Whether yo

u think
you can, or
you
think you ca
n't--
you're right
.

Henry For
d
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

Business
Sector

Non Profit Goods and Tourism

Sector Services Product

Government
Sector
 Business Sector
• Lodging Facilities
• Transportation Services
• Food and Beverage Operations
• Retail Business
• Activities and Events
• Travel Trade
 Travel and Tour Agency
An 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.
 A Scenario

Suppose a passenger comes to you and

would like to visit Paris.
The following airlines fly to Paris:
CX
KL
TG
You are not an agent of CX and TG. Which
airline will you then recommend to the
passenger?
 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 Minus
Ticket Price: USD 1,000.00
Commission: 7% of the ticket price
TA’s income: USD 70.00
Payable 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 Plus
Ticket Net Price: USD 900.00
TA’s Mark Up: USD 100.00
TA’s income: USD 100.00
Payable 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

Consumer

Travel
Suppliers 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

Traveler

Suppliers 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 travel consultant
must be knowledgeable
in order to provide the
The initial exchange of
information needed by
information is important
the client.
because it is during this time
the travel consultant can
accurately assess the needs
and requirements of 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 In the Philippines,
Management
most of the TMCs
Companies (DMCs).
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.
Special
Rates
Suppliers

Special
conditions
 Functions of Tour Operators

Assemble and integrate the various

travel components into a single tour
package.

Airline

Hotel Tour
Package
Activities &
other services
 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.