1. Functions of Travel Agency
&
Functions of Tour Operators
By
Amit Tiwari
Assistant. Professor
Indian Institute of Tourism and Travel Management
(An autonomous body under Ministry of Tourism,
Govt. of India)
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2. © Amit Tiwari Asst. Professor IITTM
Tour
“A tour in which one returns to the starting
point, a circle trip usually made for business,
leisure or education during which many
destinations are visited and for which a tour
programis actually planned.”
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3. © Amit Tiwari Asst. Professor IITTM
Cont..
● According to WTO (1993) “Tourism encompasses the
activities of persons travelling to and staying in places outside
their usual environment for not more than one consecutive
year for leisure , business and other purposes.
● According to tourism society of britain” tourism is the
temporary short period movement of people to destinations
outside the places where they normally live, work; and
activities during their stay at these destinations.” This
definition includes movement of people for all purposes.
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4. © Amit Tiwari Asst. Professor IITTM
Tourism as an Industry
● Today, tourism has been widely recognised as a global
industry. However, recognising tourism as an industry is
a debatable issue, because a few scholars are against it,
whereas others consider tourism as an industry.
● Chadwich (1981) argues that tourism industry does not
exist because it does not produce a distinct product.
● Kaiser and Helber (1978) opined that it is not properly
an industry. opposing this view, a number of scholars
take the position that tourism is an industry.
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5. © Amit Tiwari Asst. Professor IITTM
Cont..
● Robinson (1976) believed that tourism is a dynamic
industry; Smith (1988) and medlik (1988) , also
accepted tourism as an industry; Wahab (1995) says
that, “any product, whether tangible, or intangible, that
serves to gratify certain human need should be
considered as an industrial product and that if a bond of
product unity exists between various companies and
organisations in a way that charactersed their overall
function and organisations in a way that charactersed
their overall function and determines their place in in
economic life they should be considered as an industry.
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6. © Amit Tiwari Asst. Professor IITTM
Cont..
● Thus, the application of the term ‘ industry’ to
tourism has also been justified because of the
“ modern approach to the definition of
industry as a group of companies/firms/
organizations producing identical goods, i.e.
which the consumer regards as being perfect
substitutes for one another, although, they
may be physically differed.
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7. Regional and local
Tourism Organisations
Tourism Industry National Tourism
Organisations
Travel Trade
Component/Sectors
Lodging Cost
Hotels
Motels
Resorts
Other types of
Accomodation
Transportation Cost
Air
Rail
Road
Sea/Water
Travel Trade
Organisations
Travel Agency
Tour Operation
Recreation and
Entertainment
organisations
Ancillary
enterprises
Public/Private
Service oraganisations
Health
Insurance
Banking
Finance
Training and
Development
A simple structure of Tourism Industry 7

8. © Amit Tiwari Asst. Professor IITTM
Travel Trade Intermediaries
Travel Agency Tour Operators
Retails Wholesale
Inbound
Tour
Operators
Outbound
Tour
Operator
Ground
Operators
Domestic
Operators
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9. © Amit Tiwari Asst. Professor IITTM
Travel Agency
● Travel agent is a person who has full
knowledge about tourist product-
destinations, modes of travel, climate,
accommodation and other areas of service
sector. He acts on behalf of product
providers/principals and in return gets
commission. Technically, a travel agent is the
owner, or manager of an agency.
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10. © Amit Tiwari Asst. Professor IITTM
Cont..
● A travel agent’s job involves not only making
sales but also gathering travel information,
researching travel products, analysing options
and making recommendations.
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11. © Amit Tiwari Asst. Professor IITTM
Cont..
● Travel agency is one of the most important
organization in the tourism private sector which
plays a significant and crucial role in the entire
process of developing and promoting tourism in
the country or at the destination. It is a travel
agency which packages and processes all the
attraction, accesses, amenities and ancillary
services of a country and presents them to the
tourists. it may also secure travel insurance,
foreign currency for the traveling people.
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12. © Amit Tiwari Asst. Professor IITTM
Travel Trade- A Historical Perspective
● The use of the term travel trade dates back
from the early years of the 19th century, but
this should not obscure the fact that what we
today describe as travel trade (travel agency
and tour operation business) was taking place
much earlier in history.
● Let’s trace the historical development in travel
trade- in world as well as in India.
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13. © Amit Tiwari Asst. Professor IITTM
1855
● Mr. Cook started operating package tours. He
conducted the world’s first international tour
from England to the Paris. This was an
‘inclusive tour’ . In this way he developed the
concept of ‘inclusive tour’. In the next year he
developed the concept of the ‘Grand Tour’ by
organizing a grand tour to the European
continent.
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14. © Amit Tiwari Asst. Professor IITTM
1878
In order to eliminate payment in cash, Mr. Cook
introduced two systems:
● Traveller Cheque
● Hotel Vouchers
While American express introduced
● Credit Cards
● Traveller Cheques
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15. © Amit Tiwari Asst. Professor IITTM
1880
● Thomas Cook and Sons, established offices in
Mumbai and Calcutta and formed the ‘Eastern
Princes Department.’ in 1887, this department
arranged the visit of Indian Princess to Queen
Victoria’s Jublee Celebration.
● Till 1920, Thomas Cook and Sons and the
American Express Company were the only big
names in travel trade business.
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16. © Amit Tiwari Asst. Professor IITTM
Types of Travel Agencies
● Retail Travel Agencies
● Wholesale Travel Agencies
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17. © Amit Tiwari Asst. Professor IITTM
Retail Travel Agencies
● A retail travel agency sells tourist products directly to
the public on behalf of the product suppliers and in
return gets commission. Some package tours are sold in
two ways i.e. , on a commission basis and up price.
When a travel agency sells a tour on marked up price it
means that first it mark up the cost of a tour and then
sell it at a higher rate. The mark up price is the
difference between retail price and whole sale cost.
● The main source of revenue for a retail travel agency is
the commission.
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18. © Amit Tiwari Asst. Professor IITTM
Wholesale Travel Agencies
● These agencies are specialized in organizing
package tours, which are marketed to the
customers/ tourists through the network of a
retail travel agency or directly to the
prospective clients. A wholesale travel agency
purchase tourist product components in bulk
and designs package tours.
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19. © Amit Tiwari Asst. Professor IITTM
Features of Travel Agency Business
● An important link between the clients and
principal suppliers.
● Image-builder
● Ensures rapid travel service
● Provider of an authentic and reliable travel
information
● A social and continuous process
● Establishes good relationship with clients and
vendors.
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20. © Amit Tiwari Asst. Professor IITTM
Tour Operator
● An organization, firm or company who buys
individual travel components, separately from their
suppliers and combine them into a package tour,
which is sold with their own price tag to the public
directly or through the middlemen, is called a tour
operator.
● They can provide these services themselves as
some have their own cars and coaches, hotels and
other travel related services or can obtain these
from the other suppliers.
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21. © Amit Tiwari Asst. Professor IITTM
Types of Tour Operators
● Inbound Tour Operators
● Outbound Tour Operators
● Domestic Tour Operators
● Destination Management Companies/ Ground
Operators
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22. © Amit Tiwari Asst. Professor IITTM
Inbound Tour Operators
● These are also known as incoming tour operators.
Technically, the operators who receive guests,
clients/ tourists and handle arrangements in the
host country are called inbound tour operators.
● For example a group of American tourists is
coming through TCI ltd. to India and the company
makes arrangements and handles the group in
India then TCI is called an inbound tour operator.
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23. © Amit Tiwari Asst. Professor IITTM
Outbound Tour Operators
● Tour operators who promote tours to foreign
destinations, my be business tours or leisure tours
are called outbound tour operators. Indian
outbound tourist traffic is growing at a rate of 10
per cent annually and this makes India the second
largest country in the world with regard to the
travelling population.
● However, India’s outbound tourism is not holiday
oriented only but is business oriented too.
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24. © Amit Tiwari Asst. Professor IITTM
Domestic Tour Operators
● Domestic tour operators are those who assemble,
combine tourist components into inclusive tours
and sell it to the domestic travelers.
● In general, these tour operators provide travel
services within the tourist’s native or home
country. The domestic tour operators operate
within the boundary of home country and offer
package tours to the travelers viz. Domestic
inclusive tours or independent tours.
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25. © Amit Tiwari Asst. Professor IITTM
Destination Management Companies/
Ground Operators
● These are commonly known as handling agencies
and their main function is to organize tour
arrangements for incoming tourists on behalf of
overseas operators. Let us take the case of India as
a destination place that- has a varied culture.
● When a tour operator himself promotes beach
holidays, wildlife holidays, adventure tours,
heritage tours, cultural tours at different places,
the difficulty arises.
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26. Model of Travel Operational Framework
Foreign
Tour operation
Companies
India as
destination
SITA
As ground
Operator
Goa-EA
Shimla-EA
Agra-EA
Mumbai-office
Calcutta-office
Jaipur-EA
Sikkim-EA
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27. © Amit Tiwari Asst. Professor IITTM
Why Ground Operator?
Obviously, the tour operation companies do not have
close contact with suppliers, 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
● Language problem
● Company can not establish its own branch.
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28. © Amit Tiwari Asst. Professor IITTM
Difference between Wholesale Travel
Agencies and Tour Operators
● The wholesale travel agencies may offer or operate the package tours or
may specialize in developing tour operators do sell directly to clients.
● A wholesale travel agency usually combines, assembles and contacts for
existing travel services to formulate new package tours. Whereas a tour
operator creates new travel product a she has his own one or more
components of travel product ie. ‘inclusive tours.’
● Wholesale travel agencies are less inclined than tour operators to
perform ground services ie. Handling agency or ground operators.
● A wholesale travel agency may deal with one component of travel
product while a tour operator offers a variety of tour programs.
● The size of business is large in case of tour operators in comparison to
wholesale travel agency.
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29. © Amit Tiwari Asst. Professor IITTM
Integration and Linkages in the Travel
Agency Business
An integration means to grow by enabling a travel
company to increase its market share and
simultaneously reduce the level of competitive
forces. In other words , it is a concept used in
economics to describe formal linking arrangement
between one travel agency organization and the
other
1. Horizontal Integration
2. Vertical Integration
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30. © Amit Tiwari Asst. Professor IITTM
Horizontal Integration
● Horizontal integration means two tour
operators or two travel agencies or two hotels
and two airlines which are offering
competitive product amalgamate either
through merger or through take over. For
example, Thomas Cook, one of the best
known names in the global travel industry.
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31. © Amit Tiwari Asst. Professor IITTM
Vertical Integration
● When an airline company or hotel company
establishes its own travel division or agency
like British Airways, Lufthansa, ITDC and SITA
it is called vertical integration. Today, many
multinational companies are sought to own
and operate their own travel agencies, hotels,
resorts in key destinations in order to secure
trading advantage over their rivals.
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32. © Amit Tiwari Asst. Professor IITTM
Benefits of Integration
● Economics of Large Scales
● Eliminates middlemen
● Protects the market position
● Secures the supply and increases the buying
power
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33. 33
Travel
Agency
Transport
road rail
Educational
Institutions
Insurance
Cos
Govt.
DOT
Cultural
&
Entertai
nment
Airlines
Domestic-
international
Tourism
Association
Hotels
Motels
Resorts
Cruise
Cos Tour
Wholesalers
Banking
Companies
Foreign
Travel
Cos
Ministry
of Ex.
Affairs

34. © Amit Tiwari Asst. Professor IITTM
WHAT ARE THE FUNCTIONS OF THE TRAVEL
AGENCY?
● Travel agency provide travel-related information
● Travel agency organize travel plan
● Travel agency act as a link with travel suppliers
● Tour costing
● Ticketing
● Settlement of accounts
● Travel agency organized business tour
● Travel agency handles reservation
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35. © Amit Tiwari Asst. Professor IITTM
TRAVEL AGENCY PROVIDE TRAVEL-
RELATED INFORMATION
● To provide travel information is one of the basic
functions of the travel agent. The agent should have
details knowledge of tourist places, flight schedule,
hotel discount, and must be aware of the services
provided by the suppliers. Therefore, travel agents must
have knowledge of travel-related information.
● The staff working in the travel agent should be polite
and fluent in various languages. If the agent is dealing
with a foreign client they should be able to speak a
foreign language, with local clients they should be able
to communicate with the local language, vice versa.
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36. © Amit Tiwari Asst. Professor IITTM
TRAVEL AGENCY ORGANIZE TRAVEL PLAN
● After the travel agent receives the travel preferences
from the client, the next function of the agent is to
prepare the travel plan. Therefore, the travel agent
should collect the date of travel, duration, places to
visit, hotels, mode of transport, etc. After taking all the
required travel details, the agent should prepare the
travel as per the requirement of the client.
● A travel plan is a sequential program that defines the
starting points, places, hotels, food, mode of transport
and other appropriate travel information.
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37. © Amit Tiwari Asst. Professor IITTM
TRAVEL AGENCY ACT AS A LINK WITH
TRAVEL SUPPLIERS
● The travel agent maintains a close link with the travel
suppliers. The travel suppliers include airlines, railways,
hotels, and other related travel suppliers. Thus, the
agent contacts the suppliers before selling the services
to the client; they negotiate for the best price on behalf
of the clients.
● Once the negotiation is done, the travel agent sells the
service to the client on behalf of the service providers.
The agent received the commissioned from the
suppliers; the commission percent usually ranges from
5 to 20 percent.
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38. © Amit Tiwari Asst. Professor IITTM
TOUR COSTING
● After the travel plan is prepared and the
negotiation with the suppliers for the price is
done, the next work of travel agent is to do
tour costing. However, tour costing differs
from the services opted by travelers. The price
of the tour is charged based on per person.
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39. © Amit Tiwari Asst. Professor IITTM
TICKETING
● It is one of the most common functions of travel
agents. The travel agency has two sub-
department for ticketing. One for domestic
ticketing and global ticketing. The staff at the
ticketing department should be aware of the
scheduled flights of various airlines.
● Therefore, the ticketing staff should know the
airfare, special fares, airline codes, airline class,
cancellation procedure, and other ticketing-related
services.
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40. © Amit Tiwari Asst. Professor IITTM
SETTLEMENT OF ACCOUNTS
● The settlement is made with the tourism
suppliers for the services they have bought on
behalf of the client. The travel agent staff
working in the accounting department must be
familiar with currency, exchange regulations,
etc.
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41. © Amit Tiwari Asst. Professor IITTM
TRAVEL AGENCY ORGANIZED BUSINESS
TOUR
● One of the major works of travel agencies which are in
demand is handling business tour. Business travelers
might be travel to a place for certain reasons for their
work. For example, attending a business meeting,
conferences, selling products. Thus, the travel agent
must know the requirements of the business travelers
and the reason for the travels.
● The main function of a travel agent for a business tour is
to arrange the venues for meetings, exhibitions, hotels,
sightseeing, and other related services to business.
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42. © Amit Tiwari Asst. Professor IITTM
TRAVEL AGENCY HANDLES RESERVATION
● After getting all the travel details and confirmation
from the client, the next work is to book airline
seats, hotels, transport, etc. for the client.
Therefore, while booking the seat the travel agent
must be familiar with the codes of airlines and
hotels.
● After the initial payment is made and booking is
confirmed, the tickets, travel plan, travel vouchers
should be handed over to the client.
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43. Thanks for listening
For any quires
amitiittm2011@gmail.com
creativeamit2020@gmail.com
43
Amit Tiwari Asst. Professor IITTM

44. The lecture video sessions (Few) on different tourism related
topic are available at YouTube Channel
GYANDHARA KNOWLEDGE FOR ALL SEGMENT
https://www.youtube.c
om/watch?v=Mn-
V0LFIz_U&t=216s
https://www.youtube.
com/watch?v=HVzdT
v9P7NU
https://www.youtube.c
om/watch?v=_4tbAH-
bzyw
Amit Tiwari Asst. Professor
IITTM
44

45. Thank you
45
Amit Tiwari Asst. Professor IITTM