A travel agency is a retail Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" business A business is a legally recognized organization designed to provide goods or services, or both, to consumers, businesses and governmental entities. Businesses are predominant in capitalist economies. Most businesses are privately owned. A business is typically formed to earn profit that will increase the wealth of its owners and grow the business, that sells travel Travel is the movement of people between relatively distant geographical locations for any purpose and any duration, with or without any means of transport. Travel also includes relatively short stays between successive movements. Movements between locations requiring only a few minutes are not considered as travel. As an activity, "travel& related products The noun product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce '(to) lead or bring forth'. Since 1575, the word "product" has referred to anything produced. Since 1695, the word has referred to "thing or things and services A service is the intangible equivalent of a good. Service provision is often an economic activity where the buyer does not generally, except by exclusive contract, obtain exclusive ownership of the thing purchased. The benefits of such a service, if priced, are held to be self-evident in the buyers willingness to pay for it. Public services are to customers A customer, also called client, buyer, or purchaser, is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services. However, in certain contexts, the term customer also includes by extension, on behalf of suppliers A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain, such as airlines An airline provides air transport services for passengers or freight, generally with a recognized operating certificate or license. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit, car rentals A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee. It is an elaborate form of a rental shop, often organized with numerous local branches (which allow a user to return a vehicle to a different location), and primarily located near airports or busy city areas and often complemented by a website, cruise lines A cruise line is a company that operates cruise ships. Cruise lines have a dual character; they are partly in the transportation business, and partly in the leisure entertainment business, a duality that carries down into the ships themselves, which have both a crew headed by the ship's captain, and a hospitality staff headed by the equivalent of, hotels A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms and air conditioning or climate control, railways Rail transport is the means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on. Track usually consists of steel rails installed on sleepers/ties and ballast, on, sightseeing tours Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for more than twenty-four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity and package holidays A package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country. Package holidays are a form of product bundling that combine several products. In addition to dealing with ordinary tourists Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for more than twenty-four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity, most travel agencies have a separate department devoted to making travel arrangements for business travelers and some travel agencies specialize in commercial and business travel only. There are also travel agencies that serve as general sales agents A General Sales Agent is a sales representative for an airline in a specific country or region. Typically, the GSA is responsible for selling all products of the airline in its region which includes flight tickets and cargo space for foreign travel companies, allowing them to have offices An office is generally a room or other area in which people work, but may also denote a position within an organization with specific duties attached to it ; the latter is in fact an earlier usage, office as place originally referring to the location of one's duty. When used as an adjective, the term office may refer to business-related tasks. In in countries In geography, a country is a geographical region. The term is often applied to a political division or the territory of a sovereign state, or to a smaller, or former, political division of a geographical region. Usually, but not always, a country coincides with a sovereign territory and is associated with a state, nation or government other than where their headquarters Headquarters denotes the location where most, if not all, of the important functions of an organization are coordinated. The corporate headquarters is the entity at the top of a corporation taking full responsibility managing all business activities. In the UK, the term 'head office' is most commonly used for the HQs of large corporations are located.

Origins

The British company Cox & Kings Cox & Kings is the longest established travel company in the world, its history stretching back to 1758 when Richard Cox was appointed as regimental agent to the Foot Guards. Cox & Kings now thrives as an independent tour company with offices in the United Kingdom, India, the United States and Japan is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the 19th century. Thomas Cook Thomas Cook of Melbourne, Derbyshire, founded the travel agency that is now Thomas Cook Group, in addition to developing the package tour A package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country. Package holidays are a form of product bundling, established a chain of agencies in the last quarter of the 19th century, in association with the Midland Railway The Midland Railway was a railway company in the United Kingdom from 1844 to 1922, when it became part of the London, Midland and Scottish Railway. They not only sold their own tours to the public, but in addition, represented other tour companies. Other British pioneer travel agencies were Dean and Dawson, the Polytechnic Touring Association Lunn Poly was the largest chain of travel agents in the United Kingdom. The company originated from two successful travel agencies which had been established in 1890s; The Polytechnic Touring Association and Sir Henry Lunn Travel. Both firms were acquired in the 1950s by the British Eagle Group, and combined into Lunn Poly during 1965. In June 1971 and the Co-operative Wholesale Society A Co-operative Wholesale Society, or CWS, is a form of Co-operative Federation , in this case, the members are usually Consumers' Co-operatives. According to Co-operative economist Charles Gide, the aim of a Co-operative Wholesale Society is to arrange “bulk purchases, and, if possible, organise production.” In other words, a Co-operative. The oldest travel agency in North America is Brownell Travel; on July 4, 1887, Walter T. Brownell led ten travelers on a European tour, setting sail from New York on the SS Devonia.

Travel agencies became more commonplace with the development of commercial aviation, starting in the 1920s. Originally, travel agencies largely catered to middle and upper 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 convenient way to book overseas beach holidays.

Operations

As the name implies, a travel agency's main function is to act as an agent An Agent in Commercial Law is a person who is authorised to act on behalf of another (called the Principal or client) to create a legal relationship with a Third Party. Agency law deals with the tripartite relationship between:, that is to say, selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they do not keep a stock Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. It is also used for a list of the contents of a household and for a list for testamentary purposes of the possessions of someone who has died. In accounting inventory is considered an asset in hand. A package holiday or a ticket is not purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee. Essentially, the party that owes money in the present purchases the right to delay the payment until some future date. The discount, or charge, is simply the difference between the. The profit In accounting, profit is the difference between price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses is therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold. This is a way for firms to solve the principal-agent problem, by attempting to realign employees interests with those of the firm. A British travel agent would consider a 10-12% commission as a good arrangement. In Australia, all individuals or companies that sell tickets are required to be licensed as a travel agent.^[1]

In some countries, airlines have stopped giving commission to travel agencies. Therefore, travel agencies are now forced to charge a percentage premium or a standard flat fee A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup, 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 both parties.

Other commercial operations are undertaken, especially by the larger chains. These can include the sale of in-house insurance In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured or policyholder is the person or, travel guide books A guide book is a book for tourists or travelers that provides details about a geographic location, tourist destination, or itinerary. It is the written equivalent of a tour guide. Many travel guides now take the form of travel websites rather than printed books and timetables A public transport timetable is a listing of the times that public transport services arrive and depart specified locations. Timetables are published in various forms from comprehensive books covering an entire system or continent to small cards that list the departure times from a single location, car rentals A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee. It is an elaborate form of a rental shop, often organized with numerous local branches (which allow a user to return a vehicle to a different location), and primarily located near airports or busy city areas and often complemented by a website, and the services of an on-site Bureau de change A bureau de change is a business whose customers exchange one currency for another. Although originally French the term is widely used throughout Europe, and European travellers can usually easily identify these facilities when in other European countries. It is also common to find a sign saying "Exchange". Since the adoption of the euro, 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's. They will advertise the fact that they are surety bonded When a first party calls upon a second party (principal) to perform duties in contract form, a surety bond is issued by a third party (surety), guaranteeing that the second party will fulfill an obligation or series of obligations to the first party. In the event that the obligations are not met, the first party will recover its losses via the, meaning in the case of a failure, the customers are guaranteed either an equivalent holiday to that which they have lost or if they prefer, a refund. Many British and American agencies and tour operators are bonded with the International Air Transport Association The International Air Transport Association is an international industry trade group of airlines headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organization is also headquartered. IATA's mission is to represent, lead, and serve the airline industry. IATA represents some 230 airlines comprising 93% of scheduled (IATA),^[2] for those who issue air tickets, Air Travel Organisers' Licensing (ATOL) Air Travel Organisers' Licensing is a United Kingdom Civil Aviation Authority (CAA) scheme to protect people who have purchased package holidays and flights from a member tour operator for those who order tickets in, the Association of British Travel Agents (ABTA) As of November 2008, it had 5466 travel agent outlets, and 787 Tour Operators. 90% of package holidays in the UK are sold through its members, and about 45% of independent travel arrangements.[citation needed] or the American Society of Travel Agents (ASTA) The American Society of Travel Agents is a business improvement organization which represents and defends the business and regulatory public policy interests of travel intermediaries including travel agencies (including traditional "brick and mortar" agencies, online portals, mega- and corporate agencies, and small and mid-market, for those who sell package holidays on behalf of a tour company.

A travel agent is supposed to offer impartial travel advice to the customer. However, this function almost disappeared with the mass-market package holiday and some agency chains seemed to develop a 'holiday supermarket' concept, in which customers choose their holiday from brochures on racks and then book it from a counter. Again, a variety of social and economic changes have now contrived to bring this aspect to the fore once more, particularly with the advent of multiple, no-frills No-frills or no frills is a term used to describe any service or product for which the non-essential features have been removed to keep the price low. The use of the term "frills" refers to a style of fabric decoration. Something offered to customers for no additional charge may be designated as a "frill" - for example, free, low-cost airlines A low-cost carrier or low-cost airline is an airline that generally has lower fares. To make up for revenue lost in decreased ticket sales, the airline may charge for extras like food, priority boarding, seat allocating, and baggage etc.

Commissions

Most travel agencies operate on a commission-basis, meaning that the compensation from the airlines An airline provides air transport services for passengers or freight, generally with a recognized operating certificate or license. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit, car rentals A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee. It is an elaborate form of a rental shop, often organized with numerous local branches (which allow a user to return a vehicle to a different location), and primarily located near airports or busy city areas and often complemented by a website, cruise lines A cruise line is a company that operates cruise ships. Cruise lines have a dual character; they are partly in the transportation business, and partly in the leisure entertainment business, a duality that carries down into the ships themselves, which have both a crew headed by the ship's captain, and a hospitality staff headed by the equivalent of, hotels A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms and air conditioning or climate control, railways Rail transport is the means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on. Track usually consists of steel rails installed on sleepers/ties and ballast, on, sightseeing tours Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for more than twenty-four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity and tour operators A tour operator typically combines tour and travel components to create a holiday. The most common example of a tour operator's product would be a flight on a charter airline plus a transfer from the airport to a hotel and the services of a local representative, all for one price. Niche tour operators may specialise in destinations, e.g. Italy,, etc., is expected in form of a commission from their bookings. Most often, the commission consists of a set percentage of the sale.

In the United States, most airlines pay no commission at all to travel agencies. In this case, an agency usually adds a service fee to the net price.

Types of agencies

There are three different types of agencies in the UK: Multiples, Miniples and Independent Agencies. The former comprises a number of national chains, often owned by international conglomerates, like Thomson Holidays, now a subsidiary of TUI AG, the German multinational.^[3] 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.) The smaller chains are often based in particular regions or districts.

In the United States, there are four different types of agencies: Mega, Regional, Consortium and Independent Agencies. American Express and the American Automobile Association (AAA) are examples of mega travel agencies.

Independent Agencies usually cater to a special or niche market, such as the needs of residents in an upmarket commuter town or suburb or a particular group interested in a similar activity, such as sporting events, like football, golf or tennis.

There are two approaches of travel agencies. One is the traditional, multi-destination, out-bound travel agency, based in the originating location of the traveler and the other is the destination focused, in-bound travel agency, that is 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 often a smaller, independent operator.

Consolidators

Airline consolidators and other types of travel consolidators and wholesalers are high volume sales companies that specialize in selling to niche markets. They may or may not offer various types of services, at a single point of access. These can be hotel reservations, flights or car-rentals, for example. Sometimes the services are combined into vacation packages, that include transfers to the location and lodging. These companies do not usually sell directly to the public, but act as wholesalers to retail travel agencies. Commonly, the sole purpose of consolidators is to sell to ethnic niches in the travel industry. Usually, no consolidator offers everything, they may only have contracted rates to specific destinations. Today, there are no domestic consolidators, with some exceptions for business class contracts.

Criticism and 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 displaying only 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 is unaware of the possible alternatives.

Conversely, by limiting the number of companies that a travel agency represents, this can bring a better and more profitable, working relationship between the agency and its suppliers. Travel agencies can then obtain special benefits for their customers, from a supplier, by concentrating their bookings with that supplier. Some examples of these special benefits would be room upgrades or the waiver of change and cancellation fees.

("Racking" is a British expression, not used 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.^[4][5] However, travel agents remain dominant in some areas such as cruise vacations where they represent 77% of bookings and 73% of packaged travel.^[6]

In response, travel agencies have developed an internet presence of their own by creating travel websites, with detailed information and online booking capabilities. Several major online travel agencies include: Expedia, Voyages-sncf.com, Travelocity, Orbitz, CheapTickets, Priceline, CheapOair and Hotwire.com. Travel agencies also use the services of the major computer reservations systems companies, also known as Global Distribution Systems (GDS), including: SABRE, Amadeus CRS, Galileo CRS and Worldspan, which is a subsidiary of Travelport, allowing them to book and sell airline tickets, hotels, car rentals and other travel related services. Some online travel websites 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 will not 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, Orbitz and WorldHotel-Link.

The comparison sites, such as Kayak.com, 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, allotments 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 or 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 and 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 usually do not 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.^[7] 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 cargo ships.

See also

• Hospitality industry
• International Association of Travel Agents Network
• Receptive Services Association of America
• Travel technology

Notes

1. ^ "Travel Agents". Victoria (Australia): Business Licensing Authority. 2009. http://www.bla.vic.gov.au/wps/wcm/connect/Business+Licensing+Authority/Home/Travel+Agents/. Retrieved 1 July 2009.
2. ^ "Travel & Tourism". International Air Transport Association. 2009. http://www.iata.org/whatwedo/travel-tourism/. Retrieved 1 July 2009.
3. ^ "First Choice-TUI merger cleared". BBC News. 2007-06-04. http://news.bbc.co.uk/2/hi/business/6720995.stm.
4. ^ Andal-Ancion, Angela; Cartwright, Phillip A.; Yip, George S. (June 2003). "The Digital Transformation of Traditional Businesses". Cambridge, MA: MIT Sloan Management Review. pp. Vol. 44, No. 4, pp. 34–41. http://sloanreview.mit.edu/smr/issue/2003/summer/9/.
5. ^ Edmunds, Marian (2002-03-12). "A wake-up call for the industry". Financial Times. http://specials.ft.com/ftit/march2002/FT3Z9WRBNYC.html. Retrieved 1 July 2009.
6. ^ "Media Kit". Travel Agent (magazine). http://www.travelagentcentral.com/digital-media-kit/magazine-media-information. Retrieved 2008-12-28. "based on PhoCus Wright’s Travel Agency Distribution Landscape Study"
7. ^ Rebecca Tobi (2002-10-28). "Wanted: young agents! Are young people shying away from careers in travel? Agents and travel school operators say yes. Look around your agency—see any young faces?". Travel Weekly Vol 61, no. 43. p. 148–149.

References

• Bottomley Renshaw, Mike (1997). The Travel Agent (2nd ed.). Sunderland: Business Education Publishers Ltd. ISBN 1-901888-00-2. OCLC 228287734.

External links

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