BSC TTM Sem-3 Travel Agency Management and Tour Operations u-7

Institute of Distance and Online Learning ENHANCE YOUR QUALIFICATION, ADVANCE YOUR CAREER.

Bsc.TTM avel Agency Management and Tour perations Course Code: BTT 111 Semester: Third SLM UNITS : (write units covered in E- lesson from normal syllabus) Unit: 7

TRAVEL AGENCY MANAGEMENT AND TOUR OPERATIONS OBJECTIVES INTRODUCTION Student will be able to :  In this unit we are going to learn about the Understand the various income sources of Travel various income sources of Travel Agency Agency and Tour Operator Tour Operator Understand the kinds of Travel Agent Commission  Under this unit you will also understand th kinds of Travel Agent Commission Analyze the tour operator Revenue Management system  This Unit will also make us to understand tour operator Revenue Management syst INSTITUTE OF DISTANCE AND ONLINE LE

TOPICS TO BE COVERED > Various income sources of Travel Agency and Tour Operator > Kinds of Travel Agent Commission > Tour operator Revenue Management system

SOURCES OF INCOME Fees for Serving Clients Planning, booking, getting the paperwork done, arranging transport, ensuring other facilities, using connections to make the process smoother and outlining a detailed plan, are some of the many tasks travel agents do for their clients.

Fees from vendor or suppliers • With commissions off the table, many travel agencies earn the bulk of their revenue through fees. Models vary by agency. • Some might charge you a flat fee per basic airline ticket and more for complex itineraries. • Others might charge on an hourly basis, with the fee depending on how much research your itinerary requires. - WHOLESALE FEE - REPRESENTAION FEE

Consultancy Charges • Another way to earn from your clients is by becoming their advisor. • Guide them about the best places according to climate, seasons, timings, security, political situations, and cost et cetera. • Keeping their preferences in mind should be the priority.

Commissions • Apart from travellers, travel agents can make money through commissions. • Commissions are a percentage of profit that travel agent get when your client buys from someone through travel agent. • Travel agents have deals and contracts with many companies for that. Which means, their commission is decided and agreed upon.

Average commission rates are in the region of: • Package holidays 10% • Airline tickets 0 - 9% • Ferry bookings 9% • Travelers' cheques 1% • Travel insurance 25% - 40% • Coach holidays 10% • Cruises 9% - 15%

Cruises • Cruises have a hard time selling initially because not everyone affords them. • Travel agents are one of the catalysts for this process. • They filter the customers themselves and send the right ones to the cruise. • With great price comes proportionately great commission. Hotels • Travellers need stays and accommodation wherever they go. • On the other hand, hotels and lodges need to make their presence count in the market get by. • Travel agents connect the two parties.

Airlines • Travel agents are a channel for another revenue stream for Airlines. • Airline often pay commissions per passenger or offer packages to agents. • Airlines offer travel agent commissions through two routes: Consolidators & Airline Contracts Restaurants • In many cases, food and other facilities are a part of the travel plan. • Travel agents can provide a good number of coupons and packages for that. • Restaurants pay commission to get international customers.

Transport Services • Transport companies are often willing to pay commissions to have customers . • Booking city tours, cab service, and any transport service can earn travel agents commission. • Some can sell travel passes as well. • Group travel • Group travel can be a significant source of income revenue for travel agencies. • According to a survey conducted by Travel Weekly and Travel Age West major source of revenue for many travel agencies, as more than 27 percent of respondents noted that more than one-third of their sales were from group bookings.

Travel Insurance • Travel agencies offer their clients insurance that protects them in the event of cancellation before a departure, trip interruption, flight cancellation, baggage loss and accidents or unexpected illness. Foreign Independent Travelers • Travel agencies can charge higher consultation and service fees for these types of travelers, as more work is typically involved in planning these types of trips. Specialized Services • Some travel agencies specialize in specific types of travel, such as corporate travel or group travel, and earn money based on their expertise in that area.

Premium Listings • Some agencies, particularly online travel agencies, earn money directly from travel vendors by offering premium listing options. Mark up on tour • Travel agents buys the travel products from the principal suppliers in large volume, at net rate or discounted rate, and creates his/her own package tour. • The travel agents tries to get the best prices for each components of the package tour and then add a marks up to the tour cost for selling it to the clients directly or through other travel agents.

Profit from sales of own tours of travel agency • Some travel agencies operate as tour operators in limited areas of tourist interest, called sectors. • Thus, they earn profits from the sales of their own tours. Other Ways • For example, water sports, paragliding, and camping to name a few. • These businesses thrive on income from tourists.

Kinds of travel agent commission 1) Flat rate travel agent commission • A flat rate travel agent commission is the simplest type of commission. • Flat rate commissions are actually standard and predictable

2) Tiered commissions • A tiered commission structure is one of the tools you have to build incentives right into an offer. • Tiered commissions essentially mean that the more you sell, the higher the commission you get. • There are two major factors that will determine travel agent commission tiers: -Aggregate / Annual sales volume - Passenger Count

Tour Operators Revenue Management • Pricing within the travel industry is evolving to match consumers and what they are willing to pay far more accurately as a result of a better understanding of impacting variables and more ability to deploy granular prices across distribution networks. • Currently, most revenue management systems (and revenue managers) take into account things such as historical demand curves, events and conferences, seasonal factors and overall route capacity, etc.

1. Dynamic Pricing • Dynamic pricing is a system of pricing that was initially developed in the retail industry. • Dynamic pricing, the process of using data to more accurately segment consumers and automatically offer them differentiated prices based on various factors, is being deployed from both within and outside the travel industry. Why do travel providers use dynamic pricing? • Travel providers argue that this method of pricing can help them to offer discounts and rewards to loyal customers, and also adjust prices according to a range of immediate factors like demand and availability. • This would boost sales by offering appropriate pricing while giving customers access to superior products at fair prices.

How does dynamic pricing affect corporate travel?  Not tied into contracts • Difficult to budget • A challenge for compliance Ex -Airbnb • The three key factors involved in the automated pricing of Airbnb space are seasonality, day of the week and special events. • This allows Airbnb to maximize bookings for all available dates.

Difference Between Fixed Pricing and Dynamic Pricing Fixed Pricing Dynamic Pricing • The price remains constant throughout with • Pricing is time-based. This means the price no scope for price negotiation or bargain changes in real-time • It restricts you to increase profit by the • You can increase or decrease the room rates as volume sold per the demand • Generally, there is no automatic interaction • The automated systems collect accurate data to with the data systems to accurately forecast forecast accurately and increase RevPAR • Setting the room rates for every day/every • Automatically changes the room rates by season takes a fairly big amount of time watching competitor pricing using technology ••

2. Direct Booking Incentives • To increase direct bookings, you need have an engaging website, a calendar with live availability to 'book now' and (most importantly) a reason to book direct. 3.Distribution Based on Demand • Distribution based on demand has now increased customer satisfaction and almost eliminated queue time during guest visit.

MULTIPLE CHOICE QUESTIONS Q1 : Which of the following tourism service suppliers has been the most aggressive in marketing through direct distribution channels? a) Hotel b) Rental car companies c) Cruise ships d) Airlines Q2: Tour operators typically work on a b) Override basis. a) Commission basis. d) Markup basis. c) Line item basis. Q3 : GIT means_______ b) Group inclusive tour a) Group incentive tours d) None of these c) Group independent tour Q4 : The main source of income for a Travel Agency is b) Incentive a) Sales d) Operation c) Commission

SUMMARY  Travel agents have multiple sources of income.  Whatever travel agents book and buy for their clients, they earn a commission on it. This makes every business related to hospitality, accommodation and everything that interests a traveler, the travel agent’s potential customer.  Dynamic pricing, the process of using data to more accurately segment consumers and automatically offer them differentiated prices based on various factors, is being deployed from both within and outside the travel industry.

FREQUENTLY ASKED QUESTION : How travel agent get commission from Airlines ? ns -Airlines offer travel agent commissions through two routes: . CONSOLIDATORS: hese are wholesalers. They specialize in air and have private contracts with the airlines. Trave gents can make money with these contracts in one of two ways: commission and marking up ne ates. . AIRLINE CONTRACTS: our host agency or consortium/franchise/co-op will most likely have private air contracts tha low for travel agent commissions on certain airlines. Not every domestic or international ticket is oing to be commissionable, it depends on things like city pairs, class of service, the carrier, time f year, etc. he commission percentage agencies earn depends on numerous factors, the most importan ne being which private contracts you have access to. “For Further details please refer to the SLM”

Reference • Travel Agency and Tour Operation, Concepts and Principles – J.M.S. Negi. • Travel Agency Management - Mohinder Chand. • Professional Travel Agency Management – Chunk, James, Dexter &Boberg • The Business of Travel Agency Operations and Management– D.L. Foster

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