UNIT 1

Definition: Travel Agency

• A travel agency may be a business firm or a company which acts as an
intermediary in the sales and promotion of different travel related
services, such as accommodation, airlines, railways, road transport,
cruises etc. and earns a commission received on selling services to its
clients.

Definition of Tour operator

o Puts together a vacation, packages and sells it to consumer at a
cheaper price.
o Is the person responsible for actual arrangements of transport and
accommodation facilities in any tour or vacations.
o Creates packages from the value chain of tourism
o Shall mean an entity which may either be a single proprietorship,
partnership or corporation regularly engaged in the business of
extending to individuals or groups, such services pertaining to
arrangements and bookings for transportation and or
accommodation, handling and or conduct of inbound tours whether
or not for a fee, commission, or any form of compensation;

Differences between a tour operator and a travel

agent
Here are eight ways a tour operator differs from a travel agent:
1. Job description
A tour operator is a person or organisation responsible for planning
trips and holiday packages. A travel agent is an individual broker or an
agency selling holiday packages. While the tour operator creates the
services, the travel agent is an intermediary who sells these services.
2. Primary tasks
A tour operator ensures a traveller enjoys the vacation package they've
purchased. Travel agents purchase holiday packages from tour
operators and resell them to travellers. While a travel agent deals with
clients who are about to decide if and what trip to embark on, tour
agents ensure they enjoy the holiday.
3. Number of countries
A tour operator specialises in a few country destinations where they
provide tour packages. A travel agent often deals with many countries
and destinations. Their job involves working with many tour operators
and attending to customers with a large variety of holiday packages.
4. Amount of profit
A tour operator earns more profits from each vacation package
provided because they set the initial price. A travel agent earns a
commission based on the number of holidays they sell. They can make
a huge income if they're skilled enough to get large amounts of
bookings.
5. Dependence
A tour operator works independently. They can create packages and
choose to market them themselves. A travel agent doesn't create tour
packages and can't operate without a tour operator.
6. Job requirements
Both professions share similar qualifications and skill requirements,
but a tour operator requires advanced business management skills. A
travel agent requires good marketing skills and knowledge of flight
arrangements and visa applications. A tour operator needs knowledge
and skills in hospitality and planning.
7. Significance of position
A tour operator helps people plan a delightful vacation, handling all
the technicalities and offering advice on the relevant legalities. A travel
agent assists people in choosing the right vacation plan that suits their
needs. They also advise travellers on issues regarding travel
documents like visas and passports.
8. Scope of operation
A tour operator's job begins when a traveller starts the vacation and
ends when they return home. They handle a traveller's conveyance,
accommodation and meals. A travel agent's job begins with convincing
an undecided traveller and ends when they start the vacation.

Linkages of a Travel Agency and tour operator

(a) Airlines
International Air Transport Association operates a network by which travel agencies sell airline tickets
and receives Commission thus the sale of airline tickets is highly regulated and strictly controlled. The
agency commission range from 5 to 11 percent but most major airlines offer additional incentives i.e.
cash bonuses and over ride commission. However in some cases when a travel agency purchases air
tickets in bulk the margin of commission will be high. This largely depends on relationship between
the two organisations.

(b) Accommodation Companies

Most hotels and other lodging companies including major Indian and international hotel chains pay
commission to the travel agencies, (the rate varies from hotel to hotel) however hoteliers in dealing
with travel agencies are more information and less regulated than the airline companies Interestingly
many hotel and hotel chains participates in computer reservation system permitting hotel reservation
to be made at the same terminal, which is used to sell airline tickets. The commission received from
hotels is the second largest component of total agency revenue. But if the purchase is made in bulk
than the profit is based on the negotiated prices and accordingly the profit may be higher or lower.

(c) Cruise Companies

The cruise companies are informally regulated by its Own governing body i.e. cruise lines association
which must approve any travel agency that. Desires to sell booking on behalf of any member of a
cruise company the raise companies also offer a complete package including sea travel
accommodation food entertainment and sometime air travel also. The commission varies room

10 to 20 percent. However most cruise package tour are sold to the public through travel agencies. It
was Thomas cook who brought first group of foreign tourist in India through sea rout.

(d) Insurance Companies

Today many travel companies have included travel insurance in their package tour like Thomas
cooks. The company insured the travelers to protect them against accident, loss of baggage and
missing flights. Successful travel agency management has to make close contact with Insurance
companies to obtain insurance polices for its clients. Recently the Oriental Insurance Company has
introduced two new travel policies for domestic as well foreign tourist i.e. ‘Suhana Safar’ for domestic
travelers And ‘Videsh Yatra Mitra’ for foreign travelers. Incidentally the foreign policy is an upgraded
version of overseas medical insurance.

(e) Banking Companies

Travel agencies offer banking facilities to the traveler like clearance of traveler cheques and
arrangement of foreign currency. Only those travel agencies, which are authorized by the reserve
bank of India under Foreign Exchange Regulation Act 1973, can deal with foreign currency. Banking
companies give commission to travel agencies on traveler cheques and currency exchange.

(f) Educational Institutions

An agency’s success depends almost entirely on the competence of management and expertise of
the staff. It develops manpower planning in such a way that will help to conduct on campus selection
and match the student to the requirements of the company. The linkage between travel Companies
and tourism education institutions will solve the problem of human resource requirements of present
and future. Therefore a travel company needs to maintain close contact and interface with tourism
Education intuitions. Many chief executives from the industry are the members of the advisory board
of the intuitions.

(g) Travel Trade Associations

These associations provide a common platform to solve many problems of the members such as
training, common code of conduct airlines commission to any other. There are a number of travel
trade associations like TAAI, ICAO, ASTA, IATA, and PATA, WTO, that are quite active in the
Promotion of travel trade at global. Essentially every travel company should be this association to
avail financial and non – financial incentives and commissions from the airlines, hotels, railways etc

(h) Other Organizations

The travel agencies need to maintain close ties with many other organizations offering travel related
service like cultures and entertainment organizations foreign tour companies’ regional passport office,
department of tourism both at center and states sports operators transport operators food and
beverage business etc. in fact these organizations play a vital role in making travel a complete
product. Travel companies provide business to above cited organization and in return receive
commissions. However there are few other originations that help the agency to run travel business
smoothly and promote India as a tourist Destination. Technically a Travel Company cannot work in
isolation but is interdependence with other travel related enterprises.