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Functions of Travel Agency and Tour Operations

Module 003: Functions of Travel Agency and

Tour Operations

Course Learning Outcomes:

1. Understand the functioning of reservation of tickets, hotel rooms and
ground services
2. Enumerate and explain the importance of marketing and publicity and
selling package tours
3. Know the importance of research, training and development

Introduction
The role of tour operator and travel agent is significant as they are expected to
contribute so much for achieving this target of the UNWTO. As such, tour operators and travel
agents promote destinations through their different packages and they are linked with
service providers at the forward and backward points. As a business firm, a big tour
operating company or a large travel agent operates the business activities that in turn help
them yield revenue. There are more than a dozen functional or operational areas that directly
and indirectly determine the quantum of business that a travel agency or tour operation firm
manages for profit as well as customer satisfaction. In this lesson, major functions of travel
agencies and tour operators include travel information, booking tickets, itinerary
preparation, designing of tour packages, travel documents, insurance, foreign exchange,
franchising, conducting tours, marketing and publicity, research and development, training
and development, etc.
Functions of Travel Agency and Tour Operator
a. Provision of Travel Information - Places of Tourist Interest, Connectivity, Climate
Culture, Customs, Currency, Health and Security Checks Permits and Immigration
b. Market Research and Development - Package tours Destinations and Attractions
& Other Services Market Study, Customer Purchase Behavior
c. Reservation of Tickets - Airlines, Railways, Buses, Passenger Ships, Events
d. Reservation of Hotel Rooms - Hotels, Resorts, Motels, Home-stay
e. Reservation of Ground Services - Cars, Coaches, Caravans, Entertainment Entries,
Guides, Interpreters
f. Selling Cruise Package - Linking with Small Retail Agents, Negotiating Commission
with Cruise Company
g. Preparation of Itinerary - Collection of First-hand Information
h. Costing Package Tour - Estimation of Fixed and Variable Cost
i. Designing of Package Tour - Assembling All Elements of Services
j. Promotion and Publicity- Marketing, Sales Promotion and Publicity
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 k. Reservation and Cancellation - Booking Rooms, Airlines, Train and Coach Seats
l. Management of Ground Services - Uploading Responsibility to Ground Operator
m. Travel Documents - Handling Enquiries, Counseling, Travel and Destination
Information Passport, VISA
n. Preparation of Annual Budget - Cost Estimation Allocation of Budget to Different
Departments Management of Finance and Accounts
o. Corporate Social Responsibility towards stakeholders, clients, community and
quality ethics
p. Training and Development – Manpower planning, in-house and out-house training
q. Travel Insurance - Personal, Baggage, Travel Break-up, Accidents, Insolvency
r. Currency Exchange - Transaction of Buying and Selling Renewal of Authorization,
Maintenance of Stock of Currency
s. Operation of MICE - Meetings, Incentive Travel Conferences, Conventions,
Exhibitions, Seminars Symposiums
t. Disaster Preparedness - Contacting Police and Disaster Rapid Action Force
u. Use of Information Technology - Hiring IT services and Purchas of Latest IT
Gadgets
Provision of Travel Information
Information is an essential function of travel agency and tour operation. An
information seeker can become a customer to buy package tours when detailed
information is given to customers. Information must be clear and it must describe
the places of tourist interest pertaining to climate, accessibility, amenities,
facilities, activities, people, culture, etc. More particularly, tour brochure contains
description with images about the places, hotels, transports and other inclusive
services. Thus, travel agency and tour operators provide information free of cost
through telephone and internet.
For example, Cox & Kings and SOTC have created toll free number for information
seekers. Auto reply or reply through customer care executives disseminates
information. Specific information like travel mode, accommodation, meal plan,
attractions, activities and events at a destination is also provided.
Market Research and Development
Tourism is a new generation business and many entrepreneurs find it challenging to
be successful in their business ventures. Customers are more informative about the
new destinations and information is readily available on the finger tip. Travel products
are now becoming more competitive and customers have more bargaining power in
the marker. It is no longer monopoly package tour market a handful of few players like
Thomas Cook and Cox and Kings.
So much innovation has taken place in package tour business. In view of the fast
changing market, travel agents and tour operators do have any choice other than
selecting the ways of resorting to research on customer satisfactions various
parameters of services and the quality of destinations. Thus, research and development
activities are carried out continuously for exploring new destinations, events or
attractions and assessing the effects of package tours.
Research work is done on trends of market, itinerary, elements of services in
package tours, customer preference, branding and costing of products. Large
tour wholesalers are committed for research work and field-based study for
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Functions of Travel Agency and Tour Operations

assessment of products. It is the tour wholesaler that shows interest in research

and development work.
Reservation of Tickets
Travel agencies and tour operators sell a variety of products but reservation of tickets
is still one of their sources of revenue. Reservation of airlines tickets, railway
tickets, cruise lines and bus tickets can be done either at agency counters or
through reservation engines available online these days. Due to stiff competition
amongst airlines and low cost carriers in India and globally to an extent, airlines are
working on zero margin commission for travel agencies. In the recent years, the
scenario is slowly changing and online travel agencies especially are selling tickets
online. Global Distribution Systems have changed the way ticketing used to be.
Reservation of Ground Services
Ground handling operators of destination management operators have the sole
responsibility of providing cars, coaches, caravans, entertainment entries, guides,
interpreters etc., as per the contract or exchange order of the principal agents. Tour
operators select the ground operators by taking several factors into considerations.
Notably, the past track record for operating the services is assessed before uploading
the services.
Special Services for Charter Operations are as follows:
 A detail feasible plan is prepared to select the destination and options are
given to the charter tour companies to select as per their preference.
 Arrangements are made to take the team to do destination inspection and
familiarization. It helps the overseas tour operator gain confidence after
studying the facilities at the destinations
 Hotel selection and reservation is taken into consideration when charter
tour clients are largely affluent class tourists
 Transfers and sightseeing are also organized as per the itinerary and any
change in the program is not permitted.
Selling Cruise Package
The business of cruise lines is growing unlike air ticketing in case of revenue
maximization. The new-age travelers wish to have experience of cruise line and it has
become affordable for lower middle-class person. It has limited scope for direct sales
but tour operators and travel agents largely sell the package tours. Travel agencies and
tour operators have identified cruise packages to prospective clients as more lucrative.
Most of these agencies are promoting and marketing cruise packages with a variety of
offers and discounts to attract tourists.
Special Services for cruise are as follows:
 Planning of tour itinerary with all justifications and execution with the final
confirmation of cruise companies.
 Before the arrival of groups, a team of executives come for port inspection. Tour
companies take the team to the ports, fix the appointments with the port
officials, superintendent of police, tourist officers, archaeology superintendent
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 as the tourists who travel in the luxury cruise lines are mostly high end clients
and their choices and tastes are very special. The groups generally visit the
historical and archaeological sites.
 Tour companies evaluate the strengths of ground operators in terms of
operational elements such as transport, guides, traffic, parking places, safety,
hygiene, carrying capacity at the destinations, toilets, road conditions, etc. They
take the stock of operational capabilities of ground operators and finally look
into feasibility side of conducting the tours.
 Shore excursion pre/post tours are also conducted.
 Day return charters are also arranged.
 Turns around operations are also operated.
Preparation of Itinerary
Itinerary is an important exercise that tour operators engage senior executives to
design in a methodical way. Itinerary reflects the nature of tour, types of services and
duration of tour. Package tour is operated as per the descriptions and instructions in
itinerary. Tour operators make full-proof survey of the places of tourist interest,
facilities and amenities, etc., before finalization of itinerary. In brief, the sale of package
tour is determined by itinerary and programs. The process gets initiated two or three
years before the launch of package tour in the market. It involves collection of
information related to the duration of stay at a particular destination and check-in and
check-out time.
Designing Package Tour
Gone are the days when there was no market for package tour and customers used to
take one or two elements of services from travel agents. Today, there is a huge market
for organized inbound, outbound and domestic package tour market.
Thus, tour operators are now devoting their full resources for developing innovative
package tour as it is the business of tour operator to generate revenue as compared to
traditional ticketing business. Expert and experienced executives are assigned the
work of developing packages for different segments of customers. In order to design
attractive package tour, tour operators ensure for good itineraries, familiarization
trips, feasibility of itineraries. It is followed by package tour designing, costing and
promoting package tour directly or through travel agents. It is an important function as
it earns maximum profit for tour operator.
Promotion and Publicity
Marketing and publicity of tourism places of interest is an important function
of tour operator and travel agent. Tour operator designs tour packages and sells
directly to customers or through retail travel agents at various locations. They are
primarily intermediaries for marketing tour packages, hotel services, MICE, air
services, car rental services, travel insurance etc. Marketing is a key function that a tour
operator earmarks budget to spend on advertisements, sales promotions and publicity.
There are various marketing strategies through which tour operator achieves the sales
target. They generally take the help of print and tele-media for marketing and publicity
of tour packages and individual components. Some of the travel agents give
advertisements in local newspaper and regional television channels to educate the
potential buyers of package tours, cruise tour, safari tour, etc. For example, SOTC,
Thomas Cook and Cox & Kings give advertisement in English News Channels like
CNNIBN, NDTV and TIMES NOW. Local travel agents prepare small pamphlets
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Functions of Travel Agency and Tour Operations

displaying features of tour package or discounts in air tickets and send through
newspaper hawkers or their sales promotion staff.
Publicity is a promotional method that travel agents and tour operators prefer to
popularize the products with minimum costs. Participating in road shows,
exhibitions, mass plantations, etc., helps in the promotion of package tour.
Reservation and Cancellation
Reservation and cancellation are two important functions of travel agents and
tour operators. Booking of air and bus tickets, hotel rooms and cruise line is the
primary activity of travel agents and tour operators. There are systematic procedures
for making reservation of rooms and airline seats. Reservation registration form is
filled manually and electronically and gets it sent to hotel or airline for reservation. The
procedures for cancellation of reservation of rooms and tickets are followed as per the
agreements. In a large travel agency, there must be separate department to manage
reservation and cancellation.
The Global Distribution Systems have facilitated the process of reservation of hotel
rooms. Hotels provide necessary information pertaining to the type of room, facilities
and services, meal plans, room tariff and seasonal offers for customers to search,
compare, select and book rooms of their own choice. Online payment through internet
banking or debit/ credit cards is also made available.
Management of Ground Services
Both travel agents and tour operators can act as ground operator as a part of
diversification of business. Travel agents sell domestic and outbound package tour
and conducts sightseeing as a ground operator. It is hardly to see an independent
ground operator which exclusively deals with services at destinations. Tour operators
also provide the services as ground operator at important port of entry of inbound
traffic into the country.
Managing ground services is an important function of tour operator as it
involves direct interactions between guests and ground operator. Service
conditions included in package tour are realized at the destinations when ground
operators. Ground operators provide a variety of ground services like cars, coaches,
caravans, entertainment entries, guides, interpreters etc. Tour wholesalers upload the
services and send tour voucher to ground operators to arrange the services at
destinations. These arrangements are made in advance and ground operator confirms
with tour wholesaler about the services.
Travel Documentation
Travel documents include processing of passport, visa and health certificate along
with currency endorsements before the commencement of tours. The most important
task is to follow the issue of visa from Consulate Offices. It takes time to get the VISA
clearance from the embassies. As far as tourist visa is concerned, there is no much
hassle to get visa processed when it is pursued by tour operator. Visa is an
endorsement on a passport indicating the holder is allowed to enter, leave or stay
for a specified time period in a country visited. Health certificates, vaccination,
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 insurance, foreign currency and restricted area permits are also processed much before
the commencement of tour. All these formalities are managed by travel agencies and
tour operators to help customers travel comfortably.
Preparation of Annual Budget
Financial management of travel agency and tour operator is an important
function. Tentative income and expenditures statement is prepared to ascertain the
company’s financial position. Budgeting for different activities is prepared taking
different business diversification plan into consideration. In case of a multinational
company with branches across the countries, each branch submits the annual income
and expenditures to the Regional Office and it is finally consolidated and submitted to
the Corporate Office for preparation of annual budget. Majority of travel agents and
tour operators approve annual budgets in the apex level meetings. Without proper
budgeting and sufficient allocation of funds, it is difficult to find the growth of
business in a given financial year.
Corporate Social Responsibility
Ethical and fair-trade, responsible, pro-poor and sustainable tourism aims to provide
maximum protection to local ecology and environment. These tourism philosophies
teach best practices to travel agent and tour operators to follow and contribute to local
destination and community. Tour operators share the revenue for helping
educational empowerment or social welfare. The concept of Corporate Social
Responsibility (CSR) is explained as a social obligation on the part of a firm or
organization towards the welfare of communities. For example, IATO, New Delhi is
involved in counter pollution and contamination programs like Carbon Neutralization
and Carbon Trading. This national body is also funding to the NGOs for plantation
programs. Thus, the role of travel firms through CSR stands vital to travel industry.
Training and Development
Travel agency and tour operation deals with intangible and perishable aspects for
which the job of qualified and skilled human resource is needed to provide services. In
the past, training and development was not given due importance as it was run by
members of family. Travel agency was a family business and different attributes were
generally inherited from the senior members of family. Many small travel agencies have
become large business enterprises with more branches and diversified business.
Majority modern travel agencies and tour operators are now visiting for on-campus
placement to tourism and travel management institutes. In-house training is conducted
for the employees with help of professional trainers or senior executives. Senior
managers or executives are also sponsored to participate in Management Development
Program (MDP). Training curriculum highlights on the improvement of soft skills
and product knowledge and the Management Development Program (MDP)
imparts on strategic business decisions.
Membership of National and International Travel Organization
Memberships of different travel and tourism bodies provide much exposure to the
members in annual conventions and meetings. Apart from using the logo in letter head,
signboard and websites, it helps the members meet foreign and domestic travel agents
to initiate new business. Travel Agents and Tour Operators usually become the active
members of Indian Association of Tour Operators (IATO), Travel Agents Association of
India (TAAI) Universal Federation of Travel Agents Association (UFTAA), Pacific Asia
Travel Association (PATA), American Society of Travel Agents Associations (ASTA)
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World Association of Travel Agencies (WATA for sharing common data and policy
suggestions for mutual benefits.
Travel Insurance
Travel insurance is a new business area that constitutes an attractive source of
revenue. Customers are much aware of safety of their travel and compensation of
package tour. There are attractive insurance schemes introduced by insurance
companies to take care of life and package tour insurance. Premiums for these two
purposes are added into the cost of package tour or sometimes it is excluded from the
cost of package tour. Typical travel insurance may cover insurance for life, accidents,
medical treatment, baggage loss, trip cancellation and similar losses.
Currency Exchange
Search for outbound and inbound tours process for currency exchange
Operation of MICE
Event management is today a completely professional business. Organising
seminar, conferences, conventions and exhibitions is also being undertaken by
travel agencies and tour operators apart from their regular travel services
though there are specialized event management companies for handling such
events and programs. It may be noted that most large travel firms are now offering
exclusive Meetings, Incentive travel, Conventions/ conferences and Exhibitions (MICE)
packages which are handled by their MICE divisions.
Disaster Preparedness
Due to growing uncertainty about natural and manmade disasters such as cyclones,
floods, earthquakes, tsunami, landslides, accidents, fires, stampedes, terror strikes and
others, disaster preparedness is the most inevitable function of travel agency and tour
operations. Safety and security of visitors is prime responsibility of the operators and
they should be prepared to handle any such disasters. A team of professional is
trained to handle such incidents and avoid any harm to their clients to a great
extent. They also coordinate with the local disaster management teams to face any
such challenges.
Use of Information Technology
Information technology has become an enabler for the growth of the travel agency
and tour operation business. Travel agencies have no choice but to adopt new
technologies to maintain quality standard of services. Most of the modern travel
agencies are automated to deal with the clients. It enables to optimize productivity with
the extensive use of technology. The modern gadgets include telephones, fax,
electronic mail, photocopiers and computers as essential communication
equipment for travel information. Proper use of communication technology can
reduce time and costs. The staff members are selected on the basis of their adequate
computer skills. The implementation of the MIS system can identify the problems and
hence, it can generate and evaluate the alternative course of actions after collecting the

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 necessary feedback. For example, the e-ticketing is a global phenomenon to earn
commissions on ticketing.

References and Supplementary Materials

Online Supplementary Reading Materials
1. Travel Agency and Tour Operations Management;
http://www.pondiuni.edu.in/sites/default/files/travel-agency-op-mgt-260214.pdf;
January 29, 2020