02 travel agencies and tour operators (an introduction)

Whether you think you can, or you think you can't--you're right.

Henry Ford

Travel Agencies and Tour Operators

An Introduction

Objectives

• Define the role of the travel agency and tour operators in the tourism industry.

• Identify the difference between travel agencies and tour operators.

• Outline their major functions.

The Tourism Industry

Tourism Product

Business Sector

Non Profit Sector

Government

Sector

Goods and Services

Business Sector

• Lodging Facilities• Transportation Services• Food and Beverage Operations• Retail Business• Activities and Events• Travel Trade

Travel and Tour AgencyAn entity engaged in the business of extending to individuals or groups:• travel services and assistance to include documentation, ticketing, booking for transportation and/or accommodation; arrangements•handling and/or conduct of tours within our outside the Philippines

whether or not for a fee, commission or any form of monetary consideration (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.

Traditional Linkage

Traditional Linkage

Independent from

suppliers

Traditionally…

• Travel agency acts as an agent for different suppliers that cater to the need of the travelers.

• Travel agency reacts to the needs of the traveler while acting as an agent for the supplier.

• The agency earns income in the form of rate-minus or net-plus.

Rate Minus and Net Plus

Suppose a passenger comes to you and would like to visit Paris.The cost of a MNL-PAR-MNL ticket via TG is USD 1,000.00 per ticket.

Rate MinusTicket Price: USD 1,000.00Commission: 7% of the ticket priceTA’s income: USD 70.00Payable to TG USD930.00

Rate Minus and Net Plus

Suppose TG gave you a special rate of USD900.00 per MNL-PAR-MNL ticket.

Net PlusTicket Net Price: USD 900.00TA’s Mark Up: USD 100.00TA’s income: USD 100.00Payable to TG USD 900.00

With the introduction of the internet, do you think

travel agents will lose their jobs?

Travel Management Companies

• TMCs become vendors and principal selling travel services and solutions.

• TMCs form a tripartite alliance where all partners (suppliers and consumers) are treated equally.

• TMCs become partner to both suppliers and consumers.

• TMCs evaluates the consumer’s preferences and the suppliers’ assets to determine the best travel arrangements.

The Emerging Linkage

Suppliers

Consumer

Travel Management Companies

Suppose a passenger would like to visit Singapore. He

checked the internet for the airlines, hotels and activities

and other information.

He then call the TMC to request for a proposal. The

TMC will now prepare a proposal that will me the requirement of the client.

The Emerging Linkage

Suppliers

Traveler

TMC

Client will choose from different proposals given. If acceptable the client and

TMC will agree on professional fee.

TMC manages the client’s needs while capitalizing on

the available suppliers so as to have a win-win situation for

all the 3 parties involved.

Functions of Travel Management Companies

Provides information and expertise.

The initial exchange of information is important

because it is during this time the travel consultant can

accurately assess the needs and requirements of the

client.

The travel consultant must be knowledgeable in order to provide the information needed by

the client.

Functions of Travel Management Companies

Recommends destinations, products and services best fitted to the needs of the client.

There are two airlines flying to LA. One is a direct flight, arriving evening, same day

and the other is with a stopover in Narita arriving

afternoon of same day. Since you would like to arrive early, I would suggest that you take

the second option.

Functions of Travel Management Companies

Provide assistance in securing travel documents.

Functions of Travel Management Companies

Process travel arrangements.

Processing travel

arrangements means:

Reservation and Confirmation

A reservation is a request made to any supplier for a particular service (i.e. ticket, hotel room). All reservations are subject to availability.

A confirmation is a written reply from the supplier that the reservation for a particular service is accepted and will be delivered to the client by the supplier.

Functions of Travel Management Companies

Assist in cases of refunds and cancellations.

If claims are legitimate.

Sources of Revenues of TMCs

• Negotiated handling fee (cost plus)

• Fixed commission (Rate minus) or Mark Up (Net plus)

• Service fees for other service/s

• Production incentives and rebates.

Characteristics of TMCs

• Retailer

• Counselor to the end-user, agent/intermediary for the suppliers

• Derives revenues from fixed commission or professional fees

• Charges fees for ancillary services

Tour Operators

Assemble accommodation, transportation, and other travel services into a package for resale through travel agents.

Tour Operators

Responsible for the operation of all facets of the tour.

Tour Operators

Many tour operators own and operate tourist transportation units and provide a tour escorts and guides.

Tour Operators

Tour Operators are usually called Destination

Management Companies (DMCs).

In the Philippines, most of the TMCs

expand their services into tour

operations.

Functions of Tour Operators

Conceptualize, plan and develop tour packages.

Tailor made packages (Ad hoc)

Based on specific client’s needs

Functions of Tour Operators

Conceptualize, plan and develop tour packages.

Regular Packages

Based on perceived needs of market

Functions of Tour Operators

Negotiates with suppliers of travel services.

Suppliers

Special Rates

Special conditions

Functions of Tour Operators

Assemble and integrate the various travel components into a single tour package.

Airline

Hotel

Activities & other services

Tour Package

Functions of Tour Operators

Delivers the tour package.

• Overseeing the operation of the tour.

Sources of Revenues of Tour Operators

• Variable mark up

• Sales of optional tours, excursions and extensions

• Shopping commissions

Characteristics of Tour Operators

• Wholesalers

• Intermediary and integrator

• Income is variable

• Generates additional income from sales of optional tours, excursions and extensions.