forms of travel agency business

7/30/2019 Forms of Travel Agency Business

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Forms of travel agency business

travel agency

proprietorship partnershipCorporate

firm


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Proprietorship :-

one owner

Owner personally liableAll income is personal income

Self- employment tax

Expenses deducted before tax


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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.


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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.


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Corporate firm

Public

Private

Govt.

MNCs

Foreign company

Holding and subsiding company


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A organization structure of a travel

company brings to the travel

businessDevelop sound and up to date management

practices, systems and strategies.

Develop effective leadershipOptimum use of human assets

Growth and diversification

Stimulates creativity

Effective co-ordination between various

department.


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Organization structure of a small

travel agency

Director

Travel executive(dom, int)

Assistant(passport andother services)

Finance andaccountsexecutive

Accountant

Travel counselorcum marketing

executive

Assistant


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Owner/manager

Sales

Sales agent

Finance andaccounting

Finance andaccountingspecialist


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Medium sized travel agency

Owner/president

G.M

SALES

SUPERVISORS,AGENTS AND

TRAINERS

FINANCE ANDACCOUNTING

FINANCE ANDACCOUNTING

SPECIALIST

OUTSIDE SALES

SUPERVISORS,FINANCE ANDACCOUNTING

EXECUTIVES


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FUNCTION OF TRAVEL AGENCY

TRAVEL INFORMATION:-

Counseling

Immigration

Passport and visaCustom clearance and procedure

Health and security checks

Landing permits certificates


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Itinerary preparation

Airline ticketing and reservations:-International

Domestic

Accommodation reservation:-

Hotel

MotelResort

others


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Reservation of surface/sea transport:-

Rail

Road

Sea

Tour package and costing:-

Liaison with providers

Market research

Costing and pricing

Promotion of package


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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.

Diff b t t l


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Difference between travel agency

and tour operators

Wholesale Travel agency does not sell directly to thepublic, while tour operator do sell directly to clients.

A wholesale travel agency may deal with one

component of travel product while a tour operatoroffers 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.


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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.


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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 isfrom the department of tourism and the international

air transport association (IATA).


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DOT- Approval for a travel companyThe 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


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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


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The travel company must attach the audited annual

reports.


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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..

ff l d


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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


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Membership of professional travel trade organization

Such as IATA, TAAI, WTO,ASTA,PATA,IATOetc..

Sales turnover during the last five years..

Steps taken to promote tourists traffic in thecountry

Any other steps/activities.


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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.

F R h d f h d ffi d R 500 f


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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.


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APPLICATION FORM for tour operator

Name and address of the tour company.Year of registration

Nature of business and year of commencement of

businessName and address of directors/partners..

Staff employed.

Qualification and experience

Salary and wage structure.

Name of the bankers.

Name of the auditors


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Name of the auditors.

Audited financial statement..

Copy of income tax return..

Member of international and domestic tourismorganization

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


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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 IndiaHas the valid approval of the Ministry of External

affairs to handle travel documents and to deal with

passport offices andIs registered under the local shops and

establishment Act.

IATA A l f t l /t


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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 andcollect commissions.


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Rules and conditions

All applications for recognition shall beaddressed to the Director, agency investigation

panel IATA India, New Delhi.

The application for grant of approval shall be inthe 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.


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The company have must at least two staffmembers qualified from IATA approved institutions.

Sound financial credibility.

The location of the agency must be freelyaccessible and clearly identifiable to the tourists.

Security for the control of airlines ticket block.

Ability to generate business.

The travel company granted approval shall beentitled to such rights and privileges as may be

granted by the association from time to time andshall abide by the several terms and conditions ofrecognition as prescribed by the association fromtime to time.


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The company must attach an audited annual

report with the application form.

The agency must attach the statement ofinternational sale with the application form.

The decision of the IATA in the matter of

recognition shall be final. The association may in thedirections 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.


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Have maintained ethical standards of tourism

business.

The recognition granted by the IATA shall notautomatically entitle the travel agency to be

approved by any other organization/association.


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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 andbook a holiday to suit them.


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Types of travel agents

There are many different types of travel agents,

including Holiday travel agents :- such as Going Places and FirstChoice, which help customers choose and book theirsummer family holiday, group ski break or city

sightseeing tour. Specialist travel agents are also available, such asbusiness travel agents, which help businesses andbusinesspeople plan and book their conference, flights

and foreign business travel, and location specialists,who will offer expert advice, great deals and a reliablebooking service for certain locations in the world,including Australia travel agents, Caribbean travelagents and India travel agents.


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Independent travel agents, such Co-op Travel, andmany of these specialize in certain types of holidays,

such as booking round the world trips for studentsheading off on a gap year, and travel agents who onlybook cruises or UK breaks.

In recent years there has been a huge increase in thenumber of online travel agents, but online travel agentssometimes struggle to compete with airlines and hotelswhich have also taken a more direct approach towinning customers by using the Internet and no longerrely on the travel agent to fill their aeroplanes and

hotels.


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MANAGERIAL RESPONSIBILITY

1) His/her prime responsibility is to negotiate theterms and conditions for commission withprincipal suppliers. These commissionsconstitute major source of revenue for any

travel agency.

2) Recruitment of trained manpower from time totime is yet another important responsibility of amanager in travel agency operations. Right kind ofhuman resources are considered as most valuableassets for any organization.

3) Once the recruitment is over the


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3) Once the recruitment is over, theorientation/induction programmes shall bearranged by the manager. For existing employees

training and development programmes must bearranged in areas which need regular up gradation.For example, technological advancements haveforced us to train our employees to work on new

technologies or day to day changes in visaregulation, airline/rail schedules, airlines bankingsettlement plans, etc. require constant up gradationof knowledge. Undoubtedly, training programmes insuch areas would not only improve the efficiency ofthe employees but would also add to the brandname of the company in relation to efficiency and

customer care.

4) It is also the responsibility of manager to


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4) It is also the responsibility of manager todepartmentalize the agency for effective functioning andaccordingly deployment of required manpower can bedone. It is for you to assess that how many people willbe required in international section and how many fordomestic section. In other words, it is for you to decidethat 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 madeavailable for the agency operations will also be yourresponsibility, i.e., how many vehicles you will requirefor pick ups and transfers or for your staff

transportation, how many personal computers to beinstalled 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


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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 thatyour customers have more liking for activity packed

packages, you shall naturally prepare such

packages. Your job doesnt ends here. You mustalso try to find out what was the level of

satisfaction of your customers after consuming your

product/services. If some gap is suggested, theconsumer must be removed immediately.


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7) Decision on selection of promotional strategies

are another important function to be performed by

you. Here you need to address issues like what isthe mission of your agency with respect to the

image building? What is your target market? How

much will be your promotion budget? What wouldbe 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


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8) As a manager you shall always believe in sharinginformation and knowledge with your employees, aboutcompetitors, their strengths, weaknesses, corporatebusiness techniques. It is only after this that you canexpect them to work more efficiently. You must alsosubscribe them with various sources of information liketrade newsletters, documentary films/CDs, brochures and

news bulletins of principal suppliers, current affairsmagazines, 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 atravel agency you make most of the bookings on phoneand when your customer is on phone line you have veryless time to refer to his/her history in your files.

10) For effective and efficient operations of a travel


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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.


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FUNCTION OF TRAVEL AGENCY

TRAVEL INFORMATION:-

Counseling

Immigration

Passport and visa

Custom clearance and procedure

Health and security checks

Landing permits certificates

I i i


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Itinerary preparation

Airline ticketing and reservations:-International

Domestic

Accommodation reservation:-

Hotel

Motel

Resort

others

/


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Reservation of surface/sea transport:-

Rail

RoadSea

Tour package and costing:-

Liaison with providers

Market research

Costing and pricing

Promotion of package


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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


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SOURCE OF REVENUE1. TRADITIONAL SOURCE:-

(A) COMMISSION BASED

booking of hotel,

resort/rooms services

passport services

ticketing

car rental insurances

medical


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Another type of description:-

commission from modes of transport

Commission from hotels and tourist resort

Commission from tour operators

Services chargesProfit from sale of own tours

incentives

(B) MARGIN OF PROFIT BASED CONSULTANCY:-


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broadly covers packaging and selling of tours bothinternational 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

T


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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.


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Types of tour operator

Inbound tour operatorOutbound tour operator

domestic tour operator

Destination management company/ groundoperator.

G d t


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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.


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Tour package

Tour package is total tourism product which isplanned, 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.

T f k t


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Types of package tour

independent tours

escorted tour

Hosted tourIncentives tour

C f k


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Components of a package tour

Travel

Ground arrangements

T f l ti f t ff ti


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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

S f k f l i


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Stages for package tour formulation

1. Initial research

The destination research

Market research:- market research provides answerto 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?


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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 clientsprefer a faster pace.

(b) R ti


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(b) Routing

(c ) interest :- match client interest withcorresponding 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 childrenand what type of tour experience is the client

looking for.

(e) Meals : a wide range of meals plans are


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(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.


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3. Handling agency/ destination company

4. Negotiations

Airlines

Accommodation

Ancillary service organizations

5. Costing and pricing a package tourh b h


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6. The tour brochure

brochure should contain of the followinginformation:-

Name of the travel company

Means of transport

Itinerary

Accommodation, types, location, mealsName 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.


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7. Development of reservation system8. Marketing of tour package

9. Tour handling/ actual tour operation

Si ifi f k t


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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.

T ti d i i


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Tour costing and pricing

Cost in simple word means the sum total of allexpenses. 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 andWelsch).

T t


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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 orformulate a tour package.

The cost components of a package tour are:-


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The cost components of a package tour are:

research and development costTravel cost

Accommodation cost

Transfer costsSightseeing and activity costs

Administrative costs

Marketing costs

Miscellaneous costs

T f


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Types of costs

direct and indirect costs

Fixed and variable costs

Factor affecting the tour costs


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Factor affecting the tour costs

seasonalityExchange rate movements

Competitors price strategy

increase in other costsImpact of liberalization and globalization

Promotional pricing

Market segmentation pricing.

To start costing and pricing of a tour package :-


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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 percentageof profit, one will get the total sales price.

forms of travel agency business

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