AIDCSC

Travel agencies and their functions – Tour operators and guides

The business of travel agency has undergone significant changes in the last two decades. Gone are the days when there were no formal travel intermediaries to help travelers visit places of interest. Several travel obstacles discouraged people to travel distance places. Only a selected few managed to travel due to their own curiosity, motivation and spending ability. Many could not make it due to the lack of communication network along with facilities and amenities.

Leaving behind the job of a travel agent, a destination did not even have minimum facilities to hold the visitors for an hour long. So many changes have taken place over the centuries. Tourism destinations are connected by modes of transport and visitors find a place of stay at the destinations.

When modern communication system came into existence in 18th and 19th centuries, the world could witness mass travel leading to the demand of luxury transport and advance arrangement of stay and sightseeing. Those advance bookings of train, ferry, bus, airlines, theater hall, entry fees, etc were organized by a person with sound experience and information. In the beginning of travel agency business, travel agents could help their own community members or fellow members travel safely.

Later, it became a formal business with all professional practices. Gradually, the business has grown in such a scale that competitive multinational travel companies have entered into this travel business. This lesson will explain the origin of travel agency business in the world with reference to the contribution of Richard Cox and Thomas Cook for having set up professional travel agency in the 18th and 19th centuries respectively.

Origin of Travel Agency Business The nature of travel agency business is to provide holiday-related services such as ticket booking, transfer arrangement, hotel room booking and arrangement of ground transportation, venue selection and booking for MICE activities.

The scope of business of travel agents was narrow and confined to selected services. Moreover, the business was managed with small investment. It was risky business as it was depending upon the natural and socio-political along with cultural factors. The amount of profit was too little to attract new entrants to do this business. A number of restrictions were imposed by the government on travel agents and tour operators for entry into tour operation business.

Tour operators had no choice, but to deal with other problems like confirmation of hotel rooms, safety in travel, quality of foods, travel documents, volatile political system, language differences, cultural differences, cumbersome and tedious travelling, long journey, etc.

However, invention of railways and steamship as a common mode of transport changed the perceptions of people on travelling distance places. Thus, Thomas Cook could emerge as the first professional Travel Agent in the wake of introduction of affordable railway services in the United Kingdom. However, prior to Thomas Cook, Cox & Kings introduced travel business in UK.

Travel Agency- A Retailing Point of Tourism Services

Travel agency is a firm qualified to sell services pertaining to tours, cruises, transportation, hotel accommodation, meals, transfer, sightseeing and other elements to the general public. This business firm is set up for providing services and earning profits. The business of travel agency uses some of the important management practices like division of labour, hierarchical authority and responsibility. Travel agency plans, organizes, directs, controls, coordinates and sets all resources together in such a manner that it can achieve objectives. When the functional areas of management are linked with organizational objectives, travel agency makes profits after satisfying customers. For example, Thomas Cook or Cox and Kings have become leaders in travel agency business worldwide for their continuous efforts in ensuring quality for customer satisfaction and delight.

A travel agency is a business entity or firm that retails package tours or any other individual travel solutions to customers as a representative of airlines, hotels, tour companies, and cruise lines. In these days, travel agents have created separate department to meet the travel needs of leisure and business tourists. Generally, a travel agent gives advice to tourists about the climate, distance, culture and do’s and do not’s to follow at the destinations or cities. Presently, most package holidays are sold through travel agents. The modern travel agents always remember the contribution of the legendary Thomas Cook for many innovative practices and Sir Henry Lunn (Lunn Poly) for inventing skiing as a leisure activity.

Travel agencies should have dynamic and structured organization with operational experience to manage business efficiently. It is essentially important to examine the fixed and variable investment to run the business. Apart from being severally affected by the seasonal nature of business, other external factors like natural calamities, outbreak of diseases, ethnic wars, etc do affect the prospect of business negatively.

Travel agents make the booking tickets for air, rail, sea or road travel and arrange hotel reservations or guest houses, hire taxis etc. Besides domestic air ticketing, travel agents make international flight bookings and other bookings for special business tours or conferences.

On the contrary, tour operators deal with the bulk travel arrangements and management of FIT and GIT travel. It is recognized as principal agent or wholesaler. It offloads the responsibility to the ground handling agents to take care of receiving and dropping the guests at the airports/railway stations along with sightseeing arrangements. Importantly, tour packages are mostly promoted by tour operators through travel agents. Tour operators also offer special packages like deep-sea diving, snorkeling, Himalayan trekking and camel safaris.

Types of Travel Agencies

Travel agencies are broadly divided into wholesale and retail travel agency for the distribution of sale of tourism services. In addition to this classification, travel agency can also be classified as implant agency, conference organizer, meeting planners, trade fair organizer, etc.

Wholesale Travel Agency

The business of wholesaling in tourism industry is no way different from the wholesaling in the commodity market. A wholesale travel agency assembles different components of services to design tour packages for catering FIT and GIT customers.

A wholesaler is one who initiates the process of forming organized tours or sells the individual components directly or indirectly through franchise or retail agents. For example, a wholesaler of Singapore airline or Taj Hotel or Sterling Time Share Group is authorized to sell the airline tickets or hotel rooms on behalf of the principal service providers.

A wholesaler may be a consolidator or a manufacturer of tours or General Sales Agent (GSA). It buys service components in bulk from different suppliers and it designs package and sells or resells these components together.

Retail Travel Agency

According to Airlines Reporting Corporation (ARC), a retail travel agency is defined as “a business that performs the following functions: quotes fares, rates, makes reservations, arranges travel tickets and accommodation, arranges travel insurance, foreign currency, documents and accepts payments”.

A retail travel agency is one that sells directly to customers at several small locations in cities or towns. Retailer gets commission from the gross sale of hotel rooms, airline, train, bus and cruise tickets, insurance, foreign exchange, etc. Commission is the primary source of its revenues. A two-way selling method, that a large travel agent practices, includes commission and mark-up price. A marked-up price refers to mark up of cost of tour. It is sold on a higher price.

Further, market-up price is obtained from the difference between retail price and the wholesale cost. The role of retail travel agencies is crucial when majority of principal service providers have no choice to increase the sale without the help of retail travel agents. Thus, there is a mushrooming growth of retail travel agents dealing with the booking of hotel rooms, airlines seats, cruise line seats, etc. They consider in reaching the customers through retail agents or getting the hotel or airline promoted through retailers easy, reasonable and sustainable.

Full Service Agency

It is a type of travel agent that deals with all kinds of services. It may be called as complete travel agents. Apart from being an accredited agent of IATA or any other principal service providers, this full-service travel agent owns the transport fleets and charter flights and cruises.

Commercial Agency

It is a category of unconventional travel agency that deals with business travel. It books convention centers and stalls in exhibition center. It also arranges venue for conducting small and large meetings.

Implant Agency

It is a type of travel agent that is located in the premises of corporate offices to make travel arrangements of employees. It is a registered travel agent appointed as per the agreements.

Group / Incentive agency

It is an emerging form of travel agency business that a specialized category of agent acts as intermediary to deal with bulk bookings for employees and clients of corporate houses.

Online Travel Agency

It resembles an offline travel agency in all its services. It operates on the internet through a website connected to a global distribution system. The OTAs apply the operational mechanisms of e-commerce and transact online with their customers. The OTAs offer information, bookings of hotels, cars, reservation of seats in airlines, railways, ships and buses. They sell package tours; customize tours and take enquiries. Transaction of payment is also done online using online payment modes such as credit/debit cards, internet banking, pay-pal etc. Some of the major OTAs in India are cleartrip, goibibo, travelocity, traelguru, yatra.com. makemytrip.com etc.

 Roles and Services of Travel Agency

The volume of business has increased so much and the areas of business operation have also been expanded in the post globalization period. With the operation of more scheduled airlines in domestic and international sector, the scope of business of travel agency is more in terms of receiving benefits and returns. Customer satisfaction and delight is given top priority. A high degree of professional accuracy is needed to survive in the business. It is otherwise difficult to stay in the business. Most of the essential services are primarily provided by travel agents include transport (road, rail, air and water), accommodation, passport, and visa procuring facilities, foreign exchange and also guidance and information 28 about the places of travel. Many travel agents sell packages on commission basis offered by inbound operators.

These are the following important roles and responsibilities of a large travel agent

➢ It works as a retailer and sells package tours on behalf of wholesaler. The sale of package tours involves the rate of commission fixed on the agreement.

➢ It ensures horizontal integration for the purpose of achieving bumper sale.

➢ It is an intermediary between tour operators and tourists in terms of selling package tours in case of outbound tours and conducting sightseeing tours in case of inbound tours.

➢ It follows tour itinerary and it does not have anything to do with itinerary.

➢ Travel agents also provide destinations transfer services to the clients as per the tour itinerary.

➢ It acts as a local agent to confirm and reconfirm the services reserved by the tour wholesalers.

➢ It sorts out problems as per the directions of tour wholesalers. ➢➢ It prefers to become the member of national bodies like TAAI and IATO.

➢ It negotiates the terms and conditions for commission with principal suppliers.

➢ It recruits trained manpower from time to time.

➢ It procures advanced technology for operation of business.

➢ It subscribes publications like TIM for travel documentations. ➢➢ It distributes the work in the office for optimization.

➢ It arranges the vehicle in a systematic manner.

➢ It collects feedback from suppliers and consumers

➢ It shares information and knowledge

Tour Operator

Tour operator links between customers (tourists) and primary service providers. This acts as a major destination promoter and this is also called as wholesaler. It is a professional agent with the capacity of buying services in bulk and distributing through the channel in methodical and organized manner.

It is essential to understand the meaning of tour operator. It is an organization and firm or company with the experience and capacity to buy individual travel components separately from different suppliers and assembles them into attractive packages by adding mark-up. It is sold in different price tag to customers directly or through the middlemen (Travel Agent).

Tour operator is largely responsible for delivery of services as per the contract in tour itinerary. Tour operator is a professionally managed company with expertise and experience in planning and operation of pre-paid and pre-planned packages for vacationers or business travelers.

Tour operators sign long-term contracts with air carriers, hotels, cruise liners and other suppliers for provision of bulk travel services. Individual travel services are assembled into different tour package highlighting round-trip transportation, accommodations, ground transportation and sightseeing. Tour operators are accountable to consumers for the provision of travel services of each tour package. Tour operators are the organizers of package holidays and they make annual contracts with hoteliers, airlines and ground transport companies. They print brochures displaying each component of services.

Tour operators generally provide the services independently and tours

are conducted at the cities where the offices are located. However, these services can be arranged though the other suppliers at various places. Package tours are retailed through travel agencies or directly to customers. However, a tour operator may have readymade or tailor-made packages as per the trends of market.

Nature of Primary Activities of Different Tour Operators

 ➢ Inbound – Describing places of important of the country

➢ Outbound – Highlighting holidays about other countries

➢ Domestic – Specializing on domestic holidays within country

➢ Specialist – Special interest travel to destinations

➢ Independent- Specialized in specific holiday

➢ Integrated – Business Conglomerate

➢ Mass-market- Targeting more sale

The following services are provided by the tour operates in the package tours

➢ Airport and hotel transfer

➢ Arrangements for traditional reception at the arrival points

➢ Arrangements of luggage transfer in the airport and railway stations

➢ Arrangements of guided sightseeing tours

➢ Options and selection for worldwide destination

➢ Comprehensive itinerary planning

➢ Appropriate hotel selection & reservation

➢ Meeting, conference and meeting arrangements

➢ Exhibition and factory visits

➢ Theme parties, events & sightseeing

➢ Air tickets & travel documents like passport, VISA, health certificate and currency,

insurance and permits for entry into the restricted areas

➢ Foreign Exchange & Travel Insurance

➢ Experienced and professional tour guides, escorts, interpreter and tour managers

➢  Personalized services at destination

➢ Coordination with local tourist organizations at destination

➢ Domestic and international air travel

➢ Rail bookings in India, Europe, America & Japan

➢ Hotel reservation

➢ Car rental

➢ Travel documentation

➢ Airport facilitation

➢ Foreign exchange

➢ Overseas travel insurance

➢ Conference and seminar management

➢ Trade Fair/Exhibition visits

➢ Implant Operations- in-house travel consultant equipped with CRS system and

satellite ticket printer

➢ Business/trade delegations

➢ Incentive travel in India and Worldwide

Types of Tour Operator

Tour operators are classified as they do tour business and area of operation of package tours. Each category of tour operator is unique in their own ways of providing services. This classification is suggested to distinguish difference of meanings and functions. They are called as inbound tour operators, outbound tour operators, domestic tour operators, specialist tour operators and ground tour operators. Figure presents travel trade intermediaries that include types of travel agency and tour operators.

Inbound Tour Operator

 They handle inbound foreign tourists in the host country. They provide them various services on their arrival and departure such as transfer, accommodation, transportation,sightseeing, entertainment, currency, insurance services etc. They are known as inbound tour operators or incoming tour operators as they specifically operate for handling incoming foreign tourists or guests. Inbound tour operators make tour packages individually or in collaboration with foreign tour operators.

Packages are promoted and sold directly or through intermediaries. In fact, inbound tour operators attach much added appeal into tourism products. They earn foreign exchange that increases foreign exchange reserve ratio of the host countries. Some of the major inbound tour operators in India are TCI, Indo-Asia Tours and Travels and STIC Travels.

An inbound tour operator prepares package tours on their own and conducts tours through ground operators at host destinations. Reception upon arrivals and  departures of guests and arrangements of stay and sightseeing are some of the functions of inbound tour operators.

They get ground arrangements managed inside a country for inbound tourists. For example, a group of 16 Germany nationals including group leader purchased  package tour from travel agent at Berlin and arrived at IGI airport, New Delhi. It is the representative of STIC travel to receive the guests upon arrival and handles tour in Delhi. Ground operators are appointed at other places to provider services as per vouchers. Thus, STIC is called as inbound tour operator as it sold and conducted package tours.

STIC did not take the services of handling agents and tour conducted in Delhi and STIC has establishments to handle the group. For example, a tour operator needs to adopt innovative marketing strategies to promote the package holidays and work continuously to offer special interests tours to cater the special needs of foreign tourists visiting to India.

Outbound Tour Operators

They sell package tours highlighting the destinations in foreign countries. These operators are specialized in designing and promoting multi-national tours. Like  inbound tour operator, outbound tour operator sells a package tour to an individual or a group of people of a country to another country or a number of countries for a temporary period.

They arrange travel documents, transportation and hotels and sightseeing, inbound tour operators/ground operators provide accommodation, transportation, local sightseeing and other services. For example, a group of Indian visitors have bought packages to visit

Singapore, Thailand and Bangkok from Cox and Kings Office in Chennai. The Cox and Kings Chennai office takes care of the ground arrangements at these countries through an inbound tour operator.

Generally, outbound tour operators appoint inbound tour operators/ground operators to make arrangement of services. They receive the guests at airport, transfer group from airport to hotel and arrange local sightseeing for business or leisure oriented customers.

Domestic Tour Operator

 Domestic tour operator is one which conducts tour within the country. Domestic tour operators operate within the boundary of home country and cater the diverse needs of individuals and group travelers like inbound and outbound operators. They promote tour packages both through their own outlets and other retail travel agents. For example, a group of pilgrimage from Odisha visited Allahabad as part of religious tour. They bought package tour from the IRCTC and it is the IRCTC to conduct tours for the group at Allahabad. The IRCTC is a domestic tour operator that operates within the boundaries of the country for nationals of the same country.

Ground Handlers/Operators

 Ground operator is otherwise known as reception operator or destination management operator or handling agencies. These operators are generally expected to provide arrangements and ground logistics at a particular destination. Thus, a ground operator provides the services required by large tour companies and they do not have a local branch/office. They do not deal with the principal suppliers such as hoteliers, transport operators, car rentals, entertainment organizations and so forth.

The operator coordinates, supervises and handles accounts/payments of all services related to tour. For example, Swosti is a ground operator for tribal tour in Odisha.  Thus, inbound as well as outbound operators must look into the following aspects before the selection of a ground handling operators.

➢ Convenient of Location

➢ Size of business

➢ Professional staff

➢ Length of business

➢ Reputation and membership with International and national travel and tourism associations

➢ Credit facilities

The wholesale tour operators primarily depend on ground operators for the following reasons.

➢ Introduction of new product or plan to promote these exotic destinations.

➢ Lack of control over the government regulations

➢ Lack of personal contract

➢ Language of barrier

➢ Unfeasible to maintain own branches at each destination

Special Interest Tour Operator

 This type of tour operator offers and promotes the special interest package tours. They mostly do direct marketing for the packages or through the retail agents. For  example, Shikhar Tours and Travels, New Delhi is organizing adventure tours in the Himalayas in India and Nepal. These are the wildlife and ecotourism tour operators and they design wildlife and ecotourism packages for group in the niche market. This type of tour operator does not plan for mass market as buyers are limited in number. When the company plans for dealing with specialized areas, there must be potential buyers for the package tours as the nature and cost component is relatively higher unlike the conventional package tours.

The specialist tour operators only organize tours in the pleasant climate and the business is mostly seasonal in nature. In the recent years, many specialist tour operators are moving towards corporate travel, incentive travel, MICE travel, ecotourism, rural tourism and cultural tourism. They are also called as personalized or customized tour operators as package tours are made on the choice and suggestions of tourists. These are the following areas that specialized tour

operators do promote package tours.

➢ Ayurveda and Health

➢ Archaeology and historical sites

➢ Adventure and ecotourism sites

➢ Buddhism and Jainism ancient religious sites.

➢ Special cuisines at each place.

➢ Desert and jungle safari tour

These are the following activities that specialized tour operators carry out during the tour.

 ➢ Arrangement of visit of fairs and festivals venues

➢ Arrangement for shopping and exhibitions grounds.

➢  Provision of hiring equipments for sports and games (Golf, winter sports and  water sports.)

➢ Provision for scholarly interpretation of objects with the help of experts at the museums

➢ Arrangements for host community interaction

➢ Organizing special cultural programmes in the palaces

➢  Special amenities for the tourists in the train or bus journey

Roles and Characteristics Tour Operator

 In this package tour market, tour operators showcase destinations though their unique package tours. Thomas Cook, American Express and Cox and Kings follow  the customer-driven approach for designing package tours to cater the demands of customers.

Roles of tour operators are given below.

 ➢ It is a wholesaler as it assembles packages as per the trend of market and capacity of distribution channel.

➢ It deals with customers directly as a principal agent or foreign travel agent without off-loading tours to ground handling agents.

➢ Tour operator has liberty to amend the tour itinerary and program if it warrants.

➢ It invests much of time and resources to chart out delightful and value added tour itinerary for meeting the demand and expectation of tourists.

➢ It gives much stress on selling the tour than the conducting the tour.

➢ Tour operators are mostly located in the mega cities or in the cities with the international airlines services for the strategic advantage of controlling the package tours.

➢ It mostly provides international transfer from hotel to airport and vice-versa, if offices of tour operators are located.

➢ It deals with both the tourists and primary service providers as direct intermediary.

➢ Tour operators design the tours in such a way that handling agents may not get extra

excursion tours directly from tourists.

➢ It accepts foreign currency for the tour package and gets accreditation from the Reserve Bank of India money exchange dealer.

➢ It gives ample importance to become the professional member of national and international tourism, travel, and hospitality and aviation associations.

➢ It is committed to work as a responsible partner in the tourism industry to  popularize destinations and explore new potential destinations through their package tours.

Guides

Guides are those who stay at the tourist destination and explain the importance of the destination to the tourist. Escorts travel with the tour group and serve as a guide where ever they go. It is another inevitable element of tourism industry where there is a high demand for qualified tourist’s guides. Most of the guides we see today at different tourist places are not able enough to impart the authentic and real knowledge to the visitors. Able and experienced guides are paid high by major companies. There is a regional level training programme being conducted by Dept. of Tourism, Govt. of India to supply adequate number of qualified guides. After the training, based on their performance in the evaluation, they are being licensed by the government and the license is issued for 3 years. After every three years, they need to renew the license. A person can serve as a licensed guide till the age of 65 in India.

H.Sivasankari