A travel agency is a retail business, that sells travel related products and services to customers,
on behalf of suppliers, such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours
and package holidays that combine several products. In addition to dealing with ordinary
tourists, most travel agencies have a separate department devoted to making travel arrangements
for business travelers and some travel agencies specialize in commercial and business travel
only. There are also travel agencies that serve as general sales agents for foreign travel
companies, allowing them to have offices in countries other than where their headquarters are
located.
Contents
[hide]
• 1 Origins
• 2 Operations
o 2.1 Commissions
• 3 Types of agencies
• 4 Consolidators
• 5 Criticism and controversy
o 5.1 "Racking"
• 6 The Internet threat
• 7 Careers
• 8 Cargo
• 9 See also
• 10 Notes
• 11 References
• 12 External links
[edit] Origins
The British company Cox & Kings is sometimes said to be the oldest travel agency in the world,
but this rests upon the services that the original bank, established in 1758, supplied to its wealthy
clients. The modern travel agency first appeared in the second half of the 19th century. Thomas
Cook, in addition to developing the package tour, established a chain of agencies in the last
quarter of the 19th century, in association with the Midland Railway. They not only sold their
own tours to the public, but in addition, represented other tour companies. Other British pioneer
travel agencies were Dean and Dawson, the Polytechnic Touring Association and the Co-
operative Wholesale Society. The oldest travel agency in North America is Brownell Travel; on
July 4, 1887, Walter T. Brownell led ten travelers on a European tour, setting sail from New
York on the SS Devonia.
Travel agencies became more commonplace with the development of commercial aviation,
starting in the 1920s. Originally, travel agencies largely catered to middle and upper class
customers, but the post-war boom in mass-market package holidays resulted in travel agencies
on the main streets of most British towns, catering to a working class clientèle, looking for a
convenient way to book overseas beach holidays.
[edit] Operations
As the name implies, a travel agency's main function is to act as an agent, that is to say, selling
travel products and services on behalf of a supplier. Consequently, unlike other retail businesses,
they do not keep a stock in hand. A package holiday or a ticket is not purchased from a supplier
unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount.
The profit is therefore the difference between the advertised price which the customer pays and
the discounted price at which it is supplied to the agent. This is known as the commission. A
British travel agent would consider a 10-12% commission as a good arrangement. In Australia,
all individuals or companies that sell tickets are required to be licensed as a travel agent.[1]
In some countries, airlines have stopped giving commission to travel agencies. Therefore, travel
agencies are now forced to charge a percentage premium or a standard flat fee, per sale.
However, some companies still give them a set percentage for selling their product. Major tour
companies can afford to do this, because if they were to sell a thousand trips at a cheaper rate,
they still come out better than if they sell a hundred trips at a higher rate. This process benefits
both parties.
Other commercial operations are undertaken, especially by the larger chains. These can include
the sale of in-house insurance, travel guide books and timetables, car rentals, and the services of
an on-site Bureau de change, dealing in the most popular holiday currencies.
The majority of travel agents have felt the need to protect themselves and their clients against the
possibilities of commercial failure, either their own or a supplier's. They will advertise the fact
that they are surety bonded, meaning in the case of a failure, the customers are guaranteed either
an equivalent holiday to that which they have lost or if they prefer, a refund. Many British and
American agencies and tour operators are bonded with the International Air Transport
Association (IATA),[2] for those who issue air tickets, Air Travel Organisers' Licensing (ATOL)
for those who order tickets in, the Association of British Travel Agents (ABTA) or the American
Society of Travel Agents (ASTA), for those who sell package holidays on behalf of a tour
company.
A travel agent is supposed to offer impartial travel advice to the customer. However, this
function almost disappeared with the mass-market package holiday and some agency chains
seemed to develop a 'holiday supermarket' concept, in which customers choose their holiday
from brochures on racks and then book it from a counter. Again, a variety of social and
economic changes have now contrived to bring this aspect to the fore once more, particularly
with the advent of multiple, no-frills, low-cost airlines.
[edit] Commissions
Most travel agencies operate on a commission-basis, meaning that the compensation from the
airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and tour operators, etc., is
expected in form of a commission from their bookings. Most often, the commission consists of a
set percentage of the sale.
In the United States, most airlines pay no commission at all to travel agencies. In this case, an
agency usually adds a service fee to the net price.
[edit] Types of agencies
There are three different types of agencies in the UK: Multiples, Miniples and Independent
Agencies. The former comprises a number of national chains, often owned by international
conglomerates, like Thomson Holidays, now a subsidiary of TUI AG, the German multinational.
[3]
It is now quite common for the large mass-market tour companies to purchase a controlling
interest in a chain of travel agencies, in order to control the distribution of their product. (This is
an example of vertical integration.) The smaller chains are often based in particular regions or
districts.
In the United States, there are four different types of agencies: Mega, Regional, Consortium and
Independent Agencies. American Express and the American Automobile Association (AAA) are
examples of mega travel agencies.
Independent Agencies usually cater to a special or niche market, such as the needs of residents in
an upmarket commuter town or suburb or a particular group interested in a similar activity, such
as sporting events, like football, golf or tennis.
There are two approaches of travel agencies. One is the traditional, multi-destination, out-bound
travel agency, based in the originating location of the traveler and the other is the destination
focused, in-bound travel agency, that is based in the destination and delivers an expertise on that
location. At present, the former is usually a larger operator like Thomas Cook, while the latter is
often a smaller, independent operator.
[edit] Consolidators
Airline consolidators and other types of travel consolidators and wholesalers are high volume
sales companies that specialize in selling to niche markets. They may or may not offer various
types of services, at a single point of access. These can be hotel reservations, flights or car-
rentals, for example. Sometimes the services are combined into vacation packages, that include
transfers to the location and lodging. These companies do not usually sell directly to the public,
but act as wholesalers to retail travel agencies. Commonly, the sole purpose of consolidators is to
sell to ethnic niches in the travel industry. Usually, no consolidator offers everything, they may
only have contracted rates to specific destinations. Today, there are no domestic consolidators,
with some exceptions for business class contracts.
[edit] Criticism and controversy
[edit] "Racking"
This section does not cite any references or sources.
Please help improve this article by adding citations to reliable sources. Unsourced material may be
challenged and removed. (March 2009)
Travel agencies have been accused of employing a number of restrictive practices, the chief of
which is known as 'racking'. This is the practice of displaying only the brochures of those travel
companies whose holidays they wish to sell, the ones that pay them the most commission. Of
course, the average customer tends to think that these are the only holidays on offer and is
unaware of the possible alternatives.
Conversely, by limiting the number of companies that a travel agency represents, this can bring a
better and more profitable, working relationship between the agency and its suppliers. Travel
agencies can then obtain special benefits for their customers, from a supplier, by concentrating
their bookings with that supplier. Some examples of these special benefits would be room
upgrades or the waiver of change and cancellation fees.
("Racking" is a British expression, not used in the United States.)
[edit] The Internet threat
This section may need to be updated. Please update this section to reflect recent events
or newly available information, and remove this template when finished. Please see the
talk page for more information. (March 2009)
With general public access to the Internet, many airlines and other travel companies began to sell
directly to passengers. As a consequence, airlines no longer needed to pay the commissions to
travel agents on each ticket sold. Since 1997, travel agencies have gradually been
disintermediated, by the reduction in costs caused by removing layers from the package holiday
distribution network.[4][5] However, travel agents remain dominant in some areas such as cruise
vacations where they represent 77% of bookings and 73% of packaged travel.[6]
In response, travel agencies have developed an internet presence of their own by creating travel
websites, with detailed information and online booking capabilities. Several major online travel
agencies include: Expedia, Voyages-sncf.com, Travelocity, Orbitz, CheapTickets, Priceline,
CheapOair and Hotwire.com. Travel agencies also use the services of the major computer
reservations systems companies, also known as Global Distribution Systems (GDS), including:
SABRE, Amadeus CRS, Galileo CRS and Worldspan, which is a subsidiary of Travelport,
allowing them to book and sell airline tickets, hotels, car rentals and other travel related services.
Some online travel websites allow visitors to compare hotel and flight rates with multiple
companies for free. They often allow visitors to sort the travel packages by amenities, price, and
proximity to a city or landmark.
Travel agents have applied dynamic packaging tools to provide fully bonded (full financial
protection) travel at prices equal to or lower than a member of the public can book online. As
such, the agencies' financial assets are protected in addition to professional travel agency advice.
All travel sites that sell hotels online work together with GDS, suppliers and hotels directly to
search for room inventory. Once the travel site sells a hotel, the site will try to get a confirmation
for this hotel. Once confirmed or not, the customer is contacted with the result. This means that
booking a hotel on a travel website will not necessarily result in an instant answer. Only some
hotels on a travel website can be confirmed instantly (which is normally marked as such on each
site). As different travel websites work with different suppliers together, each site has different
hotels that it can confirm instantly. Some examples of such online travel websites that sell hotel
rooms are Expedia, Orbitz and WorldHotel-Link.
The comparison sites, such as Kayak.com, TripAdvisor and SideStep search the resellers site all
at once to save time searching. None of these sites actually sell hotel rooms.
Often tour operators have hotel contracts, allotments and free sell agreements which allow for
the immediate confirmation of hotel rooms for vacation bookings.
Mainline service providers are those that actually produce the direct service, like various hotels
chains or airlines that have a website for online bookings. Portals will serve a consolidator of
various airlines and hotels on the internet. They work on a commission from these hotels and
airlines. Often, they provide cheaper rates than the mainline service providers as these sites get
bulk deals from the service providers. A meta search engine on the other hand, simply culls data
from the internet on real time rates for various search queries and diverts traffic to the mainline
service providers for an online booking. These websites usually do not have their own booking
engine.
[edit] Careers
With the many people switching to self-service internet websites, the number of available jobs as
travel agents is decreasing. Most jobs that become available are from older travel agents retiring.
Counteracting the decrease in jobs due to internet services is the increase in the number of people
travelling. Since 1995, many travel agents have exited the industry, and relatively few young
people have entered the field due to less competitive salaries.[7] However, others have abandoned
the 'brick and mortar' agency for a home-based business to reduce overheads and those who
remain have managed to survive by promoting other travel products such as cruise lines and train
excursions or by promoting their ability to aggressively research and assemble complex travel
packages on a moment's notice, essentially acting as a very advanced concierge.
[edit] Cargo
A small number of companies work with cargo airlines and cargo ships.
[edit] See also
• Hospitality industry
• International Association of Travel Agents Network
• Receptive Services Association of America
• Travel technology
[edit] Notes
1. ^ "Travel Agents". Victoria (Australia): Business Licensing Authority. 2009.
http://www.bla.vic.gov.au/wps/wcm/connect/Business+Licensing+Authority/Home/Trav
el+Agents/. Retrieved 1 July 2009.
2. ^ "Travel & Tourism". International Air Transport Association. 2009.
http://www.iata.org/whatwedo/travel-tourism/. Retrieved 1 July 2009.
3. ^ "First Choice-TUI merger cleared". BBC News. 2007-06-04.
http://news.bbc.co.uk/2/hi/business/6720995.stm.
4. ^ Andal-Ancion, Angela; Cartwright, Phillip A.; Yip, George S. (June 2003). "The
Digital Transformation of Traditional Businesses". Cambridge, MA: MIT Sloan
Management Review. pp. Vol. 44, No. 4, pp. 34–41.
http://sloanreview.mit.edu/smr/issue/2003/summer/9/.
5. ^ Edmunds, Marian (2002-03-12). "A wake-up call for the industry". Financial Times.
http://specials.ft.com/ftit/march2002/FT3Z9WRBNYC.html. Retrieved 1 July 2009.
6. ^ "Media Kit". Travel Agent (magazine). http://www.travelagentcentral.com/digital-
media-kit/magazine-media-information. Retrieved 2008-12-28. "based on PhoCus
Wright’s Travel Agency Distribution Landscape Study"
7. ^ Rebecca Tobi (2002-10-28). "Wanted: young agents! Are young people shying away
from careers in travel? Agents and travel school operators say yes. Look around your
agency—see any young faces?". Travel Weekly Vol 61, no. 43. p. 148–149.
[edit] References
• Bottomley Renshaw, Mike (1997). The Travel Agent (2nd ed.). Sunderland: Business
Education Publishers Ltd. ISBN 1-901888-00-2. OCLC 228287734.
