Nowadays, when every household has an Internet access, many people are wondering if there is any reason to use the service of travel agencies while they can do all the booking on their own. In most cases it's beneficial to book your trip through a travel agent as airfare prices change daily and the great deal you found on your own today may be outdated tomorrow. Take into consideration that a difference of one day in departing or arriving dates can save you hundreds of dollars and travel agents often have first-hand experience with the places they recommend. Another advantage is that certified travel agencies have a lot more influence than individuals when settling disputes with airlines and travel suppliers.

Travel agencies can be divided into several groups depending on their specialization. Some travel agencies specialize in airfare only and they can also be subdivided into those offering domestic and international flights. Most agencies offer consolidator fares which are airline tickets purchased by "airline wholesalers" and then resold to travel agencies at considerable discounts (up to 70% off regular fares). Bear in mind that cancellation fees on consolidate fares may be substantially higher (50% or more of the fare price). In some cases no refunds are available at all. Therefore, don't purchase a consolidator fare unless you are sure about your travel plans.

Some travel agencies focus on business or corporate travel and cater for the needs of the companies with a large number of employees going on business trips on a regular basis. Some agencies have even more narrow specialization servicing specific industries or specific destinations. Another sphere of specialization is meeting and conference planning.

Another large group of travel agencies specialize in leisure and business travel in specific destination, such as Africa, Europe, or North America.

Another large sector of the travel industry is travel agencies specializing in cruises.

Some agencies target specific groups of customers, such as students, families, singles, honeymooners, nature people, seniors, or people with disabilities. Some agencies can also specialize in different types of vacation property - from luxury hotels and villas to inexpensive apartment rentals.

There are agencies that offer sports events tours, luxury tours, or adventure tours (hiking, biking, safari, fishing, diving, etc.)   

Some agencies offer customized travel services and will have your vacation organized to meet your needs. They will provide you with the insight into the country's culture and geography. They will sell you the knowledge to make your own package.

 

Today's travel market offers a wide range of option for everyone. You can choose a Caribbean getaway or go diving in New Zealand; rent a studio or a luxury suite in Four Seasons in Paris; go cycling or yachting around the globe or just relax on a Mediterranean cruise. The process of planning your next trip and looking forward to new adventures is an exciting experience. Finding the travel agent that meets your needs will make your dreams come true. Recap of Lecture 3.2

·        The introduction of what two product types (first in the 1960's and later in the 1980's) helped to increase rooms revenue as an average percentage of all hotel sales?

·        Why is it so important to convey negative aspects of a job to potential employees/managers?

·        What is the split shift and how might a manager benefit from this? Lecture 4.1 Travel Agencies

·        Travel agents supply prospective travelers with details of travel and related services. Suppliers provide these travel agents with documentation and provide advice about the suitability of services available in relation to individual requirements (Association of British Travel Agents, 1990).

·        There are more than 32,000 travel agents in the United States, who in 1993 booked more than $93 billion of travel services, $56 billion in air travel, $14 billion in cruises, $10.4 billion of hotel services, $6.6 billion of car rentals, and $0.5 billion of other services. Half of travel agents' business clients and two-thirds of their leisure customers seek advice in choosing hotel accommodations (Crocker et. al. 1994). As of 1994, travel agents book more than 95% of cruises, 90% of airline tickets, 50% of car rentals, and 25% of hotel rooms (Schulz 1994).

Who Benefits from the Travel Agencies? ·        The general public benefits from travel agencies in the aspects of:

·        Personal Service: People feel more comfortable with face-to face contact. They want a human being they can talk to and come back to if there is a problem.

·        Expert Advice: Travel agents are travel counselors rather than ticket processors.

·        Unbiased Advice on a Wide Range of Products ·        The Provision of Ancillary Service: Information on passports,

visas and health requirements, foreign currency, insurance. ·        Convenience and Location: 235,000 agents in about 35,000

travel agencies in U.S.A spread throughout every city, town suburban area. Most people have an agent within easy reach.

·        Greater Choice of Products: Most agents contact operators using quick and efficient computerized reservation systems. They have their special databases/datawarehouses and help customers get what they want.

·        For suppliers such as tour operators and airlines, travel agents provide a widespread network of product distribution points. Without the services of travel agencies, suppliers would have to operate their own sales outlets and use expensive and risky media advertising. A travel agency represents a free marketing point where all the suppliers' point of sale material will be viewed by the public (Renshaw 1992).

Type of Agency ·        By size of organization we can categorize travel agencies into

multinationals, national multiples, regional multiples and independents. Differentiating travel agencies by the business conducted we divide them into the following:

·        Retail Travel Agencies: Some of them deal with all types of travel product from inclusive tour to rail and air tickets. Business agents only take care of commercial clients. Special interests agents focus on a niche market, for example, disable, religious, senior tour.

·        Tour Wholesalers and Operators: They are assemblers of bought-in parts who produce the holiday package that the travel agent retails. They plan, organize, finance and sell the complete holiday package that includes transport, accommodation, and food.

·        Corporate Travel Managers and Agencies: Corporate and other organization are very sensitive to the increasing cost of travel. This agency allows individual department, divisions, managers to book their own flights and accommodations. This agency provides negotiating rates and price based on the combined purchasing power of an entire group.

·        Incentive Travel Planners: More corporations are using travel to reward employees for outstanding performance. They are specialized tour operators who provide services directly to sponsoring organization.

·        Convention/Meeting Planners: They organize events, ranging from international conventions to small board meetings. They select meeting destinations, lodging and convention facilities and official airline carriers.

The Future of Travel Agents: Transformation rather than Extinction ·        Travel agents have been able to withstand several challenges:

·        The commission cuts from airlines in 1995. The agencies' ire is understandable. Still, certain economic facts can not be ignored (Howe 1995). Airlines say that they don't want to drive agents out of business, they just need to cut costs. Major airlines paid $ 6.1 billion in commissions in 1996, their 5th biggest expense. Airline analysts say the cut will save airlines $600 to $700 million a year (USA Today, 9-26-97)

·        The impact of the growing popularity of on-line purchasing. Cutting commissions is not the only way airlines are trying to lower distribution costs. Airlines also see hefty savings in selling tickets directly to fliers on line, instead of through travel agents or their 800 reservation numbers. Airlines are using super-discounted fares sold only over the Internet to lure travelers to their Web sites (USA Today, 9-26-97). Booking via the Web also threatens to undermine the existing system of distribution in the hospitality and tourism industry. For example, low cost, 24-hour availability, tangibility and the opportunity of interactiveness can not be easily duplicated by travel agencies.

·        It is time for travel agent to shift their roles. Travel agents will survive, but their role has to be changed. The travel agent is going become a retail specialist in one of various travel specialties. There will be leisure travel agents who specialize in cruises, some who specialize in geographic areas and some who are strictly corporate (Wolff 1997). All agree that the Internet, which has changed the rules of booking travel, is crucial to the travel agent universe. Using a travel agent still has many advantages over the Internet. Travel agents know their customer better than virtually anyone else. Additionally, a lot of people don't have time to deal with the travel process (Wolff 1997). With the transformation, travel agents are expected to build a new relationship with customers and lead to a win-win situation.

Yield Management ·        One attempt by the hotel industry to combat sagging real ADR and

occupancy rates was to adopt the practice of yield management (see Table 1.1, Appendix A). Yield management is a short term strategy for adjusting rates to market conditions in an effort to "stimulate demand at off peak times or to encourage consumption in price sensitive market segments" (Orkin 1992: 21). The tool is practiced in some form by nearly all hotels (Donagy, McMahon and McDowell 1995: 140). The conditions necessary for employing yield management tactics include...

·        low variable costs, ·        high fixed costs, ·        perishable inventory,

·        variable demand patterns, ·        ability to forecast future demand, and ·        ability to segment customers on their varying needs,

behavior, and willingness to pay. (Hanks, Cross and Nolan, 1992: 17.) ·        Yield management was found to have reduced rates at upscale

hotels by as much as 45 percent (Smith Travel Research, 1993). By comparison, mid-level hotels (those with rates under $95) dropped rates no more than 12 percent. Smith Travel Research concluded that, based on meager occupancy gains in 1992 for both product types, yield management did little to increase total demand, but instead shifted demand between segments. This helps support the notion that lower real ADR's slightly increased occupancy in the short run, but could not halt the shifting demand patterns in the long run (see Chart 1.1, Appendix B.)

·        Criticisms exist over the very practice of yield management. Such strategies effectively create deep discounting which erodes profit margins industry wide (Dunn and Brooks 1990). In the long run, hotels with above average expenses suffer from an inability to cover fixed and variable costs when employing yield management.

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