HM-6140 - Macro Perspective of Tourism and Hospitality

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Week 3: Main Sectors of Tourism Industry and Their Linkages

Module 003: Travel Agency and Tour Operator

Course Learning Outcomes:

1. Define travel agency and tour operator
2. Enumerate the types and forms of travel agency
3. Discuss the functions of travel agency and tour operators

1. Travel Agency
- It is an agency that makes the necessary arrangements for travelers, especially the booking of
airline tickets and hotel rooms.

- It is an agency engaged in selling and arranging transportation, accommodations, tours or trips

for travelers.

- In this business the services primarily provided to the tourist or traveller includes transport
(road, rail, air and/or water), accommodation, passport and visa procuring facilities, foreign
exchange and also guidance and information regarding the place of travel. Many travel agencies
also sell the packages offered by inbound tour operators. The leading travel agencies of
Philippines are as:

1. Surfista Travels
2. Fly Dragon International Travel Agency
3. Reli Tours and Travel Agency (Makati Branch)
4. Philoxenia Travel and Tours
5. WOW Philippines Travel Agency
6. Thomas Cook Travel Agency
7. Aerostar Travel and Tours
8. Adkins Travel Agency
9. LJ4 Travel and Tour Services
10. Reli Tours and Travel Agency (Mandaluyong Branch)

Travel Agency Types:

➢ Wholesalers Travel Agents

- A wholesaler as he called specializes in putting together tour offerings, which marketed to the
public through a network of retail agents or airlines. He does not deal directly with the consumer
unless he is also operates at retail level.

➢ Retail Travel Agents

- The retailer travel agent or retailer sells travel services directly to customers.
Course Module
 - Some package tour is sold in two ways i.e., on a commission basis and mark up the price.

• When a travel agency sells a tour on the marked-up price it means that first, it markup
the cost of the tour and then sell it at a higher rate. The markup price is the difference
between retail price and wholesale cost.

Forms of a Travel Agency

As like any business firm or company, the travel agency can of as following:
➢ Proprietorship: The sole proprietorship is not a legal entity. It simply refers to a person who owns
the business and is personally responsible for its debts. A sole proprietorship can operate under the
name of its owner or it can do business under a fictitious name. The owner must report all the
income on his or her individual income tax return. Expenses such as advertising, bank charges,
equipment, depreciation, insurance, office supplies, rent, utilities and other costs of doing business
may be deducted from income before taxes are paid
➢ Partnership: Travel agency being seen on a partnership basis is jointly owned by two or more
individuals. The cash, possessions, and other items of value, known as assets; and all the obligations
(liabilities) are shared equally by each partner. Each owner is taxed according to his or her share of
profits.
➢ Corporate: A corporate travel agency is owned by shareholders/ stockholders who are represented
by a board of directors. Legally, it is a ‘person’ by and of itself.

Functions of Travel Agency

➢ Advisory- the agency advices potential travelers on resorts, carriers, travel companions and travel
facts worldwide.
➢ Reservation- the agency makes reservations for all the travel requirements
➢ Planning- it plans itineraries of all kinds including complex multi stop-over independent tours.
➢ Computation- It computes accurate airline and other fares and does costing of tours and ticketing.
➢ Correspondence- It correspondences by telephone, letter, telex, fax etc, with travel principals and
customers.
➢ Records- It maintains accurate files on reservation.
➢ Travel brochure- It maintains and displays stock of travel brochures.
➢ Complaint Handling- It intercedes with principals in the event of customers complaints.
➢ Insurance- it arranges insurance facilities for the customers.
➢ Liaison- it maintains liaison with providers of the services.
➢ Foreign exchange- it provides foreign exchange facilities for customers.
➢ Miscellaneous- it arranges any other special services ordered or required by the customer.

2. Linkages of a Travel Agency

 HM-6140 - Macro Perspective of Tourism and Hospitality
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Week 3: Main Sectors of Tourism Industry and Their Linkages

1. Airlines
2. Accommodation Companies
3. Cruise Companies
4. Insurance Companies
5. Banking Companies
6. Educational Institutions
7. Travel Trade Associations

3. Tour Operator
- They buy a range of tourist products in bulk – airline’s seats, hotel rooms and coach services.
They ‘package’ them for subsequent sale to retailers or consumers. Their product is also called
as Inclusive Tour Packages.

Functions of Tour Operators

1. Production
- Delivers value added to the customer better product, easier to organize, cheaper than own
organization by customer.

2. Marketing/Sales-
- Acts as hinge between service providers and demand
- Buys part of service providers offers over specific period of time for specific price.
- Bundling, packaging of several offers into a one-stop package.

3. Risk
- T.O has to bear the merchandising risk and the quality of risk

4. Information
- Information about possible destinations and activities.

5. Social Function
- They offer national and international tours for persons, who would otherwise not dare to
travel.

6. Destination Development
- Support the touristic development of destinations.
- Offer predictable demand, enabling investment in infrastructure.

7. Destination Changes
- They help in giving value to otherwise economically valueless resources.

Course Module
References and Supplementary Materials

Online Supplementary Reading Materials

1. Introduction to Travel Agency; http://bieap.gov.in/Pdf/TTPaperIIYR2.pdf; August 23,
2019