Forms of travel agency business

travel agency

proprietorship

partnership

Corporate firm

Proprietorship : one owner Owner personally liable All income is personal income Self- employment tax Expenses deducted before tax

Partnership:-

two or more owners partners equally liable Each owners taxed according to his/her share of profit. All income is personal income Separate tax returns to disclose payments to partners.

Corporate:-

Minimum 2 persons in private company and 7 in public company. Corporation and not individual liable. Profit are distributed as dividend to shareholders Shareholders elect board of director. Board of director appoint others.

Corporate firm
Public Private Govt. MNCs Foreign company Holding and subsiding company

A organization structure of a travel company brings to the travel business

Develop sound and up to date management practices, systems and strategies. Develop effective leadership Optimum use of human assets Growth and diversification Stimulates creativity Effective co-ordination between various department.

Organization structure of a small travel agency

Director

Travel executive (dom, int) Assistant (passport and other services)

Finance and accounts executive Accountant

Travel counselor cum marketing executive Assistant

Owner /manager

Sales

Finance and accounting Finance and accounting specialist

Sales agent

Medium sized travel agency

Owner/president

G.M

SALES

FINANCE AND ACCOUNTING

OUTSIDE SALES

SUPERVISORS, AGENTS AND TRAINERS

FINANCE AND ACCOUNTING SPECIALIST

SUPERVISORS, FINANCE AND ACCOUNTING EXECUTIVES

FUNCTION OF TRAVEL AGENCY

TRAVEL INFORMATION: Counseling Immigration Passport and visa Custom clearance and procedure Health and security checks Landing permits certificates

Itinerary preparation Airline ticketing and reservations:International Domestic

Accommodation reservation:Hotel Motel Resort others

Reservation of surface/sea transport:Rail Road Sea Tour package and costing:Liaison with providers Market research Costing and pricing Promotion of package

Travel insurance:Personal Baggage

Foreign currency:Organization of conference/ convention Travel agency as handling agency/ ground operator. Marketing and promotion of tour packages Coordination with providers of services.

Difference between travel agency and tour operators

Wholesale Travel agency does not sell directly to the public, while tour operator do sell directly to clients. A wholesale travel agency may deal with one component of travel product while a tour operator offers a variety of tour programmes. The size of business is large in case of tour operators in comparison to wholesale travel agency. Wholesale travel agencies are less inclined than tour operator to perform ground services i.e. handling agency or ground operators.

A whole sale travel agency usually combines, assemble and contacts for existing travel services to formulate new package tours. Whereas a tour operator creates new travel product as he has his own one or more components of travel product i.e. inclusive tours.

Process for approval of travel agency in India

A travel agent and tour company need to be approved and recognition by the railways, hotels resorts, department of tourism , ministry of external affairs, RBI,IATA, TAAI, IATO, Cruise companies, car-rental and other travel trade organizations. However the most important approval and recognition in this context is from the department of tourism and the international air transport association (IATA).

DOT- Approval for a travel company

The following are the main rules prescribed by the DOT for the approval of travel agencies:Application shall be in the prescribed form and shall be addressed to the Director of tourism, Ministry of tourism , Govt. of India, New Delhi. The company have functioned successfully for at least one or two years. Have minimum paid-up capital Have an IATA license or GSA of an IATA member airline

Has been approved by RBI to book foreign tourist. Approved by Ministry of External Affairs to handle documents, passports, visas and others such items Income tax assesses Registered under the local shops and establishment Act Good professional reputation, at least one or two staff members should be from the IATA and DOT recognized tourism educational institutions. Recognized by airlines Approved by railways Prescribed free for recognitions

The travel company must attach the audited annual reports.

APPLICATION FORM
The application form prescribed by the DOT is :CONTENTS Name and Address. Year of establishment.. Nature of business and year of commencement.. Type of business form.. Name and address of director/partners..

 Staff employed. qualification .. salary .. experience .. length of services .. name of bankers . Name of auditors Audited financial statements Copy of income tax number. Letter of approval from IATA

Membership of professional travel trade organization Such as IATA, TAAI, WTO,ASTA,PATA,IATO etc.. Sales turnover during the last five years.. Steps taken to promote tourists traffic in the country Any other steps/activities.

Recognition of tour operators by DOT

Application shall be in the prescribed form Minimum paid-up capital as prescribed by the DOT. Minimum turn over five lakh. Good professional reputation and trained staff- in various segments of travel industry. Operation minimum one year. Income tax assesses. Approved from IATA. Maintain ethical standards of tourism business.

Fee Rs one thousand for head office and Rs. 500 for Branch office. Approved from RBI, Ministry of external affairs. At least two or three staff members from IATA/DOT recognition tourism and training institutes. Sound financial position. Recognized by the airlines and railway. Should employ only approved guides. Should have contributed towards the promotion and development of tourism. Good location.

APPLICATION FORM for tour operator

Name and address of the tour company. Year of registration Nature of business and year of commencement of business Name and address of directors/partners.. Staff employed. Qualification and experience Salary and wage structure. Name of the bankers.

Name of the auditors. Audited financial statement.. Copy of income tax return.. Member of international and domestic tourism organization Turnover.. Volume of tourist traffic handled. No. of conference/conventions handled. No. of package tour handled.. No. of incentive tour handled Steps taken to promote tourism.. Any other activity M.D signature

The following special requirements for recognition as travel agent have been prescribed :Agency has been approved by IATA. Has valid license to book foreign passages issued by the Reserve Bank of India Has the valid approval of the Ministry of External affairs to handle travel documents and to deal with passport offices and Is registered under the local shops and establishment Act.

IATA- Approval for travel agency/tour operator

Travel /tour companies need to obtain approval and recognition from IATA, authorizing them to serve as sales agents and allowing them to write tickets and collect commissions.

Rules and conditions

All applications for recognition shall be addressed to the Director, agency investigation panel IATA India, New Delhi. The application for grant of approval shall be in the prescribed form. The objective of the recognition shall be to promote and develop travel industry in the country. The company has to be in the business for the last one year.

 The company have must at least two staff members qualified from IATA approved institutions. Sound financial credibility. The location of the agency must be freely accessible and clearly identifiable to the tourists. Security for the control of airlines ticket block. Ability to generate business. The travel company granted approval shall be entitled to such rights and privileges as may be granted by the association from time to time and shall abide by the several terms and conditions of recognition as prescribed by the association from time to time.

 The company must attach an audited annual report with the application form. The agency must attach the statement of international sale with the application form. The decision of the IATA in the matter of recognition shall be final. The association may in the directions of its committee, refuse to recognize the company without assigning any reason. The association reserve the right to withdraw at any time the recognition already granted without assigning any reason.

 Have maintained ethical standards of tourism business. The recognition granted by the IATA shall not automatically entitle the travel agency to be approved by any other organization/association.

Travel agents definition

The travel industry is big business in the UK and travel agents make up an important part of the industry. As well as being able to access details about hundreds of package holidays, flights, accommodations and excursions, travel agents have the expert knowledge to put all of this information into plain English to help their customers find and book a holiday to suit them.

Types of travel agents

There are many different types of travel agents, including Holiday travel agents :- such as Going Places and First Choice, which help customers choose and book their summer family holiday, group ski break or city sightseeing tour. Specialist travel agents are also available, such as business travel agents, which help businesses and businesspeople plan and book their conference, flights and foreign business travel, and location specialists, who will offer expert advice, great deals and a reliable booking service for certain locations in the world, including Australia travel agents, Caribbean travel agents and India travel agents.

Independent travel agents, such Co-op Travel, and many of these specialize in certain types of holidays, such as booking round the world trips for students heading off on a gap year, and travel agents who only book cruises or UK breaks.
In recent years there has been a huge increase in the number of online travel agents, but online travel agents sometimes struggle to compete with airlines and hotels which have also taken a more direct approach to winning customers by using the Internet and no longer rely on the travel agent to fill their aeroplanes and hotels.

MANAGERIAL RESPONSIBILITY
1) His/her prime responsibility is to negotiate the terms and conditions for commission with principal suppliers. These commissions constitute major source of revenue for any travel agency. 2) Recruitment of trained manpower from time to time is yet another important responsibility of a manager in travel agency operations. Right kind of human resources are considered as most valuable assets for any organization.

3) Once the recruitment is over, the orientation/induction programmes shall be arranged by the manager. For existing employees training and development programmes must be arranged in areas which need regular up gradation. For example, technological advancements have forced us to train our employees to work on new technologies or day to day changes in visa regulation, airline/rail schedules, airlines banking settlement plans, etc. require constant up gradation of knowledge. Undoubtedly, training programmes in such areas would not only improve the efficiency of the employees but would also add to the brand name of the company in relation to efficiency and customer care.

4) It is also the responsibility of manager to departmentalize the agency for effective functioning and accordingly deployment of required manpower can be done. It is for you to assess that how many people will be required in international section and how many for domestic section. In other words, it is for you to decide that how many people shall form a part of operations, marketing or any other department for that matter. 5) Scheduling of manpower and machines to be made available for the agency operations will also be your responsibility, i.e., how many vehicles you will require for pick ups and transfers or for your staff transportation, how many personal computers to be installed and which one shall be connected with WAN (Wide Area Networking) or LAN (Local Area Networking) to facilitate the transfer of data without loss of time.

6) As a manager you need to gather and assess feedback from your suppliers and consumers, which would also help you in designing your products. For example, if your feedback reveals that your customers have more liking for activity packed packages, you shall naturally prepare such packages. Your job doesnt ends here. You must also try to find out what was the level of satisfaction of your customers after consuming your product/services. If some gap is suggested, the consumer must be removed immediately.

7) Decision on selection of promotional strategies are another important function to be performed by you. Here you need to address issues like what is the mission of your agency with respect to the image building? What is your target market? How much will be your promotion budget? What would be the most effective means of promotion for your product, most suitable and effective for your target market segment? Above all, how much time you have to build the desired image. For example, many a times situation arises like riots hitting an area, military coup, etc.

8) As a manager you shall always believe in sharing information and knowledge with your employees, about competitors, their strengths, weaknesses, corporate business techniques. It is only after this that you can expect them to work more efficiently. You must also subscribe them with various sources of information like trade newsletters, documentary films/CDs, brochures and news bulletins of principal suppliers, current affairs magazines, membership of trade associations, familiarization trips as well as travel advisories. 9) You must train your employees to maintain proper storing and updating mechanism in the organization. In a travel agency you make most of the bookings on phone and when your customer is on phone line you have very less time to refer to his/her history in your files.

10) For effective and efficient operations of a travel agency you need adequate infrastructure. You must ensure that you have provided your staff with equipments like telephones, fax, electronic mails, photocopier and computers in right number and at right time so that they can carry out their functions efficiently.

FUNCTION OF TRAVEL AGENCY

TRAVEL INFORMATION: Counseling Immigration Passport and visa Custom clearance and procedure Health and security checks Landing permits certificates

Itinerary preparation Airline ticketing and reservations:International Domestic

Accommodation reservation:Hotel Motel Resort others

Reservation of surface/sea transport:Rail Road Sea Tour package and costing:Liaison with providers Market research Costing and pricing Promotion of package

Travel insurance:Personal Baggage

Foreign currency:Organization of conference/ convention Travel agency as handling agency/ ground operator. Marketing and promotion of tour packages Coordination with providers of services.

SOURCE OF REVENUE
1. TRADITIONAL SOURCE:(A) COMMISSION BASED booking of hotel, resort/rooms services passport services ticketing car rental insurances medical

Another type of description: commission from modes of transport Commission from hotels and tourist resort Commission from tour operators Services charges Profit from sale of own tours incentives

(B) MARGIN OF PROFIT BASED CONSULTANCY: broadly covers packaging and selling of tours both international and domestic. 2.Modern avenue: Conference, convention and exhibition Trade boards Educational tours Seminars Insurances Events income tax solutions Trade shows Visa and other documentation Promotional services Thematic tours Special interest tours

Tour operator
An organization, firm or company who buys individual travel components, separately from their suppliers and combines them into a package tour, which is sold with their own price tag to the public directly or through the middlemen's is called a tour operator.

Types of tour operator

Inbound tour operator Outbound tour operator domestic tour operator Destination management operator.

company/

ground

Ground operator
The tour operator companies do not have close contact with supplier, governments, destinations and so on. It leaves no choice with the companies but to appoint handling agencies at the destinations. The main reasons are: introduction of new product or plant to promote an exotic destination. lack of government regulations lack of personal contract company can not establish its own branch.

Company consider various factor before the selection of a handling agency

size of business professional staff length of business Reputation and membership, the agency has with international and national travel and tourism associations. credit facilities available.

Tour package
Tour package is total tourism product which is planned, organized, combines and sold as an inclusive tour by a set price to the tourist by a tour operator.

It means a pre- arrangement, prepaid trip that combines two or more travel components like airfare, airport transfer, accommodation and other services.

Types of package tour

independent tours escorted tour Hosted tour Incentives tour

Components of a package tour

Travel Ground arrangements

Tour formulation- factor affecting

purpose of tour choice of destination tourist budget legal consideration tour period types of tourist accommodation tour price tour reference tools tour features Departure and stay information

Stages for package tour formulation

1. Initial research The destination research Market research:- market research provides answer to the following question: What is the size of tourism market? Who are the existing clients? Where do they live? Who will be their potential buyers? What price the client will accept? How many tourists one wants to cater? Who are their competitors?

2. Itinerary preparation: the element of itinerary include the route, distance, travel time, activities and sightseeing during the tour. (a) Pace :- pacing refers to how quickly or slowly an itinerary moves. Providing comfortable pace for clients is essential to their enjoyment of the tour. Older client often prefer to stay two or more nights at each hotel, while younger and healthier clients prefer a faster pace.

(b) Routing
(c ) interest :- match client interest with corresponding activities and attractions along the way.

(d) Energy :- take note of how much walking certain tours require whether or not the client is travelling alone or with family with small children and what type of tour experience is the client looking for.

(e) Meals :- a wide range of meals plans are available while booking tours and hotels : European plan :- no meals are included continental plan :- light breakfast included Modified American plan:- breakfast and one major meals is provided, normally dinner. American plan :- all three daily meals are provided, this, plan is common on cruise and tours that visit remote areas. Bermuda plan :- include a full cooked breakfast and no other meal is provided.

3. Handling agency/ destination company 4. Negotiations Airlines Accommodation Ancillary service organizations

5. Costing and pricing a package tour 6. The tour brochure brochure should contain of the following information:Name of the travel company Means of transport Itinerary Accommodation, types, location, meals Name of the overseas representatives Duration of each tour Booking reservation and cancellation conditions Detail of price Travel documents required Detail of other services-insurance, currency.

7. Development of reservation system 8. Marketing of tour package 9. Tour handling/ actual tour operation

Significance of package tour

Time savers Less cost and price increase the seasonality of a destination earn foreign currency better quality of products professional services wide- variety of tour package Provide bulk business to organizers.

Tour costing and pricing

Cost in simple word means the sum total of all expenses. cost is the amount expenditure incurred on or attributable to a given thing to ascertain the cost of a given. The concept of cost has been defined as cost is a measurement, in monetary terms, of the amount of resources used for some purpose.(Anthony and Welsch).

Tour cost
Tour cost means the total cost incurred or attributed to a tour product services or tour cost is the sum total of costs incurred to create or formulate a tour package.

The cost components of a package tour are: research and development cost Travel cost Accommodation cost Transfer costs Sightseeing and activity costs Administrative costs Marketing costs Miscellaneous costs

Types of costs
direct and indirect costs Fixed and variable costs

Factor affecting the tour costs

seasonality Exchange rate movements Competitors price strategy increase in other costs Impact of liberalization and globalization Promotional pricing Market segmentation pricing.

To start costing and pricing of a tour package :Identify the tour components Identify the cost of each tour component Segregate total cost in to fixed and variable costs find out fixed and variable costs per pax. Calculate break-even-point in total and per pax. Add fixed cost and variable costs. Multiplying the total cost by budgeting percentage of profit, one will get the total sales price.