Introduction to Hospitality Industry Travel Agencies and Tour

Introduction to Hospitality Industry “Travel Agencies and Tour Operators”

Learning Objectives To introduce services provided by travel management companies and tour operators To know the differences in traditional, contemporary, and electronic travel and tour agencies To be able to describe consumer trends related to travel bookings and tours To gain insights into management issues and techniques To learn the types of jobs in travel management companies and tour operators

Introduction After the “great recession” of 2008– 2011, there is again expanding demand for travel by both domestic and international travelers. There is an increasing desire by many travelers for highly specific travel information and a unique travel experience. Out of these needs have evolved travel management companies, including electronic travel agencies, and tour operators.

Characteristics of travel industry Low Fixed cost on investment & low entry barrier Creative & variety form of product (easy to copy) Labor intensive industry (rely on manpower) Expending online Market (internet, Social media)

Travel Management Company TMC is a more contemporary and accurate term for the new travel agency and reflects more of the consulting and management functions that successful agencies now provide. Travel agents within a TMC act to match the travel desires of leisure and business travelers with the most appropriate suppliers of tourist services. TMCs still play a key role in the travel industry, representing about 30% of all 2011 U. S. travel bookings, down from 33% in 2008.

Travel Management Company TMC • provides information to plan an optimal trip • arrange individualized and coordinated itineraries • secure tickets for transportation , lodging, receptive services, resorts and cruise lines, recreation attractions etc.

Travel Management Company TMC

Classification of TMC Inbound TMC : involves non-residents traveling in another country Outbound TMC(국외 여행업) : takes residents from one country to travel in another country Domestic TMC (국내 여행업) : involve residents of the given country traveling only within own country

TMC Operations In 1867 Thomas Cook introduced the first hotel coupon and started the travel agency business. Over 85% of travel agencies today are considered small independently owned businesses. Most (57%) TMCs are single-location businesses, but over half (73%) are affiliated with or buy the services of a consortium or association. The average independent TMC receives 68% of their revenue from leisure sales, 25% from

TMC Operation Types of TMC • Wholesalers • Retailer • Corporate Agencies • Leisure Agencies • Specialized Leisure Agencies • Incentive Travel Houses • Electronic Travel Agencies • Consolidators

TMC: Wholesalers Sell primarily to travel agents and not to the general public Organize and promote specific types of travel services, but do not operate the tours or facilities Wholesalers contract with suppliers for blocks of tickets or rooms in anticipation of future sales (Hana tour, MODE tour)

TMC: Corporate Agencies Specialize in serving business clients, often with little or no walk-in clientele Cater to corporations via their own websites or through e-mail, often working under contracts that provide for exclusivity Require the return of a portion of the normal travel agent commission, or on a fee-based arrangement Rely heavily on revenue from airline tickets, hotel rooms, and rental cars

TMC: Corporate Agencies Hyundai dream tour (Hyundai) Sejong tour (Samsung) Redcap tour (LG) SK Tourvis (SK) BT&I (SM Entertainment)

TMC : Leisure Agencies Tourists going on vacation are the primary clients of this agency Clients have traditionally gone to the agency office to discuss options and to look at brochures and videos Business relies heavily on cruise sales, resort packages, airline tickets, rental cars, tours, and hotel room sales

TMC : Incentive Travel Houses Develop customized programs for corporations who offer incentives for high employee productivity by providing deluxe travel rewards Set up and administer reward contests, inform eligible staff, and contract with suppliers Earn their profits from supplier commissions and management fees

TMC : Electronic Travel Agencies Electronic travel agencies, such as Travelocity. com, Expedia. com, have developed from the Internet revolution and communicate entirely via websites and e-mail. No human travel agents or physical location Employ extensive databases, online booking technology, and are open 7 days a week, 24 hours per day (Travelocity, Orbitz) Some electronic travel agencies are independently owed, like , while others are owned and/or controlled by the airlines, such as

TMC : Consolidators Purchase large blocks of airline seats or cruise berths at a substantial discount, and resell them to travel agents or the general public for a lower than normal fare Have contracts with certain airlines for larger commissions on certain routes Advertise to the public in the travel sections of metropolitan newspapers, so also known as “Bucket Shops, ” www. 072. com

TMC Functions Travel product development Sales Consulting Reservation and arrangement Guide

TMC Operation Getting Paid • Since TMCs do not own the facilities or equipment used to operate destination services, they are paid only when they make a sale. • Payment is in the form of a commission, based on a percentage of the sale price, or increasingly, payment is by an additional ticketing charge. • A large number of agencies have diversified and are starting to develop and market their own tour packages.

TMC Operation • Other experienced agents charge hourly fees. • Develop complex customized vacation packages for a wide variety of individuals.

TMC Operation Automation and Certification • Precise accurate information on schedules, availability, and rates is critical for a travel consultant to know, but the scope and amount of information on the global travel industry is overwhelming. • Global Destination Systems (GDS), such as Apollo, Sabre, World Span, and Amadeus list over 15 million fares, a quarter of which are updated daily. • In order to be able to issue domestic tickets, an agency must be approved by the Airlines Reporting Corporation (ARC), and by the International Airlines Travel Agent Network (IATAN) for sale of international airline tickets.

TMC Operation Information Technology • Travel agencies no longer have exclusive access to the myriad schedules, fares, and destination information that are found in a GDS • Suppliers have also embraced the Internet as a way to lower their travel sales distribution costs • Technology is again changing the way people book travel • Social Media is being more important for trip planning, as well as use of smart phones

Tour Operators Organize complete travel programs for groups or individuals to every continent, by all kinds of transportation modes Different from travel agents and individual suppliers in that they plan, arrange, and market pre-established packages at a set price that include, to varying degrees, transportation, lodging, educational opportunities, recreation, meals, and entertainment

Tour Operators typically combines travel components to create a package tour product Through volume buying power they can offer competitive rates United States and Canada spent a total of approximately $166 billion on packaged tours worldwide

Tour Operators Types of Tour Operators • Wholesale Tour Company They arrange and promote tour packages, but sell them primarily to travel agents or international tour operators, and not the general public • Receptive Operator This type of company, also called a ground operator, may meet and greet groups at airports, make arrangements for lodging, and shuttle them to the lodging at one particular destination

Tour Operators Specialty Travel Tour Operators They are organizations that possess highly specialized equipment and guides for unique tours, such as diving, rafting, biking, and photography programs Motorcoach Tour Operators These companies own and operate deluxe motorcoaches holding up to 52 passengers, with some costing over $250, 000

The Future Despite being battered by global changes in the marketplace, travel management companies and tour operators will continue to provide needed services to business and leisure clients in the future. Travel agencies have shifted away from a traditional dependence on domestic airline ticket sales. Revenue growth in electronic travel agencies will continue and this will provide exciting opportunities for sales, programming, and