his
association to the distance of 22 miles. He bought railway tickets in
bulk to sell them to people.
The experiment was successful and everybody was exultant. Mr.
Cook had done his job on a no profit basis. But, incidentally, It gave
him a new idea and turned it into a tour business.
Four years later in 1845, he set up a ‘World’s First Travel
Agency‘ to organize excursions. Due to this innovative
approach, Mr. Thomas Cook is known as the Father of Travel
Agency Business. He co-ordinated railway and steamship
excursions throughout England, Scotland and Europe.
However, the railways only gave him 5% commission which was not
enough to meet his overheads, so he decided to diversify this
business into tour operation.

In 1855 Mr. Cook started operating package tours. He conducted

the world’s first international tour from England to the Paris.

Types of Travel Agency

Travel agencies are basically categories in two types-: Retail Travel
Agency and Wholesale Travel Agency.

Retail Travel Agency

A retail travel agency sells tourists products directly to the public on
the behalf of the products suppliers and in return get commissions.
Some package tour is sold in two ways i.e., on a commission basis
and mark up the price.

When a travel agency sells a tour on the marked-up price it means

that first, it markup the cost of the tour and then sell it at a higher
rate. The markup price is the difference between retail price and
wholesale cost.
Definitions
According to Airlines Reporting Corporation (ARC) a retail
travel agency is defined as ” a business that performs the following
functions: quotes fares, rates, make reservations, arrange travel
tickets and accommodation, arrange travel insurance, foreign
currency, documents and accepts payments.”
According to SARC (1967), ” retail travel agency business consists
of the activities involved in selling tourism products/services directly
to the tourists and performs normal functions such as issuing air
tickets, making accommodation and transportation reservation,
providing specialized services, and accepting and making
payments.”
The main source of the revenue for the travel agency is the
commission received from the vendors. However, the rate of the
commission differs from organization to organization an travel
component to the travel component.

A travel agency receives appx. 95% of their revenue from the

commission, and the remaining 5% from consultancy services and
others.

Wholesale Travel Agency

These agencies are specialized in organizing package tours, which
are marketed to the customers/tourists through the network of a
retail travel agency or directly to the prospective clients ( if
wholesale travel agency has a retail division). A wholesale travel
agency purchases tourists product components in the bulk and
designs tour package.

Sometimes, a wholesale travel agency buys travel components from

the vendor in bulk and resell them to another travel business
originations.

Wholesale travel agencies assemble package holidays and sell them

to the clients through retail travel agencies. A typical package tour
includes – air tickets, accommodation, and something other services
may also be included in it such as entertainment, sightseeing, and
sports activities etc.

These packages are referred to as ‘package tours’ most of these

tours include the services of escorts but a few are sold to people
who wish to travel independently.

Now a question arises – How a wholesale travel agency

generates profits?
Generally, 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 room at a particular hotel or resorts.

Practically, a wholesaler who sells package vacations/tours is called

a Tour Operator. However, technically there is a difference
between a wholesaler and a tour operator. A wholesaler who sells
tourists product individually without assembling them into a
package tour is called as a Consolidator.
Mostly, these are specialized in particular product components such
as air tickets, accommodation, and conference, and conventions etc.

Difference between Wholesale Travel

Agencies and Tour operators
The wholesale travel agencies may offer or operate the package
tours or may specialize in developing tours for inbound as well as
outbound travelers. They are often referred to as tour operators, but
these two essentially different:
1. Wholesale travel agency does not sell directly to the public, while
tour operators do sell directly to clients.
2. A wholesale 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 i.e. ‘ inclusive tours.’
3. Wholesale travel agencies are less inclined than tour operators to
perform ground services i.e. handling agency or ground operators.
4. A wholesale travel agency may deal with one component of travel
product while a tour operator offers a variety of tour programmes.
5. The size of the business is large in the case of tour operators in
comparison to a wholesale travel agency.

Features and Importance

of the Travel Agency
Travel agency plays an important role in travel sector business.
Some most important features and importance of the travel agency
business are following as:-

1. An important link between the clients and principal suppliers.

2. Image-Builder.
3. Ensures rapid travel services.
4. Provider of an authentic and reliable travel information.
5. A social a continuous process.
6. Establishes a good relationship with clients and vendors.
These are the most important features of the Travel Agency
Business.

Functions and Services of

Travel Agency
Today, Travel Agencies have been recognized as a vital component
of travel and tourism and have become an integral part of the travel
and tourism industry at global. They account for more than 90% of
international and 70% of domestic tourist traffic
Further, more than 60% of all travel agency revenues are derived
from business travel. Most travel agencies sell both commercial and
leisure travel but there are many travel agencies which only
specialized in one sector or the other.

The operation of each travel agency is based on the scope of its

activities and organizational size. Here we discuss the functions of a
large scale travel agency that performs all types of activities such as
Retail travel agency, wholesaling and tour operations etc. The main
function of large-scale travel agency are:

Travel Information
Whatever the size of a travel agency, it has to provide necessary
travel information to tourists. A travel agency must give up-to-date,
accurate and timely information regarding destinations mode of
travel, accommodation, sight-seeing, shopping, immigration,
passport, visa, customs clearance and procedure, health and
security rules and about various permits required to travel in
particular areas etc.

Itinerary Preparation
The term tourists itinerary is used to identify the origin, destination
and all the stopping points in a traveler’s tours. It is a composition of
various elements and designed after a detailed study of the market.
Travel agencies prepare an itinerary for tour packages.

Airline Ticketing and Reservation

A travel agency sells a variety of tourism products. Airline ticketing
and reservation is still a major source of revenue. Travel agencies
perform a function of airline ticketing and reservation on the behalf
of various airlines.

Tour Packaging and Costing

Travel agencies prepare tour package and sell them to tourists. The
coasting and pricing of tour packages depend to a large extent on
the ability of travel agent as to how effectively he is able to
negotiate with the principal suppliers.

Reservation
It is a very important function of all types of travel agencies. A travel
agency consistently makes linkage with the accommodation sector,
transport sector and other entertainment organizations to reserve
rooms, and seats in the cultural programmes and transportation.
Travel Insurance
Some large-scale travel agencies perform additional functions to
serve its clients. Travel insurance protects the travelers against the
personal as well as baggage losses resulting from a wide range of
travel related happenings and problems.

Currency Services
Approved travel agency authorized by Govt. body provides currency
exchanges services to tourist.

Organisation of Conference/Conventions
Large-scale travel agencies offer a complete convention/conference
package which includes registration of the participants at the venue
to be picked up for dropped to the airport/hotel, overhead
projectors, slide projectors, TV, VCR, information counter, sightseen
etc.

Travel Agency Linkages

and Integration
Basically, a travel agency serves two type of clients: business
travelers and leisure travelers. Incidentally, the requirements of
these tourists are different and an agency has to assemble or
purchase related components from the principal suppliers to cater to
their needs.
Essentially, travel agencies maintain close ties with Airlines, hotels,
car rentals, banks, insurance companies, railways, government,
trade associations, foreign tour operators and travel agents, ground
operators, cruise companies and tourism educational institutes.