Travel agency Totally Explained

Everything about Travel Agency totally explained

A travel agency is a business that sells travel related products and services, particularly package tours, to end-user customers on behalf of third party travel suppliers, such as airlines, hotels, tour companies, and cruise lines. In addition to dealing with ordinary tourists, most travel agents have a special department devoted to travel arrangements for business travelers, while some agencies specialize in commercial and business travelers. Some agencies also serve as general service agents for foreign travel companies in different countries.

Origins

The British company, Cox & Kings is sometimes said to be the oldest travel agent in the world, but this rests upon services that the original bank (established in 1758) supplied to its wealthy clients. However, the modern travel agent first appeared in the second half of the nineteenth century. Thomas Cook, in addition to developing the package tour, established a chain of agencies in the last quarter of the nineteenth century, in association with the Midland Railway. These not only sold their own tours to the public, but represented other tour companies. Other British pioneer agencies were Dean and Dawson, the Polytechnic Touring Association, and the Co-operative Wholesale Society.
Travel agencies became more commonplace with the development of commercial aviation starting in the 1920s. Originally, the agencies largely catered to middle-class customers, but the post-war boom in mass-market package holidays resulted in travel agencies on the main streets of most British towns, catering to a working class clientèle looking for a cheap overseas beach holiday.

Operations

As the name implies, their main function is to act as an agent, that's to say selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they don't keep a stock in hand. A package holiday or a ticket isn't purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount. The profit is therefore the difference between the advertised price which the customer pays and the discounted price at which it's supplied to the agent. This is known as the commission. A British travel agent would consider a 10-12% commission as a good arrangement.
   Since March of 1995 airlines have stopped giving commission to travel agencies. Therefore, travel agencies are now forced to charge a standard flat fee, per sale. However, some companies still give them a set percentage for selling their product. Major tour companies can afford to do this because if they were to sell a thousand trips at a cheaper rate they still come out better than if they sell a hundred trips at a higher rate. This process benefits everyone here.
   Other commercial operations are undertaken, especially by the larger chains. These can include the sale of in-house insurance, travel guides and timetables, car rental, and the services of an on-site bureau of change dealing in the most popular holiday currencies.
   The majority of travel agents have felt the need to protect themselves and their clients against the possibilities of commercial failure, either their own or a supplier. They will advertise the fact that they're bonded (posting a financial bond with an organisation). In the case of a failure, the customers are guaranteed either an equivalent holiday to that which they've lost, or (if they prefer) a refund. Many British agencies (and tour companies too) are bonded with IATA for those who issue their own tickets, ATOL for those who order tickets in, or ABTA for those who sell package holidays on behalf of a tour company.
   Of course, a travel agent is supposed to offer impartial travel advice to the customer. This function almost disappeared with the mass-market package holiday, and some agency chains seemed to develop a 'holiday supermarket' concept, in which customers chose their holiday from brochures on racks and then booked it from a counter. However, a variety of social and economic changes have now contrived to bring this aspect to the fore once more, particularly the advent of multiple no-frills airlines.

Types of agencies

There are three different types of agencies: these are Multiples, Miniples and Independent Agencies. The former comprise a number of national chains, often owned by international conglomerates (Thomson Holidays is now a subsidiary of TUI, the German multinational). It is now quite common for the large mass-market tour companies to purchase a controlling interest in a chain of travel agencies, in order to control the distribution of their product. (This is an example of vertical integration.) In the United States there are four different types of agencies: Mega, Regional, Consortium, and Independent Agencies. American Express is an example of a Mega travel agency. In the Asia there's a kind of travel OtelSepeti Asian Travel

The smaller chains are often based in particular regions or districts.
Independent Agencies usually cater for a special or niche market. Some cater to the needs of residents in an upmarket commuter town or suburb, or concentrate upon a particular area or group (catering to the travel needs of Polish expatriates, perhaps), or an activity such as sports(servicing the needs of football supporters).
There are 2 approaches of travel agents. One is the traditional multi-destination travel agent based in the originating location of the traveller and the other is the destination focussed travel agent that's based in the destination and delivers an expertise on that location. At present, the former is usually a larger operator like Thomas Cook while the latter is a smaller, often independent operator.

Consolidators

Travel consolidators or wholesalers are high volume sales companies that are sometimes specialized in a niche. They may or may not offer various types of services at one single point of access. These can be for example hotel reservations, flights, or car-rental. Sometimes the services are combined into vacation packages that include transfer to the location and lodging. These companies don't usually sell directly to the public but act as fulfilment for retail companies. As the travel industry has changed we see more and more consolidators selling directly to the public. The sole purpose of wholesalers is to sell ethnic niches in the travel industry. There is no consolidator that offers everything. All travel companies can sell you whatever you may be looking for but they only have contracted rates to specific destinations. Today there are no domestic consolidators with some exceptions for business class contracts.

Criticism & Controversy

"Racking"

Travel agencies have been accused of employing a number of restrictive practices, the chief of which is known as 'racking'. This is the practice of only displaying the brochures of those travel companies whose holidays they wish to sell, the ones that pay them the most commission. Of course, the average customer tends to think that these are the only holidays on offer, and are unaware of possible alternatives.
   Conversely, by limiting the companies a travel agent represents brings a better working relationship between the agent and supplier. Travel agents frequently will be able to obtain special benefits for the traveler from a supplier for concentrating their bookings with that supplier. Examples of these special benefits would be room upgrades or the waiver of change and cancellation fees.
   Generally speaking, small or specialist tour companies don't sell their product through travel agents, since they couldn't afford to pay the rates of commission that would be expected. There are a few exceptions to this rule. Independent agents might sell or take bookings for local tour companies (such as coach companies) or tour companies offering specialist holidays that fit into their target market.
   Consequently, even before the advent of the internet, small niche tour companies mostly ignored travel agents and sold direct to their customers.
   Note, "racking" is a British expression not used in the United States.

Commissions

Most travel agencies operate on a commission-basis, meaning that compensation from the hotel, airline, and customer is expected in form of a commission from all bookings. Most often the commission consists of a set percentage of the sale.
Most airlines pay no commission at all to travel agencies in the United States.

The Internet threat

With general public access to the internet, many airlines and other travel companies began to sell directly to passengers. As a consequence, airlines no longer needed to pay the commissions to travel agents on each ticket sold. Since 1997, travel agencies have gradually been disintermediated by the reduction in costs caused by removing layers from the package holiday distribution network.
   Many travel agencies have developed an internet presence by posting a website, with detailed travel information. Full travel booking sites are often complex, and require the assistance of outside travel technology solutions providers such as Travelocity. These companies use travel service distribution companies who operate Global Distribution Systems (GDS), such as Sabre Holdings, Amadeus, Galileo and Worldspan, (now Travelport GDS ) to provide up to the minute, detailed information on tens of thousands of flight, hotel, and car rental vacancies.
   Some online travel sites allow visitors to compare hotel and flight rates with multiple companies for free. They often allow visitors to sort the travel packages by amenities, price, and proximity to a city or landmark.
   Travel agents have applied dynamic packaging tools to provide fully bonded (full financial protection) travel at prices equal to or lower than a member of the public can book online. As such, the agencies' financial assets are protected in addition to professional travel agency advice.
   All travel sites that sell hotels online work together with GDS, suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site will try to get a confirmation for this hotel. Once confirmed or not, the customer is contacted with the result. This means that booking a hotel on a travel website won't necessarily result in an instant answer. Only some hotels on a travel website can be confirmed instantly (which is normally marked as such on each site). As different travel websites work with different suppliers together, each site has different hotels that it can confirm instantly. Some examples of such online travel websites that sell hotel rooms are Expedia and Orbitz.
   The comparison sites, such as Kayak, TripAdvisor, and SideStep, search the resellers site all at once to save time searching. None of these sites actually sell hotel rooms.
   Often tour operators have hotel contracts, alottments and free sell agreements which allow for the immediate confirmation of hotel rooms for vacation bookings.
   Mainline service providers are those that actually produce the direct service, like various hotels chains/airlines that have a website for online bookings. Portals will serve a consolidator of various airlines and hotels on the internet. They work on a commission from these hotels/airlines. Often they provide cheaper rates than the mainline service providers as these sites get bulk deals from the service providers. A meta search engine on the other hand, simply culls data from the internet on real time rates for various search queries and diverts traffic to the mainline service providers for an online booking. These websites won't have their own booking engine.

Careers

With the many people switching to self-service internet websites, the number of available jobs as travel agents is decreasing. Most jobs that become available are from older travel agents retiring. Counteracting the decrease in jobs due to internet services is the increase in the number of people travelling. Since 1995, many travel agents have exited the industry, and relatively few young people have entered the field due to less competitive salaries. However, others have abandoned the "brick and mortar" agency for a home-based business to reduce overheads, and those who remain have managed to survive by promoting other travel products such as cruise lines and train excursions, or by promoting their ability to aggressively research and assemble complex travel packages on a moment's notice (essentially acting as a very advanced concierge).

Cargo

A small number of companies work with cargo airlines and ships which are connected to cargo business.

Further Information

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