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Travel Agency Operation & Management

Tourism Academics

Chapter One

1. Introduction

A travel agency is a business that retails travel related products and services, particularly packaged tours to customers on behalf of third party travel suppliers such as airlines, hotels, tour companies and cruise liners.

Travel agency is an axis of tourism industry. The tourism activities revolve around the travel agency. The tourism is the result of the movement of the people from one place to another and travel agencies generate the movement. So, a travel agency is the generator or a creator of the tourism. Without travel agency, tourism will have no joint effort, no planning and no programming. We cannot imagine tourism without travel agency because “Tourism is the result of joint effort of the travel related activities” and travel agency joins them together to form a travel industry.

Travel agency represents all suppliers of travel services. They are free to make reservations with any supplier of travel services with the exception of suppliers who do not pay commissions to travel agents, small suppliers who are not experiences or equipped to work with travel agencies and a few suppliers who do not believe they need business generated by travel agents. Some travel agencies may limit the services they sell, in order to specialize in certain segments of the travel industry.

1.2. Role of travel agency

The role of the travel agent is that of a retail agent that sells travel plans and services. Their main function is to act as an agent for travel related products and services on behalf of the supplier who are the principals or tour operators. They do not keep stocks on hand but requisition them from the supplier on demand by the customer. They approach travel principals to get cheap rates for the facilities they offer. Principals would be those travel partners like the airlines, surface transporters, hotels, etc who provide essential agents get better rates because of the volume of the business they give to each principal. The agents profit is the difference between the supplier’s price and the price that they quote to the customer. The difference is called the commission which may vary from 10% to 20 %.

The role of travel agencies is as follows:

1. Plan itineraries for wholesale operators in their region, including arranging hotel accommodations, surface transportation and sightseeing tours.

2. Negotiate favorable rates with surface transporters to provide coaches for airport transfers, sightseeing tours and inter-city travel.

3. Negotiate with hotels for favorable room rates and meal prices for FIT.

4. Negotiate with art centers for cultural entertainment.

5. Negotiate fares with domestic airlines and railways for inter-city travel by the most economical route.

6. Co-ordinate with various tourist centers for sightseeing tours.

7. Develop comprehensive local package for tour operators and individual travelers.

8. Provide information on national and international tours.

9. Arrange international and domestic airline, railway, bus, river boat, ocean liner tickets to the public consumer.

10. Arrange hotel accommodation.

11. Arrange city and inter-city tours.

12. Arrange surface transportation including limousines and coaches.

13. Organize local sightseeing tours.

14. Make arrangement for travel insurance travel guides, timetables, car rental, on site exchange bureau etc.

16. Travel agencies give confidence to their customers by enrolling ad members of the national and international association.

1.3. Functions of travel agency

Travel agencies being a commission agent do and function unlimited varieties of job. By the introduction of new concepts of travel and tour, the functions of modern travel agencies have widened. Travel agencies carry two types of activities 1.As a middlemen. 2.As an organizer. The function of a travel agency is described below:

1. To provide travel information:

A retail travel agent provides necessary travel information to the general public. The interesting tourists come to the office of the travel agent and ask all the related information regarding their proposed visit.

2. Preparation of promotional material:

A travel agency should prepare promotional materials to motivate the potential travelers. They should prepare reading materials to give information. In this respect they must prepared, program, itineraries, brochures, fliers, dossier etc.

3. To develop new idea and destination:

A travel agency must involve constantly finding out new idea, new destination and do the calculation of the cost. He/ She must try to find out best destination and quality in the best price.

4. Reservation and confirmation of the services:

The travel agencies on behalf of its customer reserves and confirms the services from the service agencies such as booking of Air, Rail, Hotel, etc. It provides the guarantee of the service to the customer and security to the service agencies.

5. Agreement and negotiation of price:

To provide the facility to the customer and to fascinate the service agency it does the agreement and fix the price with the principles and fix the prices for different categories of tourism.

6. Money transfer:

Many travel agencies provide the service of money transfer. The service of traveler’s cheque, credit cards, union money transfer etc is handled by travel agencies. The same way when a customer buys a tour it does not require to carry heavy amount with him and it will help to enjoy the tour. At the same time it is also very safe to the service agency of the guaranteed sale of the product.

7. Insurance:

Travel agency also offers different types of insurance and they have contract or policy, to cover

(a).Personal accident

(b)Medical and related expenses


(d)Disablement or cancellation and interruption

(e) Loss/damage of baggage.

8. Information on destination:

They provide all type of information on destination. You must have a good knowledge and sense of geography like city distance, capital, climate, flora and fauna etc. For this purpose, travel agencies organize fame tour for their employees and other agent who are selling the particular destination.

9. Travel agency also developed package tours by combining the different lament of tourism products. It has the price advantage because you buy in bulk and get more discounted prices. It also shows cases the creativity and innovation. Destination also gives subsidy for the bigger tour operators and travel agency. Inclusive tour charters are also organized by tour operators.

1.4. Historical perspective and changing environment of travel agency

Thomas cook may be considered to be the travel agency as we know today. Thomas cook founded the agency by his name in November 1841.He worked as a cabinetmaker and apart-time publisher of Baptist and temperature pamphlets. The idea of offering excursions occurred while waiting for a stage coach at ribwort, UK. With the opening of the extended midland countries railway, he arranged to take a group of 570 temperance campaigners from Leicester to a rally on MOUGHBOROUGH, eleven miles away. Thomas cook arranged for the rail company to charge one shilling per person that included rail tickets and food on this train journey. Cook was pad a share of the fares. During the following three summers he planned and conducted outings for temperance societies and Sunday school children. In 1844, the midland countries Railway Company agreed to make a permanent arrangement with him provided he found the passengers. This success leads him to start his own business running rail excursions for pleasure taking a percentage of the railway tickets.

In august 1845, he arranged accommodation for a party to travel from Leicester on a tour of Scotland. His real success came when he arranged for 165,000people to attend the great exhibition. Four years later, he planned for his first excursion abroad when he took a group from Leicester to Calais to coincide with the Paris exhibition. He took parties to Switzerland, Italy, Egypt and USA. The following year he started his grand circular tours of Europe. During the 1860’s Cook established inclusive independent travel, whereby the traveler went independently but his agency charged for the travel arrangements, food and accommodation for a fixed duration at any chosen period of time.

With his only son John Mason Cook, he formed a partnership and renamed the travel agency as Thomas cook and son. They acquired business premises on Fleet Street in London. By this time, cook had stopped personal tours and became an agent for foreign or domestic mass travel. The office also contained a shop which sold essential travel accessories including guide books, luggage, telescopes and footwear. Thomas saw his business as both religious and social service. His son provided the commercial expertise for expanding the business. Their business model was refined by the introduction of the ‘hotel coupon’ in 1866 which was issued to travelers to redeem meals or overnight stay at listed restaurants and hotels of the company. In 1865, the agency organized tours of the USA picking up passengers from several departure points. John Mason Cook lead excursions as tour leader to tours of several American civil war battle fields. In 1872, he provided a round-the-world trip for 200 guineas including a steamship ride across China and India lasting 222 days.

Thomas Cook retired in 1879 when his son john and his two sons expanded the business the brilliant direction that their father did. The great company changed several hands and was nationalized in 1948. In the 1950’s, the company promote ‘foreign holidays’ to Italy, Spain and Switzerland. The company suffered by not going into cheap holidays which was the demand and went into decay only to be rescued by a consortium of trust house forte. Midland Bank and the Automobile Association who bought it from the British Government in 1972.

The company prospered entering into the traveler’s cheque business especially in the USA. Thomas Cook has changed several hands since then and is presently owned by Lufthansa and KRSDAT of Germany.

1.5. Growth and Present Position of Tourism

Over the decades, tourism has experienced continued growth and deepening diversification to become one of the fastest growing economic sectors in the world. Modern tourism is closely linked to development and encompasses a growing number of new destinations. These dynamics have formed tourism into a key driver for socio-economic progress.

Today, the business volume of tourism equals or even surpasses that of oil exports, food products or automobiles. Tourism has become one of the major players in international commerce and represents at the same time one of the main income sources for many developing countries. This growth goes hand in hand with an increasing diversification and competition among destinations.

This global spread of tourism in industrialized and developed states has produced economic and employment benefits in many related sectors from construction to agriculture or telecommunications.

The contributions of tourism to economic well-being depend on the quality and revenues of the tourism offer. UNWTO assists destinations in their sustainable positioning in evermore complex national and international markets. As the UN agency dedicated to tourism, UNWTO points out that particularly developing countries stand to benefit from sustainable tourism and acts to help make this a reality.

a. Current Developments and forecasts

-International tourist arrivals grew by 4.3%in 2014 to 1.133 billion.

-In 2014, international tourism generated us$ 1.5 trillion in export earnings.

-UNWTO forecasts a growth in international tourist arrivals of between 3% and 4% in 2015.

1.6. Retailer and Wholesaler Travel Agency

Retail travel agency

The retail travel agent is an intermediary or middleman who acts on behalf of a travel principal i.e. original providers of tourist services and is rewarded by a commission. Sale of airlines tickets constitutes the largest sources of revenue for travel agency. The retailer undertakes no liability for the services he sells on behalf of his principals. They don’t take any responsibility for selling the tickets of airlines, cruise liner. The main principals of retail travel agent are transport carriers, notably airlines, accommodation providers and to lesser extent railways, shipping company, car hire, firms etc.

1.7. Wholesaler Travel Agency

Wholesale travel agents are generally skilled agents who specialize in organizing tours and then selling them to retail travel agencies. (Retail travel agents, in turn, sell the tours to travelers.)Designing and developing a tour involves arranging for tour escorts, and making travel and accommodation reservations. Many tours also include optional side trips and activities that have to be planned carefully. Wholesale travel agents must have good marketing skills to interest retail travel agents in the tours they have developed.

1.8. How to open/Registration procedures of travel agency in Nepal

1. Apply for licence:

Person interested to do the work of travel agency can apply for the license to the Ministry of Tourism and Civil Aviation (MOTCA).

2. Issuance of license:

MOTCA studies/analyzes the application and the related documents. If the ministry (Tourism Industry Division under MOTCA) feels viable to give the license, it issues the license by collecting NPR 15000.

3. Validity and Renewal of licence4:

-License is valid for 5yrs.

-Before the validity of the license expires, it has to be renewed by depositing NPR 10000.

-Late fee NPR 5000 will be added if the renewed is done within first three months from the expiry date.

-Late fee NPR 10000 will be added if the renewal is done within second three months from the expiry date.

-License is cancelled if someone fails to renew it within 6 months from the date of expiry.

4. Provision regarding company registration and bank guarantee:

-A firm or company should be registered having paid up capital RS 1000000 before applying for the license.

-For the assurance, travel agency has to deposit NPR 300000 respectively as bank guarantee in the name of MOTCA.


5. Contract should be done:

-License owner should have a contract with the staff for the service period, before sending him/her out with the tourist.

6. Remuneration of the staff:

-Remuneration should be given to the leader and the staffs going with the tourist. i.e.

-Up to 3700m-leader-minimum of NPR300 and staff minimum of NPR 250.

-Above 3700m-Leader-minimum of NPR 350 and staff-minimum of NPR 300.

7. No selling or transfer of equipment without the permission:

-Equipment bought obtaining special subsidy from the government should not be sold or transferred without the permission of the government.

8. Report submission:

-The report of the business transaction should be submitted to the MOTCA by the license owner in every 6 months.

-Transactions between shrawan1-poush ends should be submitted within 35 days from POUSH end.

-Transaction between Magh1- ASHAD ends should be submitted within 35 days from ASHAD end.

9. Can give directives:

-MOTCA can give any kind of directive at any times to the license owner of travel agency. The directives should be followed by the owner, as it is his/her responsibility.

10. Script of the forms:

-Forms can be printed in English as per need.

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