TRAVEL AGENCY AND TOUR OPERATION BUSINESS BTTM 202

UNIT - 1
TRAVEL AGENCY AND TOUR OPERATION TRADE:
ORIGIN AND DEVELOPMENT
Structure

1.0 Objectives
1.1 Introduction
1.2 An Overview of Role of Travel Agency and Tour Operation
1.2.1 Pre-Independence Period
1.2.2 Post Independence Period
1.2.3 Post Liberalized Period
1.3 Travel Intermediaries in India
1.4 Changing Roles of Travel Agents and Tour Operators
1.5 Current Scenario of Indian Tourism
1.6 India’s Outbound and Inbound Growth
1.6.1 A Case Study of Kuoni
1.7 Tourism Awards to Travel Agents and Tour Operators
1.8 Indian Tourism Offers New Business Opportunities
1.9 Role of TAAI and IATO
1.10 Summary

1.0 OBJECTIVES:

After reading this unit, you will be able to:

 Discuss the evolution of travel agency and tour operation
business in India;
 Describe the changing functions of travel agency and tour
operation during the post independence period in India;
 Explain the pre and post-liberalized period business scenario
of travel agency and tour operation in India; and
 List the issues and challenges of the travel agency and tour
operation in the new century.

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1.1 INTRODUCTION:
The role of travel agency in the promotion of tourism in India is very crucial
in the new millennium. Travel intermediaries play a very significant part in
the development of Indian tourism industry. In the previous unit you have
learned about the history of travel agency and tour operation. In this unit,
we shall study the growth and development of travel agency and tour
operation from Pre-independence period to post independence period and
post liberalized period. We shall also discuss in detail the current scenario
of Indian tourism, India’s outbound and inbound growth and role of TAAI
and IATO.

1.2 AN OVERVIEW OF ROLE OF TRAVEL AGENCY AND

TOUR OPERATION:

In today’s volatile market, travel organizations work towards showcasing

India’s rich tourism heritage in the form of designing organized package
tours for the inbound, outbound and domestic tourists. The international
travel organizations like Thomas Cook, American Express and Cox and
Kings are the forerunners of the travel agency and tour operation
business. Those travel agencies are responsible to bring this idea to the
limelight and in the subsequent period, travel agencies in various
countries started their operation on the line of them. Unlike the travel
intermediaries in European countries, India’s travel trade sector did not
witness any such development in the pre-independence period and then in
the post independence period some measures were initiated by the
central government that became favourable for travel agents to expand
the scope of their activities and business scenario.

The role of the travel agents is not limited merely in selling travel related
services but often also in taking considerable interest in promoting tourism
destinations. The growth and development of travel agency was not
remarkable in the first phase of the post independence period. Afterwards
many actions were taken to increase the share of India’s position in
international tourism scenario and travel originations were largely
benefited with the increasing flow of tourist traffics to India. There has
been a paradigm shift in the travel trade in the second phase of the
liberalization in India and travel organizations have got the business
diversified to target the growing outbound and domestic tourism market in
India.

Travel agents are solely indulged into marketing the concept of travel and
plan and sell holiday trips and ancillary services to individuals and groups.
Travel agents do book tickets for air, rail, sea or road travel, arrange hotel

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reservations or guest houses, hire taxis etc. Besides domestic, all travel
agents undertake international bookings and special business tours or
conferences. On the contrary, tour operators are mostly involved into bulk
travel arrangement and management for individual and groups. It is
recognised as principal agent or wholesaler and offloads business to the
ground handling agents. Tour packages are mostly promoted by the tour
operator through the travel gents. Tour operators can offer special
packages that include such diverse attractions as deep-sea diving,
snorkelling, Himalayan trekking or even camel safaris in the Thar Desert.

1.2.1 PRE-INDEPENDENCE PERIOD:

The evolution of modern travel agency and tour operation in India is not as
old as the flourishing travel agency business in the Europe and the North
American countries. As there was no such formal and organized form of
travel related services, overseas travel agents exploited the vast potential
of inbound travel markets of India. The framework of modern travel
agency business in India was designed on the line of function and
activities of earliest group of travel agencies like Thomas Cook, Cox and
Kings and American Express. Those two UK based travel agents were
well-experienced to conduct round the world tour and special interest tours
to different parts of the world and more particularly, package tours were
regularly conducted to India for British officials and their family members
and relatives. It was the maiden attempt of Thomas Cook to take a
pioneering attempt in commencing the package tour to India during the
visit of Queen Victoria to Kolkatta after the end of the Sepoy Mutiny in
1858. The success of the tour had made much impact in terms of safety
and security in India. Subsequent improvement of sea route connectivity
between India and the Europe opened a new avenue for providing safe,
comfortable and affordable journey. It was a matter of renewing
relationships between the uprooted families of British officials living in the
Europe and their counterpart living in India. Therefore, the prevalence of
travel brought people of India and the Europe together. In 1878, Mr. Cook
brought the first British Group of tourists to India by taking support of the
Peninsular and Oriental Steamship Company. The group landed in
Mumbai, traveled to Agra by train to see the Taj Mahal. In the final leg of
tour, the group visited Kashmir valley. The tour tuned to become very
successful and Mr. Cook gained confidence to set up offices in India. In
the beginning, the Thomas Cook and Sons International (Ltd.) continued
the inbound operation in India with its main branches and offices in metro
cities. In 1880, Thomas Cook and Sons established offices in Mumbai and
Kolkatta as those two provinces were regarded as significant hubs of trade
and commerce. Considering the huge demand of royal families, the
Eastern Princess Department was also established in 1887 and that

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resulted in the rise of outbound travelers to Europe. Thomas Cook took
much care and interest to arrange the sophisticated tour for India Princess
to Queen Victoria’s Jubilee Celebration. The outcome of the tour brought
about drastic changes in the perception of elite class people in India to
plan leisure trips to Europe.

A large chunk of the British, the French and other European nationals had
much greater interest to meet their friends and relatives in India and vice
versa. Many Europeans wished to undertake travel through sea routes to
India for visiting selected tourist places of interest such as the Taj Mahal,
Jammu & Kashmir, Shimla, Goa, Ajanta & Ellora, hill stations and beach
resorts. The unique attractions of India were blended with unprecedented
and exceptional history, exquisite art, architecture and sculpture, natural
scenic places above all, a land of wonders. It is in fact relevant to mention
that it was Thomas Cook which opened opportunities for taking travel to
India and more particularly, the company ensured travel to all places by
multiple modes of transport.

In the later period, people from other parts of the Europe were motivated
with the attractive and well organized package tours to India. A large
number of people in Europe had much fascinating perception and feelings
about India and its cultural and natural wonders. Towards the middle of
the 19th century, a sizable number of young Indians sailed particularly to
England for pursuing higher study and appearing civil service examination
and in the later periods, Indian political leaders traveled to England to
participate several round table discussions on the solution for socio-
economic and political issues.
More particularly for the British nationals, Thomas Cook got involved more
actively in the inbound operation to India for long period of time. Thomas
cook used to book train tickets, reserve government run guest houses,
arrange small car, mini coach, book horse carts and animal driven carts to
transfer the tourists from the railway station to their places of stays and
followed by conducting sight seeing tour in and around the places.
Thomas cook used to face the following obstacles for conducting tours in
India
 Lack of amenities and facilities such as road, bridges, railway
stations, accommodation, money exchanger, public toilets.
 Lack of trained tour conductors, guides, escorts and
interpreters.
 Untrained staffs in the guest houses and other eating places.
 Cab drivers without having essential attributes worked for the
travel agents.
Thomas Cook and other contemporary travel agencies were
also confronted with certain issues related with service factors.

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The factors which were partly responsible for the depletion of
the service quality are as follows;
 Travel agents were not properly manned by the qualified and
trained manpower.
 Lack of technology was a vital bottleneck in the growth of travel
agency business.
 Lack of credit facility to the travel agent for the reservation of
hotel rooms and airlines tickets.
 Lack of diversification of business was also an important factor
that narrowed the scope of the expansion of opportunities for
generation of revenue.
 Lack of promotional measures was also another pertinent factor
to ensure higher growth rate in the travel agency sector.
Unlike in the Europe, the Indian railways system was much
underdeveloped in the context of integration with the travel agents and
tour operators in the promotion of inbound and domestic package tour.
The issue has not been addressed fully as yet. In the similar instance, the
airlines had limited role to work with travel agents and at the same time,
there were not much airlines connectivity with India. Because airlines were
generally operated within the domestic sky and countries did not venture
for linking airline services beyond the boundary of country for two
important reasons like political turmoil and low engine capacity for long
haul journey.

The Indian Travel Agencies like Jeena & Co., Lee & Muirhead India Pvt.
Ltd and Jamnadas & Co. Ltd located at Mumbai and operated inbound
and outbound tours ventured into the so called sophisticated travel
business. Meanwhile Thomas Cook and American Express Co. were
uploading the inbound package tour business through Jeena & Co. and
other contemporary travel agencies. Howsoever it might be the business
scenario, Mr. J. N Katgara joined in the travel agency club in the world as
the pioneer travel agent in India. In 1920 the first travel agency was
founded in the name of Jeena and Company to cater to the domestic
travel needs and the operation of the company was mostly serving the
demand of Mumbai. As the cosmopolitan city was a major and busy port
not only for arrival and departure of passengers but also for the goods and
the inflow of foreigners to India was possible. Major trading centers were
located in and round Mumbai. Mr. Katgara capitalized the opportunities of
the volume of business and started looking into the cargo and courier
business in the beginning and in the due course, shifted to other
components of travel related services like ticket booking, hotel
reservation, package tour, transport arrangements, etc. The company
along with other travel agents underwent massive reformation and
development in the post independence period.

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CHECK YOUR PROGRESS:

Answer the following questions.

1. Write five lines on the growth and development of the travel agency
in the pre-Independence period.
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2. Write five lines on the major issues of travel agency business in the
pre-Independence period.
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Check your answer with the one given at the end of the unit.

1.2.2 POST INDEPENDENCE PERIOD:

Even before the world war –II, the importance of tourism was well
recognized as a critical segment of economy. The outbreak of war stalled
the progress in the direction of tourism. The post independence tourism
development and its bearing on the travel trade in India unveiled a new
chapter in the annals of Indian tourism scenario. The great concerned
shown by the then colonial Government to appoint a committee headed by
Sir John Sargent in 1945 was a major step forward to fathom the

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potentials of tourism products dotted across the country. After a through
investigation, the committee duly figured out the potentialities of
developing tourist traffic in the country. The committee in one its
suggestions mentioned about the development of means of travel from
nearest railway station, residential accommodation, travel brochures and
guide books, provision of authorized guides, etc. that should be provided
at places both for the domestic visitors and foreign visitors. The resultant
impact was the formation of a separate Tourist Traffic Branch under the
Ministry of Transport in 1949 to deal with the task of increasing tourist
traffic to India. The tourist traffic section was mostly entrusted the charge
for coordinating with the travel agencies and tour operators in India and
overseas to augment the internal and external tourist traffic. It also dealt
with internal conferences on tourism, coordination with railways,
establishment of tourist bureau in States and development of tourist
centers and the training of guides. Another most important action was
taken to open a chain of tourist offices both in India and abroad and
Regional Tourism Offices were also opened in Delhi, Mumbai, Kolkata and
Chennai.
The tourism offices located at different regions and destinations
coordinated and controlled various segments of travel trade and ensured
that the foreign tourists would get various services at reasonable cost and
would not be hassled at any cost. There was a great leap forward when
operation and functioning of eighteen overseas tourism promotion offices
formally started to display the tourism potentials of the country. Those
offices were based at countries and regions from where maximum inflow
of foreign tourists to India was originated. As a result, overseas tour
operators were encouraged to design itinerary and package tour for India
and in a regular interval, local and regional tour operators held meetings
with the India’s overseas tourism promotional offices and sought all kinds
suggestions related to the operation of tours, booking of hotels, safety and
security. Foreign tour operators were also encouraged to participate in the
familiarization tour program in India and overseas tourism offices and Air
India hosted the tour with the purpose of introducing those places of
interest to them. Both tourism offices in India and abroad were equipped
with colourful brochures. Foreign tour operators were enthused to promote
package tours to India and the there was a steady increase in the tourist
traffic to India. In 1950, 17 thousands foreign tourists visited India when
there were no such overseas promotion offices or any promotional
measures taken for the increase of inbound tourist traffic.

The Travel Agents Association of India (TAAI) was formed towards the
end of the year 1951 by a group of twelve leading travel agents, who felt
that the time had come to create an Association to regulate the travel
industry in India. The primary purpose was to protect the interests of those
engaged in the industry, to promote its orderly growth and development

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and to safeguard the rights of the travelling public. TAAI represents all that
is professional, ethical and dynamic in our nation's Travel related activity
and has been recognized as the voice of the Travel and Tourism industry
in India. With a membership data base of over 1800 Active; Allied and
Associate members comprising of IATA accredited Travel Agencies;
Airlines & General Sales Agencies; Hotels and Tour operators; TAAI is the
largest Travel Association of India.

Travel agency and tour operation business in India was relatively in the
preliminary stage in first phase of independence. Even after also, there
was hardly any travel company with full-fledged facilities. With the setting
up of the Travel Agents Association of India (TAAI) in Mumbai in 1951, the
travel business in India started in an organized manner. The Jeena and
Company, the first Indian Travel Agency organized group tours abroad
and in India for Indian travelers and it handled the first group of foreign
tourists in 1950. However, Jeena and Company and other two Indian
Travel Agencies were merged into one composite travel company known
as Travel Corporation of India Ltd. (TCI) in 1961.
Moreover, the bulk of International tourists were then handled by the
Thomas Cook and Sons and The American Express. Followed by the
growth, there were a good number of travel companies established in
India such as SITA (1963), Thomas Cook India Ltd. American Express,
Cox and Kings, India Travel and so forth. As per the Foreign Exchange
Regulation Act (FERA) 1973, Thomas Cook India (Ltd.) was established
under the companies Act 1956 in 1978.

The Asian games were hosted in 1952 in India made a significant impact
on the inbound traffic to India. The scenario of travel trade stimulated by
promotional measures underwent remarkable change due to the rising
number of tourist traffic. From 1951 to 1961 travel agencies were banking
on airlines tickets and inbound operations to limited destinations. Travel
agents started operating at Delhi and other destination points like Agra
and Jaipur. More particularly travel agencies were resorting to the ticketing
business and inbound tours to golden triangle circuit. Travel Agencies
were facing the shortage of transport fleets to conduct sight seeing tours
in the cities. There was no such means to arrange different transports to
conduct sight seeing tours in the lesser known destinations. It was
certainly a challenging moment for travel agents which had business plan
to handle additional demand for the operation of package tour. In those
times, travel agencies had to take much time to confirm the booking of
hotels, transports, train tickets, guide services and other ground
arrangements to the clients. Scope of business was not expanding owing
to have limited operational network. The concepts of tour through ground
handling agents were not fully known as there were very limited
professionally skilled people to take the responsibility of handling the

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tours. Presently, there are around more than thousand travel agencies
and tour operation companies on the approval list of the Department of
Tourism, Government of India. . These are located in over 50 cities of the
country and many have promotional offices in abroad. In addition to this,
there area large number of non- recognized travel agencies scattered all
over the country. In India there are more than 400 travel agencies which
have been approved by the IATA and a number of them have more
branch offices.

Following the report of ad-hoc Committee on Tourism documented by the

Jha Committee in 1963, that recommended the role of public sector in the
promotion tourism. Along with other two corporations, India Tourism
Transport Undertaking was set up in 1965 later it merged with other two
tourism public undertaking subsidiaries of Government and gave birth to
India Tourism Development Corporation (ITDC) in 1966. ITDC was, in the
beginning, fully geared up with the plans and programs to development
new infrastructure and strengthen the existing facilities, resultantly, many
such hotels were constructed at popular tourist destinations and luxury
transport facilities were also provided to the tourists. With the construction
of hotels at many key destinations catered demand for accommodation
and restaurant facilities, which enhanced the total hotel room capacity and
ITDC associated travel agents and tour operators for the booking of rooms
on the basis of commission. Overseas tour operators were completely
apprehensive about the availability of rooms and other facilities and
amenities in the destinations. When ITDC hotel properties came up,
subsequently after, the apprehension was removed by the establishment
of ITDC properties. There was a surge in tourist traffic to India. The fact
remains that rooms, other facilities and amenities of ITDC hotels were at
par with the international star hotels that provided a kind of impetus and
confidence to Indian tour operators and foreign tour operators to conduct
package tours. As the quality of rooms and transports are two significant
components in the package tour, so when those facilities were plentifully
available at the places of tourist interest, it is obvious that there were
many tour operators shown their interests to organize tours in India. Thus,
the number of travel agents and tour operators went on increasing and the
business was treated to be feasible and profitable. When accommodation
and transportation capacity were somehow manageable, overseas tourist
promotion offices took initiatives to showcase India to Europe in 1968 in a
mass scale by launching a promotional campaign in a very grand way.
With the exposure of introducing India to Europe campaign, the strategy
for marketing India’s tourism overseas underwent a significant change. In
the later period, the scheme was extended to UK in 1970 and to USA in
1971. However, overseas tourism promotion was jointly sponsored and
organized by the Department of Tourism with Air India’s active
participation and support. All those efforts were translated into tangible

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results. The tourist arrivals registered a growth from 17, 000 in 1950
188,820 in 1968. From the year 1965, there has been a constant increase
in the number of tourists visiting India and International tourists arrivals
also increased to 1329950 in 1990. The share of India in the World
tourism receipts has been varying between 0.64 per cent in 1991 to 0.38
per cent over the last few years.

CHECK YOUR PROGRESS – II

Answer the following question.
1. Write five lines on the growth and development of the travel agency
in the post-Independence period.
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2. What are the major issues affecting the growth and development of
travel agency in the post-independence period.
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Check your answer with the one given at the end of the unit.

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1.2.3 POST LIBERALISATION PERIOD

The expansion of business opportunities for travel agency and tour

operators depends on the active role of the governments to formulate
certain strategic objectives for the tourism development of sector. These
strategies comprise five key actions such as to position tourism as a
national priority, enhance India's competitiveness as a tourism destination,
improve and expand product development, create world class
infrastructure and draw up effective marketing plans and programmes.
This growth-oriented strategy indicates vast of opportunities for the travel
agents and tour operators. While travel agents are profiting from the
tourist boom in the past couple of years, a number of them also feel
threatened and are worried about the future. Commission cuts by airlines
and the rapid technological advancement, especially the increasing
penetration and use of the Internet has forced the travel agents
community to rethink their business models and strategy for not just
growth but their survival in the future. Airlines and hotels have turned
away from intermediaries in the past couple of years, preferring to invest
heavily in their corporate sites and offer best-rate guarantees in an
attempt to woo e-tourists. In face of these commission cuts, the main
income generator, many travel agents are attempting to diversify their
operations by providing other services and also remodeling themselves as
travel consultants, a makeover, which happened in the developed markets
quite a while ago. Another recent trend, which is hitting the small time
travel agents hard, is consolidation in the travel distribution network that
has significantly reduced the number of travel agencies.

Currently the Indian travel industry is in the midst of a transition towards

becoming a mature market and the key words for all stakeholders are
adaptation and innovation. One way towards the future is adopting the
idea of service fee. This practice highlights the advisory role of the travel
agent as a professional or a consultant where clients pay for the agent's
expertise instead of suppliers having to pay a commission. The role of a
consultant dovetails nicely with the trend towards customized travel.
Indian tourists today are well traveled and want to enjoy a certain freedom.
They want to go beyond the beaten path, yet enjoy the benefits of a
hassle free planning and expertise proffered by a travel agent. This means
that agents must have the flexibility needed to offer customized travel
products. Apart from changing their business models to meet the
challenges of the future, travel agents and tour operators also have a
wider and important role to play in the development of tourism. They can
coordinate with the Ministry of Tourism and other related central and state
ministries in their endeavor to improve facilities, guaranteeing safety and
security of tourists and disseminating information.

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Besides this, travel agents and tour operators also need to establish
channels of communication and liaison with the department of tourism,
state and other public and private bodies and take all necessary steps to
promote and develop tourism in India, while also promoting environment
protection, cultural exchange and national integration. The challenge for
the travel agent and tour operator community is also to formulate a
uniform code of conduct to govern the procedure of booking,
confirmations, payments, refunds, cancellations, no-shows, changes, pre
ponements and postponements, retention charges, commission and
discounts.

1.3 TRAVEL INTERMEDIARIES IN INDIA:

In order to encourage quality standards and services, the Ministry of
Tourism approves travel agents, tour operators, tourist transport operators
and adventure tour operators in the country. As on 31st Dec.2003,186
travel agents,340 tour operators, 154 tourist transport operators and 13
adventure tour operators are registered with Ministry of Tourism. Rank
wise distribution of these units is given in the table below: 1
Table-1
Tour Operators in India
S. State/ UT No. of Tourist No. of No. of Adventure Total
No. Name Transport Travel Tour Tour
Operator(s) Agencies Operators Operators
1 Delhi 64 85 238 11 398
2 Maharastra 11 40 30 0 81
3 Tamil 18 20 8 0 46
Nadu
4 Kerala 17 12 14 0 43
5 Karnataka 10 11 4 0 25
6 Rajasthan 6 6 11 0 23
7 West 0 10 9 0 20
Bengal
8 Uttar 5 4 5 0 14
Pradesh
9 Andhra 6 2 0 0 8
Pradesh
9 Goa 2 1 4 1 8
10 Haryana 0 0 7 0 7

Source:-Tourist Statistics, 2003, Department of Tourism, Govt. of India.

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1.4 CHANGING ROLES OF TRAVEL AGENTS AND TOUR
OPERATORS
Traditionally, in the Indian market the travel agent acted as an
intermediary that brings travel products to the end consumer. Travel
agents used to receive a base and override commission. Pay-for-
performance override commissions are now typically only available to
large travel agents. The bigger the travel agency, more sales can be
drawn to the airline paying the override. This revenue stream is generally
not available to the small travel agents, who do not have a significant
impact on an airline's market share. With the airline commissions
diminishing fast, the agents who survive and grow will be those who
embrace technology and implement alternative revenue streams and
service fee concept. Apart from ticketing, travel agents are beginning to
offer services like travel insurance, hotel bookings. Although package
tours remain an industry staple, tour operators will need to develop more
flexibility in the creation of holiday packages to serve the growing self-
service segments. Whether catering for the inbound, outbound or
domestic markets, tour operators seem to have been the most forward
thinking in their efforts to innovate in their products and services.

Thomas Cook India has recently decided to focus strategically on the

travel business for augmenting future growth, which include hiving off
financial services into a separate outfit. KUONI travel company SOTC
outfit in India is looking for mergers and acquisitions for SITA-Inbound
Division in terms of specialized markets like adventure tourism, incentive
tourism and convention tourism. The travel business in India is segmented
into: a) leisure; b) business; c) inbound and domestic; and d)
employment/migrant travel. Business travel has stabilized at a growth rate
of 10-15 per cent per annum. With increasing disposable incomes and
lower costs, leisure travel -- both domestic and, to a larger extent,
outbound travel -- is experiencing an upward trend at 30 per cent. Inbound
travel is still fraught with infrastructural problems. SITA Inbound is growing
at 15 to 20 per cent per annum. The formula for a merger is that the
merging companies should have a product fit, a price fit and a people fit.

1.5 CURRENT SCENARIO OF INDIAN TOURISM:

Indian Tourism is identified as a significant engine of economic growth
.According to the World Travel and Tourism Council (WTTC), India’ s
Travel and Tourism (T&T) industry contribute 2.1 percent to Gross
Domestic Product in 2006 (INR 713.8 billion or US$16.3 billion). In the first
half of the Annual Plan period of 2006-2007, the Ministry of Tourism has
taken several initiatives in the field of infrastructure development and

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positioning Indian tourism as a major engine for economic growth. These
include emphasis for developing the existing and new destinations to
world-class standards, improvement of connectivity to important
destinations and identification of 10-15 new destinations/ circuits by each
state /UT for development to world class standard with all the required
infrastructure components. Fastest-growing distribution channel, the
Internet is generating annual bookings upwards of US $35 billion in the US
alone. In 2005, 25 per cent of all hospitality revenues globally were
Internet generated, and in 2006 this figure is expected to reach between
27 and 29 per cent.

1.6 INDIA’S OUTBOUND AND INBOUND GROWTH:

The outbound market is surging ahead due to the drastic fall in the
international airfares, liberal open sky policy, increasing disposable
incomes of consumers and aspiration to travel abroad increasing, as for
the inbound traffic, India definitely has a bright future to look at. The recent
government initiatives such as the Incredible India campaign, Athithi Devo
Bhava campaign and Lonely Planet rankings etc have made India a very
popular country. The FIT market is growing at a rapid pace and the profit
margin varies between 70 per cent and 80 per cent.
India expects about five million overseas visitors this year, as outsourcing
cities like Bangalore and Hyderabad draw more business travellers. The
government is trying to improve airports in New Delhi and Mumbai, two of
the busiest airports, through private participation. The modernization of
airports and licenses for new budget airlines are part of the government's
effort to attract more travellers to India. World Travel & Tourism Council of
London expects India to be the third-fastest expanding tourism market in
the next decade. The entry of new airlines has pushed down fares by
about 25 per cent in two years. Indian hotel companies added 1,200
luxury rooms in 10 cities and vacation destinations like Goa, taking the
five-star category of accommodation to 24,000 rooms by the end of 2006.

The addition of hotel rooms coincided with the increasing frequency of

flights by British Airways, Lufthansa, Singapore Airlines and Qatar Airways
mainly. International passenger traffic at Indian airports rose 17 per cent to
19.41 million in the year 2007. Existing travel agencies are being replaced
by self-serve travel Web sites on the Web and thus facing the following
challenges.

 Revenues from ticket sales are shrinking

 Profitability is becoming harder to maintain.
 Middle and upper class travelers require more services than
bargain travelers.

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 Middle and upper class travelers will pay fees for services that
go beyond issuing tickets.

1.6.1 A CASE STUDY OF KUONI: You look at the world. We look

after you.

Kuoni-India's key Outbound Division operates under the name of SOTC is

the country's largest outbound tour operator. SOTC has escorted over
350,000 travellers across the globe to various destinations including
Europe, Australia, New Zealand, USA, Africa, Mauritius, South Asia, and
the Far East. SOTC has a wide distribution network of 130 sales outlets
across India to retail its range of products and serve its customers better.
The flagship brand of SOTC, pioneered the designing and marketing of
escorted tours to cosmopolitan travellers in India. Sport Abroad provide
global sports-based holidays whilst Student Holidays strives to enrich the
educational environment through travel and fun-filled experiential learning.
SOTC Do-It-Yourself Holidays provides customized fully flexible holidays
that cater to seasoned travellers. SOTC is also known for the domestic
holiday brand which offers a wide range of organized domestic travel
options across India, namely, Classic Holidays, Fun-filled Beaches, Hill
Stations, wildlife Holidays and Spiritual

The outbound travel division of Kuoni (India) has a 66 per cent share in
the outbound-travel business in India. At least 60,000 to 70,000 Indians
visit international trade fairs every year and small and medium
entrepreneurs consider such visits as a business investment. Germany
organises the largest number of these trade fairs, followed by Italy (Milan),
China, France and Japan. The major trade fairs in Germany often attract
1.5 lakh visitors every year. The leading source of India’s outbound
travellers is Delhi and it shares covers somewhere at 26 per cent.

1.7 TOURISM AWARDS TO TRAVEL AGENTS AND TOUR

OPERATORS:

The Ministry of Tourism, Govt. of India gives away the National Tourism
Awards to the tour operators such as inbound operators, adventure tour
operators, domestic tour operators, MICE operators, Most Innovative Tour
Operator and Tourist Transport Operators on the basis of their foreign
exchange earnings and innovation in promoting.

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1.8 INDIAN TOURISM OFFERS NEW BUSINESS
OPPORTUNITIES:

Travel agents and tour operators can take the advantage of the emerging
tourism areas like Medical Tourism, Rural Tourism, Cruise Tourism and
Convention Tourism. The following key areas of tourism can be tapped in
the future course of time by the travel agents and tour operators.
 The ministry of tourism has taken several initiatives and actions like
road shows and publication of brochures, in association with the tour
operator, travel agent, hotels, airline companies and private ultra
modern hospital in the private sector, to promote India as a destination
for medical tourism and make it a global health destination.
 A concept of rural tourism has been developed for showcasing the art,
crafts and culture of rural India and for creating gainful employment in
villages with tourism potential.
 India has a vast and beautiful coastline and hence the potential to
develop cruise tourism.
 India is undoubtedly a unique Conference Destination as it offers
cultural and heritage sites, the exotic and mystical, excellent facilities of
beach and adventure holidays which can be combined as pre and post
conference tours. International convention Centres of the global
standard is considered to be one of the important segments for
promoting India as an attractive tourist destination in the global market.
Ministry of Finance, Govt. of India has already identified New Delhi,
Mumbai, Bangalore, Goa and Jaipur for opening of world-class
convention centres. Several initiatives have been taken up by way of
public-private partnership to develop small convention centres of high
standard.

1.9 Role of TAAI and IATO:

TAAI strives to build in its constituents and others with several a

commitment to contribute largely for the growth and development of
tourism industry in India. There are certain roles of TAAI which will bring in
changes in the travel trade sector in the country. Thus, TAAI has set some
important objectives such as delivery of highest service, build trust and
credibility in the marketplace and apply technical skills.

The Indian Association of Tour Operators (IATO) was established in 1982

and its head quarter is located in Delhi. It is the national apex body of the
tourism industry. It has over 4000 members covering all segments of
Tourism Industry. Established in 1982, IATO today has international
acceptance, and linkages. It has close connections and constant
interaction with other Tourism Associations in US, Nepal and Indonesia,

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where USTOA, NATO and ASITA are its member bodies; and is
increasing its international networking with professional bodies. Indian
travel agents and tour operators have certain significant infrastructure
limitations such as clogged and creaking airports, ageing air traffic control
systems and a chronic hotel shortage, combined with slow and
cumbersome bureaucracy are threatening to slow down India's ascension.
Travel and tourism as an industry has been slow to take off in India, as
compared to the tiger economies of Southeast Asia, it has only been in the
last two decades or so that this sector has witnessed massive expansion
and improvement. Though its growth rate is still lower than many smaller
countries in the region, the industry is emerging as one of the largest
foreign exchange earners, providing direct employment to more than 80
lakh people.

Check Your Progress – III:

Answer the following questions.

1. Write five lines about the impact of globalization and liberalization on

the development of travel agency and tour operation.
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2. Write five lines on the role of travel associations in the growth and
development travel agency in the post-liberalization period.
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Check your answer with the one given at the end of the unit.

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1.10 SUMMARY:

Travel industry has seen a phenomenal growth in the ear of globalization

and liberalization. Modern Travel agencies in India have evolved through
various stages and contributed immensely to the Indian tourism sector.
The size of the travel market was relatively small and the numbers of
travel agencies were also very limited. It is the Travel Agents Association
of India in the beginning and in the later the Indian Association of Tour
Operators strived relentlessly to give a face shift to the travel industry by
bringing all travel intermediaries to a common platform to discuss issues
pertaining to the growth and development of tourism industry. Travel
agencies have seen a buoyant growth in the post liberalization period.

In this unit you read about the beginning period of travel agency business
in India. The unit also throws light on various issues, which mostly
obstructed the growth of travel agency business in India. Moreover, this
unit has also gone further into clarifying details about the role of public
sector undertakings in tourism and travel agencies have been greatly
supported with the building of infrastructure at the tourism places of
interest and port of entries. In this context, the unit also underlined the
importance of tour operators in the promotion of inbound and domestic
tourism in the country. Furthermore this unit discussed the growth of
outbound tourism as to how the boom of the outbound travel would be
sustained and captured in the foreseeable future.

1.11 ANSWER TO CHECK YOUR PROGRESS

Check Your Progress -I

1. Your answer should include major benchmarks in the development of

travel agency in pre-independence era in India. (See sub section
1.3.1)
2. You should include major issues in travel agency business in the pre-
independence period. (See section 1.3)

Check Your Progress – II

1. You should include in your answer major highlights in the post
independence period. (See Section 1.3.2)
2. The answer should include major issues which affect the growth of
travel agency business. (See section 1.3.2)

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Check Your Progress – III
1. For answers please refer section 1.5 to 1.7
2. For answer please refer section 1.10

1.12 SUGGESTED READINGS

Source: Asia Pacific Journal of Tourism Research, Vol. 11, No. 4,
December 2006, Distribution in Emerging Tourism Markets: The Case of
Indian Travel to New Zealand by Shalini Sharda and Douglas G. Pearce

1.13 REVIEW QUESTIONS

1. Explain the role of travel intermediaries in the promotion of
tourism in India?
2. What is the current scenario of Indian tourism?
3. Discuss in detail the role of TAAI and IATO?
4. What are the various new business opportunities offered by
Indian tourism?
5. Write a short note on success story of ‘Kuoni’.

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UNIT-2
MEANING AND DEFINITION TOUR OPERATORS
AND TRAVEL AGENTS AND DIFFERENTIATION
BETWEEN THEM
Structure:
2.0 Objectives

2.1 Introduction

2.2 Tourism and Hospitality industry- an overview.

2.3 Travel Trade intermediaries

2.3.1 Travel Agents- Origin and Meaning

2.3.2 Tour Operators-Meaning and definition

2.4. Functions and role of Travel Trade intermediaries in hospitality

management
2.5 Summary

2.6 Glossary

2.7 Review Questions

2.0 OBJECTIVES:
After reading of this unit you will be able to:

 Explain the overview Tourism and Hospitality industry;

 Describe the Origin and Meaning of Travel Agents;
 Discuss the meaning and definition of Tour Operators;
 Elaborate the Functions and role of Travel Trade intermediaries in
hospitality management

2.1 INTRODUCTION

In the previous unit you have learnt about the origin and development of
the travel and tour operations. And, it is clear that a travel agency works

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as retailer (travel agent) as well as wholesaler. In fact, due to the structure
of tourism industry a Travel intermediary (travel agency or tour operator)
performs multiple functions. In this unit we will under stand the meaning,
concept and functions of travel intermediaries and their role in hospitality
management.

2.2. TOURISM AND HOSPITALITY INDUSTRY- AN

OVERVIEW

The Indian hospitality industry is a significant growth area employing over

20 million people accounting for 8.5% of the total workforce. The industry
operates in a wide range of sectors: Its activities have a profound impact
on the daily life of almost every member of the society. The hospitality
industry provides food, beverage and accommodation to meet the needs
of international as well as domestic tourist besides catering the
requirements of sport centres, leisure centres, clubs and so on. There are
more than 3.50 lac catering outlets in the country serving over 15-20
million meals a year and earning more than 5 millions every year.
In 2007, tourist arrivals in the country crossed the 4 million mark for the
first time with a total visitors of 4,867, 980 and is expected to increase to
5.62 millions by the end of 2010. There was a continuous increase in
arrivals throughout the year and in all a 23.5% growth was recorded in
comparison to 2006. The growing trend has a profound impact on the
development of hospitality industry. This has increased the demand for
more professionals i.e. travel intermediaries

2.2. TRAVEL AGENTS:

2.2.1 ORIGIN AND MEANING :

The history of Travel Agent business can be traced back to over
165 years to Thomas Cook, who while travelling from Derbyshire to
Leicester thought of an idea regarding ‘engaging a special train to
carry the friends of temperance from Leicester to Loughborough
and back.’ He thought that it would be a better proposition to
persuade a railway company to carry a train of passengers at a
very cheap rate than to run the train at standard fares, but
probably only half full. The railway companies jump at the idea and
a few weeks later, a-train carrying 570 passengers traveled at
specially reduced fares. The venture was soon followed by
excursionists to various other places.
Cook’s Paris excursions are the first true ‘package tours’; all the
details of transport, accommodation and other facilities were pre -

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arranged. In 1863, he was given a red-carpet welcome by hoteliers
and transporters in Switzerland. In 1864, the first guided tour of
Italy left England with applications for a berth for exceeding the
then available capacity. Then he introduced the concept of ‘railway
and hotel coupons’. By the end of 1880s, more than a thousand
hotels throughout the world has accepted the hotel coupons.
In 1880 John Mason Cook, the son of Thomas Cook, left for India
and established offices in Bombay and Calcutta. In 1887, these
offices arranged the visits of Indian princes to Queen Victoria’s
Jubilee Celebrations. Thus travel agency business kept on growing
as many other travel agencies were established and contributed
towards growth of the business. But much water has flown down
Thomas since then and the scope of the functions of a modern
travel agency has widened.
The travel agent has been defined as one who does the actual
work for another person to enable that person to make a journey.
The establishment one maintains’ for business pu rpose is travel
agency. The travel agent need not necessarily be an individual; it
could be a firm, company etc. The job of a travel agent is very
important as he is supposed to be an’ expert or professional whose
knowledge, training and experience have enabled him to advise
client on how to travel most comfortably within his limited budget
and time. To do, an agent needs to acquire knowledge and skills in
obtaining lieliable, correct and up to date travel information for
each one of his clients.
Travel agents are responsible for organizing travel. It in fact, is a travel
consultant and organizer for the tourist. At the same time it provides a link
to the suppliers of services with the tourists/travelers. Hence we can say
that a travel agency is like a retail store, the uniqueness being that it acts
on behalf of both, the suppliers as well as the clients. For example, a
tourist visits a Travel Agency to meet his travel demands. The Travel
Agency makes reservation for accommodation, air tickets, arranges for his
pick from the airport and so on. Now at the surface it appears that it is only
the tourist who is being catered to or looked after by the travel agency. On
the other hand, a travel agency has also served the airline by booking
the seat or the hotel by booking the room. In all these services the Travel
Agency has provided business to the suppliers of services while serving
the tourist at the same time. This demonstrates the importance of the
Travel Agency whose role is growing more and more in the modem world.
Not every traveller has the energy or time to organise all travel
arrangements. The suppliers too don’t have the reach to every prospective
customer. Hence, the travel agency plays a vital role between the tourists
and the traveler suppliers. In fact, it is the link between tourists and the
suppliers.

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Before we go further to explain the various functions and operations
involved there in let us look at some of the basic qualities the personnel
working in a travel agency should have. One should be:
 Courteous and helpful,
 Able to look at minute details,
 Ready to work under pressure,
 Prepared to work for solving problems, and
 Proficient in languages etc.
 Sound knowledge of geography — particularly map reading and
seasonality,
 Fair knowledge of customs and practices in different countries or at
the destinations one is dealing with,
 information about health, visa, permit and foreign exchange rules,
knowledge of arithmetic as fares are to be calculated or worked out,
 should know typing or working on computers, and
 Have proficiency in communicating skills.

2.3. TOUR OPERATORS:

2.3.1 MEANING AND DEFINITION:

You must have seen advertisements in the newspapers or magazines
regarding three day or one week tour that mentions the total price of the
tour along with the itinerary. For example, one week in Kerala 2000 Rs.
(350 Rs. worth healthcare coupons free or ten days in Goa—heavy off
season discounts, beaches, music, Rs. 20000 inclusive meals. etc. These
are the offers of package tours which are available to individuals as well
as groups. But have you ever paid attention to this that who packages
such tours and why? Or how they are packaged aid marketed? Well many
individuals work out their own details of travel and pleasure. But this is a
time consuming process. There are many who don't want to bother
themselves about it planning and organizing their journeys, stay etc.
Rather they want this to done by some one else. It is the tour operator
who packages all attractions of a destination into one composite product
and retails it through the travel agents or directly to the tourists. He
creates the demand, travel, market and image of the destination. Thus, it
is precisely this demand that led to the origin of package tours. Today,
many tourists buy these package tours as per their interests, priorities and
budget at a price that is pre-determined. The complete holiday package
tour includes travels (air/surface) accommodation, escort/guide and so on.
The person who puts together all these aspects into a package is known
as the Tour Operator.

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In other words we can say that Tour Operator is a person who provides
information, plans and coordinates travel with various agencies to create a
package or service. At the same time he also ensures smooth operation of
the tour He can thus, also be called a Tour/Travel consultant or Tour
Coordinator. The tour Operator may or may not necessarily have any
product of his own but act as an intermediary to tailor a package to meet
the needs of a traveller. In fact, a tour operator plays an important role in
organizing explorations, research expeditions and holidays. We must
remember here that tour operations originated ever since people wanted
to explore new areas, go on pilgrimage or trade expeditions, individually or
in groups. The above facts indicate that a tour operation involves:
1) Information of the area of operation i.e. in-depth knowledge of the
places of interest, the accommodation, transport facilities and other
logistics required for planning a tour.
2) Planning of a tour in the most efficient manner.
3) Coordination with allied industries or services such as hotel
reservations, airline, rail or road transport reservations. Local
assistance, guides, etc.
4) Operations of tour mean a close monitoring of the tour i.e. all that is
packaged together is working in smooth coordination. In case of
break in the circuit an alternate is to be organised with least
inconvenience to the client. This is another vital segment in the
planning and operation of a tour.
Over the years, due to the rapid changes in the global tourism
marketplace, tour operators are playing pivotal role in the tourism market
and catering the requirements of all types of tourists. Thus, in order to
meet the tourism market requirements tour operators are classified into
the following categories:
 Individual/independent tour operator,
 Incentive tour operators
 Outbound tour
 Domestic tour operators
 Inbound Tour Operators
The following examples clarify the concept and meaning of tour operators:

A group of tourists from Germany wants to visit India-Mumbai, Goa, Delhi

and Sri Nagar (J&K) but does not know who to go about. He walks in the
Travel Agency (Retailer) which he normally uses or thinks that it can help
him. He meets the Travel Consular who talks to him and finds out his
interest, the money he could spend for travel, the tour he could afford, the
luxury he is looking for and the season of travel. The Travel Consular then
shows him the brochures of the various types of tours which he could
recommend with the cities or areas of interest, type of facilities, etc. These
are normally (the tours produced by the Tour Operator (wholesaler). Such

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tours have a schedule date of departure and a set programme. He then
books his name on one such group. The wholesaler collects people from
all over the country and forms a group. thus, the group with names,
itinerary and flight details etc. is sent to an inbound tour operator who has
organised reservations for hotel, transport and other services all over the
country. This inbound tour operator then gives message to excursion
agents in each city of visit about the groups strength, arrival and departure
details and request for services to be arranged in that city. Practically, the
following information is required by the tour operator in order to ensure
efficient services:
1) Receiving the group at the airport and taking them to the hotel and
vice versa.
2) Provide appropriate transport for the group to travel in the area.
3) Provide Guide for sightseeing tours.
4) Provide tickets for entrance fee at places of visit.
5) Any special services for the group.
6) Reconfirm hotel reservations.
7) Reconfirm onward flight/train/bus reservation confirmation.

And so the group moves from one excursion agent to another while the
inbound tour operator is closely monitoring the movement being the chief
coordinator. This way an inbound tour operator is able to provide pickup
service and transport and excursions at each city in India even though he
does not have an office in more than one city. The following figure clearly
indicates the process of services offered by the travel intermediaries in the
tourism industry:

Tourist

Excursion Agent
Wholesaler Inbound Tour
Operator
Retailer

CHECK YOUR PROGRESS-1:

Answer the following questions

1. Define travel agent.
2. Define tour operator. .
Check your answer with the one given at the end of the unit

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CHECK YOU PROGRESS -11

Answer the following questions:

1. What is the main difference travel agent and tour operator?
Check your answer with the one given at the end of the unit.

2.4. FUNCTIONS AND ROLE OF TRAVEL TRADE

INTERMEDIARIES IN HOSPITALITY MANAGEMENT
The functions performed by a travel agent, travel agency, and tour
operators depend upon the scope of activities it is involved in and
also the size and location. The following are the major functions
performed by a travel Intermediaries:

Provision of Travel Information:

One of the primary functions of a retail travel agent from the point
of view of’ the tourist, the general public is to provide necessary
information about travel. This information is provided at a
convenient location where the intending tourist may ask certain
questions and seek clarifications about his proposed travel. This is
a very specialized job and the person behind the counter should be
a specialist having excellent knowledge of various travel alternate
plans. He should be in a position to give upto date and accurate
information regarding various services and general information
about travel, etc. The presentation to the potential customer must
be forceful, and exciting variations much continually be dev ised to
help sell wares. A good travel agent is something of a personal
counsellor who knows all the details about the travel and also the
needs and interests of the intending traveller. Communication
plays a key roll in dissemination of any type of inform ation. This is
equally true in case of dissemination of travel information. The
person behind the travel counter should be able to communicate
with the customer in his language. The knowledge of foreign
languages is an essential prerequisite for personnel working in a
travel agency.

Preparation of Itineraries:
Tourist itinerary is a composition of a series of operations that are
a result of the study of the market. A tourist journey is
characterized by an itinerary using various means of transport to
link one locality with another. Preparation of different types of

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itineraries is another important function of a travel agency. A travel
agent gives advice to intending travellers on the type of
programmes which they may choose for their holiday or business
travel. The study and the realization of the itineraries call for a
perfect Organisation (technical and administrative) as also
knowledge of the desires of the public for a holiday and the
propensity to receive tourists by the receiving localities.

Liaison with Providers of Services:

Before any form of travel can be sold over the counter to a

customer, contracts have to be entered into with the providers of
various services. These include transportation companies, hotel
proprietors, the providers of surface transport like motorcars or
coaches for transfers to and from hotels and for sight -seeing, etc.,
also for general servicing requirements. The work carried out
under these headings is usually that of the owners or senior
employees of agencies concerned. In the case of large agency
with worldwide branches, the liaison work involves a great deal of
coordination with the principals.

Planning and Costing Tours:

The contracts and arrangements having been entered into there

comes the task of planning costing tours, both for inclusive
programmes and to meet individual requirements. This job is
intensely interesting and at the same time challenging. The job
calls for a great deal of initiative and drive. The Job cal is for travel
to those places which are to be included in the itineraries.
Paradoxically, many of those who do this type of work visit
comparatively few of the places included in the itineraries they
prepare. This is essentially a job for a meticulously minded pc son
and call for considerable training and ability. Many agencies with
the cooperation of airlines and other transportation companies take
the opportunity of arranging educational tours for such staff to
countries with which they deal.

Many large agencies have people who are authorities on part icular
countries and, in addition to a general programme many will issue
separate programmes dealing with specific territories. Separate
programmes dealing with holiday offers based on specific forms of
transportation, e.g., air, rail, road or sea may also be prepared.
Programmes also have to be issued to cover different seasons of
the year.

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Publicity is an important part of the programme. Having spent
considerable time and money on preparing all that goes into the
issue of a programme, publicity must feature considerably in the
activities of a travel agency and more so if the agency happens to
be a large one. The majority of large travel agencies have their
own publicity departments under the management of an expert in
the publicity field.
Ticketing:
Selling tickets to clients using different modes of transport like air,
rail and sea is yet another important function of a travel agency.
This calls for a thorough knowledge of schedules of various modes
of transport. Air carriers, railways and steamship compa nies have
hundreds of schedules and the man behind the counter should be
conversant with all these. Ticketing is, however, not an easy job as
the range and diversity of international air fares is very complex
and varied. There are nearly 50 different types of fare
combinations alone on the North Atlantic route. Changes in
international as well as in the local air schedules and additions of
new flights from time to time makes the job of the travel agent one
of constant challenge. Up-to-date knowledge about various
schedules of air companies, Steamship companies and railways is
very essential.

Computerized reservation system has in the recent years rather

revolutionized the reservation system both for air and rail seats
and also a room in a hotel. Many large travel agencies are using
this system. This system comprises a computer network that can
be used by the travel agent to reserve an air or rail
accommodation as also accommodation in a hotel. Through a wide
network confirmation of reservations are availabl e in a matter of
seconds.

Linked with the function of ticketing and reservation of

accommodation in a hotel is the settlement of accounts of the
clients. Accountancy plays a great part and is one of the important
duties to be performed by the travel agency. Dealing with the
settlement of accounts in all parts of the world calls for a thorough
knowledge of foreign currencies, their cross- values and, above all,
the intricacies of exchange control regulations, which vary from
country to country.

Provision of Foreign Currencies:

Provision of foreign currencies to intending travellers is another
specialized activity of a travel agency. Some of the larger travel

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agencies deal exclusively in the provision of foreign currencies,
travellers’ cheques’ etc. This is an important facility to intending
travellers as it saves them a lot of time and energy in avoiding
visits to regular banking channels.

Travel Insurance:
Travel insurance, both for personal accident risks and to baggage,
is yet another important activity of travel agency. Some of the
larger travel agents maintain sizeable shipping and for warding
departments, aimed at assisting the traveller to transport personal
effects and baggage to any part of the world with a minimum of
inconvenience.
Although the functions of ticketing, itinerary preparation etc. are
also performed by the tour operator yet his job s much difficult as
he has to secure various services from the principals and sell them
in form of packages. The major functions performed by a tour
operator are as follows:

Identification of profile of target market:

First of all, the tour operator has to select a particular market
segment he wants to cater to because possibly one cannot serve
all kinds of clients effectively. Once a particular market seg ment or
more than one segments is/are selected, he has to prepare their
profile i.e. what age, sex, income, education, social groups they
belong to because ultimately their, preference for destination,
transport and accommodation and purchasing power depen d upon
these factors.

Preparation of tour package:

A tour package includes transport, accommodation and
entertainment facilities. The package is prepared keeping in view
the preferences of target market regarding transport,
accommodation and entertainment facilities; and time and money
at the disposal of tourists. The first step in formulation of package
is itinerary preparation which is the preliminary form of the
package itself.

Negotiating for services with principals:

Once the itinerary is prepared, the principals (Hoteliers,
transportation companies etc.) are approached whether they can
provide the services in bulk at possible dates and on what terms.
This is a very important phase as the profitability of the tour
operator depends to a large extent on it. If he is able to negotiate
effectively, he will secure quality services at heavily discounted
prices and earn more money.

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Costing and pricing of tour package:

After this the costing of the tour is done. First the cost for the full
tour is done. Some extra cost is added for unforeseen
contingencies. Then occupancy rate is estimated and then the cost
per head is calculated. Some contribution towards administrative
expenses and fixed cost is also taken care of. The cost per head
refers to the cost the tour operator has to bear for that package.
For pricing, he has to add a certain amount of profit to it. The
amount of profit depends upon the operator’s objectives and
pricing policy he has adopted.

Promotion of package:
One the package is formulated and priced, it is ready for sales.
However, prior to that, it needs to be promoted so that the targeted
tourists may come to know about it and are motivated to purchase
it. There are different methods with the help of which the pack
ages are promoted—advertising, personal selling, public relations,
publicity, and sales pro motion etc. Familiarisation tours are fast
becoming a favourite of tour operators as a pro motional tool.

Expediting documentation and foreign exchange procedures :

If the package includes crossing frontiers, the tour operator like a
travel agent expedites the process of documentation —passport,
visa, permits etc. and also arrangements for foreign exchange from
concerned authorities. Apart from this some tour operators get all
their clients insured for the period of their package.

Execution of Tour Package:

The final and perhaps the most important function of a tour
operator are to execute the tour he has sold. He has to ensure that
all the facilities which had been promised by the principals an d in
turn, which he promised to the tourists are actually provided to the
tourists. Usually a tour escort accompanies the tours who look
after the tourists. Guides and interpreters are also sent along with
the tourists whenever necessary.
Thus it is clear ‘that the difference between a travel agent and a
tour operator essentially lie in their function and role they played in
the tourism and hospitality industry.

CHECK YOU PROGRESS -111

Answer the following questions:

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1. Travel desk in a hotel generally performs the travel agent’s
functions. Justify the statement.
_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

2. What types of Negotiation a tour operator has with airlines?

_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

_____________________________________________________

Check your answer with the one given at the end of the unit.

2.5 SUMMARY:
In this unit we attempted to give you an idea about the travel agent and
tour operators. In fact, this unit familariesed you with the concept,
functions & role of travel agent and tour operators in the hospitality and
tourism industry. There are ample opportunities for those who are
planning to enter this vital sector of the tourism and hospitality industry.
Even many of you have huge opportunities right in your own location if
your area is a tourist destination. In this unit you must understood about
the functions of travel intermediaries. In the coming units we will discuss
the role and contribution of transport operators, airless, and Indian
railways in hospitality industry.

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Answer to check your progress
1. 1) see section 2.3
2) See section 2.3

2. 1) see section 2.4

3. 1) see section 2.5

2) See section 2.5

2.6 GLOSSARY:
 Package holidays: travel arrangements packaged and sold as one
price.

 Retailer: the sales outlet for travel goods the retailer is the travel agent.

 Tour operator: a tour operator is one who packages all attractions of a

destination into one composite product and retails it through the travel
agents or directly to the tourists

2.7 REVIEW QUESTIONS

1. Discuss the present profile of tourism and hospitality industry.
2. Traced the historical development of travel agent business. Also give
the present status of travel agent business in India.
3. Illustrate the meaning and role of tour operator.
4. Explain the functions Travel Trade intermediaries in hospitality
management.
2.8 SUGGESTED READINGS:
 Mohinder Chand, (2006) Travel Agency Management-an introductory
Test, 2nd. (Ed.), Anmol Publications pvt. Ltd., New Delhi.

 Negi J.M. (2001). Travel agency and tour operator- concepts and
principles, kanishka publications, New Delhi.

 Tewari S.P. (1990) Tourism Dimensions, Atma Ram and sons New Delhi.

 Hollway, (1999) The Business of tourism, pitman.

 Ministry of tourism, Govt of India, reports.2006.

 Negi J.M, (2004) International Tourism and travel – concepts and

principles., S.Chand,

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UNIT-3
FORMS AND TYPES OF TOUR OPERATION AND
DIFFERNTIATION BETWEEN THEM
Structure:
3.0 Objectives
3.1 Introduction
3.2 Concept of Travel Operations
3.3 Different Types of Tour Operation
3.3.1 Inbound Tour Operations
3.3.2 Outbound Tour Operations
3.3.3 Domestic Tour Operations
3.3.4 Destination Management Companies/ Ground Operations
3.4 Integration and Linkages in the Travel Operation
3.4.1 Integration in Travel Operation
3.4.2 Travel Agency/ Tour Operation – Linkage
3.5 Different function in Travel Operation
3.6 Travel Technology
3.7 Difference between a travel agent and tour operator
3.8 Summary

3.0 OBJECTIVES:
After reading this unit, you will be able to:

 Define the concept of travel operation;

 Discuss the difference between travel and tour operation;
 Describe the different types and forms of travel operation; and
 Explain the linkages in travel operations.

3.1 INTRODUCTION:

The concept of organized tours is quite old in this world even though the
business travels have started quite late and the economic benefits from

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tourism are considered and appreciated much later to be the strong tools
for revenue generation. Travel operations generally means by handling
related arrangements
With a travel schedule of a tourists inside the travel agency which includes
his air tickets and rail tickets to a particular destination of tour. Ticketing is
the most important part of the travel operations which starts right from the
demand generated by a client for travel to a particular destination. There
are several courses which are offered to understand the techniques of
ticketing including the courses run by IATA too. In brief, the arrangements
related with movement from one place to another place of a client are
called travel operations. In wider forms, to fulfill the motive of traveling and
to arrange accommodation and guides in the destination for a tourist is
called tour operation.
In this unit we shall discuss the different types of tour operation,
integration and linkages of in the travel operation, different forms of travel
operation and tourism techniques.

3.2 CONCEPT OF TRAVEL OPERATIONS:

A travel agency arranges for travel services from suppliers such as
airlines, hotels, car rental companies, and cruise lines. Typically, travel
agencies operate at the retail level, the wholesale level, or both. Retail
agencies sell services directly to the consumer; it may be helpful to view
them as commissioned middlemen for numerous suppliers of travel
services. Most agencies provide information and reservations services at
no charge to the customer; but in some locales, retail agencies are
considering a fee structure for these services. The "consumer" is often
thought of as an individual seeking transportation services or a tour
booking. For many agencies, however, the more important "consumer"
may be the business accounts. The income reported on the agency's tax
return does not indicate the relative importance of the business accounts,
but to the excise tax examiner, it provides valuable information about the
point of collection of excise tax.

A wholesale agency primarily assembles and sells "packages" of services,

such as air and land arrangements to Alaska or Hawaii. Although some
wholesale agencies specialize in only one type of service, such as air
passage to South America, they do not usually provide these services
themselves; rather, they secure them from suppliers. The consumer is the
individual traveler, and the traveler must normally purchase the package
through a retail agency. A wholesale agency earns its income by securing
blocks of reservations and reselling them at a markup. Suppliers deal with
wholesalers instead of selling only to the public directly because
wholesalers generate advance sales to the suppliers.

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When selling the tour packages directly to the paying public, the tour
operator has the responsibility for the collection and remittance of the
excise tax. It is incumbent on the operator to maintain adequate records in
order to determine the basis on which to apply the tax. In other words, a
distinction is required to split the air transportation component (actual
taxable flight and related services) from the nontaxable, non-air
transportation components. Such nontaxable items are:
 Ground transportation;
 Baggage handling, storage, and transfer; and
 Charges for admissions, guides, meals, hotel accommodations,
and other non transportation services.
3.3 DIFFERENT TYPES OF TOUR OPERATIONS:

3.3.1 INBOUND TOUR OPERATIONS:

These are also known as incoming tour operators. Technically, the

operators who receive guests / clients/ tourists and handle arrangements
in the host countries are called inbound tour operators. For example a
group of American tourists is coming through TCI limited to India and the
company makes arrangements and handles the group in India then TCI is
called an Inbound Tour Operator. Incidentally the inbound traffic to the
country for the last two decade has been increasing. Essentially the tour
operators need to adopt innovative marketing strategies and should
introduce special interest tours to cater the special needs of Japanese,
Americans, French and British tourists.

3.3.2 OUT BOUND TOUR OPERATIONS:

Tour operators who promote tours to foreign destinations may be business
tours or leisure tours are called out bound tour operators. Indian out bound
tourist traffic is growing at the rate of 11% annually and this makes India
as the second largest country in the world with regard to the traveling
population. However India’s out bound tourism is not holiday oriented only
but it is business oriented too. There are many travel companies which
offer outbound packages such as Raj Tours Travels, SOTC, TCI, Thomas
Cooks and sons etc.

3.3.3 DOMESTIC TOUR OPERATIONS:

Domestic tour operators are those who assemble combined tourists
components into inclusive tours and sell it to the domestic travelers. In
general these tour operators provide travel services in the tourist’s native

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home country. Domestic tour operators operate within the boundary of
home country and offer package tours to the traveler’s viz., domestic
inclusive tours or independent tours.

CHECK YOUR PROGRESS:

Answer the following question.

1. The operators who receive guests/ tourists and handle
arrangements in the host countries are called -----------------------------
-----------------.
2. Tour Operators who promote tours to foreign destinations are
called --------------------------------------------------------------.
3. ----------------------------- operate within the boundary of home country
and offer package tours to the traveler’s viz., domestic inclusive
tour or independent tour.

Check your answer with the one given at the end of the unit.

3.3.4 DESTINATION MANAGEMENT COMPANIES/ GROUND

OPERATIONS:

These are commonly known as handling agencies and their main function
is to organize tour arrangements for incoming tourists on behalf of
overseas operators. When a tour operator himself promotes beach
holidays, wildlife holidays, adventure and heritage tours, cultural tours at
different places then the role of ground operator become effective. It is the
ground operator who by handling the incoming travelers at different places
makes the tour successful

3.4 INTEGRATION AND LINKAGES IN THE TRAVEL

OPERATION

3.4.1 INTEGRATION IN TRAVEL OPERATION:

Today, the travel and tourism industry is becoming more and more
competitive at globe level. Such competition is often encouraged by
government policies like deregulation of airlines, transportation,
communication and other sectors of the economy. But is has been noticed
that no other factor is more influential than the political unrest, social
conflicts and other world events which have a profound impact on the
travel agency business. The competitive forces compel the travel

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companies to seek ways to become more efficient and profitable in this
context.
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
arrangements between one travel agency organization and the other. It is
of two types:
 Horizontal Integration
Firstly, Horizontal integration means two tour operators or two travel
agencies or two hotels or two airlines which are offering competitive
products amalgamate either through merger or through take over. For
example, Thomas Cook, one of the best known names in the global travel
industry, strengthened its hand in the British market on October 6, 1998
when it announced plans to merge its worldwide business with US owned
Carlson companies. Secondly, Horizontal integration occurs between
companies offering complementary rather than competitive products like
hotels and travels agencies and other sectors.
 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.
Benefits of Integration
- Economics of Large Scales
- Eliminates Middlemen
- Protects the Market Position
- Secures the Supply and Increases the Buying Power.

3.4.2 TRAVEL AGENCY/ TOUR OPERATION – LINKAGES:

Basically, travel agencies serve Business travelers and leisure travelers

clients. Incidentally, the requirements of these tourists are different and
agency has to assemble or purchase related components for the principal
suppliers to cater their needs. Thus, travel agencies, maintain close ties
with the airlines, hotels, car rentals, banks, insurance companies,
railways, government, trade associations, foreign tour operators and travel
agents, grounds operators, cruise companies and tourism educational
institutes. A brief discussion of these undertaking are as follows:
 Airlines:
International Air Transport Association (IATA) operates a network by
which travel agencies sell airline tickets and receives commission. Thus,
the sale of airline tickets is highly regulated and strictly controlled. The
agency’s commission range from 5 to 11 percent but most major airlines

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offer additional incentives, i.e., cash bonuses and override commission.
However, in some cases when a travel agency purchases air tickets in
bulk, the margin of commission will be high. This largely depends on the
relationship between the two organizations. The procedure to sale of
domestic airline tickets is different from country to country and even the
rate of commission also varies. Today, airline ticketing and reservation is
almost entirely automated.
 Accommodation Companies:
Most hotels and other lodging companies, including Major Indian and
international hotel chains pay commission to the travel agencies. (the rate
varies from hotel to hotel). However, hoteliers in dealing with travel
agencies are more informal and less regulated than the airline companies.
Interestingly, many hotels and hotel chains participate in Computer
Reservation System (CRS), permitting hotel reservation to be made at the
same terminal which is used to sell airline tickets. The commission
received from hotels is the second largest component of total agency
revenue. But if the purchase is made in bulk than the profit is based on the
negotiated prices and accordingly the profit may be higher or lower.
 Cruise Companies:
The Cruise companies are informally regulated by its own governing body,
i.e., cruise lines association, which must approve any travel agency that
desires to sell booking on behalf of any member of a cruise company’. The
cruise companies also offer a complete package including sea travel,
accommodation, food, entertainment and sometimes air travel also. The
commission varies from 10 to 20 per cent. However, most cruise package
tours are sold to the public through travel agencies. It was Thomas cook
who brought first group of foreign tourists in India through sea route.
 Insurance companies
Today, many travel companies have included travel insurance in their
package tours like Thomas Cook. The company insured the travelers to
protect them against accident, loss of baggage and missed flights.
Successful travel agency management has to make close contact with
insurance companies to obtain insurance policy for its clients. Recently,
the Oriental Insurance Company has introduced two new travel policies for
domestic as well foreign tourists i.e. ‘Suhana Safar’ for domestic travelers
and ‘Videsh Yatra Mitra’ (VYM) for foreign travelers. Incidentally, the
foreign policy is an upgraded version of ‘overseas mediclaim insurance’.
The ‘Suhana Safar’ covers accident and Baggage loses – excluding
Money, jewellary, cheques and other costly items. The policy is valid for a
period of 60 days and it could be served and claims settled in any one of
the 953 officers of the company.
The ‘Videsh Yatra Mitra’ contains medical expenses and repatriation cover
up to $ 5 lakh worldwide including US and Canada and up to $ 2.5 lakh
worldwide excluding US and Canada. It also covers a total loss of checked
– in baggage by an international airline and a cover of up to $100 for

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purchases enforced by the delay of check – In baggage. Even the loss of
passport is covered up to US$ 250 and personal liability is covered up to
US$ 200,000. Insurance companies allow 20 to 30 per cent commission
on insurance policies to travel companies.
- Banking Companies
Travel agencies offer banking facilities to the travelers like clearance of
traveler’s cheques and arrangement of foreign currency. Only those travel
agencies, which are authorized by the Reserve Bank of India (RBI) under
Foreign Exchange regulation Act 1973 (new amendment FERM 1998) can
deal with foreign currency. Banking companies give commission to travel
agencies on traveler cheques and currency exchange.
- Educational Institutions
An agency’s success depends almost entirely on the competence of
management and expertise of the staff. It develops manpower planning in
such a way that will help to conduct on campus selection and match the
students to the requirements of the company. The linkage between travel
companies and tourism education institutions will solve the problem of
human resource requirements of present and future. Therefore, a travel
company needs to maintain close contact and interface with tourism
education institutions. Many Chief Executives from the industry are the
members of the advisory board of the institutions.
- Travel Trade Associations:
These associations provide a common platform to solve many problems of
the members such as training, common code of conduct, airlines
commissions or any other. These are a number of travel trade
associations like TAAI, IATO, ASTA, IATA and PATA which are quite
active in the promotion of travel trade at global. Essentially, every travel
company should be approved by these associations to avail financial and
no financial incentives and commissions from the airlines, hotels, railways
etc.
- Other Organizations:
The travel agencies need to maintain close ties with many other
organizations offering travel related services like cultural and
entertainment organization, foreign tour companies, regional passport
office, department of tourism both at centre and sates, sports operators,
transport operators, food and beverage business etc. In fact, these
organizations play a vital role in making travel a complete product.
Travel companies provide business to above cited organizations and in
return receive commissions. However, there are few other organizations
that help the agency to run travel business smoothly and promote India as
a tourist destination. Technically, a travel company cannot work in
isolation but is interdependent with other travel related enterprises.

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3.5 DIFFERENT FUNCTIONS IN TRAVEL OPERATION
 Handling queries:
In the office of a travel agency there are several business queries that a
person receives through emails, fax and telephones. Handling of these
queries needs a very special training and experience of the product. Once
the business query is received, one needs to read it very carefully and
respond it accordingly. In today’s world majority of queries are received
through email and the time is very important for the sender of the queries,
secondly the option for travel through internet is extremely wide which
simultaneously increases the competition also. So the swift responses of
email queries are highly appreciated and it sustains the business too. To
handle the queries in a professional way one needs to have the
information of the destination the client is asking, the available facilities at
that destination with several options, the prices of the services and a
proper liaison with the handling team at the particular destination so the
operations move smoothly once the client/group reaches there. It should
be taken of good care that the queries have to be responded quickly and
the potential client has to be made satisfied as maximum as possible from
the first interaction itself. No fake information or approximate cost should
be supplied to the client.
 Designing itineraries:
There would be different kinds of travel queries, the potential clients may
ask for a tour which is published by you through your brochures and
websites or they can ask for a tour of a particular region by giving the
approximate number of days they wish to spend for the holidays or they
can ask a customized or tailor made program from your organization. If
the tour program is not designed, the concerned person handling the
query has to design a feasible itinerary for the clients. The itinerary is a
day to day tour program which includes the detail of place,
accommodation, distances and meal plan in brief. While designing the
itinerary against any query one needs to keep the spending capacity of the
client in mind which can be asked from the client while handling the initial
query or can be judged from the occupation, previous travel history and
the place of the potential client if he is not interested to mention his
budget. Normally today there would hardly be a place which is not
explored and the details of all the regions are well mentioned in the
numerous websites available on internet and its also quite important that
the travel consultants should be a very good travelers in themselves
because if the product is experienced by the consultant himself, it would
be very easy for him to design the program and put the best price for that.
 Sending Quotations:
This would be third phase of travel pre operation in a travel agency
business. Once the itinerary has been finalized the consultant/ executive
or the file handler is expected to send the final quotation to the client. The

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quotation for the package contains prices for the flights, railways, surface
transportation (whatever is applicable according to the program),
accommodation and the sight seeing during the tour. If there are
monuments to be visited during the tour, it also has to be finalized weather
the clients/group will directly pay the entrance fees or the same has to be
included in the tour price. Normally the prices for the accommodation are
included on the basis of continental plan which includes room plus
breakfast but a destination management company has to follow the
brochure programs of its foreign agents and if there are any other meals
are found included on a group tour, the same has to be included while
sending the quotation. If the query is sent by FIT or a individual, the tailor
made itineraries will follow the instructions of the client while adding the
meals in the package cost. The second essential aspect of quotation is
your markup or the profit share on that particular package. The profit
share or the mark up is normally included on the net price of the services
whereas the travel agencies do have the special prices from the hotels/
transporters on their operational circuits which are absolutely less than the
rack rates. It has to be noticed that the quotations should be competitive
so the business must remain with you. This is the time of World Wide Web
which has several benefits and threats too. To avoid the threats, the god
travel agencies have developed the technique of “dynamic packaging” as
a very strong tool of travel technology.

3.6 TRAVEL TECHNOLOGY:

Travel technology was originally associated with the computer

reservations system (CRS) of the airlines industry, but now is used more
inclusively, incorporating the broader tourism sector as well as the
hospitality industry. While travel technology includes the computer
reservations system, it also represents a much broader range of
applications. Travel technology includes virtual tourism in the form of
virtual tour technologies. Travel technology was born with the airline
industry's use of automation and their need to extend this out to the travel
agency partners. It should be kept in mind that there was an online world
before the advent of the world wide web in the form of private and
commercial online services. The convergence of industries has forced
people to create terminology such as information technology,
biotechnology, ubiquitous technology and even cultural technology to
explain frequently talked about topics. Tourism Technology is a term that
encompasses all social, cultural, managerial, and value-adding activities
of the tourism industry. Tourism Technology also incorporates and
encourages technological advancements and economic development in
the tourism industry.

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Tourism Technology: Initially based on the concept of cultural
technology, is a more comprehensive term covering knowledge used to
add to the value of tourism products on a micro level and the management
of the travel and tourism industry on a macro level. New tourism products
are also the end result of tourism technology combining with other
industries. These include medical tourism, educational tourism,
agricultural tourism, marine tourism, and the application of information
technology to the travel and tourism industry.

Application of Tourism Technology: The term "technology" can easily

call to mind scientific achievements, computer graphic skills, special
effects and other engineering-related images. However, "Tourism
Technology" encompasses the integrated fields mentioned in the previous
paragraph, statistics, managerial and socio-cultural know-how, and skills
that the tourism industry can adopt to design, produce, and market various
tourism products. In addition to coordinating various aspects of human
resources in the travel and tourism industry, “Tourism Technology”
describes a comprehensive field containing but not limited to such widely
referred to subjects as entertainment technology, contents technology and
creative technology.
Examples of how Tourism Technology can be applied are as
Follows:
- Development of tourism products that tell a story
- Convergence with other industries such as medical and film
industries
- Application of advanced information technology to provide tourist
information via navigation systems or PDAs

The Time of Virtual Tourism:

Virtual tourism refers to pre-planning alternative touristic activity before

your departure, by integrating multiple digital resources to explore regions
of the world without having to physically travel. It helps focus attention
onto people, places and exploring changes over time! By using the
internet, travel literature (travel guides and travelogues), Journals, Papers
and television a customer gets sufficient information necessary to make
an informed decision about which places to visit and explore. It is an
economical activity that employs people from several different specific
areas, such as journalists and photographers, geographers, editors,
cameras, writers, etc... and it is one activity related to promoting nature-
based or people-powered outdoor recreation involving adventure-based
tourism.

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The phrases panoramic tour and virtual tour are often used to describe a
variety of video and photographic based media. The word panorama
indicates an unbroken view, so essentially, a panorama in that respect
could be either a series of photographs or panning video footage.
However, of late the phrases 'panoramic tour' and 'virtual tour' have mostly
been associated with virtual tours created using stills cameras. The image
above is an example of what a virtual tour movie looks like when it has
been 'flattened'. This is also referred to as a panoramic image.

Such virtual tours created with still cameras are made up of a number of
shots taken from a single point. The camera and lens are rotated around
what is referred to as a nodal point (the exact point at the back of the lens
where the light converges). These images are stitched together using
specialist software; the movies are each resized and configured for
optimal on-line use. Travel agents have developed dynamic packaging
tools to provide fully bonded (full financial protection) travel at prices equal
to or lower than a member of the public can book online. As such, the
agencies financial assets are protected in addition to professional travel
agency advice.

All online travel sites that sell hotels online work together with numerous
outside travel agents. Once the travel site sells a hotel, one of the
supplying travel agents is contacted and will try to get a confirmation for
this hotel. Once confirmed or not, the customer is contacted with the
result. This means, that booking a hotel on a travel website will not get you
an instant answer. Only some of the hotels on a travel website can be
confirmed instantly (which is normally marked as such on each site). As
different travel websites work with different suppliers together, each site
has different hotels that it can confirm instantly.
 Making reservations
Once your quotations are accepted by the client/ agent; it’s the time to
forward the reservation according to the hotels you have offered in the
itinerary or at the phase of supplying quotations. It should be noted that if
the same hotels are not available at this stage, one must try to offer the
similar hotels on same prices. The reservations can be made initially on
telephone but latterly it has to be done by email or fax and the
hotels/vendors should be requested to acknowledge all your important
emails/fax messages and they must reconfirm the services at your earliest
so the same can be forwarded to the agent/client if demanded. The same
has to be done with the transporters; handling agents and guides/escorts
too and one must get the reconfirmations from them also for the office
records. There are following main areas where a client/group has to be
booked.

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Air lines
Hotels
Transportation
Guides/escorts

Issuing vouchers:
This is the third step of travel operation to issue the vouchers to
concerned hotels/handling agents and transporter on the itinerary. These
are the same organizations where the client/group has been confirmed.
The vouchers are the printed exchange orders of one travel agency which
are issued against services that the vendors have to provide for the
clients. There are four copies of the vouchers, one is sent to the
hotel/transporter/ handling agent, second is kept with the agency for its
office record, third is forwarded to the accounts department and the last
one is carried by the client/ tour leader while traveling. The client’s copy is
the original copy of the voucher that he gives to the hotel/
transporter/handling agent after using their services by making a signature
on it. Since the voucher contains the list of services that the hotel has to
provide against it and the travel agent is liable to pay for only those
services which are mentioned on the vouchers and on every voucher it is
always mentioned at the end of leaf that all the extras have to be collected
directly from the client. Here the extras mean for the services which are
not mentioned in the voucher. Once the services are provided, the hotel
sends the original voucher with its bills to the issuing office that’s the travel
agency and collects the payments. The person who is issuing the voucher
must write everything very carefully on it because the services by vendors
will only be provided on it.

Payments- Collection and Distribution:

The collection and distribution of payments is the next phase of a travel
agency working. Normally the payments are received from the client/
agent well in advance, which is before the arrival of the client/ group. The
payment to the hotels and transporters are made after they send the bills
once the inbound operations are concerned and for outbound tours the
payments are send to all the service providers before the arrival of the
client/ groups. Generally all the travel agencies do have their separate
accounts department which takes care of everything related with the
accounts including the adjustments of service taxes and income taxes.

Liaison and coordination:

This is the real part of the tour operation. Once the group is arrived till the
time of its departure back to origin, it is the responsibility of the file
incharge or manager/executive operations to be in touch with the
hotels/transporters/ guides/escorts and local handling agents and also
with the client directly or indirectly. This is the way of professionally

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working conditions so the agency remains informed about the every days’
happening with the client/group. The same office is responsible to keep all
services reconfirming including the international flight tickets to the origin
place which have to be reconfirmed at least 72 hours before the
commencement of the flight.

Feedback and remarks:

A right and proper feed back and remarks are the basic tools for further
research and business development. The liaison and coordination phase
too provide important information about the success of any tour and even
the negative points are also observed at this stage. The remarks can be
obtained once the group/client reach back to the last destination and the
same is discussed in the office to get maximum success for the upcoming
tours on same circuit.

3.7 DIFFERENCE BETWEEN A TRAVEL AGENT AND A

TOUR OPERATOR:
Historically, the tour operator has mostly emerged from retail
travel agency. However, today a clear distinction must be made
between a travel agent and a tour operator. Essentially a travel
agent is a retailer and tour operator is a manufacturer and
wholesaler. The travel agent is a retailer because he sells the
travel services to the final consumers i.e. the tourists directly,

Suppliers Suppliers
(Hotels, Transport Companies etc.)

Your operator
Travel Agent (prepares the package)

Tourist Travel Agent

Tourist
Fig. 2
But unlike the travel agent, the tour operator is a manufacturer of
the tourism product He plans, organises, sells and conducts the
tours, He acts as a wholesaler also sometimes because he has to
engage travel agents as middleman to sell his package tours in
different territories. The Figure 2 makes amply clear the flow of
travel services from suppliers to the tourists.
Presently, there are roughly 1200-1,500 travel agencies and tour
operators in India, concentrated in major cities such as Mumbai, Chennai

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Delhi and Kolkata while online booking is on the rise, travel agencies
continue to play dominant roles in the Indian market as a means for
consumers to purchase and book their travel, particularly international
travel. The travel trade industry in India is fragmented, with different
ranges of travel agencies, ranging from small, to medium and large. In the
past ten years, there has been a gradual shift towards smaller agencies
operating to cater for independent travellers. Traditionally, the international
travel market in India has been dominated by a few large agencies such
as TCI, SOTC, Thomas cook, Kuoni, Cox and Kings, and so forth which
are prominent in group travel. There are a few recognized travel
associations such as the Travel Agents Association of India (TAAI) and
the Indian association of tour operators (IATO) which play active roles in
promoting domestic and international travels. TAAI has over 700 members
and holds annual events, such as an international travel expo, sports
days, and Familiarization trips for tour agencies. In addition, TAAI also
hosts country-specific international travel fairs in conjunction with various
airlines and national tourism boards, such as Singapore, Japan, Australia,
China, Korea, etc. With the rise of Internet and online booking, smaller
independent ticket agents have also emerged to serve the needs of
customers. These ticket agents have more international experience and
are more comfortable with booking online. However, the number of online
customers and agencies is still relatively small but rising. Most Indian
travel agencies book through international or big travel agencies seeming
to have a dominant position, particularly vis-à-vis European travel
products. A handful of agencies specialize in the corporate/incentive
segment, with clients ranging from insurance companies, beverage
companies, to pharmaceutical and multinational companies. While a
myriad of travel agencies exist in big cities, it is only the big companies
with clout and connections that win clients from large MNCS and
government offices. Most are companies that have been established for
some years and have cultivated enough goodwill, reputation and
relationships with airlines and government offices. In contrast to group
travel, the leisure travel market does not seem to be dominated by any
particular company. Company size ranges from small to medium, with
most products being advertised through newspapers and travel
magazines, both in Hindi and the English languages

3.8 SUMMARY:
In this Unit you have discussed:

 Travel agency and its working system

 Different Types and Forms of Travel operations
 Retail Agencies and wholesale Agencies

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 Different linkages in travel operations
 Bookings and reservations
 Itinerary preparation and its importance
 Tourism techniques and importance in modern travel operations
 Inbound, outbound and domestic travel operations
 Different functions in travel operations

3.9 ANSWER TO CHECK YOUR PROGRESS:

1. Inbound Tour Operator
2. Outbound Tour Operator
3. Domestic Tour Operator
3.10 SUGGESTED READINGS:
 Bagri, S.C., (1997), ‘What is tourism? Concepts and definitions.’ Journal
of travel and tourism, Vol.1, No. 1, March 1997 IITTM Gwalior.
 Foster, L.D., (1994), Introduction to Travel and Tourism, McMillan, New
York.
 Foster. D.L., (1990), The Business of Travel Agency Operations and
Administration, Mc Graw Hill, Singapore.
 Gee Y. Chuch, (1990), Professional Travel Agency Management,
Prentice Hall, UK.
 Godwin, N. (1987), A Complete Guide to Travel Agency, Albanj, Delmer.
 Seth, P.N. (1977), Successful Tourism Management, Vol. II, Sterling
Publications Pvt. Ltd., New Delhi.
 Tewari, S.P, (1994), Tourism Dimensions, Atma Ram and Sons, Delhi.
 Wahab, S. (1995), Tourism Management, Tourism International Press,
London.
 Yale, P. (1995), The Business of Tour Operation, Pitman, London, WTO
news 1996 and 1997.

3.11 REVIEW QUESTIONS

 How many kinds of travel operations are there?

 What is the difference between inbound and outbound travel operations?
 What is domestic travel operation?
 What are the different organizations that a travel agency is linked with?
 Define tourism technique and its importance in worldwide web promotion?
 Write a detailed note on different functions of a travel operation?

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UNIT - 4
ROLE AND CONTRIBUTION OF TRAVEL AGENTS
AND TOUR OPERATORS IN DEVELOPMNET OF
TRAVEL INDUSTRY
Structure:

4.0 Objectives
4.1 Introduction
4.2 Present Travel and Tourism Business Trends
4.2.1 India’s Present Position- an Overview
4.2.2 Problems, ethical, regulatory problems faced by travel
business
4.3 Role and contribution of Travel Business
4.3.1 Future Prospects of Tourism and Travel Business
4.3.2 Factors Responsible for the growth of tourism
4.4 Summary
4.5 Glossary
4.6 Suggested readings

4.0 OBJECTIVES:
After reading this unit, you will be able to:
 Describe the present travel business trends;
 Discuss the determinants responsible for present status of Tourism
and travel business in the country; and
 Explain the future prospects of travel business.

4.1 INTRODUCTION

Demographic, socio-structural, socio-cultural developments, information

technology, deregulations, globalization, liberalization and changing public
attitudes have posed constant challenges to the Indian travel agency
and tour operation business organisations. In fact, these have always led
to changes in tourist demand and faced service providers in tourism with
substantial need to adjust. These constant challenges have expanded and
intensified considerably in the first few years of the new millennium. War
and tourism, extreme weather, the ongoing internationalization of tourism

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and the ageing of society (increasingly prominent in public awareness)
have emphatically demonstrated the latent vulnerability of tourism as a
boom industry. The survival of the tourism industry depends decisively on
recognising relevant present trends and allowing for them in good time. In
this unit, the students will understand the present trends of tourism
business and its future prospects.

4.2 PRESENT TRAVEL AND TOURISM BUSINESS TRENDS

4.2.1 INDIA’S PRESENT POSITION- AN OVERVIEW:

India’s travel and tourism market was valued at US$42 billion in 2005, and
is growing rapidly. India emerged as the fifth most preferred destination by
the world’s travellers in a survey conducted across 134 countries. India
also figures in the Annual Readers’ Travel Awards 2005, which were
announced by the prestigious magazine Conde Nast Travellers UK in its
September 2005 edition. A 5,000 year history, culture, religion and
alternative medicine fascinate both budget and luxury travellers alike. The
Department of Tourism’s resolve in promoting Indian tourism has
strengthened as it recognizes it’s potential. Tourism in India is the third
largest foreign exchange earner, accounting for 2.5% of GDP. It also
makes a direct contribution to economy with significant linkages with
agriculture, horticulture, handicrafts and construction. The outlay on
tourism development rose to Rs.7, 860 million in 2005/2006, from Rs3,
500 million in 2003/2004, and continued to focus on the “Atithi Devo
Bhavah” campaign, targeted at the inbound foreign tourists in the country.
Translated literally this means “Guest is God”.

Unfortunately, tourist arrivals and tourism earnings growth slow down

during the year 2005 i.e. growth in arrivals and incoming tourism earnings
slowed down substantially in 2005, to 14% and 19%, respectively. The
slowdown followed a particularly good performance in 2004, with global
travel recovering from various health and natural disaster scares in the
previous two years. Returning Indians constitute a significant proportion of
incoming arrivals and as both the country and long haul travel became
more expensive. They chose other holiday destinations instead of
returning to their home country. The UK and the US lead arrivals into the
country. Combined, they accounted for 33% of total arrivals in 2005. The
Middle East, including Dubai, the UK and the US were the favourite
destinations in terms of departures. Popular new destinations for Indians
include Southeast Asian countries such as Singapore, Thailand, Malaysia
and Hong Kong. Cheaper airfares and competitive holiday packages have
made these favored vacation spots. On the other hand the number of
outbound travellers from India grew by 15% and reached 6.2 million in

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2005. This was almost twice the number of arrivals witnessed by the
country. A booming economy, with GDP growth of more than 7%, rising
disposable incomes, higher aspirations, and cheaper air travel to countries
such as Malaysia, Thailand and Singapore and better products from the
industry enticed Indian travellers. This has prompted a number of global
tour operators to enter the Indian tourism market either directly or through
strategic alliances.

According to the recent forecasts the Domestic tourism driving the industry
with 390 million Indians on the move in 2005, it is little wonder that it is
domestic travellers that sustain the travel and tourism business. Domestic
business travel and visiting family/friends, as well as pilgrimages,
contributed to the 13% growth in number of trips within the country that
year.

4.2.2 PROBLEMS, ETHICAL, REGULATORY PROBLEMS FACED BY

TRAVEL BUSINESS

The present status of tourism and travel business in the country is due to
the following facts such as:
Budget Airlines Introduced
India’s transportation industry is the largest sector of the travel and
tourism industry at Rs1, 103 billion in 2005. The sector outperformed the
review period CAGR performance in 2005, with 15% sales value growth.
Investment in international quality roads, the launch of low cost carriers as
well as the expansion of the railways were responsible for driving growth.
Six new low cost carriers were launched in India in 2005, and there
seemed to be room for more. Spice Jet Ltd was the outstanding success
during the year. As competition heated up, prices came down, making the
Indian consumer the winner in all respects. Promotional fares as low as
Rs1 were launched, but this was limited to short periods, as fuel price
hikes and taxes made it difficult for companies to sustain these fares. Tier
II city routes that were earlier sidelined or ignored were taken note of and
serviced. The airline sub-sector outperformed the growth of the
transportation sector as a whole in 2005.

Budget Hotels:
Travel accommodation in India accounts for only 12% of the travel and
tourism industry in value terms. The skewed nature of hotel
accommodation in India is evident from the fact that it constituted 5% of
the accommodation market in terms of number of outlets, but accounted
for 28% of sales value. The hotel sub-sector achieved growth of 18% in
current value terms in 2005, which was driven by increasing demand,
notably in business travel.

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The huge gap between demand and supply of hotel rooms drove up
occupancy levels and average room rates (ARRs) to new highs during the
review period. Hotels generally cater to foreign visitors, corporate
business clients and high-end Indian travellers, as hotel accommodation is
out of the reach of the average Indian. Indians are increasingly seeking
world-class facilities, such as clean and comfortable accommodation,
Internet connection, and perhaps even fitness facilities at local prices.
In response to changing consumer needs, leading luxury and business
hotels player Indian Hotels Company Ltd shifted its focus to budget hotels
and rolled out the first Indian hotel, its budget brand, in Bangalore in South
India. Interglobe Enterprises signed a joint venture with Accor, in March
2005, to develop budget hotels in India under the brand name Ibis.

Shifts focus On-line travel in India

The travel retail sector constituted 17% of the travel and tourism industry
in 2005, and was the second largest sector, valued at Rs274 billion. With
25% growth in 2005, it was responsible for driving much of the value
growth in the overall market. Sensing opportunities in this area, with Indian
travellers becoming more Internet savvy, dropping costs of broadband and
a general increase in access to information, on-line travel retail
intermediary MakemyTrip.com shifted its focus from returning Indians
primarily from the American market to Indians within the country.

Indian Railways Popularise the Internet

E-ticketing and e-travel in India took off as a result of efforts by Indian
Railways in late 2004, accompanied by good deals offered by new
generation budget airlines, which sell most of their stock through the
Internet. An estimated 7,000 tickets with an average price of Rs1,500
each are sold each day on the Indian Railways website. However, in terms
of value sales, Internet rail transportation constitutes a lower proportion of
the total than air transportation.
Consumers sought out Internet access through various means and made
sure they did not get left out of the benefits – usually price discounts. On-
line hotel reservations in India have also picked up, but constitute just 3%
of the business. According to the Internet and Mobile Association of India,
16% of on-line shoppers spent in the Rs10,000 plus range, including
spending on computers, hotel rooms, jewellery, airline tickets and home
appliances. Company-owned sites, as well as specialised travel portals,
drew in travellers in thousands. Travel agents also recognised the
importance of the Internet as a means to distribute and market various
deals, drawing in 7% of business from this medium. Much of it is still,
however, not real-time.
CHECK YOUR PROGRESS: I
Answer the following questions.

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1. What is current inbound tourist arrival figure in India?

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2. Give the figure of India’s current tourist earnings.

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Check your answer with the one given at the end of the unit

4.3 ROLE AND CONTRIBUTION OF TOURISM BUSINESS

4.3.1 FUTURE PROSPECTS OF TOURISM AND TRAVEL BUSINESS

By 2020, the government of India expects travel and tourism to contribute

Rs8, 500 billion to GDP, almost four times the value in 2005. With
successive governments committed to reform, a strong manufacturing
sector and a private sector that already has a critical mass that is needed
to drive growth, it is unlikely that the strong growth in GDP is likely to be
reversed. The rising middle class is also becoming increasingly affluent,
mobile, Internet savvy and more sophisticated in terms of what is
demanded in terms of tourism products and services, and more
importantly the price they are willing to pay for it. A boom is expected in
travel accommodation, as more serviced apartments, budget hotels (2-star
category) and highway motels are established.

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Significant changes are expected in travel retail, with the arrival of more
international players, such as Le Passage and Cox & Kings, particularly in
outbound travel. British company Cox & Kings plans to relocate its
corporate headquarters from London to Mumbai as a result of its being
bought out by its Indian arm in late 2005. Global interest also includes the
American millionaire Alfred Ford with plans to set up a Himalayan ski
resort. Internet intermediaries are expected to expand significantly and
grow the market without significantly adding to volume growth. Rural
tourism and medical tourism for inbound tourists will also give rise to new
products and services in this sector.

Until recently, not much emphasis had been given to the maintenance and
development of the historical and heritage sites in India, which resulted in
a large number of tourists staying away from these. However, the Indian
government’s increasing investment in the upgrading and modernisation
of infrastructure will translate into better facilities, amenities and access to
the leading tourist attractions and sites.

4.3.2 FACTORS RESPONSIBLE FOR THE GROWTH OF TOURISM

The following points highlight the future prospects of travel business both
at global and India level:

 Internet will hold much promise

According to International Data Corporation (IDC), India is expected to
record the highest compound annual growth rate (CAGR) of 84%, among
Asia-Pacific countries in e-commerce revenues between 2003 and 2008,
exceeding the CAGR of 81% expected in China. It is estimated that travel
will account for one third of this. Much of the growth is expected to be
driven by intermediaries. By 2010, India is expected to have 100 million
Internet users, with the majority of them aged 25-39. Transportation and
accommodation transactions will grow as they seek out newer
experiences and get more comfortable with the medium.

Across all the sectors, much higher growth is expected from the Internet in
contrast to bricks-and-mortar business operations. 16% of travel retail
business in 2010 is expected to be sourced through the Internet, as the
nascent dynamic packaging sub-sector picks up due to the efforts of on-
line retailers. While there is no direct danger of bird flu at the moment, it is
definitely a potential threat as India sees a significant number of migratory
birds from China, Tibet, Mongolia and Russia. It is said that, India’s
pharmaceutical industry is more than sufficiently equipped to provide
supplies of medicine for the purpose. A significant proportion of India’s

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poultry industry is of small scale and scattered, translating to a low level of
threat.

 Demographics
The tourist industry is more than almost any other industry linked to its
social and natural contexts. One parameter for the longer term
development of society is obvious – the current and foreseeable
demographic shift. In the tourist system the socio-demographic shift – and
specifically the advancing ageing of society - will result in far reaching
changes, particularly on the demand side. At global level, the world
population will continue to grow. This growth will be primarily in developing
countries, so that per capita income will not increase despite global
economic progress. By contrast, in the industrialised nations – and
particularly in India – the demographic shift is taking a different form.
Although the number of inhabitants will probably change only moderately
in the next 10-20 years (it is more likely to fall than rise), a secular decline
in the birth rate and simultaneous increase in life expectancy is leading to
a clear change in the age structure.

 Increase in Discretionary Income

Earlier retirement, falling pension contributions, rising life expectancy and
the resulting prolongation the pension-drawing period during retirement
are the causes of the already serious threat to the social security systems.
The demographically caused decrease in the working population threatens
to further erode the available contributions. If current conditions persist,
future generations will pay higher contributions while working than current
generations do. There is a similar problem with care insurance. These
trends will probably be met by additional private pension plans which are
very much in many countries. The shift in responsibility for old age would
be one possible response to the demographic challenge. However, no
matter which of the numerous proposed reforms is implemented, there are
impacts on discretionary income in every case.

The increase in leisure which was apparent up to the 90s has increased,
however the trends in working hours (longer working hours, greater
proportion of multiple jobs) makes it more likely that leisure will decrease.
There is growing disparity in the distribution of time and money. As a
result, a clear structural change is emerging in the long term. These
developments will have less effect on the volume of travel than its nature
(frequency of travel, timing, destinations, combined business and private
travel). The travel agents and tour operators will be able to offer
personalized product and services which target increasingly specific
customer needs and offer convenience and time savings. This creates
positive prospects for organized travel, despite the many predictions of its
demise. The stagnation or even decrease in the number of vacation days

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also offers an opportunity for domestic tourism. Domestic vacations have
a particular growth potential in catering for additional vacation trips. As
fewer days are available for additional vacation trips, people tend to pick
closer destinations. Frequently the time and money available for annual
vacation is consumed by the main foreign vacation to such an extent that
closer destinations are the only possibility for second and third vacation
trips.

 Senior Citizen Tourism

Given the socio-demographic trend, senior citizens will grow as a tourist
market segment in India. Taking a broader view and considering other
markets of origin for Indian tourism (particularly in Europe), there is further
longer term growth potential in the shifting age structure. Identifiable
potential in senior tourism would continue to gain importance if the growth
in life expectancy outstrips the increase in lifetime working hours, so that
the period for retirement is at least not decreased. Improvements in the
state of health of older persons or greater technological and organizational
convenience in travel may help activate the potential for tourism which can
be expected from the demographics by 2020. One particular reason for
believing that senior citizens will remain the principal source of growth for
tourism in the foreseeable future is the fact that much of this market
segment is still currently financially secure, so that there are substantial
purchasing power resources available for tourism. After retirement, the
time available also increases accordingly. Senior citizens appreciate travel
as a way to keep physically and mentally fit and participate in social life. It
is likely that senior citizens in particular will invest in future in maintaining
their accustomed lifestyle. This could be associated with rising intensity of
travel, which is presently still below average.

 Reorientation in Tourism Product

The tomorrow’s tourists will be more sophisticated and will demand quality
tourism products and services. Thus, tourist product design and marketing
must adapt to the fact that its customers are becoming more aware.
Together with the expected increase in frequency of travel by the 40 - 60
age groups, this should have a positive effect on senior tourism. It should
not, however, be forgotten that as society ages the number of people with
health problems will also increase. The growing share of older people in
the total population will be accompanied by an increase in the number of
chronically ill old people. The result of the rising number of older people
and rising health and nursing costs will mean that the younger senior
citizens will increasingly be tied by the need to invest time (and money) in
supporting their parents. Packages combining tourism and nursing care
which takes into account the needs of relatives of the chronically ill or
people with health problems are currently still rare in the tourist market.

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There is also a trend towards a two-segment split in the senior market–
tourists who want to enjoy new experiences and who spend a lot on
tourism, and tourists who have a relatively small budget but who still want
to travel. The tourist industry will accordingly have to develop target group
specific packages for both groups, to a greater extent than it now does.
The economy group in particular is a target group whose size means that
it cannot be neglected. In future, marketing must increasingly be tailored
to match the needs and desires of older people. In order to address the
very heterogeneous target group of senior citizens successfully, thorough
knowledge of their much differentiated motivations and lifestyles is
needed, and this still needs to be gathered.

It is generally true that estimating the future development of eco- tourism

is subject to great opportunity for the tour operators. Thus, the
motivations, attitudes and behaviour of future generations are still largely
unknown territory, as is the assessment of their material situation.

 All Season Tourist Destination

Various current tourism forecasts show that the India has great potential
to offer to the tourists round the year tourism destinations as compared
with other Asian nations. Thus India could succeed in gaining market
shares in incoming tourism in the coming years as per WTTC forecasts.
However, despite the predicted dynamic growth of spending in India by
foreign tourists, this will have only minimal effect on the resulting direct
value added from domestic demand by tourism. In fact, in Asian countries,
India will benefit most from the high growth rates, and could accordingly
expand its position in international tourism. In 2005 India had 2.92 million
overnights from visitors from the ten European countries, with the
majority of all vacation trips to Rajasthan, Kerala, Goa and Mumbai
involving longer stays of at least 10 overnights.

Business travel to India is already very important in travel by the various

countries. Attractive packages for trade fair participants could further
promote the business travel segment, and at the same time strengthen
India as a location for international trade fairs within Asia. This could also
have a spill-over effect on incoming vacation travel.

 Emergence of New Destinations

It can be assumed that there is considerable opportunity for increasing
tourism to the India as a result of low price level. This gives a major
competitive advantage over traditional vacation countries. Another reason
for this growth is certainly that many travellers are still unfamiliar with the
destinastions. There is also great interest in travelling in these
destinations. For this and other reasons (number of inhabitants, income
levels, travel frequency, location), India is particularly important as a

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market of origin for all the nations. Developing the new markets requires
both travel operators and the destinations in the countries to step up their
marketing efforts, and also requires domestic travel agents to reconfigure
their offer.

The growth in services offered by budget airlines suggests that various

cities directly accessible through various airlines. This could also have an
impact on the domestic market, because in times of tight tourist budgets
the destinations will have a considerable competitive advantage. Rural
vacation tourism by contrast will develop slowly in many regions over the
next few years, despite boosts to investment from promotional measures.
The main reasons for this are inadequate tourist infrastructures and
underdeveloped and aging transport infrastructures. Health related
tourism has good prospects particularly in the Kerala and Himalayan
states. Very low prices and the assumption of costs of medical treatment
and rehabilitation in the these states which is provided for under the
Single Market will probably lead to substantial growth in demand and a
lasting flow of patients from different countries.

 Insecurity, Risks and other crises

Wars and violent conflicts, international terrorism, new diseases and
epidemics and the increasing number natural disasters and extreme
weather conditions have resulted in a current increase in attention to the
need for security. It is reasonable to assume that new security risks and
crises will take on a new scale, because of the growing shift in wars from
the state level to, for example, ethnic and religious armed conflict,
because epidemics can spread globally with extreme rapidity, and finally
because extreme weather conditions seem to be becoming an
increasingly frequent feature worldwide, with a growing scale of damage.
Questions of security and tourist risks are accordingly becoming
increasingly important for the future of travel. Today, a great need for
security is apparent in all tourist target groups, where security covers a
wide range: freedom from threats of war, terrorism, epidemics and natural
disasters, reliable positive socioeconomic development, a desire for
familiarity and order.

At the same time we see repeatedly that after a specific event (crisis)
awareness of a threat quickly fades among those wanting to travel.
Surveys show, for example, that earlier disasters and crises had little
impact on the 2005 travel season. In 1995 only 1 % of respondents intend
and to travel to a different destination than the one originally chosen, 1 %
cancelled their trip due to the tsunami in south-east Asia, 3 % were
undecided, but 95 % had not changed their vacation plans at all.

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Tourism as a whole generally recovers relatively quickly after every crisis,
and particularly nonrecurring events and natural disasters. Even so, the
question basically remains how the tourist industry will respond in future if
risks occur more frequently and have increasing impact.

 Climate
Alongside storms, and floods are the most frequent causes of damage
and injury from natural events. Between 1998 and 2003, around 800,000
people died in natural disasters worldwide. The International Disaster
Database shows that this link cannot be dismissed. There is a rising trend
in the storms, floods, earthquakes, volcanic eruptions, epidemics and
plagues listed in this database.

Tourism is one of the industries particularly affected by climate change

and natural disasters, specifically because these ultimately lead to a
change at different levels in the pattern of ´"most favoured” and “least
favoured” tourist areas. Discussions and measures in the tourist industry
should not be limited to strategies for adjustment. In addition, preventive
strategies are needed to reduce the scale and pace of environmental and
climatic change. Tourism as one of the sources of the anthropogenic
greenhouse effect should make a relevant contribution here, in its own
interest.
 Terrorism and Violence
Where there were formerly attacks or hijacking which affected individual
tourists, we are now seeing terrorism directed against tourists and tourist
destinations. Terrorists use the tourist system to attract global media
attention through spectacular attacks on tourists or the tourist
infrastructure. As a result, tourists avoid these destinations, which again
impact the tourist industry. The greatest impact on tourist demand comes
from terrorist attacks where tourists and locals are the direct target or
victims of the attack.

Thus, the importance of secure travel to tourists is growing, from the

decision to book (or not) through to customer expectations that travel
operators and local tourist managers will assume responsibility for the
tourist’s safety, life and health. However, the importance of making the
customer's vacation secure is still underestimated. Experts agree that
tourists' perception of risks and security significantly affects the image of a
destination and overall satisfaction, although to a very different extent. A
concrete and objectively understandable high level of security at every
stage of travel and transparent communication contribute decisively to
improving actual (objective) security and positively affecting the tourist’s
subjective impression of protection and security.

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 Epidemics and Health Risks

As a result of the growth of long distance travel to countries with different
climatic and hygienic conditions, travellers are at risk from a very wide
range of diseases. In many of the so-called developing countries which
are also often tourist destinations, 50 % of the total mortality rate is due to
infectious diseases. The greater people’s mobility, for example as a result
of tourist activities, the faster the consequences can spread. In the worst
case, a local tourist crisis can spread a virus worldwide with great rapidity,
as the global dissemination by travellers of SARS in early 2003 showed.
The following aspects in particular should be drawn from the overall
picture:

There is increasing inequality in income and living conditions, poor

population groups and regions are disproportionately affected by
diseases. Growing poverty and population growth and growth in diseases
are mutually reinforcing.

 Communication:
The risk perception of all the actors in tourism has so far been dominated
by terrorism and acts of violence, but in future the emergence of other risk
trends will lead to a more comprehensive understanding of tourist security.
As a result, risk communication will in future have to take on more diverse
and new functions. The focus should be on the educational function in
terms of risk prevention and awareness about informed risk management.
This applies to both travel tips and warnings by public agencies through
the media, consumer networks, travel guides, direct advice locally to
travellers and tourists and information services of travel operators and
travel insurance companies. However, such risk communication must be
given higher priority in the face of marketing and local interests. So far,
risk communication has been virtually unable to communicate positive
aspects and information – presenting greater security as a gain for
travellers, rather than a restriction. This is due particularly to the fact that
so far it has not been possible to evaluate many risks adequately and
these are not an automatic element in corporate communication. It is
likely, however, that risk communication could prove a unique feature in
future which could improve or create market opportunities. A prerequisite
for this is the existence of improved early warning systems and their
systematic expansion and use.

 Crisis Management:
Despite initial serious efforts at strategic early intelligence on tourist risks,
major travel operators have so far been primarily concerned with (reactive)
crisis management. By contrast, virtually no attention is paid to structural
causes for crises. Risk identification and management by the airlines is

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aimed primarily at measures to avert immediate danger and prevent
terrorist attacks. Airlines have fundamentally revised their security
concepts in part after the attacks of 11 September 2001. New security
strategies concentrate on preventive measures, ranging from improved
check-in to security measures on the aircraft. These measures are based
either on initiatives by the airlines themselves or the implementation of
national and international regulations. Similarity, the hotel and restaurant
industry is responding to new risks mainly with improved security
technology, choice of location and risk management. Most major hotels or
hotel chains have appointed security officers and cooperate with security
technology companies. International hotel chains are also advised by risk
consultants and security firms.

 Govt. Initiatives:
The governments are also taking various steps by formulating tourism
policy and try to respond at various levels to the risk trends. In certain
organizations the stress has been laid on the regulations requires by all
member countries to develop a system of quality assurance and national
programmes for air security such as SAARC, G 8 and others.

 Political Will:
The growth of tourism India could be explored in dialogue between politics
and science, for example if and how framework conditions could be
created which increase travel to India. Scenarios and historical and
empirical case studies could contribute to improved risk communication
and the development of prevention oriented early warning systems for
risks and crises in tourism. Moreover, political will has a profound impact
on the future of tourism industry in the country.
CHECK YOUR PROGRESS – II
Answer the following question.
1. Name any two factors responsible for the growth of tourism in India.
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Check your answer with the one given at the end of the unit.

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4.4 SUMMARY:
In this unit we attempted to give you an idea about the present status of
travel business and its future prospects. The present status of tourism
industry is directly associated with the efficient provisions of products and
services. In fact, it is attributed to the integrated efforts made by the
tourism organisations and various private associations. However, what we
achieved today may not repeat tomorrow. As demographic, socio-
structural & socio-cultural developments, information technology,
deregulations, globalization, liberalization and changing public attitudes
have posed constant challenges to the Indian travel agency and tour
operation business organisations. To compete with the future challenges
one must have sound resource base, management, Human resources and
close linkage with the other related organisations.

4.5 ANSWER TO CHECK YOUR PROGRESS:

Check Your Progress – I

1) See sub-sec.4.2.1
2) See sub-sec 4.2.2
Check Your Progress - II
1) See sec. 4.3.2

4.6 SUGGESTED READINGS:

 Chand Mohinder (2006), Travel Agency Management - An
Introductory Test, 2nd. (Ed.), Anmol Publications Pvt. Ltd., New
Delhi.

 Chand Mohinder (2003), Tour Operation Industry in India; an

Analysis of Operational Dimensions, in Tourism Development
Journal, vol.1st, No.1.

 Ministry of Tourism, Govt. of India, Travel and Tourism in India

Report, Sept. 2006.

 Summary of TAB working report No. 101, 2005, www.buerotab.com.

 WTTC report, 2004.

 WTO report, 2005

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4.7 REVIEW QUESTIONS:
1. Critically examine the present status of tourism industry in India.

2. Illustrate the future prospects of travel trade in India.

3. Explain the factors responsible for the future growth and

development of tourism industry in India.

4. Discuss the role and contribution of travel agency and tour

operation business in further growth of tourism business.

4.8 GLOSSARY:
Destination – a place that has touristic appeal.
Budget hotel - a hotel that cater the demands of economy tourist class.

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UNIT 5
CORE AREAS OF TRAVEL AGENCY BUSINESS AND
FUNCTIONS (TICKTING, TRAVEL FACILITATION,
DOCUMENTATION, MARKETING ETC)
Structure:
5.1 Objectives
5.2 Introduction
5.3 Origins of Term Travel Agency
5.4 Need for Travel Agency
5.5 Meaning & Definition of Travel Agents
5.6 Types of Travel Agency
5.6.1 Definition of Retail Travel Agency
5.6.2 Definition of Whole sale Travel Agency & its features
5.6.3 Full Services Travel Agency
5.6.4 Implant Agency
5.6.5 Special interest Travel Agency
5.6.6 E- Travel Agent or online Agents (OTA)
5.7 Functions of Travel Agency
5.7.1 Providing Travel Related Information
5.7.2 Planning tour itineraries
5.7.3 Liasoning with the tourism supplier / vendor
5.7.4 Costing of tours.
5.7.5 Marketing & Promotion of tour packages
5.7.6 Ticketing
5.7.7 Travel Documentation
(a) Passport
(b) Visa
(c) Provision of Foreign currencies
(d) Travel Insurance
5.7.8 Settlement of Account

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5.8 Summary / Lets sum up
5.9 Glossary
5.10 Check Your Progress
5.11 Clues to Answers
5.12 References
5.13 Terminal Questions

5.1 OBJECTIVES:
After reading Unit 5 on Core Area of Travel Agency Business & Functions
( Ticketing, Travel Facilitation , Documentation, Marketing etc. The aim of
this unit is two explain the concept of travel agency business and its
functions.

 Explain the need for travel agency in the tourism Industry.

 Define the term travel agents
 To Understand the type of Travel agencies
 To understand the benefits of Travel agency/ Travel agent.
 To understand the function of Travel agency in Travel agency
business.

5.2 INTRODUCTION:
In the Unit 5 leaner will understand about the core area of Travel agency
business.
In the core are of travel agency we will study what is the meaning of travel
agency and its need. In this Unit leaner read concept of travel agency
and what is the role of travel agency in tourism industry.
In this Unit we will understand the function of travel agency of travel
agency organization. In the functions of travel agency leaner read how to
travel agency provide travel related information to the customer. The
second function of travel agency is planning / preparing of tour itinerary
in travel agency for prospective customer & how it benefits for
customer.
In this unit learner will learn abut the function of travel agency how to
Liasoning with tourism supplier in the travel agency. After the third
function student read fourth function importance of costing the of tour
package. The most important function of travel agency is the marketing
and promotion of tour package in the travel agency.
After the marketing leaner understand. Ticketing function which most
important of travel agency without ticketing we can’t make the tour
package for travel agency. As learner know document section play a vital

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role in the international tourism under function learner will understand
passport , visa , travel insurance , hotel voucher , air ticket . Which is
mandatory function of travel agent. At the end of travel agency function is
final settlement of the customer and management a settlement the
account.
Through this unit leaner will get the complete information of all functional
department of travel agency & its benefits for customer.

5.3 ORIGION OF THE TERM TRAVEL AGENCY:

The Term’ Travel agent coined in the early years of the eighteenth
century. At that time was very simple with no formalities that exist today.
The different modes of transport available today were also not present in
those times. People were more motivated to travel only after the
transportation system such as railroads developed and organized travel
came into picture.
The rising income due to the industrialization and urbanization is another
factor that has helped in the growth of organized travel can be
associated with Thomas cook , the founder of Thomas cook group limited
, who was not only first organized travel agent in the world but also the
invention of the travel and tourism business as it is today.

Airline

Hotel Tour Operator

Travel
Agency
Transport Tourist
operator (individual/
(e.g. Car, group)
coach)

Cruises

Fig.5.3 Principal Suppliers for a travel agency

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5.4 NEED FOR TRAVEL AGENCY IN TOURISM:

Tourism require a wide range of tourism related services ranging
assistance in procuring a Passport, Visa , airline tickets accommodation ,
information about the destinations and attraction , local transport & other
service.
Tourism supplier of the tourism Industry need to approach their potential
customer and need their effectively. so that the task of the travel agent is
to link the supplier of tourism service to the consumer therefore the
demand of both the supplier and the consumer are fulfill . This link in
the tourism system is travel agent means through which the tourism
product is sold to the customer or tourist.
They form their channel of distribution. Their role is bring the customer of
distribution plays an important link in the tourism system, linking tourism
supply and demand.
Travel Agent either working for a travel agency or individual working on
their own assist their client in planning their trips, planning tour itineraries
, making reservations for airlines, hotels, and other services . They act as
intermediaries between the customer and the principle supplier. They sell
a variety of travel product and services and help their client in turning their
dreams in reality. The Travel Agent/Travel agency sells the principles
services and is rewarded by commission.

Principal Suppliers

Travel General Sales Agent (GSA) Tour Operator

Customer Agent

Travel Agent
Travel Agent
Customer

Customer Customer

Fig. 5.4 Distribution Channels used by suppliers.

5.5 MEANING AND DEFINITION OF TRAVEL AGENCY:

Definition of Travel Agency:
A Travel Agency may be an individual, a business firm, or company
which acts as an intermediary in the sales and promotion of different

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travel related services, such as accommodation , airlines , railways, road
transports cruise, etc and earn commission received on selling service
services to its clients .
A Travel agency can also be referred to as a retail travel agency since it
sells the various services offered by the travel supplier directly to its
customers.
Meaning of Travel Agency:
A travel agency mean the intermediaries agency between the tourism
service suppler and the customer or is a retail business that sells travel
related products and services to customers on behalf of suppliers such as
airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and
package holidays that combine several products. In addition to dealing
with ordinary tourists most travel agencies have a separate department
devoted to making travel arrangements for business travelers and some
travel agencies specialize in commercial and business travel only. There
are also travel agencies that serve as general sales agents for foreign
travel companies, allowing them to have offices in countries other than
where their headquarters are located.
Travel agent of /Travel Agency:

An individual who arranges travel for individuals or groups. Travel agents

may be generalists or specialists (cruises, adventure travel, conventions
and meetings.) The agents receive a 10 to 15% commission from
accommodations, transportation companies and attractions for
coordinating the booking of travel. They typically coordinate travel for their
customers at the same or lower cost than if the customer booked the
travel on his/her own.

5.6 TYPES OF TRAVEL AGENCIES:

As learner know that in the earlier days travel was mainly by sea and
railway; tickets were sold directly at the offices of the steamship
companies and the railway stations. But when the airlines and the
transport operators started operating, they were unable to earn profit, as
they could not sell enough tickets through their own offices. The airlines,
therefore, were forced to identify sales outlets and this started the concept
of retail travel agencies.
To boost their sales, the airlines offered higher commission to the travel
agent.

5.6.1 RETAIL TRAVEL AGECIES AND ITS DEFINITION:

Retail Travel Agency is one which sells the different travel-related services
directly to its clients on behalf of the principal service providers/services,
i.e. hotels, airlines, cruises, railways, coach operators, etc. and in return

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earns a commission from them. The retail travel agency may add a
markup cost on these travel services. Thus, it earns its income form the
commission earned from suppliers as well as from the mark up.
Definition:
According to Airlines Reporting Corporation (1987), a retail travel
agency is defined as a business that performs the basic function of
quoting fares and rates , books seats for airlines , railways , coaches ,
makes reservations for hotels , arranges for passport , visa, and , other
documentation services, and acts on behalf of the tourism vendors’.

The services performed by a retail travel agency are as follows:

 Preparation of tour itineraries
 Transportation- air, rail and road.
 Accommodation
 Insurance services
 Foreign exchange
 Travel documentation
 Special interest tour.

5.6.2 WHOLESALE TRAVEL AGENCY DEFINITION AND ITS

FEATURES:
Wholesale Travel agency:
A Wholesale travel agency plans, organizes, develops and sells packages
tours through a network of travel agencies or directly to the clients if it
operates as a retail travel agency. Some travel agencies operate as both
retail as well wholesale travel agency, for example, Thomas Cook, Travel
Corporation of India, etc.
The Wholesale travel agency is one which assembles the different
components of travel and forms a package to suit the needs of tourists. A
wholesale travel agency thus designs package tours and sells them under
its agency’s name.
Feature of wholesale travel agency:
The feature of the wholesale travel agency is as follows:
 It serves as a link between the principal travel suppliers and retail
travel agency.
 It negotiates with the travel suppliers for best possible rate on the
bulk booking.
 It assembles the various travel components such as hotels, airlines,
rail and ground transport to form a package tour.
 It conducts research to know the changing preference of tourists.

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 It markets and promotes its products through advertising, etc. to
increase sales volume.
There are many ways in which travel agencies can be further
classified. Travel agencies are generally classified as follows:

5.6.3 FULL SERVICE TRAVEL AGENCY:

A full service agency organizes and handles all types of tours for leisure,
free individual travellers (FITs), group individual travelers (GITs) ,
corporate travellers, etc inbound , outbound , and domestic destination.
Individual departments work on the different functions of travel agency, for
example, leisure department, inbound department, outbound department,
trade fairs, accounts, etc.

5.6.4 COMMERCIAL TRAVEL AGENCY:

Commercial Agency
Commercial agencies are specialized for meeting the requirements of
corporate travelers. Such agencies are mainly located at the business
centre and cater only to the business travelers. Walk-in or individual
travellers are not served by these agencies. The airline, hotel, car/coach,
documentation. etc, are all looked after by the trained staff.

5.6.5 IMPLANT AGENCY:

Implant Agency
It is branch office of full- fledged travel agency/tour operator functioning on
the premises of a corporate office. It handles all travel arrangements of the
corporate office.

5.6.6 SEPCIAL INTEREST TRAVEL AGENCY:

Special Interest Travel Agency
Specializes in creating tour programs for special interest groups, such as
adventure, wildlife, religious etc. For example, Pug Mark, Pune.

5.6.7 E-TRAVEL AGENTS OR ONLINE TRAVEL AGENTS (OTA):

E-travel agents or online travel agents (OTA):
Also know as virtual/ online travel agents (VTA’s) or e-retailers, they are
the mew generation travel agents such as MakeMyTrip.com, Yatra.com,
ezego1.com, Travelgure.com, and lastminute.com. These web portals
allow consumers to access information and make online bookings.

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5.7 FUCNTIONS OF TRAVEL AGENCY
The Travel Agency being an intermediary has an active role in providing
quality services to the tourist.
The Travel Agency performs a number of function such as:
 Providing Travel Related Information
 Planning tour itineraries
 Liasoning with the tourism suppliers / vendor
 Costing of tours.
 Marketing & Promotion of tour packages
 Ticketing
 Travel Documentation
 Passport
 Visa
 Provision of Foreign currencies
 Travel Insurance
 Settlement of Account

5.7.1 PROVIDING TRAVEL RELATED INFORMATION:

Provide Travel related Information is one of the most important and basic
function of travel agency business. When the client or prospective client
arrives in the office of the travel agency, he seeks information that could
help him undertake the tour. So that travel agency provide necessary
information about travel to their client. Therefore the travel agency
professional should have deep an detailed knowledge of the tourist
destination , major attraction, weather condition , accessibility , culture ,
location, destination on the distance from the airport /railway station,
different categories of hotels and the services provided by them, etc. The
staff should well trained & skilled, fluent in local language – English &
foreign language if dealing with foreign countries.

5.7.2 PLANNING /PREPARING OF TOUR ITINEARIES:

Planning of tour itinerary is secondary mandatory function of travel
agency. It is most important aspect for Domestic, Inbound & outbound
tours weather group or individual tours.
The tour professionals after receiving the client’s preference of destination
to be visited his/her approximated date of travel and duration, the mode of
transport, routing, hotel, etc. It has to plan the itinerary to suite the client’s
need. The itinerary is a suit the client’s need.
The itinerary is preplanned tour programme in sequential order like day
by days description of tour & as per the itinerary identity the origin points
to destination points & destination enrouting point , hotel needs , mode of

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transport , sightseeing , car/ coach and other relevant details related to
the tour.
Before planning a tour for his /her prospective customer, a travel
agent must answer the following question:
 Who are the potential buyers and where do they come from?
 What are their like & dislikes?
 What are their transport preferences?
 Whether they would mix business with excursion?
 What are their special preferences if they are travelling along with
their families, elder’s children’s, or disabilities etc.?
 When would like to start their itineraries?
 When they would like to end such itineraries?

5.6.3 LIASONING WITH TOURISM SERVICE

The tourism suppliers are the airlines, railways hotels, transport operators,
Cruise companies, tour operator, travel insurance companies, etc. The
travel agents, before selling any travel product to their client, they have to
contact their service providers on their behalf.
The travel agent have to negotiate for best possible rate from the
service providers .They suppliers give a certain amount of fixed
percentage as a commission to the travel agents for selling their
products. Some service providers also give net rate as per their business
relationship and business agreement or contract with the tourism suppliers
in this regard.
This commission structure, period of contract, and terms and conditions
are mentioned in the agreement.

5.7.4 COSTING OF TOURS

As learner will understand about the Costing of tours and most important
function of Travel agency. after the Liasoning with tourism supplier
/vendors agents go for costing of tours .After planning the tour and
negotiation for rates with principal supplier , the next job of the travel
agent is to do the tour costing. The costing of tour is done for both the
inclusive tours (package tours and individual tours). The tour costs are
worked out on per person basis which. In the domestic tours included –
hotel, Meal charges, airlines airfare, hotel airport transfers charge,
sightseeing by Car /Coach, guide fees etc.
In international tours costing include - hotel airlines , cab and coach
transfers , Visa , passport, travel documents , forex arrange , traveler
cheque , guide , local transport .The tries to provide the best facilities at
least cost as per the client requirement and budget .Therefore tour
arrange by travel agency must be well – planned and cost – effective .

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The plans must be made in such manner as to deliver the best possible
level of comfort and economy to the traveler and per the economic level of
the client.

5.7.5 TICKETING:
Ticketing is one of the most common function of a travel agency. The
travel department of a travel agency has two sub department – domestic
ticketing and International ticketing. Ticketing department is responsible
for handling ticketing query weather it is domestic or international.
The executive at the travel desk should aware of the computer and
internet familiar. He have good knowledge of flight schedules’ of various
airlines and airlines applicable for journey like – Special fare , discounted
fare , night fare , classed to travel , classes of travel , special fares ,
booking and cancellation rules ,booking update , prephone and the city
code and airport code and airlines code , reservation code , special
service etc.
The travel desk counter executive have good knowledge of Computer
reservation system (CRS) is commonly used for making airlines bookings.
Travel agent executive should also be familiar with Global distribution
system (GDSs) such as Amedeus, Galileo, Abacus etc.

5.7.6 RESERVATION:
After ticketing reservation is most importance function the travel agents.
The travel agent after getting the confirmation and initial payment from
the client has to book airlines seat , hotel rooms , transportation
arrangement and other services as per the requirement of the clients .
The tour professionals should thus be familiar with the term and
abbreviation used for and hotels . The travel agents executive
preferably used phonetic alphabet used at the time of making reservation
on telephone. Once the booking has been confirmed and payment make
by client, travel agent executive confirm the ticket, itinerary, and raise
voucher to be handed over to the client.

5.7.7 TRAVEL DOCUMENTATION:

As learner understand that after the Reservation another important
function of travel agency is to prepare of arrange the travel documentation
for the client.
Travel document are the papers associated with the travelling abroad
particulars of international journey including – airline ticket , other ticket ,
hotel voucher, Visa , travel Insurance , foreign exchange (forex) and
Passport .

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The documentation department helps its clients to providing facilitates
Service.
The basic document service is necessary for any passenger are such
as:
a) Passport
b) Visa
c) Travel Insurance
d) The foreign Exchange
e) Health documents (health certificate )

5.7.7 (A) PASSPORT:

The is an official document, which is defined as “ an official document

issue by a competent public authority to national or to alien resident of
the issuing country ‘
A Country government issue the passport to citizen allowing them to
exit and enter their own country and to seek entry into and exit from
foreign countries.
5.7.7 (B) VISA:
VISA stands for visitor intended stay abroad. when a person wants to visit
a foreign country permission has to be sought from the foreign
government representation , which permit him/her to enter and stay in a
foreign country for a specific purpose .
The VISA issue depending upon the nature of the person’s abroad
The consulate of the visiting country is authorized to issue a VISA .
5.7.7 (C) TRAVEL INSURANCE:
Traveler can face many health related problem at the time of travel to
aboard. If a traveler takes a travel Insurance cover hem can make a
smooth ride through the problem in term of paying off the expenses
through the insurance cover . When a passenger buy a travel insurance
cover, the need of cover safety and security or medical contingencies.
To avoid such situation a passenger is advised to take a travel
insurance cover to help take such problems.
A part from the health , policies are made for covering lost baggage ,
any financial failure of the service provider s and other misfortunes etc.
The travel Insurance policy can be bought from insurance companies
clines bank directly through the insurance companies like – ICICI
Health, tavellite , Relience Insurance . The Policy vary as per the time
period and the rules of different countries. There are different levels of
coverage and will vary from policy to policy.

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A travel insurance policy generally cover the following:
 Medical and other related expenses.
 Personal liability
 Cancellation , missing departure
 Hi- Jacking aircraft
 Travel trade indemnity ( Travel Agency , Bankrupt )

5.7.7 (D) FOREIGN EXCHANGE:

After the documentation foreign currency is the next function of travel
agency. If somebody wants to travel abroad he /she need foreign
currency. The travel agent provide foreign exchange for travel to abroad.
The foreign exchange is given to the traveler in the form of cash or trveller
cheque. Which can be exchange any foreign country. The foreign
exchange is issued based on the guidelines of reserve bank of Indian
(RBI) under FERA (Foreign exchange regulation act).
The different form of foreign currency are:

 Cash
 Credit Card
 Travller draft
 Bank draft
 Telegraphic transfer
The money for traveler is entitled to carry while travelling abroad is termed
as BTQ, which means basic travel quota.
For Indian traveling abroad
Other than for business purpose is entitled for a BTQ of USD 10,000 per
trip & business traveler is entitled to a BTQ of 25,000 per trip. The basic
document required for issuing BTQ need BTQ form , a valid passport of
the traveler , a confirmed ticket and visa stamped in the passport .

5.7.8 SETTLEMENT OF ACCOUNT:

As leaner know Settlement of Account with the tourism supplier / client is
one of the major function of a travel agency. Settlement of Account –
linked with the function of ticketing and reservation of accommodation in
hotel for client. Accounts department play an important role in travel
agency.
The working in the accounts department should be familiar with and have
through knowledge of foreign Currencies, their cross value, exchange
regulation etc. which vary country to country.

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5.8 SUMMARY / LETS SUM UP:
After this Unit now we have understood core area of travel agency
business & function Travel agency. Under the core area of travel
agency we have understood meaning, definition & type travel agency in
travel agency organization . In this unit we also understood what is the
role of travel agency function & responsibility of travel organization.
Through this unit leaner understood concept of travel agency & how to get
benefit customer from travel agency. In this unit we also understood how
we run travel agency through travel agency function.

5.9 GLOSSARY:
- Travel Agent – An individual who arranges travel for individuals or
groups. Travel agents may be generalists or specialists (cruises,
adventure travel, conventions and meetings.) The agents receive a 10
to 15% commission from accommodations, transportation companies
and attractions for coordinating the booking of travel. They typically
coordinate travel for their customers at the same or lower cost than if
the customer booked the travel on his/her own.
- Visa - A validating document placed in a passport by a foreign
government, indicating that the traveler's passport has been examined
and the passport holder may travel to that specific country. Not all
countries require visas.
- Tour Wholesaler---- A Company that doesn’t sell to the public but
through travel agents and particularly tour and coach operators. They
generally rely on low margin, mass market product.
- Tour Wholesaler - An individual or company that sells tour packages
and tour product to travel agents. Tour wholesalers usually receive a
20% discount from accommodations.
- Tourism: the term for the movement of people to destinations away
from their place of residence for any reason other than following an
occupation, remunerated from within the country visited, for a period
of 24 hours or more.
- Itinerary – A travel plan or schedule which includes all travel details
such as date time, mode of transport, accommodation, etc. for
travelers.
- Passport - An official document required to travel outside the country
which proclaims the citizenship of the holder.
- Electronic ticket an airline ticket in the form of a computer entry. An
electronic ticket, or e-ticket, is supposed to function like an actual
paper ticket by reserving you a space on a flight; all you need to do is
give an identification number and show an ID at the airport. But you
should also bring the written receipt sent by the airline in the event the

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airline's computer system has crashed or the airline has lost your
reservation.
- Foreign Tourist: Any person visiting a country, other than that in
which he/she usually resides, for a period of at least 24 hours
(Committee of Statistical Experts of the League of Nations, 1937).

5.10 CHECK YOUR PROGRESS:

1) What is Travel Agency?
………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

……………………………………………………………………………………..

2) What is the need of Travel Agency in tourism Industry?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

3) What do you mean by Travel Documentation?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

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4) What are the importance of Travel related Information?
………………………………………………………………………………

………………………………………………………………………………

………………………………………………………………………………

………………………………………………………………………………

………………………………………………………………………………

5) What are the importance of Travel Agency function?

………………………………………………………………………………

………………………………………………………………………………

………………………………………………………………………………

………………………………………………………………………………

………………………………………………………………………………

5.11 CLUES TO THE ANSWERS

1) Refer Sec. 5.5

2) Refer Sec. 5.4

3) Refer Sec. 5.7.7

4) Refer Sec. 5.5.1

5) Refer Sec. 5.7

5.12 REFERENCES
 Bhatia,A.k, Tourism Management and Marketing :The Business of
Travel Agency Operation , First Edition, Sterling Publishers, New
Delhi.

 Kamra.K.K and Chand Mohinder 2002,Basics of Tourism Theory

Operation and Practic , First Edition , Kanishka Publishers , New
Delhi , PP145-154.

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 Roday, Sunetra .Biswal,Archana and Joshi, Vandana 2011 ,
Tourism Operations and Management , Third Edition , Oxford
University Press , New Delhi PP165- 175.

 Gregory, R.2007, Managing Tourism in South Africa, Oxford

University Press, Cape two.

5.12 TERMINAL QUESTIONS

Q1. What is Travel Agency? What are the different types of Travel
Agecny?
Q2. Explain the Function of Travel Agency?

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UNIT 6.
DEPARTMENTALIZATION OF TRAVEL AGENCY
AND ORGANIZATIONAL STRUCTURE OF
STANDARD TRAVEL AGENCY
Structure:
6.1 Objective
6.2 Introduction
6.3 Understanding the Departmentalization of Travel Agency
6.3.1 Tour Department division
6.3.2 Ticketing Department
6.3.3 Travel Documentation Department
6.3.4 Foreign Exchange Department
6.3.5 MICE Department
6.3.6 IT Department (Information Technology Department)
6.3.7 HR (Human Resource Department)
6.4 Organization Structure of Standard Travel Agency
6.4.1 Organization Structure of Small Scale Travel Agency
6.4.2 Organization Structure if large Structure Travel Agency
6.5 Summary /Lets Sum Up
6.6 Glossary
6.7 Check Your Progress
6.8 Reference
6.9 Terminal Question

6.1 OBJECTIVES:

After reading Unit 6 Departmentalization of Travel Agency and

Organization Structure of Travel Agency. The aim of this Unit is to explain
about the departmentalization of Travel Agency with various department
and leaner understood what type organization structure in the standard
travel agency.
 To Understand the Departmentalization of travel agency.
 To Understand the how various department working in the
Travel agency.
 To Understand the Organization Structure of Standard Travel
Agency.
 To Understand the term Passport.
 To Understand the term Visa.

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 To Understand the Travel Document & its Importance.
 To Understand the Organization structure as per scale of Travel
agency.

6.2 INTRODUCTION:

In this Unit you will read and understand the Departmentalization of travel
agency and Organization structure of standard travel agency. In the
departmentalization of the travel agency learner read working of various
department of the travel agency like – Tour department secondly
Ticketing department , MICE (Meeting Incentive Conference Exhibition )
department , Information technology department , Human Resource
department, Accounts Department . So that after Completion of this unit
the learner will know about the role and responsibility of various
departments in the travel agency organization and how it benefits the
organization and the customer.
In the second phase of the Unit 6 leaner will read regarding the
Organization structure of the standard travel agency. In the Organization
Structure of a Travel agency learner will understand about the hierarchy
of the management in the Organization structure of travel agency learner
read small level Travel agency Organization Structure of Travel agency.

6.3 DEPARTMENTALIZATION OF TRAVEL AGENCY

As we know that departmentalization of Travel Agency is most important
role play in travel agency business. As learner understood the
departmentalization is depend upon Size and Volume of operation of a
travel agency. So that we can say that responsibility of the manager is to
focus the departmentalization for effective functioning of the travel agency.
As leaner have understood that in the departmentalization of Travel
agency we have various department of a travel agency details as under
below:

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DEPARTMENT OF A TRAVEL AGENCY:

1. Tour Department:
(a) Domestic & Inbound Tour Division.
(b) Outbound Tour Division.
2. Ticketing Department
(a) Domestic Ticketing Division.

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(b) International Ticketing Division.
3. Travel Documentation.
(a) Passport
(b) VISA
(c)Travel Insurance
(d) Traveller cheque
4. MICE DEPARTMENT
(a) Arrangements for Meeting.
(b) Arrangement for Incentive Tour.
(c) Arrangement for Conference.
(d) Arrangement for Exhibition
5. IT (Information technology) Department
(a) Internal Computer system handling
(b) Handling Company website
(c) Handling company toll free no software
6 HR (Human Resource) Department.
(a) Employee hiring
(b) Providing employee training.
(c) Personality development of employee
7. Accounts Department

6.3.1 TOUR DEPARTMENT:

In the large scale Travel Agency have Tour Department & this
department is responsible for domestic /Inbound and outbound
operation .It divided into two part one is the Inbound tour division second
Outbound tour division .
(A) INBOUND TOUR DIVISION
In the large scale travel agency having inbound tour division. Inbound
tour department handling inbound tourist. Inbound tourist coming from
overseas. This division provide various service for inbound tourist right
from their arrival to departure such as – at the time of arrival Air transfer
, accommodation , local sight by car / coach , entertainment , guide ,
escort and other ground service .
The Inbound tour division gets their business directly from individual or
through the foreign tour operators. Inbound tour division help in boosting
of travel agency Company through huge & valuable commission in term of
foreign currency earning.
(B) OUTBOUND TOUR DIVISION
Outbound tour division is the second part of the tour department of the
travel agency .Outbound tour division operates tours to foreign countries.
The Outbound tour division design and marketing of tour package for

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outbound tourist. Outbound tourists are those tourists those who visit to
another country for purpose may be leisure and recreation.
The responsibility of Outbound tour division is all the necessary
arrangement and Documentation for Outbound tourist such as -
Passport , Visa , ticket , hotel booking , accommodation, transfer ,
ground arrangement , sightseeing , coordinating foreign tour operator &
the earning source of the income is commission for the Outbound tour
service supplier company .

6.3.2 TICKETING DEPARTMENT:

This department is the most important department of the Travel Agency.
This department is support both Inbound and outbound tour division. The
travel ticketing department has to subdivision.
(1) Domestic department
(2) International ticketing division

(a) DOMESTIC TICKETING DEPARTMENT:

Domestic ticket is the term used for all travel with in the country. With the
growing of the airlines network, frequency complication between airlines. It
is most busy department of any travel agency. The responsibility of
domestic ticket desk executive to provide check flight schedule, to check
the status flight, issue of the ticket and hold the air ticket for domestic
tourist. The executive desk good knowledge of city code and airlines code
and he is well computer and internet savvy. For the domestic ticketing
executive use computer reservation system like-Amedius,Galileo,Sabre
etc.
The domestic ticket desk executive of good knowledge of airlines name,
cancelation process, well aware about special service for special
passenger.
(b) INTERNATIONAL TICKETING DEPARTMENT
International ticketing division is the second most important ticketing
division of the international ticketing department of travel agency the
responsibility of the international department is handle the query regarding
international travel. International ticketing executive should good
knowledge of international airlines schedule knowledge country code, city
code, airport code, IATA rules & regulations, good knowledge of
International airline fare rules, and having a good handling of Computer
reservation system.
Therefore we can say that through International ticketing division boost
up the Outbound Journey and Outbound Tour promotion of Intentional
tourism promotion.
It is the one most important earning source of the travel agency.

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6.3.3 TAVEL DOCUMENTATION DEPARTMENT:
Travel Documentation department is one of the most important
department in the travel agency. Responsibility of the travel
documentation department is preparation of travel documents for
outbound traveler.
This department provide facilitation service to the client such as:-
 Passport
 Visa
 Travel Insurance
Travel Document are the papers associated with particular Journey
including air tickets , Hotel voucher , Visa , Passport , Travel Insurance ,
foreign exchange etc.
(a) PASSPORT
The Passport is an official Documents which is issued by competent
Public authority to nationals or to alien residents of the issuing country.
(b) VISA
Visa stands for “visitor intended stay abroad”. Visa is official confidential
document or Stamped of visiting country or it show on your passport and it
show the permission of foreign government for visit stay abroad. As
stamped of visiting country or it show on your passport and it show the
permission of foreign government for visit stay abroad.
(c) TRAVEL INSURANCE
Travel insurance is the one of the most important travel Document at the
time of travel to abroad. Customer can obtain the insurance through travel
agent. Because the traveler can face many health related problem If
traveler takes a travel insurance policy cover:
 Medical and related expenses
 Personal liability
 Cancellation, missed departure.
 High Jacking.

6.3.4 MICE DEPARTMENT OF TRAVEL AGENCY:

MICE is stand for Meeting Incentive Conference Exhibition. MICE is the
one of the most important department of large Scale Travel agency. This
department handling MICE tourist for business organization & getting
huge Commission from travel agency linkages.

6.3.5 INFORMATION TECHNOLOGY DEPARTMENT:

It is the most important department of the travel agency because
information technology also play vital role of the travel agency. Because
world without IT we can’t do nothing in the travel agency. In the IT
department such thing come under mention below.

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1) Internal Computer system
a. IT department handle & Trouble shoots of the internal computer
system.
2) Company Website handle
In the IT department also update the company website & trouble
shoot the problem.
3) Handling Toll free no software
Under IT department maintaining and handling the company toll
free number software of travel agency.

6.3.6 (HR) HUMAN RESOURCE DEPARTMENT:

Human Resource department if one of the most important department any

travel agency. Without HR department we can’t run the large scale Travel
agency. So that responsibility of the Human Resource department is time
to time conduct new & existing employment training.
 Recruitment of all the department for Human resource.
 Human Resource department conduct time to time personality
development programme for the all department. Whether they are
new employ of existing working employee.
 One of the major responsibility of HR department delivered the
report for performance appraisal, hiring, firing the employee as per
the performance of employee.

6.3.7 ACCOUNT DEPARTMENT:

Account department is the backbone of any travel agency. It deals with all
the financial transaction matter of the company. Working or Accounts
department -
 Maintain the all Income and expenditure Records of company.
 Handle all the revenue either cash cheque or other forms of income.
 Accounts department coordinate with all the supplier and vendors of
travel agency like – payment receiving and sending to other travel
agent and the service supplier.
 Accounts department is also making the employee salary and handling
the financial transaction of with in the travel agency.

6.3.8 FOREIGN EXCHANGE DEPARTMENT:

Foreign exchange department handle all foreign currency transaction with
the client and other foreign vendors. It provides the foreign currency for
the outbound traveler and make the conversion of the foreign currency. –
like, Dollar , Euro , Diner , Great Britain Pound .

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6.4 ORGANISATION STRUCTURE OF STANDARD TRAVEL
AGENCY
Travel agency depends type of client and Volume of business. As per the
business segment they divided into the department. And as per the size of
business they developed organization structure.
Organization structure of Travel agency. We can divided into two
parts:
(1) Organization structure of large Scale travel agency /standard
Travel agency.
(2) Organization structure of Small scale Travel agency.

6.4.1 ORGANISATION STRUCTURE OF LARGE /STANDARD TRAVEL

AGENCY:
Large scale travel agency has its own qualified staff and skilled dominated
in major cities of the world. Both type of travel agency produced manager
of each department accordingly. Each to deliver the enteric product and
service package to the tourist

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Fig - 6.4.1- shows the Organization structure of standard/large travel

agency. It is public limited company or MNC of the cases. A large travel
agency may become a producer of tourism service with the passage of
time. In that case, it may acquire hotel, motel, resort, cruise lines etc.
Then, it operates as a producer – cum – distribution.

6.4.2 ORGANISATION STRUCTURE OF SMALL SCALE AGENCY:

A small level travel agency can have tie-up with other small size of tourism
service supplier. Whereas a large scale Travel agency tie up with large
or all service supplier according to the business because of large size of
business.

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Fig 6.4 Organization Structure of Small Scale of a Small Travel

Agency
Director

Finance Travel Counsellor

Travel cum Marketing
& Executive
Executive
Accounts
(Domestic & Executive
International)

Assistant
Accountant Assistant
(Passport

&

Other Services )

Fig 6.4.2:- Shows the organization structure small travel agency. It is a

private limited company in most of the case. A small travel agency can
become a large travel agency with the passage of time.

6.5 SUMMARY:

After going through Unit 6 leaner have understood about the

Departmentalization of Travel Agency. Through this learner have
understood about the working profile of different department in the Travel
agency, Organization Structure of Travel agency.

In this Unit leaner understand the Organization Structure of various level

of Travel agency. At the end of this learner understood about the
Organization structure of travel agency depend upon the size and volume
of business handle the company.

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6.6 GLOSSARY:

- Agent – A person authorized to act on behalf of another, for

example , a travel agent is authorized by the provider of services
such as airlines , car rentals , tour operators , hotels ,etc to sell
travel – related services on their behalf.
- Convention – An assembly of people meeting formally to discuss
common issues and formulated policies. Conventions are normally
annual event and attended by large number of people.
- Meeting - In the context of tourism it may be defined as an
organized event , which brings people together to discuss a topic of
common interest which may last for a new hours or few days and
which utilized services of the tourism industry .
- Exhibition or Trade fair - It is the display and sale of product or
service to an invited audience or to the general public , with an
aim to creating awareness and promoting products. They are of
importance to the tourism Industry because buyers, sellers and
exhibitors travel long distance to visit them.
- Incentive Travel - Incentive travel is offered to motivate or reward
staff exhibitions are organized to promote corporation. Etc.
- Domestic Tourism - Travel undertaken within one’s own country.
- Tourism: the term for the movement of people to destinations away
from their place of residence for any reason other than following an
occupation, remunerated from within the country visited, for a period
of 24 hours or more.
- Web Fare (also referred to as an Internet fare) - A highly restricted
fare the airline offers only on the Internet for a limited period of time.

6.7 CHECK YOUR PROGRESS:

1) Why do we need to departmentalization our agency as per Operation?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

……………….…………………………………………………………………….

………………………………………………………………………………………

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2) What is the job description of ticketing department?

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

3) What is the job description of Tour department?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

4) Describe the responsibility of foreign exchange department?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

5) Describe the responsibility of Travel documentation department?

………………………………………………………………………………………

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………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

6.8 CLUES TO ANSWER:

1) Refer Sec. 6.3

2) Refer Sec. 6.3.2

3) Refer Sec. 6.3.1

4) Refer Sec. 6.3.4

5) Refer Sec. 6.3.3

6.9 REFERENCES:
 Roday, Sunetra .Biswal,Archana and Joshi, Vandana 2011 , Tourism
Operations and Management , Third Edition , Oxford University
Press , New Delhi. P173.

 IGNOU 2003, School of Social Science MTM -13 Tourism Operation,

New Delhi. P.79.PP. 85-86.

 Kumar.A.2005, Tourism Administration and Management UGC-

NET/First Edition, Cosmos Bookhivec(P) ltd , Gurgaon, PP6.17-620.

6.10 TERMINAL QUESTION

Q1. Briefly Describe the Departmentalization of Travel Agency?

Q2. Describe the Organization Structure of Standard Travel Agency?

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UNIT 7
SETTING UP A TRAVEL AGENCY, FISCAL & NON
FISCAL INCENTIVE PROVIDED BY THE
GOVERNMENT AND SOURCE OF INCOME
Structure:
7.1 Objectives
7.2 Introduction
7.3 Requirement of Travel Agency
7.3.1 Infrastructure & Financial requirement for Travel Agency
7.3.2 Approvals from Concerned body
7.3.3 Recognition from principle supplier for Travel Agency
7.3.4 Incentives & benefits (Fiscal & Non Fiscal Incentive & benefits
provided by the government.
7.4 Sources of Income of travel Agency.
7.4.1 Commission on selling their products to the clients
7.4.2 Incentive overrides.
7.4.3 Income from service charge
7.4.4 Mark-up on tours.
7.4.5 Wholesale fee
7.4.6 Profits for sale of own tours.
7.4.7 Commission from mode of transport.
7.5 LETS SUM UP/SUMMARY
7.6 Glossary
7.7 Check your progress
7.8 Clues to Answer
7.9 References
7.10 Terminal and Model Question

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7.1 OBJECTIVES:
After reading Unit 7 learner will understand about the Setting up a travel
agency, Fiscal Incentives provided by the Government & Sources of
Income. This Unit aim at explaining the concept setting the Travel Agency,
Understood the Incentive provided by the Government & Information
provide regarding Sources of Income of Travel agent.
 To understand how to set up a Travel Agency.
 To understand the things requirement of setting up the Travel
Agency.
 To Understand about Fiscal & Non Fiscal Incentive Provided by the
Government for travel Agency.
 To Understand the Sources of Income of Travel agency.

7.2 INTRODUCTION:
In this Unit leaner will Understand about the Setting up of a Travel agency,
Fiscal & Non fiscal Incentive provide by the Government and Sources of
Income.
As leaner will understand what the important things are at the time of
setting up a travel agency we need, various type of approval of concerning
authority. At the time setting up of travel agency we also need the
recognition from principle supplier of the travel agency like – Hotel
Airlines, local transport company etc.
One of the most important things in this Unit is ‘what fiscal & non Fiscal
Incentive with benefits provided by the government at the time setting up
the travel agency.

7.3 SETTING UP OF TRAVEL AGENCY:

In setting up a travel agency business there are no legal requirements. In
some countries however, government exercise some kind of licensing
control over agencies. Most principals’ license the sale of their service
through the issue of an agency contract or agency agreement. In the
absence of such a contract or agreement, a travel agency will not get any
commission from selling the service on behalf of the principal. The income
of a travel agent is derived only from a commission that they receive from
the principal after selling their services.
A lot of planning goes into starting and setting up of a travel agency. Any
kind of business is risky and the person involved should have proper
knowledge of the product he /she is selling. Similarly, for a travel agency
business, the person should have good product knowledge and
presentation skills. He / she should be clear about the product which he
/she wish to sell / for example, whether the travel agency wants to

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handle domestic tours , inbound tours , outbound tours , or all of these ,
has to be decided in advance. This has to be decided by the travel agent
at the initial planning state. The staff to be employed should be trained
properly to handle the queries asked by tourists. Qualified and trained staff
should be hired by the employer to handle the clients.

7.3(A) REQUIREMENT FOR TRAVEL AGENCY:

The Travel agency can be successful if it meets the following minimum
requirements:
 Enough finance to run the business.
 A centrally located premises or near a business centre.
 Qualified trained staff;
 Approvals from government and other organizations, such as
Indian tourism office, Ministry of tourism, IATA, and TAAI.
 Authorization to sell on behalf of principal suppliers, hotels,
transport operator.

7.3.1 INFRASTRUCTURE & FINANCIAL REQUIREMENT:

For starting a new business in this area the capital requirements are not
very high. The requirements in this regard require investment for the
following:
 Buying or hiring of office space,
 Office furniture and furnishings,
 Communication equipment’s (like fax, telephone, Xerox, computers,
etc.),
 Salaries for the staff, and
 Office materials (like files, labels, promotional brochures,
letterheads, etc.)
 These capital requirements are not too high and because of this we
find a number of persons entering this business. (for raising funds
to meet capital requirements )
While formulating the business plan or project report for starting the travel
agency business an important point to be considered is the location of the
agency. Most of the travel agents have their offices in big cities with
branches in small towns. In small towns also people have been setting up
their own travel agencies. Travel agents compete for business in the area
Where they are located. Hence, while deciding on the location of your
office you should ensure that it is in the market place with close access to
business or industry centre, institutions and their offices, or a
neighborhood of residents who travel a lot. Hence, some on the spot
surveys are required for deciding the location.

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7.3.2 APPROVAL FOR CONCERNING BODY:
A travel agency requires certain approvals for carrying the business and in
this regard an approval from the International Air Transport Association
(IATA) which is the World
Organization of Scheduled Airlines is very useful. IATA has worked out
International fares and rates and uniform transportation documents (airline
tickets and airway bills) to facilitate the carriage of passengers and cargo
world-wide. An IATA approved Passenger Sales Agent is an Agent who is
capable of receiving commissions on International Air Travel documents.
This commission is paid only to approve Agents. To apply for IATA
approval, an application has to be submitted, by filling out the requisite
forms, and sent to Secretary, Agency Investigation, and Panel No. 9 (AIP-
9). In this regard the following aspects are checked:

Ability to generate and procure air passenger transportation, Professional

standing, financial status, Business premises, and Staff ability and
experience

7.3.3 RECOGNITION FROM PRINCIPAL:

A travel agency must seek recognition from the Department of Tourism

(DOT), Government of India and also take licenses from the principal
suppliers like, the airlines and Reserve Bank of India along with
recognition from the hotels. This is necessary for earning commissions on
the business carried out.

Department of Tourism:
The Department of Tourism, Government of India has set certain rules
for giving recognition to a travel agency and it gives a one time approval.
This recognition is given to those agencies only who have been in
operation for at least one year. Reserve Bank of India license
In order to receive and deposit foreign exchange earned, with a Bank the
agency should have a Restricted Money Changer's Licence (RLM-3)
and proper returns must be filed with the Reserve Bank of India every
fortnight. According to regulations, Indian Airlines has dollar fares for
foreign tourists and there are incentives given by the Government for
foreign exchange earning, so this license and record is very important to
register your foreign exchange earnings.

Hotel Recognition:
Once a travel agency is recognized by the Department of Tourism, most
hotels (whether they are 1Star, 2Star, 3-Star or Budget) and leading hotel
chains will automatically give commission on business handled by a travel
agency. The Department of Tourism's recognition gives creditability to the

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travel agency. It gives a standing in the Industry and the hotels feel
reassured that their bills will be paid. Depend upon the volume of
business, hotels may give 10% commission and credit and sometimes
even an over-riding commission.

At times special rates are negotiated keeping in view the volume of

business. A good travel manager must know the art of negotiating special
rates so as to maximize revenue.

A travel agency should also establish linkages with tour operators, tourist
transport operators, tourist cargo operators, etc, along with getting
recognized by the railways and state tourism development corporations.

7.3.4 FISCAL & NON – FISCAL INCENTIVES & BENIFITS PROVIDED

BY THE GOVERNMENT:

The Government of India gives certain incentives and benefits to the

tourism industry and a person intending to set up a travel agency should
be aware of such benefits. For example:

1. Financial benefits are available under Section 80HHD to the travel

agents. Under this 50% of earning profits in foreign exchange are free of
income tax and the other 50% are also tax free if they are ploughed hack
into the development of tourism.

2. The Department of Tourism gives prizes for various categories of travel

agencies for foreign exchange earnings. This is an honour that acts as an
incentive to boost foreign exchange earnings by the travel agency.

3. The Tourism Finance Corporation of India gives loans to persons for

setting up travel agencies. The Department of Tourism, Government of
India provides brochures, tourism related data, etc. to travel agencies for
promotional purposes.

4. The Department of Tourism, Government of India also provides

assistance to the travel agencies for participation in tourism fairs, travel
marts, and in official promotional delegations. Generally such assistance
is provided through the Travel Agents Association of India (TAAI) and
it is advisable that travel agencies should become members of TAAI.

From time to time certain other incentives are given by the Government of
India as well as the state tourism departments and a travel agency
manager should keep track of these.

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7.4 SOURCES OF INCOME OF A TRAVEL AGENCY:

The travel agency and tour operator ‘s main source of income is form
the commission , which they get from the various travel service
providers. The travel agency sells the airline seats, railway seats, hotel
rooms, cruise package , car rental services, etc. and in return are paid a
commission for each travel product sold by them for the respective
airline, railways, hotels , cruise line companies , transport operators, and
tour operators . the commission structure differs from suppliers tor
supplier and also as per the business given by the travel and tour
operator to these service providers. It ranges from five percent to 20
percent.
Airlines (domestic
and international)

Railways Hotel bookings

Sources of
Income

Package Transport
Cruise
tours Operators
Companies

Fig. A travel agency earns revenue from these principles.

7.4.1 COMMISSION ON SELLING THEIR PRODUCT TO THE CLIENTS

The industry suppliers pay these approved agents a commission on the
service sold on their behalf. the commission is usually a fixed percentage
of the sales prices of the or the service or the product sold, and is
paid to the travel agent /tour operator after the sale of the service or
product. The commission is deducted from the final payment and the
balance is forwarded to the principal. For example, a client purchases a
tour worth Rs 20,000. If the commission for that tour is 10 percent for the
tour operator the then the travel agent will retain Rs 2000 and forward
the tour Operator the net amount of Rs 18,000.

Some service providers such as airline give commission only to officially

appointed travel agencies. Officially approved agencies are those
agencies which are approved by IATA. To be an IATA approved agency it

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is necessary that the staff working in the agency is IATA qualified. Non-
IATA accredited agents work as subagents for IATA accredited agents
and earn a commission of around 4.5 per cent of the basic fare.
Commission received from principal suppliers is shared by non-
appointed or non IATA travel agents who obtain tickets from IATA
appointed travel agents . Such commission is called split commission or
shared commission.

7.4.2 INCENTIVES OR OVERRIDE:

As leaner have understood that, In addition to the commission , some
service providers may pay incentives to the travel agents who have
given large amount of business in terms of sales volume to them. These
incentives are referred to as overrides or bonuses.

The Commissions given by the principal suppliers are normally fixed, but
some suppliers offer the agency an override, i.e. higher the sales, higher
will be the commission rate. Sometimes a part of this commission may be
passed on to the customer as a discount rate.

Travel agency also received incentives from tour operators. If they are
able to sell a fixed number of tour packages in a fiscal year, the tour
operators gives them turnover incentives. The amounts of such incentives.
The amounts of such incentives are mutually decided.

7.4.3 SERVICE CHARGE FOR THE TRAVEL AGENCY:

Service charges are another source of revenue to travel agents which are
charged for services rendered to the clients. For instance, for getting a
passport or a visa the travel agency charges the client as they do not
receive any commission on selling these services. Some service providers
may give the travel agent very less commission which is insufficient to
cover the expenses of the travel agency. Such charges are very high
nominal and vary from Rs.100 to 250 per task.
In such cases the travel agent charges the client for services rendered the
service charges differ from travel agency to travel agency and on the
nature of service provided. Apart from commission and service charges,
the agency gets additional income from other sources. They are as follow.

7.4.4 MARK UP ON TOURS:

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

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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.

7.4.5 WHOLESALE FEE:

Some wholesalers may not pay the usual 10 per cent commission to the
travel agents for selling their tours. Instead, they will pay a flat fee for each
reservation made.

7.4.6 REPRESENTAION FEE:

The tour operators or airlines may not have their branch offices in all cities
of the country or world. In this care, the tour operator or the airline may
appoint a general sales agent (GSA), who could be travel agent, to handle
their business in these cities, so as to generate higher sales. The GSA will
handle the service of the tour operator or principal service provide to
promote the sales. The tour operator will pay a fixed fee on commission
and a budget for advertising and promoting their products to the GSA.

7.4.7 PROFIT FORM 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. We have already stated that some travel agencies graduate as a
tour operators after some time. It is quite natural if their operations
expand in the domestic and international markets.

7.4.8 COMMISSION FROM TOURS OPERATOR:

Travel agencies approaches a tour operator for its services on the behalf
of its client. It sells This services of a tour operator as a middleman
between the tourist and the tour operator. It gets commission, which is
also part of its income.

7.4.9 COMMISSION HOTELS & OWN TOURS:

Travel agencies books hotels on behalf of their clients, they market and
sell the hotel service and get commission in return. Thus, they get certain
fixed percentage on sales effected by them.

7.4.10 COMMISSION FROM MODES TRANSPORT:

Travel agencies gets commission from various operators of transport
operator services such as airlines, AC coaches, cruise lines, ships etc.
These transport companies give commission on as certain percentage to

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the agency that books the packages for its clients . Normally, this
percentages varies from 2 per cent to 20 percent.

Source of Revenue & Income of Travel Agency

Traditional Sources Modern Avenue

Commission based
Margin of Profit Niche Markets
Consultancy
Based
Conferences
Booking of Broadly Cores Convention
Hotel Room Packaging and Selling Exhibition
Ticketing of Tours both Trade Shows
Car Rental International and Educational Tours
Insurance domestic Seminars
Medical Events
Thematic Tours
Special interest

Passport Services Visa Services Insurance Income tax

Trade boards others

7.5 SUMMARY:

After completing this Unit learner have understood departmentalization of

Travel agency, its working profile. Through this Unit leaners have
understood what the role of various department of travel agency is. After
understand department of Travel agency we can easily deal with customer
requirement.

7.6 GLOSSARY:
- Ground operator or ground handler -Company making all
arrangements for incoming groups or travellers from overseas, from
the moment they arrive in the UK (or other destination) to the moment
they leave the country. This may include anything from
accommodation booking to transfers and sightseeing. Some ground
handlers prefer the term, “incoming tour operator”

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- GIT (Groups Independent Travel): Group travel in which individual’s

purchase a group package in which they will travel with others along a
pre-set itinerary.

- Package: A fixed price salable travel product that makes it easy for a
traveler to buy and enjoy a destination or several destinations.
Packages offer a mix of elements like transportation,
accommodations, restaurants, entertainment, cultural activities,
sightseeing and car rental.

- Domestic independent tour: DIT: a custom-made tour of a part of

the USA planned exclusively for a client by a travel agent.

- Domestic escorted tour: a packaged, pre-planned itinerary,

including the services of a tour manager (escort) within a traveler s
own country.

- Electronic ticket: an airline ticket in the form of a computer entry. An

electronic ticket, or e-ticket, is supposed to function like an actual
paper ticket by reserving you a space on a flight; all you need to do is
give an identification number and show an ID at the airport. But you
should also bring the written receipt sent by the airline in the event the
airline's computer system has crashed or the airline has lost your
reservation.

- Travel Protection: A combination of travel insurance benefits and

emergency hotline services, designed to provide protection for travel
investment, health and belongings while traveling.

- FAM tour: an abbreviation for familiarization tour which is often a

complimentary or reduced-rate travel program for travel agents, tour
operators, travel writers or others to acquaint them with a specific
destination or attraction, thereby helping to stimulate sales

- Leisure travel: Travel undertaken for pleasure and unrelated to paid

work time.

- Override: a commission over and above the normal base commission

percentage

- Special interest tour: tour designed to appeal to clients with a

curiosity or concern about a specific subject. Most special interest

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tours provide an expert tour leader and usually visit places and/or
events only relevant to that interest.

- Tour conductor. 1. An employee of or contractor to a tour operator

who accompanies and is in overall charge of a tour. 2. A member of a
group taking a tour who is designated as that group's leader and who
might have played a key role in bringing the group together for the
tour.

- High season: time of the years at any destination when tourist traffic and as
a result rate are regularly maximum.

- Low season: time of the years at any destination when tourist traffic and as
a result rate are regularly low.

- Shoulder period: It is the calendar period between the peak season and an
off peak or lean season for which the promotional rate is adjusted in a
manner that it is on the lower side of the peak season and on the upper side
of the off- Season.

7.7 CHECK YOUR PROGRESS:

1) What are the basic requirements of setting up the Travel Agency?

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

…………………………………………….…………………………………………...…

……………………………………………………………………………………………

…………………………………………….…………………………………………..….

2) Describe the fiscal & non Fiscal Incentives provided by the Government for
Travel agency?

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

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……………………………………………………………………………………………

……………………………………..………………………………………...…………..

……………………………………………………………………………………………

..............................................................................................................................

3) Describe Markup of tour?

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

…………...…………………………………………………………………………………

.4) Describe the Commission of mode payment?

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

7.8 CLUES TO ANSWER:

 Refer Sec. 7.3
 Refer Sec. 7.3.4
 Refer Sec. 7.4.4.
 Refer Sec. 7.4.8

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7.9 REFERENCES:
 Roday, Sunetra. Biswal, Archana and Joshi, Vandana 2011, Tourism
Operations and Management, Third Edition, Oxford University Press, New
Delhi PP176- 179.

 IGNOU 2003, School of Social Science TS -3 UNIT 23.Management in

Tourism, New Delhi. PP. 36-38.

 IGNOU 2003, School of Social Science MTM -13 Tourism Operation, New
Delhi. P.86.

7.10. TERMINAL AND MODEL QUESTION:

Q1 Briefly describe the setting up a Travel Agency?

Q2 Briefly Explain the Sources of Income of a Travel Agency with Suitable

example?

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UNIT 8
PROCEDURE FOR APPROVAL FROM THE STATE
DEPARTMENT, CENTRAL GOVERNMENT & IATA
Structure:
8.1 Objectives
8.2 Introduction
8.3 Procedure for approval Travel Agency
8.3.1 Travel Agency approval/recognition from Department of
Tourism.
8.3.2 Travel Agency Approval from Central Government (Ministry of
Tourism)
8.3.3 Travel Agency Approval from IATA (International Air Transport
Association)
8.4 Summary
8.5 Glossary
8.6 Check your Progress
8.7 Clues to Answer
8.8 References
8.9 Terminal Question

8.1 OBJECTIVES:
After reading Unit-8 learners will understand about the Procedure of
approval from the state Government, Central Government & IATA. This
Unit aims at explaining the Concept of approval Travel Agency from
concerning authority.
 To understand the approval of Travel agency.
 To understand the approval of Travel agency from Department of
Tourism.
 To Understand the approval of Travel from Ministry of Tourism
 To Understand the Travel Agency Approval from IATA
(International Air Transport Association)

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8.2 INTRODUCTION:
After reading Unit-8 leaner will understand about the procedure of
Approval for travel agency from state government, Central government &
IATA International Air Transport. In this Unit we will study about how to get
approval from travel agency from department of tourism? What are things
required at the time of approval. After the approval from DOT, we will
study about what are things require for approval from ministry of tourism &
at the time of approval we follow the rules & regulation.
In this unit we also understood what mandatory things requirement for
IATA approval - like Financial Standing , Suitability of the premises ,
security for Control of ticket stock , proficiency of the staff ability to
generate new business , goodwill of travel agency .
At the end of the Unit we will study about what are the benefits after
approval of IATA.

8.3 PROCEDURE OF APPROVAL OF TRAVEL AGENCY

Procedure of setting up of Travel agency depends upon the different
concerning authority approval – like Travel Agency approval/recognition
from Department of Tourism, Travel Agency Approval from Central
Government (Ministry of Tourism), Travel Agency Approval from IATA
(International Air Transport Association).

8.3.1 PROCEDURE OF APPROVAL OF TRAVEL AGENCY FROM

DEPARTMENT OF TOURISM
As learner knows that the aim and objective of the reorganization are to
promote tourism in India. It is a voluntary scheme open to all bonefide
travel agencies and tour operators’ enterprises. The travel companies
which are granted reorganization or entitled to such incentives and
constituencies as may be granted by govt. from time to time.
Rule for the travel agency:
The following are the main rules prescribed by the DOT for the approval of
travel agencies:
1) Application shall be in the prescribed form and shall be addressed to
the director of tourism, ministry of tourism, govt. of India New Delhi.
2) The company has functioned successfully for at least one year.
3) Have minimum paid of capital.
4) Have an IATA license of GSA (general service agent) of IATA member
airlines.
5) Has been approved by RBI to book foreign tourist.
6) Approved by ministry of external affairs to handle document, passports,
visas and such another items.
7) Income taxes assess.

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8) Registered under the local; shops and establishments.
9) Good professional reputation, at least one or two staff members should
be from IATA and Dot recognized tourism educational institutional.
10) Recognized by airlines.
11) Approved by railways.
12) Prescribed fees for reorganization.
13) A travel agency must attach the audited annual report.
The applications form described by DOT.
Contents
1) Name and address…………………………………………………..
2) Year of establishment………………………………………………
3) Nature of business and year of commencement…………….……...
4) Types of business form……………………………………………..
5) Name and address of directors/partner……………………………..
6) Staff employed……………………………………………………...
i) Qualification……………….………………………………………..
ii) Salary/wages structure….……………………………...…………
iii) Experience………………..……………………………………….
iv) Length of service…………..……………………………………...
7) Name of bankers……………………………………………………
8) Name of auditors……………………………………………………
9) Auditor’s financial statement……………………………………….
10) Copy of income Tax no……………………………………….
11) Auditor’s financial statement…………………………………
12) Letters of approval from IATA……………………………….
13) Membership of professional travel trade organization such as
IATA/TAAI/IATO/WTO/ASTA/PATA /etc……………………….
14) Sales turnover during last five years………………………….
15) Steps taken to promote tourist traffic in the country………....
16) Any other steps/activities……………………………………..
Date: MD/Director
Place: Signature (with seal)

Rules for Recognition of tour operator by DOT:

The main rules are:
1) Application shall be prescribed form.

2) Minimum paid be capital as prescribed by the organization.

3) Minimum turnover should be 5 lacks.

4) Good professional reputation and trained staff in various segment of

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travel industry.

5) Operation minimum one year.

6) Income taxes assess.

7) Approved from IATO.

8) Maintained ethical standards of tourism business.

9) Approved for RBI, ministry of external affairs.

10) At least two or three staff members from IATO/DOT recognized

tourism and training institute.

11) Sound financial position.

12) Recognized by the railway and airlines.

13) Should employee only approved guides?

14) Should have contributed towards the promotion and development of

tourism.

15) Good location.

Application form for tour operators:

1) Name and address of tour company………………………………………...
2) Year of registration…………………………………………………………….
3) Nature of business and year of commencement of business.……………
4) Name and address of directors/partner……………………………………..
5) Staff employed……………………………………………………..................
6) Qualification…………………………………………………………………….
7) Salary/wages structure………………………………………………………..
8) Name of bankers………………………………………………………………
9) Name of auditors………………………………………………………………
10) Auditor’s financial statement………………………………………………..
11) Copy of income tax return…………………………………………………..

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12) Member of international and domestic tourism organizations…………..
13) Turn over……………………………………………………………………...
14) Volume of tourist traffic handles……………………………………………
15) No. of conferences and convention handled……………………………..
16) No. of package tours handled during the last year………...…………….
17) No. of incentive tour handle…………………………………………………
18) Steps taken to promote tourism…………………………………………….
19) Any other activities…………………………………………........................

8.3.2 PROCEDURE OF APPROVAL OF TRAVEL AGENCY FROM

MINISTRY OF TOURISM:

The Ministry of Tourism, Government of India has a scheme whereby any

travel agent can get recognition as an approved travel agency. The aim
and objective of the scheme for recognizing a travel agency are to
promote tourism in India. This is a voluntary scheme opened to all a
bonafide travel agencies in the country. According to the Ministry of
Tourism, a travel agency is one to make arrangement of tickets for travel
by air, rail and ship and for assisting with passports, visas, etc. It may also
arrange accommodation, tours, entertainment and other tourism related
service.
Before recognition is accorded, the travel agency must fulfill
following conditions:
 The application for a grant of recognition is to be given in the prescribed
from and submitted in duplicate. (See format below )
a. The travel agency must have a minimum paid-up capital of Rs. 5 lacs,
duly supported by the latest balance sheets/ Chartered Accountant’s
Certificate.
b. The travel agency should be approved by International Air Transport
Association (IATA) or should be the General Sales Agent (GSA) of an
IATA member airline.
c. The travel agency should have been in operation for a minimum period
of one year before the date of application.
d. The minimum office space where the travel agency has to establish a
business be 250 sq. feet. Besides, the office must be located in a neat
and clean surrounding and equipped worth a telephone. Fax,
Computer Reservation System (CRS), etc. The office must be located
preferably on the ground floor first floor , if situated in a residential
area with sufficient space for a reception and easy access to
washroom facilities.

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The travel agency should be under the charges of a full time. Member
professionally trained, experienced in matter relating to ticketing,
transport accommodation, facilities, currency, customs regulations and
other tourism related service, In addition, greater emphasis must be
given to effective communication skill and knowledge of foreign
languages, other than English.
e. There should be a minimum of four qualified staff out of which at
least two should have a diploma/ degree in travel and tourism
from a recognized university (IITTM) or institution approved by
AICTE .The academic qualification may be relaxed in case of
exceptionally experienced personnel in airlines, shipping transport,
PR agencies , hotels other corporate bodies and those who have
worked for at least three years with IATA / UFTAA agencies .
f. The Travel agency should be an income tax assesses and should
have field their income tax return for the current assessment year.
 The travel agency should employ only regional guides trained
and licensed by the Department of Tourism , Government of
Tourism and state level guides as well as local guides approved by
the state government.
 For outsourcing any of the services related to tourists, the travel
agency should used approved specialized agencies in the specific
field of activity.
 Initially the recognition as a travel agency is granted for a period of
three years and renewed thereafter for five years on an application
made by the travel agency, along with prescribed fee.
 The travel agency will be required to pay a non-refundable onetime
fee while applying for recognition. The fee is to be made a payable
to an accounts officer, Ministry of Tourism, in the form of a bank
draft.
 Recognition is to be granted to the head quarter officer of the travel
agency. Branch offices will be approved along with head quarter
office. Branch offices can also be approved subsequently provided
the particulars of these are submitted to the Ministry of Tourism and
accepted by it.
 The travel agency granted recognition shall be and entitled to such
incentives and concessions as may be granted by the government
from time to time and shall abide by the terms and conditions of
recognition as prescribed from time to time.
The decision of the government of India in the matter of recognition is to
be final. However, the government of India may at their discretion refuse
to recognized any firm, or withdraw/withhold at any time recognition
already granted, with the approval of the competent authority. However,
before such a decision is taken, the necessary show- cause notice would
be issued and the reply considered on merit. This will be done as a last

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resort and circumstances in which a withdrawal is resorted to would also
be brought out.

Application form for Travel Agency Recognition from Ministry of

Tourism
Prescribe Application form for recognition which is to be addressed to
the additional Director General (Ministry of Tourism , Transport
Bhawan, Parliament Street , New Delhi) is as follows:
1. Name of the Organization………………………………………………..…
Address of Head Office ………………………………………………………..
Address of the Branch office (if any)………………………………………….

2. Nature of the Organization……………………………...Year of

registration / commencement of business (with documentary proof)………
………………………………………………………………………………………
………………………………………………………………………………………

3. Name of the Director /Partner etc. ………………………………………….

Details of their interest, If any ………………………………..........................
In other business may also be indicted ……………………………………….

4. Particular of the Staff Employ

Name Qualification Experience Salary Length of service with the firm.
1)……………………………………………………………………………..
2)……………………………………………………………………………..
3)……………………………………………………………………………..
4) Details of office premises Space in sq.ft………………………………
Location Area of Commercial
residential……………………………………………..
Reception area ……………………..accessibility to
toilets…………………………
5. Name of Bankers (please attach a reference from your
Bankers…………………………………………………………………..

6. Name of Auditors
………………………………………………………………………………..

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A balance sheet and profit and loss statement pertaining to the travel
business, as prescribed under Company Law, must be submitted by each
applicant. These audited statements should be in respect of your
establishment for the last completed financial year or for the calendar year
immediately preceding the date or submission of your application. Also
furnish details of your turnover in the following statement:
Particulars of the Travel Agency concerned
a) Paid up Capital (Capital employed)…………………………………….
b) Loans:……………………………………………………………………...
i. Secured
………………………………………………………………………
ii. Unsecured
………………………………………………………………………
c) Reserves
……………………………………………………………………………………..

d) Current Liabilities and provisions………………………………………………

e) Total (a to d):
……………………………………………………………………………………..
f) Fixed assets (excluding intangible assists)……………………………………
g) Investment……………………………………………………………….………..
h) Current assets
……………………………………………………………………………………..
i) Intangible Assets…………………………………………………………………
j) Total (f to I)……………………………………………………………………….
Notes:
I. Intangible assets should include goodwill expenses, tenancy and
business rights, deferred revenue expenditure. Accumulated loss etc.
II. Reserve should include balance of profit and loss Account and exclude
taxation reserve.
III. Current assets should include sundry debts, loans advance, cash and
bank balance.
IV. Current liabilities and provision would taxation reserve.
V. Copy of acknowledgement in respect of income Tax return for the current
assessment year should be enclosed. ………………………………………
……………………………………………………………………………………
VI. Whether any activity are undertake by the firm besides travel
Organizations, if any……………………………………………………………
…………………………………………………………………………………….
VII. Letter of approval of IATA and Certificate of accreditation for current year
should be enclosed. GSAs? PSAs, of IATA airlines should be enclosed
(documentary proof in this regard).
VIII. Indicate the Air/Shipping? Railway ticketing agencies held by the
firm……………..

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Enclosed Demand Draft of Rs 3000/- for each Branch Office as fee for
recognition /renewal.
Please mention the D.D
No………………Date……………………Amount…………………..
Please mention the D.D No………………Date………………….
Amount…………………….
Signature of Proprietor/Partner / Managing
Director
Rubber Stamp
Place:L
Date:

NB.1 this application should be submitted in duplicate along with

supporting documents.
2. Reference number of Department of Tourism should be quoted if the
application is for renewal of recognition.

8.3.3 PROCEDURE OF APPROVAL OF TRAVEL AGENCY FROM

(IATA INTERNATIONAL AIR TRANSPORTATION)

The Travel agency needs to be recognized or approved by airlines. In fact,

the sale and purchase of International airlines tickets are regulated by the
International Air Transport Association (IATA) whereas the sale and
purchase of domestic airline’s tickets are approved / regulated by the
concerned Government and Ministry of Tourism or Civil Aviation. These
approvals are necessary in all countries whether travel agencies are
appointed by IATA and / or Govt . (Civil Aviation or any other agency
authorized by these such as ARC in and US AND Canada etc. In these
countries, the Airlines Reporting Corporation (ARC) in the US and Canada
etc.
According the industry agent’s handbook, the main objective of ARC is to
provide method pf approving/ authorizing travel agency location for sale
of airlines tickets and cost effective procedures for processing records
and funds of such sales to customers .
The applicant’s ability to generate new business is another requirement to
be taken into consideration by IATA before considering an applicant for
approval. This is to ensure that agent is capable of generating new
business in the market and has sufficient contacts to do so.
Any travel agency, in order to get IATA approval for selling the services of
IATA airlines worldwide, has to ensure the following:
1. Financial standing.
2. Suitability of the premise.
3. Security for control of ticket stock.
4. Proficiency of the staff.
5. Ability to generate new business.

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6. Good will.
Passenger sales Agreement
After considering the above aspects and if IATA’s Agency Administration
Board is satisfied, necessary IATA approval is accorded to an agency.
Once approved, a Passenger Sales Agreement is issued and a numeric
ticket validation code is provided which will be stamped on all tickets
issued by that IATA approved agent.
IATA approval enables the agent to do business on behalf of all IATA
members. It enables the agent to sell the services of all IATA member
airlines throughout the world. The entire process of getting an IATA
approval can be quite time- consuming and lengthy and in the meantime
agents applying for IATA approval are expected to generate business
without getting any commissions.

TRAVEL AGENT IATA ACCREDITATION BENEFITS:

 Access to IATA airline members with a single Sales Agency

Agreement which authorized the sale of international and / or
domestic tickets.
 Access to IATA’s Billing and Settlement Plan (BSP), an efficient
interface for invoicing and payment between the agent, airlines and
transport providers.
 Use of the “IATA Accredited Agent” logo, providing visibility and
credibility on the premises and their website.
 Unique identification throughout the global travel industry with the
“IATA Numeric Code”.
 Agent staff eligibility for the IATA/IATAN ID Card, giving access to
special deals of over 1000 suppliers.

RULES AND CONDITIONS FOR RECOGNITION OF TRAVEL AGENCY

TO ISSUE AIRLINES TICKETS
The IATA ‘s basic service to its active members involves ticket
distribution, processing, settlement of financial & accounting matters, and
appointment of travel agency must be appointed / approved by the
International Air Transport Association (IATA) and placed on airlines’
Agency List ‘ as an approved entity. As per the IATAN travel agency
Handbook, the following rules and conditions are required to become IATA
approved Travel Agency.
 An application for recognition shall be addressed to the Director,
Agency Investigation Panel IATA.

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 The application for grant of approval shall be in prescribed form.
The objective of recognition is to promote and develop air transport
and tourism industry at global, regional and national level.
 Travel Agency has to be in the business for the last two to three
years.
 The travel must have professional staff members, qualified from
IATA approved institutions.
 The agency must have financial credibility.
 The location of the agency must be freely accessibly and clearly
identified to the tourists.
 Security for the control of airlines tickets block/stock.
 Ability to generate business.
 The travel company granted approval shall be entitled to such
rights and privileges as may be granted by the association from
Time to time and shall abide by the several terms and conditions of
recognition as prescribed by the association time to time.
 The agency must attached audited annual reports with the
application form.
 The agency must attach the statement if International Sales with
the application from.
 The decision of the IATA in the matter of recognition shall be final.
The association may refuse to recognize any a travel company
without assigning any reason.
 The recognition granted by the IATA shall not automatically entitle
the Travel agency to be approved by any other organization.

APPLICATION FORM FOR IATA APPROVAL /APPOINTMENT

1. Name of the Travel agent /Tour operator ………………………………
2. Form of business – Sole proprietor /partnership/corporation..………
………………………………………………………………………….…..
3. Nature of principle business..........……………………………………..
4. Other type of business activities………………………………….…….
5. Address of the Registered Office ..…………………………………….
6. Capital structure :……………………………………
7. Date of Establishment …………………………………………………..
8. Trade registration………………………………………………………...
9. The date and type of Govt. Licence required………………………….
………………………………………………………………………………

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10. The name of Regd. Office which is to appear on IATA register……..
………………………………………………………………………………
11. Address of Branch Office ……………………………………………..
12. If approval is required for a Branch Office……………………………
……………………………………………………………………………..
13. Date of Commencement of business………………………………….
…………………………………………………………………………….
14. Length of Business……………………………………………………
15. Name of Director / Managers IATA /UFTA…………………………..
……………………………………………………………………………
16. Training Course, Extent of Participation, Other business Interest
………………………………………………………………………………
17. Qualifications of Staff ……………………………………………………
18. Audited Balance Sheet and Profit and Loss Account…………………
………………………………………………………………………………
19. Name of Bankers ………………………………………………………...
20. Name of Auditors…………………………………………………………
21. Approval from other Associations…………...………………………….
22. GSA of any organization…………………………………………………
23. Profits of GSA/ IATA agency…………………………….………………
24. Are your acting GSA of an Airlines/non-IATA Airline…………………
25. Approved form other Associations……………………………………..
26. Statement of Sales (Previous years)…………………………………..
27. Sales in US dollars……………………………………………………….
a. 1st Year………………………………………………..
b. 2nd Year……………….……………………..……….
28. Need for seeking Ticket stocks………………………………………….
29. Adequate facilities for storing ticket…………………………………….
30. Step to secure stocks…………………………………………………….
31. Steps taken to promote airlines and tourism business...……………..
………………………………………………………………………………
Date: MD/Director
Place: Signature (with Seal)

8.4 SUMMARY:
After Completing Unit8 we have understood about the Procedure of
Approval for Travel agency what mandatory things for travel agency

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approval from Department of Tourism. After going through Unit 8 learner’s
must have understood how and why the approval of travel agency from
Ministry of Tourism.
At the end of the unit learner’s have understood that how to get
recognition of Travel agency from IATA and things require for approval for
IATA. After IATA what is the benefits of travel agency.
So we can say in the end, that overall leaner have read about what are the
major approval for travel agency and what are the concerning authority
for approval of travel agency. What are the benefits of approval?

8.5 GLOSSARY:
Transfer – The service provided travelers when they arrive and leave a
given city. Which takes them from the airport , air terminal, pier, or railway
station to their hotel and vice- versa, generally accompanied by the local
representative of the
Tour operator transfers are carried out by private, chauffeur- driver car or
by Taxi, and whether the transfer is provided between airports and
downtown air Terminals, or between the airport and directly to the hotel.
Commission: - An agreed upon percentage of the rate or fare, charged
from the customer allowed to the travel agent/agent for his services.
Principle service supplier - A provider of travel –related product and
service.
General Sales Agent (GSA) – General Sales Agent are agents
appointed by an airline or any other organizations in a particular territory
to handle their booking , inquiries, etc.
Inbound tourism – It refers to outgoing tourists or tourists leaving
their country of origin to travel another country .
Commission: - An agreed upon percentage of the rate or fare, charged
from the customer allowed to the travel agent/agent for his services.

8.6 CHECK YOUR PROGRESS

1. What is the full form of IATA?
…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

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2. What is the full form of DOT?
…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

3. What is full form of MOT?

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

4. Why should Travel Agency approve from Ministry of Tourism?

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

…………………………………………………………………………………

8.7 CLUES TO ANSWER:

1) Refer Sec. 8.3.3

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2) Refer Sec. 8.3.1

3) Refer Sec. 8.3.2

4) Refer Sec. 6.3.4

8.8 REFERENCES
 Bhatia,A.k, Tourism Management and Marketing :The Business of
Travel Agency Operation , First Edition, Sterling Publishers, New Delhi.

 Kamra.K.K and Chand Mohinder 2007,Basics of Tourism Theory

Operation and Practic , First Edition , Kanishka Publishers , New Delhi ,
PP62-164.

 Roday, Sunetra .Biswal,Archana and Joshi, Vandana 2011 , Tourism

Operations and Management , Third Edition , Oxford University Press ,
New Delhi PP177.

 Bhatia , A.K 2008, Travel Agency Management Module -6, Kuoni

Travel Indian Private Ltd (Kuoni Academy), Mumbai .PP144-148.

 http://codis4u.wetpaint.com/page/Proceedure+for+the+Approval+of+Tra
vel+Agency+and+Tour+Operator)

8.9. TERMINAL QUESTION

Q1. What is need of IATA Approval of a travel agency its rules & approval
or regulation for approve?

Q2. Why should department approval from Ministry of Tourism justify?

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UNIT-9
TOUR OPERATION: CONSIDERATION,
CHALLENGES AND ORGANISATION
Structure:
9.0 Objectives
9.1 Introduction
9.2 Current Trends in the Management of Travel Organisations
9.2.1 Mergers and Acquisitions
9.2.2 Scarcity of Trained and Qualified Manpower
9.2.3 Constraints of Financing
9.2.4 New Search Engines: A Nightmare
9.3 Trends in Modes of Transport
9.3.1 Sophisticated Coach Travel
9.4 Consumer Market
9.4.1 Demographic and Attitudinal Shifts in Travelers’ Market
9.4.2 Increasing Baby Boomers Market
9.4.3 Travel by Low Cost and No Frill Airlines
9.4.4 Internet Airline Model
9.4.5 Self-Managed Individual Tour
9.4.6 Greater Fragmentation of Holidays
9.4.7 Greater Role of Community
9.5 Contemporary Practices in Travel Agency and Tour Operation Sectors
9.6 Summary

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9.0 OBJECTIVES:
After reading this unit, you will be able to:

 Identify the changes in consumer market which affect travel agency

operation;
 Explain the recent trends in management of travel organization;
 Describe the consumer trends in tourism market; and
 Discuss the current practices in travel agency and tour operation sector.

9.1 INTRODUCTION:
In the previous units you learned about the factors responsible for growth
of travel sector. In this unit, we shall study the current trends in the
management of travel organizations, trends in modes of transport,
consumer market and contemporary practices in travel agency and tour
operation sector.

9.2 CURRENT TRENDS IN THE MANAGEMENT OF

TRAVEL ORGANISATIONS
Travel organizations as part of overall economic scenario has been
experiencing the dynamism of the economy in the lieu of the competition.
However tourism and travel trade have some typical issues which are
unique to it.

9.2.1 MERGERS AND ACQUISITIONS

Travel business as any other sector is experiencing an age of merger,
take over and acquisition. Reasons may vary from stiff competition, focus
on specialized areas to inefficiency and many more. Examples may be
drawn from SITA and SOTC being acquired by Kuoni travels, TCI has
taken over by Thomas Cook, Orbit travels being separated to Orbitz and
Orbit in travel companies. Thus the companies, which fail to adapt to the
changed situations are either getting extinct from the market or has been
taken over by other successful ventures. Customer orientation in the
market is evident from the fact that all stake holders whether vertically or
horizontally located, work in cooperation with each other to ensure
unhindered and quality service to the customer. This helps in giving a
wholesome experience to a customer. The increasing fragmentation in the
industry leads agents to aim for profitability by giving specialized, tailor
made packages to clients other than aiming at economies of scale. This
however is not the case in big companies like Thomas Cook, Kuoni and
Cox and Kings who have a larger presence in any country. Their
marketing teams from various regions gather business and help the

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company in organizing group travel with economy price for standard
service.

9.2.2 SCARCITY OF TRAINED AND QUALIFIED MANPOWER

Travel industry particularly in IT and ITES era faces a severe skilled

human resource crunch. There is a continuing and growing need to
increase the supply of personnel and to enhance their professionalism.
Tourism professionals do not get equal pay packages, where as
employers in industry feel that the industry faces low rate of return on the
capital. The World Travel and Tourism Council (WTTC) survey of 13
National Tourism Organisations indicated the skills level of workers to be
the most serious issue over the next ten years. In reviewing the findings of
the WTTC study, approximately 64 per cent of the employers surveyed felt
that the current education and training programmes did not address the
skill requirements of the positions, indicating that it was very important to
make programmes more relevant to actual work place needs. In particular,
employers felt that programmes have had difficulty in keeping abreast of
changes introduced by new technologies. From the employees’ point of
view, the question of low salaries is intrinsically linked to that of long
working hours. This affects the turnover and dissatisfaction levels in the
entire travel and hospitality industry in India.

9.2.3 CONSTRAINTS OF FINANCING:

Traditionally all tourism businesses have been facing the sources of
finance crunch. Unlike other sectors tourism entrepreneurs have been
complaining about the slow turn over. Particularly new entrants in the
market may continue to face difficulty in financing their venture initially.
Thus all sizes of start-up tourism businesses will continue to face difficulty
in spite of low interest rates. Moreover earlier the bookings were done
before 6 to 9 months in advance giving sufficient flexibility to agencies in
the period between receipt and actual payment to the suppliers. Now the
advance payment period has reduced to mere two months before
departure which handicaps the agencies in reaping the benefit of extra
funds for that period. The result of all these is more reliance on equity
investment and non-traditional sources of capital from external sources,
including foreign investors.
With the ranging role of government from business runner to a catalyst
may affect many government run businesses and attractions. These high-
quality public facilities and attractions that have traditionally been
supported and/or subsidized by governments will come under serious
funding pressures. However there will be new opportunities for innovative

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financing for mega-projects and mega-developments that enjoy the
support of the residents of a destination. Some of them are follows:

 Alliances, mergers and acquisitions

 Companies adopting to market changes which ensures quality levels
 Cooperation amongst all stakeholders to restore tourist confidence
 Greater emphasis on profitability less on volume
 Increased economies of scale and reduce costs – concentration

9.2.4 NEW SEARCH ENGINES: A NIGHTMARE:

Search engine in the dotcom era is a popular phenomenon. Travel portal
at the beginning has brought out the possibility of success of search
engines in travel sector. Recently some of the search engines like Kayak
and Mobissimo have made their presence felt through out the world.
Started in the U.S., fledgling brands such as Kayak and Mobissimo have
been growing leaps and bounds. These new type of travel search engines
have opened their operations in India too. Their deployed technology may
prove to be a disaster to the whole travel industry.
Both websites with sophisticated shopping capabilities have wide range of
alternatives to choose from. For example, Mobissimo claims to search 166
travel sites directly. Kayak has 120 online sites as of now. The services
range from air lines ticket, hotel booking, car rental and other activities
which returns results of list price, hotel rating, name and address, and
provider’s name. Mobissimo with a logo of “we search you travel” claims
its mission is to, improve the way people seek and discover travel
information. The purpose is to search out the best price for the consumer.
The technology is a scary move further move towards commoditizing
travel market, where consumers have little regard for product features.
Consumers believe that product as are homogeneous and it is only price
which matters which may not always be the case. This leads to price war
amongst travel providers to maintain market share and fill capacity. As
prices are brought down, the weak entrepreneurs are bound to close or
merge with their more efficient competitors. This will result in reducing
choice and competition which certainly is not good for the travel industry
and hence in long term for the consumers too. In future if more of such
companies join the race it will surely be a nightmare for the whole travel
industry.

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Check Your Progress – I:

Answer the following questions:

1. List out the name of top countries with their receipts from tourism.
__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

2. Write major issues those impede the success of travel organizations.

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

Check your answer with the one given at the end of the unit.

9.3 TRENDS IN MODES OF TRANSPORT:

Thus there has been a gradual increase in air travel. Travellers no more
feel the air travel as unsafe. If we compare the market share of various
modes of transport we can see the share of air transport has increased
from 26% in 1990s to 30.8% in the year 2000. At the same time all other
modes of transport (Road transport 61.1 to 57.0, Rail transport 7.0 to 6.0
and Water transport 5.9 to 6.2) have lost their shares to the Air transport.

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Table – 1.3
Shares of different modes of transport

Modes Share of the total volume

1990 2000
Air 26 30.8
Road 61.1 57.0
Rail 7.0 6.0
Water 5.9 6.2

According to a UN WTO statistics, just about half of all international

tourists arrived over land by road (45%) or by rail (4%) to their destination
in 2004. Air transport represented 43% of arrivals and transport over water
accounted for 7%. The road transport hence remains as most popular
mode of transport. After three sluggish years air transport rose by 15% in
2004, while transport over water increased by 9% and transport over land
by 7%. Thus growth in air transport is highest over other modes of
transport which can be reasoned to advent of low cost carriers and
competition due to open sky policy.
In India too there has been a steady growth in air traveler as is evident
from the table below. Except the year 2001-02 all other years have shown
a steady growth in air travel. The reason for down fall in 2001-02 can be
due to major accidents like Trade centre attack, Parliament attack in New
Delhi and wide spread SARS in Asian countries. The average growth
baring 2001-02 is around ten percent which is even more than the growth
rate of GDP.

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Table – 1.4
Number of passengers traveled by Air

Year International Domestic Total Growth

(in million) rate
% age
1999-00 3.7 12.7 16.4 -

2000-01 3.8 13.7 17.5 6.7

2001-02 3.7 12.9 16.6 -3.15

2002-03 4.2 14.0 18.2 9.6

2003-04 4.5 15.7 20.2 11

2004-05 5.3 19.4 24.7 12

Source: Directorate General of Civil Aviation, Government of India

9.3.1 SOPHISTICATED COACH TRAVEL:

The advent of luxury Volvo coaches has brought in a major change in
travel industry. Despite of a marginal decrease in share of road
transportation in total volume of traffic, coach travel has been a favorite
mode of transportation amongst travelers. The advantage of coach travel
in terms of mobility, availability and luxury attracts passengers especially
for sight seeing, short distance travel and pick up and drop.

Check Your Progress –II

Answer the following question.
1. Calculate rate of growth in domestic and international air passengers
from the year 1999 to 2005:
___________________________________________________________

___________________________________________________________

___________________________________________________________

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___________________________________________________________

___________________________________________________________

Check your answer with the one given at the end of the unit.

9.4 CONSUMER MARKET:

The recent development in the tourism industry can be characterized as a
shift of market power from producer to consumer (From sellers’ to buyers’
market). This increased dominance of consumers is visible from the heavy
downfall in prices in the airlines, tour packages and other tourism related
services. Other features of the market are as follows.

9.4.1 DEMOGRAPHIC AND ATTITUDINAL SHIFT IN TRAVELERS’

MARKET:
‘Consumer needs’ world wide is constantly changing. Fast changing social
structure, life style, tastes and fashion lead to generate multitude of new
demands in market for quality and style of product, vacation experiences
that live up to their pitch. Professional and businessmen especially have
the ability and interest to travel with less time at their disposal. This
"Getaway" Market as a result of a time-pressure is increasingly seeking
relief when it is possible. Thus, more frequent, shorter vacations [break-a-
tions] are the trend of the day. An increase in short duration trips, with
combination of business and pleasure are evident. Till recently the pattern
of shorter distance travel has been long distance travel on short breaks.
Whether cross-border or within boundary this can be termed as "cross-
over" trips.
Since tourists are well informed and have wide range of alternatives, the
price and quality are expected to match their expectation. Travellers wait a
long time before making a purchase to find the lowest price. Moreover the
group booking tendency of corporate clients to book before 6 to 9 months
in advance have undergone a radical change to mere two months before
departure now. This causes cash problems to a travel agent. The growing
consumer expectations clubbed with market knowledge infuse severe
competition amongst the suppliers. Particularly in case of airlines booking
consumers have been found to be very sensitive to any discounts and
reduction in fare. To this, some airlines like British Airways have accepted
the trend to directly access the customer overriding middlemen to cut
additional cost. Modern technology and efficient safety and security
measures also have increased the fear of flying amongst the travelers. In
addition to air transport for long haul travel tourists are more interested in

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coach travel due to invention of luxury Volvo coaches. In many cases
tourists are found experienced, mature and informed than the information
assistant on the table. However the frequent accidents, terrorist attacks
and calamities have increased the concern for safety and security
amongst the tourists. Thus a growing area of tourism development in
many destinations may be organized travel that protects tourists from
crime, health and security threats. An increased emphasis on "human
relationships" may encourage new forms of tourism in which contact
between hosts and guests is less superficial. People are becoming as
important as places, and the collecting of interactive, novel experiences
versus site visits or things is growing in interest. The psychology,
hereditary affinity and safety concern result in tourist opting for VFR.
Travelers many a times are seeking out unique and diverse experiences
that are authentic to the place they are visiting. An increased emphasis on
special interest tourism - such as cultural, educational and professional
development travel is evident which may greatly strengthen and enrich the
meaning of the travel experience. These highly motivated youth seek for
thrilling adventure trips where degree of physical involvement is high to a
greater extent. The present age travelers normally follow the following
travel pattern:

 Wait and See attitude

 Last minute booking – Cash flow problems to Travel agency.
 Sensitivity to price/ Discount at airlines.
 Fear of flying is nil
 Preference to coach travel
 Increased competition/ motivation
 More mature and experienced traveler
 Increased concern for safety and security
 Travel with high motivation factor
 Visiting VFR
 Short haul stay in one place
 Travel as experience
‘Mancation’ (Men only tour):
Increasing number of male affinity groups have been found going for
vacations in recent period. This is more evident in industrialized regions
where week end holidays are more popular.

9.4.2 INCREASING BABY BOOMERS MARKET:

Baby boomers are the elderly generation in USA, Japan and UK who are
in 55-75 age group. In the next 20 years these residents of developed
nations between the 55-75 age group will increase exponentially. This is a

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prospect market for Travel and tourism industry with substantial
discretionary income, desire to travel and disposable time. These baby
boomers in North America, Japan and UK form a lucrative market with a
new set of vacation needs and experiences and pricing structures which
shows healthier signs with increased disposable income as a retiring
batch. This highly educated, well-traveled baby boomers market will also
contribute to the general awareness about vacation in the market which
further may increase the overall demand in the market.

9.4.3 Travel by Low Cost and No Frill Airlines

In India low cost carrier age started in the year 2003 when Air Deccan
introduced its operation. Since then number of airlines in India have
increased from three in 2002 to eleven in 2007. Till then there have been
continuous growth of air travelers and reduction of fares in India.
Gradually low cost carriers are on roll to acquire market share of full
service carriers. Even full scale airlines also have started either floating
low cost subsidiaries or keeping some seats vacant in their flights for low
frill operation.
Chart - 1.2

Cost Structure-full Service / Low-cost

5/3/2007

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Low cost carriers as is revealed by the above graph have high fuel
expenses in the overall cost structure. Since fuel cost is almost same for
all in the aviation industry, it is understood that LCCs are very efficient in
other operational expenses as administration, Passenger amenities and
salaries and wages.
Despite of a short history of operation, low cost carriers have acquired a
significant 23% share of market very quickly. The rate of growth in case of these
low cost carriers is so high that by 2010 the market share of these airlines may
rise to the half in terms of numbers of passengers fly. The full service airlines
also have joined the race by introducing low cost subsidiaries like Jetlite, Indian
etc.

Table – 1.5
Percentage of Market Share

Percentage Indian Jet Sahara Air Kingfisher Spice Para-

of share in Airlines Airways Deccan Jet mount &
Goair
2006 23.9 34.9 9.7 15.2 8.3 6 2

2005 34.7 44.1 14.2 7 0 0 0

Source: Directorate General of Civil Aviation, Government of India

Note: Air Sahara has been acquired by Jet Airways and renamed as Jetlite
recently in April, 2007

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Chart – 1.3
Market Share of Different Airlines

9.4.4 INTERNET AIRLINE MODEL:

In recent period some airlines are trying hard to cut costs by overriding
middlemen. Especially low cost carriers want to cut all middle-men such
as travel agents, GDSs and online travel portals from the distribution
channel. The savings in distribution costs is believed to be the way to
compete in the market. Interestingly these Internet airlines are achieving
impressively high load factors and online booking penetration. In
December 2001, easy Jet, a UK based low cost carrier achieved an 82.8%
load factor with 89.1% of passengers booking online, while Ryanair
achieved a 78% load factor and 91% online bookings.
The low cost carriers normally dominate the short haul market by adopting
the internet airline model. The key elements of this model are: Optimum
utilization of aircraft with fast turnarounds; lowering distribution costs by
direct selling; minimizing operational costs by using secondary airports,
cutting out catering and other frills; adopting simple fare structures. All
these principles are possible in case of short haul routes. In Europe this
model has been very popular with the low cost airlines offering hop on/hop
off bus-like connections. Thus big carriers may find it difficult to compete in
the marketplace, because of low aircraft utilization and high cost

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operations. Thus big airlines may be forced to withdraw substantially from
short haul routes.

9.4.5 SELF MANAGED INDIVIDUAL TOUR:

There have been less large group travels. Smaller groups and fully
independent travel have been in demand. This market is difficult to
identify, develop products to support, and market to. There is an increase
in specialized or niche markets that want specific products and
experiences. Thus priority of vacationers for large resorts and hotel
properties is shifting to more intimate facilities and services such as
Paying guest houses, lodges, country inns, bed and breakfasts, and small
all-suites hotels. Tour products are becoming more flexible, less structured
and customizable. Hence more efficient and trained management and
staff are required to meet instant demand of prospective customers.

9.4.6 GREATER FRAGMENTATION OF HOLIDAYS:

The demand for vacations those provide a sense of regeneration and
knowledge will further increase in the market in years to come.
Opportunities to experience the outdoors and nature with modern and
comfortable facilities will continue to be popular amongst vacation
seekers.
Rising health consciousness amongst city dwellers acts as a push factor for
tourism products like spa and yoga centres. Especially these centres in natural
settings like Kerala will continue pulling tourists to these places. Concerns with
the effects of stress and aging have fueled the spa industry.

A growing number of youth from modern metros and cities will demand fulfilling
vacations which are exhilarating, be it adventure, challenge, further education,
cross-cultural awareness, or peace of mind.

Local foods and delicacies are very often a sought after component of a travel
experience.

Event-based tourism is an important element of the tourist market and is growing

faster with more business meets, trade shows, festivals, large concerts, sports
competitions, social and cultural events and other events that attract large
influxes of people.

Aboriginal tourism: With large migration round the world citizens are interested to
learn about indigenous people of the destination to which they are traveling. This
finding the route however does not mean they seek only ceremony or superficial
contact with people. Some may want to experience their ancestors’ lifestyle. Most
will want to experience the cultural and historic sites and places of the
destination. They may further show interest in meeting and interacting with the
people in real setting and buying some art and craft.

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9.4.7 GREATER ROLE OF COMMUNITY:
There is a wide spread feeling that there are finite limitations to tourism
development. There is a scarce of resources in terms of both physical and social
carrying capacity of destinations. Sensitivity towards the scale and design of
developments to limit their impact on the environment will be the recommended
approach. National park systems in developed nations are adopting ghetto
tourism (discouraging mass tourism) where as in developing and
underdeveloped Nations, locals demanding their stake in the developmental
process. National parks in India are seriously into community participation which
forces travel agencies and tour operators to involve locals in the tour planning to
these natural areas.

All tourism planning and development process irrespective of nature and

ambience will be increasingly mindful of the need for meaningful public
involvement and input. Concern for and consultation with people who are
immediately affected by new facilities and visitor inflows have been guideline for
any sorts of policy formulation. Residents' responsive tourism will be the order of
tomorrow. Community demands for active participation in development and
management will be reflected in setting up new travel agency and tour operators.

CHECK YOUR PROGRESS – III

Answer the following questions.
1. Compare the cost structure of a full service airline with that of a low cost
airline.
___________________________________________________________

___________________________________________________________

___________________________________________________________

___________________________________________________________

___________________________________________________________

2. What is meant by an internet airline model?

___________________________________________________________

___________________________________________________________

___________________________________________________________

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___________________________________________________________

___________________________________________________________

Check your answer with the one given at the end of the unit.

9.5 CONTEMPORARY PRACTICES IN TRAVEL AGENCY

AND TOUR OPERATION SECTORS:
Travel Agency Automation:
Travel industry especially the airlines has been forerunner in adopting
computer for that matter any technology very fast soon they were
invented. Ever since the ENIAC was developed by US army in 1939, it
was first used for preparing navigational charts for warships and
calculating artillery trajectories. Until the mid of twentieth century airlines
reservations were made manually by airline staffs at its counters or over
telephone to the airline staffs. It was first in the 1960s; most of the airlines
had installed computer reservation system and microfilms were used for
storing and displaying flight schedules and fares. However the use of
reservation system was limited to airlines office. Travel agents continued
book tickets over telephone and issue hand written tickets to its
customers. Subsequently after invention of teletype machine connected
through telephone lines enabled an agent to issue direct printed tickets in
its own office. However booking was done through telephone. The
information transmitted from airlines office was received at agents’ desk
and ticket could be printed by the teletype machine. The first airlines
reservation system was developed in the 1970s. But those attempts were
purely experimental until 1976 when American Airlines, United Airlines
and Trans World Airlines developed a CRS each containing flight
information and fares of member airlines. Travel agents could obtain
information from CRS via a data terminal consists of a key board and a
screen. The data terminal was connected with the CRS through telephone
line. TWA named its CRS as PARS an abbreviation for Passenger Airlines
Reservation System. American Airlines named it as SABRE an acronym
for Semi Automated Business Research Environment. United Airlines
System named it as Apollo. The suit was followed by other airlines
like Eastern Airlines developed “System One” in the year 1982 and Delta
Airlines developed DATAS in 1984 both having capacity to connect to
other CRS. In 1988 DATAS and PARS merged to form World Span
System. Till now Travel agencies use GDS for all type of travel solutions
like booking air tickets, rail tickets, cruise lines and reserving hotel rooms
and making payments through BSP.

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However GDS companies are facing competition due to advent of travel
portal and travel search engines.
Contemporary Travel Agency Functions
Table – 1.6
Travel agency functions
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Reservation of Surface/ Sea

Tour packaging and costing

Accommodation Reserve
Airline ticketing and
Travel Information

Travel insurance

Organisation of
Reservations

transport

Coun Internati Hotel Cruise Liaison Personal Entertainment

selin onal with
g Resort Rail Baggage Cultural
Domesti s provider programme
Immi c Road s Travel
gratio Others MICE
n Market
Resear Seminars
Pass ch
port
Acting as a GSA / Handling Agent/ Ground Operator of parent company
Symposiums
Costing
Visa and Conferences

Cust pricing Exhibition

om
Clear Promoti Others
ance on of
and
proce Packag
dure e

Healt Executi
h and ves of

Secu Tour
rity packag
Chec e
ks
Itinerary Preparation

Landi
Foreign currency

ng
permi
ts

certifi
cates

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Organisation of Conference/ Convention:
MICE business has become a profitable option for travel agencies which is
of late tapped by the travel agencies. Some companies have specialised
branch to deal in MICE businesses. Target customers for this operation
are commercial organizations who intend to hold training programmes,
conduct seminars, symposiums, trade shows and conventions. Typical
conference related services or package include:

 Allotment of space (sale of space) at the conference centre

 Travel to/ from the venue
 Accommodation at the venue
 Registration fees and facilities
 Facilities for conference like audio-visual equipments
 Secretarial services
 Sight seeing
 Arrangement of cultural show and other entertainment activities
 Shopping
Travel Insurance:
Major change travel agency function is the inclusion of travel insurance in
the service list. All most all large travel agencies have started offering
insurance schemes jointly with some insurance majors. Travel Insurance
protects the traveler against the personal, baggage losses and other travel
insurance for any loss due to flight delay, major health problem, trip
cancellation etc. Bajaj Alliance, American express, Max New York, TATA
AIG, Thomas Cook, New India Assurance etc are major players in travel
insurance sector.
Travel Agency Approval:
Travel agencies these days require multiple recognitions to start and
operate business. Recognition of Department of Tourism in India is a
basic requirement which is mandatory for agents to deal with tourists. This
recognition helps the agents in getting other approvals to start and run
business in addition to financial and non-financial incentives provided by
the government from time to time. The Ministry of External Affairs and
Reserve Bank of India authorizes an agent to deal in foreign currency and
travel documents of international tourists. As business entities, travel
agencies need to be registered and work under the Companies Act 1956
or Partnership Act 1932 etc as the case may be. In order to open an office
in a municipality or town, permission from the Corporation or Municipality
authority has to be taken. The recognition of IATA authorizes an agent to
issue air ticket of international airlines. This helps in making payment
through Billing and Settlement Plan (BSP) through Global Distribution

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System (GDS) network. Further IATA authorization is required to
subscribe to any GDS vendors. Approval of Indian Airlines in India is
required for issue of IA tickets. In addition voluntary marketing
negotiations with individual airlines help Agencies and Operators in
operating business successfully. Membership of Hotel and Restaurant
Association of India and other State Associations promotes the business
of the Operator. However over the years travel agency functions have
been diversified. Agencies are diverting from air ticketing to package tour
operation and marketing. Thus recognition and approval from individual
airlines is not much sought after.
Computer Reservation System:
CRS became very popular since early 1980s works through an
interconnectivity of data terminals of agents otherwise called as agents’
set with the main super computer owned by the promoters of CRS
otherwise called CRS vendors or GDS (Global Distribution System)
companies. The super computer is capable of serving many sites with
multi functions like retrieving flight availability, fares and passengers
records simultaneously. Agents’ set is connected via a modem to the
Central Processing Unit (CPU) of super computer. The modem (acronym
for modulator/ demodulator) transfers computer data into signals for
transmission via a telephone line. A printer which is connected by the
modem prints the ticket being confirmed by the vendor’s super computer.
When a travel agency books any ticket it feeds the information to his
computer which in turn transmits data and it get stored in the CPU of the
super computer. The agent is authorized only to retrieve its reservations
and other general information. For special information it needs to seek
permission from the CRS vendor. Thus CRS is used for fare display, flight
availability, flight booking, storage of passenger’s record, advance seat
assignments, storage of client profiles, queue functions, ticket and
document printing, auxiliary segments and accessing general information.
E-tourism - Travel Portal:
E-tourism is about using internet technology in tourism systems and
activities like promotion, resort management, online shopping, reservation,
destination information services. A travel portal is a gateway in the internet
which provides access to specialized and focused information and links. It
is customized and acts as a channel between the provider and the
audience. These virtual travel agencies and principals create a brand
value in the minds of the consumer by designing appealing Web sites,
emphasizing better service and providing additional product information.
The key to success for online travel agencies is to build customer loyalty
and reduce dependence on price competition by effectively addressing
pressing issues like security and quality. However the ease entry to the

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markets has made it much simpler for new entrants to get into the market
and gain market share quickly thus increasing competition day by day.
Worlds leading travel portals are expedia.com, lastminute.com,
thomascook.com, firstchoice.com MyTravel.Uk etc. In India
MakeMytrip.com, Travelocity.com, TravelGuru.com, Traveljini.com,
indianholidays.com, indiainfo.com, yatra.com, ezeego1.co.in etc. With
more and more people becoming techno-savvy travel portals are
becoming popular medium of booking. In the year 2006 online booking
size has reached US $523 million mark from US $ 368 million in the
previous year. Online booking is fast becoming a significant portion of
Traditional travel agency system which is reflected travel majors like Cox
& Kings promoting ezeego1.com, Air Deccan tying up with
Travelguru.com, Thomas cook opening its own travel portal by the same
name. Most tour operator reservation system suppliers are also offering
Web integration so that bookings made on the Web are stored directly in
the same system where all other bookings are received. Thus these large
vertically integrated travel companies are now taking multi-channel
integration very seriously.
Emerging Travel Marketing concept from Selling:
The agencies in early 90s were mostly dependent upon sale of air tickets,
hotel rooms and renting cars. Subsequently the airlines started cutting
commissions and some airlines even stopped giving commissions due to
high competition in the market on one hand and rise fuel prices on the
other. The advent of internet further helped airlines to directly reach the
customers by overriding the middlemen. In the third stage of evolution
Travel portals further helped customers to reach their individual suppliers.
All these made traditional suppliers shift their traditional style of
functioning from sale of tickets and hotel rooms to customized package
tours.
Customer Relationship Management:
Travel agencies are increasingly investing Customer Relationship
Management (CRM) these days to build a brand loyalty. There has been
trend of adopting sophisticated CRM technology have the ability to have
one-to-one relationships with the customers. Moreover CRM is being
regarded as a philosophy or a culture in the industry. A sense of personal
care for customers is created by assuring them as they are not mere numbers in
company’s computer system, rather they can relax and trust that their travel
arrangements will go smoothly. Thus an agent is expected to know the travel
preferences of his customer, answer all questions raised by the customer, record
all past transactions, suggest ideas to make one’s trip more enjoyable, take the
feed back after the trip gets over, keep the customer abreast of all happenings in

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the industry etc. Thus there has been an increasing trend of acquiring CRM
technologies in the travel agencies.

The Death of the Brochure:

After the evolution of internet and tour operators are increasingly spending on
web content development rather than spending on publication of brochures. This
is because brochure costs are a massive financial burden on operators. However
customers may feel dissatisfied at this moment with being offered so much
unnecessary information in the web content. Moreover people inherently like to
browse paper-based information rather than computer screen. But once
consumers get used to searching for travel on the Internet operators will divert
funds from brochure production to content development.

M-Commerce:

M-commerce (short form of mobile commerce) in travel products is going to be a

big part of travel business. The benefit of it being handy mobile can become a
great source of information to tourists. M-commerce probably won't take off for
leisure travel now since customers take time to think for their big investment and
big screen will their preferred mode. With all this online time, booking the theatre
or arranging excursion to the local fiesta, booking a restaurant etc will remain the
businesses through mobile.

Destination and Market Research:

Tour package before formulation and design need a through research based on
analysis and assessment of the destination and market. With changing travel
agency functions from sale of air ticket to ground handling and package tour
operation, companies are increasingly emphasizing on research and
development. The idea of tour executives thus is of greater importance in
developing new products as he has a better knowledge about the developments
in destination and client psychology. Market research provides the information
about the size of tourism market, profile of the potential buyers and clients,
details about the competitors in the market, customer expectations of quality and
price etc. Once the operator is aware about various components of package tour,
distribution channel and market conditions and constraints it can carve out
strategies for successful operation.

CHECK YOUR PROGRESS – IV:

Answer the following questions.
1. Write the concept of CRS.
_________________________________________________________

_________________________________________________________

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_________________________________________________________

_________________________________________________________

_________________________________________________________

_________________________________________________________

2. What is meant by travel portal?

_________________________________________________________

_________________________________________________________

_________________________________________________________

_________________________________________________________

_________________________________________________________

_________________________________________________________

Check your answer with the one given at the end of the unit.

9.7 SUMMARY:
Travel agency and tour operation in recent ages has undergone a sea
change in all the spheres. The business has transformed from manual
operation to Global Distribution System and onwards to websites and
internet. Industry in general is sensible to technological, socio-economic
and political factors. The competition in the industry often results in
healthy companies taking over the management and ownership of less
competitive and loss making units. In Management of agencies, scarcity of
trained and less skilled human resource in addition to constraints of
financing is an issue in better performance. Travel portals and travel
search engines seem to affect the long term benefit of the industry.
However there has been a significant growth in air travel due to online
booking and competitive prices offered by low cost airlines. All the
developments in the market in recent period have favorably benefited
customers. Hence the market can better be characterized as consumer
driven market. There has been a significant shift in consumer
expectations, preferences and thus behaviour. Consumers are more
informed and have a wide range of alternatives which makes marketing
more competitive and challenging. Travel agents and tour operators in

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order to be successful in the market are very receptive to the technological
and other changes in the market. The traditional dependence on airlines
ticket has been changed to marketing and development of tour package.
Intermediaries play a vital role in research and development of innovative
products and services and invest substantially in these areas.

9.8 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress – I

1. Your answer must reflect all the top five countries with their receipt
from tourism. (See Table – 1.1)
2. In your answer you should talk constraints in terms of competition
from technology driven search engines, lack of trained manpower and
lack of suitable source of finance.

Check Your Progress - II

1. You should calculate percentage of growth every year from the year
1999 to 2005. Results need to be reflected separately for domestic and
international air passengers. (See table – 1.4)

Check Your Progress - III

1. Your answer should make a comparative study of a full service airline
with a low cost airline. (See chart – 1.2)
2. Your answer should mention the concept of internet model of airlines.
(See sub section 4.4.4)

Check Your Progress – IV

1. Your answer must include the concept of computer reservation
system. (See sub section 4.5.6)
2. In your answer, you should include all functions of a travel portal. (See
sub section 4.5.7)

9.9 SUGGESTED READINGS:

1. Directorate General of Civil Aviation, Government of India
www.dgca.nic.in

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2. Department of Tourism, Government of India, www.incredibleindia.org
3. World Travel and Tourism Council (1994) Gearing up for Growth: A
study of Education and Training for career in Asia Pacific Travel and
Tourism, Brussels, Belgium.
4. World Travel and Tourism Council (1999), Millennium Vision Strategic
Economic & Employment Priority, London.
5. http://www.genesys.net/article051014.htm

9.10 Review Questions

1. Define the various current trends in the management of travel
organization.
2. Write a short note on ‘Computer Reservation System.’
3. Explain the functions of a travel agency?
4. What is meant by ‘M-Commerce’?

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UNIT – 10
ORGANISATIONAL STRUCTURE AND FUCTIONS
OF A TOUR OPERATOR
Structure:
10.0 Objectives
10.1 Introduction
10.2 Travel Agency and Tour Operation History of India
10.3 Definition of Travel Agency and Tour Operator Business
10.4 Case Studies:
10.4.1 Travel Corporation (India) Pvt. Ltd. (TCI)
10.4.2 Students International Travel Association (SITA)
10.4.3 Cox and Kings India Ltd.
10.5 Indo Asia Tours
10.6 The Company at a Glance
10.7 Thomas Cook India Ltd.
10.8 Le Passage to India
10.8.1 Profile
10.8.2 LPTI Products and Services
10.9 Summary

10.0 OBJECTIVES:
After reading this unit, you will be able to:

 To explain the history of tourism;

 To discuss the history of organized travel business in India;

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 To describe the travel agents and tour operators- definition and
differences;
 To list the leading travel agencies and tour operators of India; and
 To discuss the travel programmes of leading travel agents and tour
operators of India.

10.1 INTRODUCTION:
Travel has existed since the beginning of time when primitive man set out,
often traversing great distances, in search of food and clothing necessary
for his survival. Throughout the course of history, people have traveled for
purposes of trade, religious conviction, economic gain, war, migration and
other equally compelling motivations. In the Roman era, wealthy
aristocrats and high government officials also traveled for pleasure.
Seaside resorts located at Pompeii and Herculaneum afforded citizens the
opportunity to escape to their vacation villas in order to avoid the summer
heat of Rome. Travel, except during the dark ages, has continued to grow,
and throughout recorded history, has played a vital role in the
development of civilizations. This unit deals with the history of Indian travel
agents and tour operations, we will discuss the case studies of TCI, SITA,
Cox and Kings India Ltd., and Orbit – Travel and Trade Fairs. We shell
also discuss the division of Orbit such as business tours, study tours,
freedom tours, travel support etc.

10.2 TRAVEL AGENCY AND TOUR OPERATION HISTORY

OF INDIA:
Tourism today has grown significantly with both economic and social
importance. The fastest growing economic sector of most industrialized
countries over the past several years has been in the area of services.
One of the largest segments of the service industry, although largely
unrecognized as an entity in some of these countries, is travel and
tourism. According to the World Travel and Tourism Council (1992),
'Travel and Tourism’ is the largest industry in the world on virtually any
economic measures including; gross output, value added, capital
investment, employment and tax contribution.
Travel trade in India is relatively new. At the time of independence there
was hardly any travel company in India worth the name in present context.
The travel business in India in an organized manner started with the
setting of the TAAI, Travel Agents Association of India in Mumbai. The
Travel Agents Association of India (TAAI) was formed towards the end of
the year 1951 by a group of twelve leading Travel agents, who felt that the
time had come to create an Association to regulate the Travel industry in
India. The primary purpose was to protect the interests of those engaged
in the industry, to promote its orderly growth and development and to

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safeguard the rights of the traveling public. TAAI represents all that is
professional, ethical and dynamic in our nation's Travel related activity and
has been recognized as the voice of the Travel and Tourism industry in
India.
With a membership data base of over 1800 Active; Allied and Associate
members comprising of IATA accredited Travel Agencies; Airlines &
General Sales Agencies; Hotels and Tour operators; TAAI is the largest
Travel Association of India. Prior to it there were two major companies
Thomas Cook and Sons and The American Express with their main
branches and Indian companies, Jeena and Co., Lee and Muirhead India
Pvt. Ltd., and N. Jamnadas and Co. Ltd., operating in India.
However the bulk of international tourists were handled by Thomas Cook
and sons and the American Express. In 1920, Jeena and Company, the
first Indian travel agency organized group tours abroad and in India for
Indian travelers and it handled the first group of foreign tourists in 1950.
However Jeena and Company and other two Indian travel agencies were
merged into one composite travel company known as Travel Corporation
of India Ltd, popularly known as TCI in 1961. After this there were a
number of travel companies established in Indian such as SITA (1963)
Thomas Cook India Ltd, American express, Cox and Kings, Ind. Travel
and so forth.
Presently there are more than 500 travel companies on the approved list
of Department of Tourism, government of India which are located in 50
cities of the country and many have promotional offices in abroad too. In
addition of this there are a large number of non-recognized travel
agencies or registered with respective states, scattered in the country. In
India there are more than 400 travel companies approved by the IATA,
International Air Transportation Association and a number of them have
more than one office or branches.

10.3 DEFINITION OF TRAVEL AGENCY AND TOUR

OPERATOR BUSINESS:
Generally we call travel agency a retailer that sells tourist products directly
to the public on behalf of the product supplier and in return gets
commission. According to the Airlines Reporting Corporation (ARC) a
retail travel agency is defined as “ a business that performs the following
functions- quotes fares, rates, make reservations, arrange travel tickets
and accommodation, arrange travel insurance, foreign currency,
documents and accepts payments.” The main source of revenue for the
retail travel agency is the commission received from the vendors. However
the rate of commission differs from organization to organization and travel
component to travel component. In India the travel agency receives ninety

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percent of its revenue from commission and ten percent from the
consultancy services.
Tour operator is 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 is called a tour operator. More precise
tour operators are primarily responsible for delivering and performing the
services specified in a given package tour. They can provide these
services themselves as some have their own infrastructure like car/
coaches and hotels etc. or can obtain these from other suppliers. That’s
why they are called manufacturers of tourism products.

10.4 CASE STUDIES

10.4.1 TRAVEL CORPORATION (INDIA) PVT. LTD. (TCI):

TCI is India’s premier travel and tour organization, established in 1961. It
has 25 offices in India and a total of 11 offices in USA, Canada, UK,
Europe, China, Korea, Japan and Australia. TCI is a member of AFTA,
ASTA, IATA, IATO, ICCA, JATA, PATA, TAAI, UFTAA and USTOA.
TCI's core activities are Inbound Tourism, Business Travel and Leisure
Travel. Over 1000 professionals at TCI offer expert guidance and take
care of your every requirement, giving you optimum value for money. TCI
is a leader in the inbound tourism field and works closely with tour
operators worldwide. Besides tours to popular destinations in India and
neighboring countries, TCI specializes in special interest and incentive
tours, conferences and air charter / cruise ship ground operations. It
operates its own Taj Tour and Delhi City Tour and is a G.S.A. for the
Palace on Wheels and the Deccan Odyssey. TCI is one of India’s largest
outbound operators and is the G.S.A. in India for Globus & Cosmos Tours,
Rail Europe, Greyhound, Amtrak, Rocky Mountaineer Vacations, Japan
Rail and Disneyland Paris. TCI organizes customized vacations and
package tours to worldwide destinations.
TCI’s Corporate Travel Management Services include implant operations,
travel insurance, foreign exchange, conferences and incentive tours for
multinationals and leading companies in India. In keeping with worldwide
trends, TCI Travel Net offers 24 X 7 travel services through toll free
numbers and on-line bookings on www.tcindia.com. TCI has won the
National Tourism Award for “Excellence in the Tourism Industry” in
Category I every year since 1976, besides annual awards and
recognitions.

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TCI has a widely distributed network of over 2000 travel agents and tour
operators worldwide and service over 2,50,000 travelers annually. TCI's
strong resources deliver the best in the industry. TCI sells various
products in India including all paces like North, South, East and West. The
company sells tours in mountains, beaches, deserts, wildlife areas and
organizes tours out of India too. In 2007 TCI merged with Thomas Cook.

10.4.2 STUDENTS INTERNATIONAL TRAVEL ASSOCIATION (SITA)

A Division of Kuoni Travel (India) Ltd. - SITA Inbound is India’s Number
One Destination Management Company, operating Inbound Tours from all
over the World, with Tour Operations and Marketing activities centralized
at the Head Office in New Delhi. The company’s strength is service,
backed by experience, reputation and network of 11 branch offices in India
and 6 overseas offices with associate offices in Nepal & Sri Lanka. With
marketing offices in London, Paris, Frankfurt, Milan, Barcelona, Lisbon
and Stockholm, SITA is fully equipped to handle every guest query
globally.
Since its existence SITA is handling incoming tourists to India from all over
the world. SITA INBOUND organizes attractive and carefully planned tours
of the Indian subcontinent for groups and individuals. Its key markets are
Europe, UK and North America where it enjoys distinct leadership. It has
ambitious growth plans and is actively targeting new markets like South
America, East Africa & Austral-Asia. The operations and marketing
activities of SITA are centralized at New Delhi and its networking with its
offices is technology driven, with over 300 committed professionals
offering personalized services. SITA has preferred rates with all the
suppliers, which ensures that partnership with all overseas Tour Operators
with SITA is mutually beneficial. A stringent Quality Control department
monitors feedback from across the country and endeavors to constantly
improve the caliber of service, endeavoring to provide a matchless travel
experience to each and every guest.
History
Its history goes back to 1933 when in New York a bicycle tour arranged by
John C Dengler set the pace for a small company called Students
International Travel Association. The company soon became popularly
known by its acronym – SITA – and launched itself into the orbit of world
travel. After achieving unprecedented success in the U.S.A., SITA looked
beyond the Atlantic to Europe and Asia – India. In 1956 the first office was
setup at New Delhi and from then onwards SITA has traveled a long and
arduous journey in the sphere of travel and tourism to be recognized

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worldwide as a reliable and efficient agency with integrity and offering
quality service.
Staring with a staff of just three people, today the company is proud to
have increased its fold to encompass over 250 professionals. Foreseeing
a policy of Indianisation, in 1963, SITA was converted into a private limited
company under the guidelines of the Companies Act 1956 and came to be
known as SITA World Travel (India) Pvt. Ltd. With the rapid growth of the
Incoming Tours business, SITA soon set its sights on foreign land, starting
in 1972 with its first office in Paris. Thereafter the extension continued to
Milan, Frankfurt, London, New York, Stockholm, Barcelona and Lisbon. At
the same time SITA extended its sphere of activity to the neighboring
SAARC countries with a presence in Sri Lanka (1982) and Nepal (1984).
Further in 1993, it became a fully owned Indian public limited company
and came to be known as SITA World Travel (India) Ltd. Between 1970
and 1994, the company achieved a spectacular growth rate of 3062%.
The foreign exchange earnings showed a monumental increase of 6041%.
This remarkable progress was the result of adhering to well-defined
business principles and goals over the years as well as providing services
backed by experience, network and reputation. The company’s excellent
rapport with the Government, International & Domestic Airlines and Hotels
chains was a valuable asset.
SITA Indian Trails is a business unit of Kuoni Travel India (P) Ltd. and
specializes in Incoming Services for foreign tourists traveling to India,
Nepal, Sri Lanka & Bhutan. It handles tailor-made individual tours, group
series, ad-hoc special groups as well as incentives. In 2003, with a staff of
40, SITA Indian Trails handled over 20,000 foreign tourists with a turnover
of US$ 7 million. The operations are streamlined with three market-
focused departments: English Department, European Department and Far
East Department.
Committed to excellence, the staff is IT-savvy, experienced and
multilingual. Speaking English, French, German, Spanish, Italian,
Japanese, Chinese and Korean, they cater to the individual needs of
international clients from all walks of life in their own respective languages.
The quality of services is further enhanced by the presence of our
dedicated staff all over the country, which form an indispensable network
of transport and communication. The offices are located in cities like: New
Delhi, Agra, Bangalore, Chennai, Cochin, Goa, Jaipur, Jodhpur,
Kathmandu, Khajuraho, Mumbai, Thiruantapuram, Udaipur and Varanasi.

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10.4.3 COX AND KINGS INDIA LTD:
Cox & Kings is the longest established travel company in the world. Its
distinguished history began in 1758 when it was appointed as general
agents to the regiment of Foot Guards in India under the command of Lord
Ligonier. By 1878, C&K were agents for most British regiments posted
overseas, including the Royal Cavalry, Artillery and Infantry, as well as the
Royal Wagon Train and the Household Brigade. The Royal Navy was next
and in 1912, The Royal Air Force came under its wings. Between 1750's
and 1950's, Cox & Kings was witness to an exciting era in Indian history,
and, in its own way, helped to shape it. Today, Cox & Kings is a premium
brand in all travel related services in the Indian subcontinent, employing
over 800 trained professionals.
At present, the COX & KINGS group has offices in UK (2 offices), USA,
Japan, Germany, Italy, Turkey, Pakistan and Nepal. In India, Cox & Kings
has offices in Mumbai, New Delhi, Chennai, Bangalore, Calcutta,
Ahmedabad, Cochin, Hyderabad, Pune, Goa and Jaipur and one satellite
office in Andheri in Mumbai and Gurgaon in Delhi.

10.5 INDO ASIA TOURS:

Indo Asia Tours was founded in February 1987 by a dedicated group of

professionals, experienced in every facet of tourism in the Indian sub-
continent, and each with more than a decade of experience behind him. It
is an owner managed organization, hence good personalized services,
prompt replies and competitive rates are its benchmarks. The company is
headquartered in Delhi, besides having branch offices in Mumbai,
Bangalore, Chennai and Kathmandu. The company has 45 sub agents all
over the Indian subcontinent. The company is registered and recognized
by the Ministry of Tourism, Govt. of India and is members of a number of
international organizations, like ASTA, PATA, DRV, COTAL, IATO. Since
inception the company has experienced rapid but steady growth and
presently handles tourists from 19 nations of the Globe. Ever since its
inception, the company has regularly received The National Tourism
Award for Excellence in Travel Industry from the Govt. of India.
The Company has been awarded No. 3 position in the First Category by
Department Of Tourism, Government of India in 2001-2002.

10.6 The Company at a Glance:

 Tourist Guide:
The company knows that the success of any tour largely depends on the
good tourist guide. For this it has a group of in house professionals doing

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the escorting job with the tourist group. They speak different foreign
languages and keep themselves abreast with the latest information. This
results in very satisfied clients who keep repeating their visits to various
parts of this sub-continent.

 Transport Division:
The company has its own fleet of 12 modern (Indian make) buses. The
bus sizes vary from 10 to 35 seats. All busses are air-conditioned and
have very comfortable seats. All are well experienced, service oriented
and has been with the organization for the last 5 years. The company has
also a small fleet of new medium size cars.

 Hotel Division:
The company owns three hotels. These are 3 star properties located in
Jaiselmer, Bikaner and in Madikeri (Karnataka -South India). The
company has plans to build a hotel in Hassan (Karnataka) and yet another
one in Hampi - a World Heritage Site in the State of Karnataka. The
company has plan to have these hotels operational in the year 2008.

10.7 THOMAS COOK INDIA LTD.

During John Mason Cook’s 1881 visit to India, he set up the company’s
first Indian office in Mumbai. He courted senior government officials and
he negotiated special rates with railway officials. On his return, India was
officially added to Cook’s Travel Empire with the publication of a shilling
brochure entitled Cook’s Indian Tours. It contained an extensive
programme of tours and numerous tips for the first-time visitor. The
number of tourists visiting India was initially small, but Cook’s position was
enhanced by several official commissions. In 1887, the firm was invited to
make arrangements for senior British officials and Indian princes to attend
Queen Victoria’s golden jubilee celebrations in London. In the 1890’s
Cook’s set up the Indian Princes Department for the sightseeing purpose
of Royal family members. Also in 1887, following overtures from the
viceroy, Cook’s began organizing the transport of Indian Muslims on the
annual pilgrimage to Mecca. They had previously been subjected to
terrible conditions and extortion’s, and Cook’s brought welcome order to
the proceedings. The agreement was terminated by the Indian
Government in 1893.
Subsequently, it expanded to the cities of Kolkata, Bangalore, Delhi and
Chennai, under the aegis of Thomas Cook Overseas Limited. The current
company, Thomas Cook (India) Limited (TCIL) came into existence with
effect from November 1, 1978. TCIL made its public issue in February
1983.

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Size:
Present in 19 cities across 67 locations in India Over 1100 employees
Thomas Cook (India) Limited- National Network:
TCIL has offices in Mumbai, Pune, New Delhi, Gurgaon, Chandigarh,
Agra, Ahmedabad, Bangalore, Baroda, Bhubhaneshwar, Chennai, Cochin,
Goa, Hyderabad, Jaipur, Jalandhar, Kolkata, Trivandrum and
Vishakapatnam. TCIL has Foreign Exchange Counters at the international
airports of Mumbai, New Delhi, Kolkata, Chennai, Cochin and Trivandrum,
open 24 hours and 365 days a year to cater to the needs of the
international and domestic traveler. TCIL also has a round-the clock
Foreign Exchange counter at the New Delhi Railway Station.
Leisure Travel:
The Leisure Travel division promotes domestic inbound and outbound
holidays. The business is already one of the top two names in the leisure
travel in the country.
The Tour Operating sub-division operates over 40 Group Inclusive Tours
(GIT) to leading destinations in all 5 continents and also promotes Free
Individual Travel (FIT) to over 50 countries around the globe. It also offers
domestic tours in the country. In order to offer Indians a full range of
holidays, the company has also forged ties with the best names in the
leisure business such as Globus & Cosmos, Rail Europe and Star
Cruises.
The Incoming Services sub-division caters to the needs of tourists visiting
India from all over the world. This division currently caters to the needs of
over 50,000 foreign tourists in India and is one of the top two names in the
country for incoming services. It handles tourists in all segments including
Charters, FIT, regular and ad hoc groups and incentives. In fact Thomas
Cook India is the undisputed market leader for the charter segment of the
industry which gives it access to lowest hotel and transport rates in the
country. The Conferences & Convention cell provides a number of large
international conferences in India and has been recognised as the leading
conference organiser in India.
Foreign Exchange:
Thomas Cook (India) Ltd is a leading foreign exchange provider and offers
a wide range of innovative products and services. These include Cash
Passport, a reloadable global card that enables travellers to withdraw local
currency from more than 800,000 Visa ATMs across 144 countries
worldwide; Wire transfers of funds worldwide, using the SWIFT network;

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MoneyGram money transfer service for quick money transfers to India
from anywhere in the world.
Thomas Cook has bank notes in 25 currencies and travellers cheques and
foreign currency drafts in major currencies such as US Dollars, Pounds
Sterling, Euro, Australian Dollars, Swiss Francs, Japanese Yen and
Canadian Dollars. Their customers include persons travelling on business,
leisure, employment, medical treatment, further studies and migration.
Thomas Cook is also the largest player in the bulk foreign exchange
business handling bulk currency volumes for the countries leading banks
and moneychangers. This branch has over 20 money exchange bureaus
at the Mumbai, Delhi, Kolkata, Trivandrum, and Cochin International
Airports, which operate 24 hours a day to provide foreign exchange
services to travelers at gateway locations.
Corporate Travel Management:
In this segment, Thomas Cook effectively “manages” the travel budgets of
several large national and multinational companies such as TCS, Reliance
Industries, Godrej, Sanmar, Mahindra British Telecom, Texas,
Instruments, Mastek and Tata Motors.
Thomas Cook sets up ‘On-sites’, which are CRS-linked and offers
comprehensive end to end travel solutions.
Insurance:
Thomas Cook (India) Ltd. is the only travel company in India to have a
registered license to sell insurance and offers its own Travel Insurance
branded products Viz. Travel Care, Scholar Care, Family Care, Corporate
Care and Travel Perks exclusively designed for different customer
segments like, Leisure Traveller, Students, Family, Corporate & Frequent
Flyers.
Incentives and conferences:
Corporate Marketing & Incentive is one of Thomas Cook's Travel divisions
to cater to the needs of the corporate clientele. For many organizations
and establishments, incentive travel has become a tool to motivate their
employees at work. The company specializes in providing travel
arrangements with high quality services for individual as well as
organization from different industries. Our clientele include Multi National
Companies, academic institutions, government bodies, exhibition
organisers, community clubs, resident committees and etc.
Available Products and Services:
Group Air-ticket booking

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Group Hotel Accommodation Arrangement
Seminars/Conference
Tailor-Made Incentive
Business Travel:
Thomas Cook effectively "manages" the travel budgets of several large
national and multinational companies. The company’s large volumes and
immense buying power help the agency in effectively managing the travel
budgets of several MNC's, blue-chip companies and multinational banks
to their advantage. Thomas Cook knows the needs of the corporate
traveler like no-one else does, and provides businesses a complete
basket of products for all their travel needs including the followings:

 Air Reservations
 Hotel Reservations
 Car rental
 Passport/Visa Service
 Foreign Exchange
 Conference/Incentive tour arrangements
Its branches specialize in offering tailor-made Travel Policies for each
corporate, thereby bringing savings on spend, by focusing on areas such
as:

 Travel Policy Review

 Travel Planning and Budgeting
 Joint definition of preferred vendors and joint negotiation of
preferred rate programs
 Consolidation of Spends onto limited number of preferred suppliers
 Travel Policy Compliance
 Corporate MIS generating details as required by the Corporate
 Streamlining of Ordering Procedure
 Review Procedure to review the corporate on pre-determined
intervals
The company’s Travel Insurance products under the brand Travel Care is
high on service excellence, world-wide coverage and value for money.

 Issue of policy for the ages between six months to 70 years.

 No medical certification required for any individual irrespective of
age and destination.
Any pre-existing ailments or medical conditions are not covered under this
policy.

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CHECK YOUR PROGRESS:
Answer the following questions:
1. Travel Corporation (India) Pvt. Ltd. (TCI) was established in the
year_____________________
2. SITA Indian Trails is a business unit of ----------------------- Travel
India Pvt. Ltd.
3. Indo Asia Tours was founded in -------------------.
4. Thomas Cook (India) Limited (TCIL) give into existence with effect
from ------------------------.
Check your answer with the one given at the end of the unit.

10.8 LE PASSAGE TO INDIA:

10.8.1 Profile
Le Passage to India Tours and Travels Pvt. Ltd. is the country’s fastest
growing destination management company. Set-up in August 2002, Le
Passage to India is already amongst the top two inbound tour companies
in a short span of time. The company is specialized in package tours and
tailor made holidays for groups and discerning individual travelers to
whom it offers a wide range of specially designed products. With its
headquarters in New Delhi, the company is managed by over 200 travel
professionals with over 500 years of collective travel experience. The well-
knit motivated team of committed people who have in-depth knowledge of
the business and unspoken passion to promote tourism in the Indian
subcontinent ensures that all guests are well looked after. The philosophy
is simple and aims to apply strong management practices in an
atmosphere of collaboration and intellectual honesty. Le Passage to India
is recognized by the Department of Tourism, Government of India. The
company mission is to make “Travel” a truly magical experience with the
vision to make the company India’s top Travel Company
Aims:

 To be India’s most trusted travel company

 Exceed customer expectation of service – “wow” on every smile
 Be the employer of choice
 Foster partnerships with client & supplier
 Meet shareholders expectations

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10.8.2 LPTI PRODUCTS AND SERVICES:
The company sells and promotes various kinds of tours in India under
following headings:

 Cultural tours- This category shows the best essence of India

including south India, Rajasthan, Golden Triangle (Delhi- Agra and
Jaipur), North India and combination of India with Nepal.
 Incentive tours- The tour to Golden Triangle in this category is the
best incentive tour by the company.
 Special interest- Under this category the company offers
architecture and Handicraft tours.
 Adventure and wildlife- This category offers the tours in Ladakh
and wildlife areas of Coorg. The elephant safari at Corbett National
Park is another attraction of this category.
 City Stopovers- Under this category the company offers 04
metropolitan cities of India with 3-4 days itinerary.

10.9 Summary:
In this unit you have discussed:
 Tourism is very important tool for the world economy and it has
tremendous potential for the employment generation.
 Tourism is a business concept and a strong tool for the social
development
 The development of tourism in India has come up with the efforts of
Travel Agents Association of India.
 The details and case studies of leading travel agencies and tour
operators of India.
 The different products and services offered by selected travel agencies.

10.10 Answers to Check Your Progress:

1. 1961
2. Kuoni
3. February 1987
4. NOV 1, 1978.

10.11 Suggested Readings:

 Bagri S.C., (1997), ‘What is tourism? Concepts and definitions.’ IITTM
Journal of travel and tourism, Vol.1, No. 1, March 1997 IITTM Gwalior.

 Beaner, Allen, (1975), Retail Travel practice, Beaner and Gardonland

Tours Ltd., London.

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 Burkart, A.J. and S. Medlik, (1974), Tourism: past, present and future,
Heinemann, London.
 Foster, L.D., (1994), Introduction to Travel and Tourism, McMillan, New
York.
 Godwin, N. (1987), A Complete Guide to Travel Agency, Albanj, Delmer.
 Website of TAAI, www.taai.org
 Website of TCI, www.tci.com
 Website of Cox and Kings, www.coxandkings.com
 Website of SITA, www.sitaindia.com
 Website of Indo Asia Tours, www.indoaisa-tours.com
 Website of Thomas Cook India, www.thomascook.co.in
 Website of Le Passage to India, www.lepassagetoindia.com

10.12 REVIEW QUESTIONS:

1. Why the tourism business is important?

2. What is the role if TAAI?
3. Define the business functions of travel agency and tour operator.
4. Write a short note on the history of travel agency business in India.
5. Explain the growth and development of SITA.
6. Explain the organizational update of Travel Corporation of India Ltd.
7. Write a detailed note on the insurance services provided by Thomas
Cook.
8. Describe the different package of Le Passage to India.
9. Write short notes on Indo Asia Tours and Cox and Kings.
10. Write a detailed note on the development of Orbit and its contribution as a
leading trade fair organizer in India.

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UNIT-11
FACTORS AFFECTING THE TOUR COST
Structure:
11.0 Objectives
11.1 Introduction
11.2 Factors affecting the tour cost
11.3 Cost sheet
11.3.1 Significance of tour cost sheet
11.4 Costing a tour package
11.4.1 Ground operator quotation
11.4.2 Tour wholesale quotation
11.5 Costing the elements of a tour package
11.5.1 Transportation
11.5.1.1 Airfare
11.5.1.2 Motor coach pricing
11.5.2 Lodging
11.5.2.1 Lodging Meal Plans
10.5.2.2 Restaurants
10.5.4 Sightseeing and Guide Service
10.6 Summary

11.0 OBJECTIVES:
After reading this unit, you will be able to:

 Discuss the factors affecting tour costing.

 Explain the costing of a tour package.
 Describe the meaning and significance of tour cost
 Prepare cost sheet for tour packages.

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 Explain different elements of tour costing.
 Describe procedure for cost determination.

11.1 INTRODUCTION:
Perhaps the single most important element in developing a group tour is
proper costing. Here is where many novices make serious mistakes. If you
are not very careful in costing a tour, you may so overprice it that it is
unmarketable. It is just easy to err in the other direction and cost a tour so
that you barely break even or you may lose money. There are many
snares in costing. These include such items as porterage (how many
pieces of luggage), airport taxes, and tips for guides, currency fluctuations,
and so forth, it is essential to study and fully understand all aspects of tour
costing.

11.2 FACTORS AFFECTING THE TOUR COST:

Determination of accurate tour cost is the main task of the tour planner/
tour-costing manager. The cost should be designed in such a way that it
must generate an adequate profit for survival. Before costing a tour, the
tour-costing manager considers the following factors, which have a
profound impact on company’s profitability position.

 Seasonality
 Exchange rate movements
 Competitor’s price strategy
 Increase in other costs
 Impact of liberalization and globalization
 Promotional pricing
 Market segmentation pricing
 Increase in fuel and other costs
It is true that the cost management of a travel company when wielded
wisely acts as a crucial bridge between strategic and operational efficiency
that can channel the working of entire organization towards the unified aim
of achieving competitive advantage. Every strategic choice that a travel
company makes, viz, costing a tour package, introduction of new
products/ services to new products and so on, must be validated by its
cost implications. Thus, while costing a product, the tour company should
concentrate on the four pivots namely- cost consciousness, cost
measurement, cost responsibility and cost improvement.

11.3 COST SHEET:

Tour cost sheet is a statement designed to show the total costs along with
the break up of tour costs. The information incorporated in tour cost

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sheets are collected /derived from the confidential tariff. The confidential
tariff is prepared after negotiating the rates quoted by the suppliers like
hotels, airlines, railways and others. The handling agency/ destination
company also prepares a confidential tariff. There is no fixed form for the
preparation of a confidential tariff and tour cost sheet. But in order to make
the cost sheet more useful, it is usually prepared in a systematic form like
transportation, hotel, transfer etc.

11.3.1 SIGNIFICANCE OF TOUR COST SHEET:

Cost sheet will reduce the chances of errors or omissions in the
calculations and the tour operator will have a clear picture of the profits
made on the arrangements. The advantages of cost sheet are;

 It discloses the total tour costs and the cost per passenger.
 It enables the tour company to keep a close watch and control over
costs.
 It helps in fixing up the selling price more accurately.
 It helps the tour company to submit quotations.

Name of Tour------------------------- No. of Pax-------------------------

Tour Code----------------------------- Period-----------------------------

Rate of Exchange--------------------

Sector Transportation Hotels

Transfer sightseeing Sin Dou Meal Ex-tra O

gle ble th
plan er

S
er
-

vi
c
e
s

Car Coach Car Coach

AC Non AC Non Ac Non AC Non

AC
AC AC
AC

Total tour cost

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11.4 COSTING OF THE TOUR PACKAGE:
In a group tour, it is especially important to estimate realistically the
number of tour members. Do not be overly enthusiastic and get carried
away so that you misjudge anticipated tour membership. Such
exuberance is likely to cause serious problems later. For example, if you
assume that you will be able to sell forty bookings and you end up with
twenty bookings, you will not have any leeway if the price was quoted on
the basis of forty. You will have to operate the tour at break even or at a
loss, cancel the tour completely, or go back to the tour members to collect
more money. You should always put a clause in the terms and conditions
statement to the effect that the price is based on a specified number of
participants and if the number drops below that, the price will be
increased. Even with forewarning, clients are often irritated, to be asked
for more money, so it is far better to base the price on conservative tour
membership in the first place.
If you base the tour price on a membership of 25 and end up with 40
bookings, the tour operator or the reception agents will bill the agency at
lower per person cost. The additional money earned can be absorbed by
the agency as a higher profit margin, or it can be used to pay for an
unpublished extra, such as cocktail party, a special dinner, or an additional
sightseeing tour. Or it can be refunded to the clients. Here is a tour
operator, who’s per person land cost of a 21 days tour of Europe;
Basis 15 participants ------------$1555
Basis 25participants ------------$1495
Basis 35 participants ------------$1395
Basis 40 participants ------------$1295
The per person cost varies because many of the tour components have
fixed prices that must be divided equally among whatever number of tour
members there are. For example, the cost of a motor coach is the same
whether 25 or forty passengers use it. If the net cost is $3500 for a motor
coach and driver and 40 passengers use it, the per person cost jumps to
$140. Other tour components that don’t vary in cost in relation to number
of participants are sightseeing and transfer motor coaches and the cost of
the tour escort.

11.4.1 GROUND OPERATOR QUOTATION:

Here the pricing formula becomes more complicated and requires
accuracy and knowledge on the part of the person costing the tour. Even a

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small omission, such as overlooking the cost of a city sightseeing tour or
transfer, can throw the final price off. Tours are costed by using the
ground operators’ confidential tariff and by getting written confirmation
from each ground operator involved in the itinerary. Many confidential
tariffs local currency, so it is important to use current exchange rates on
anything quote in a foreign currency.

11.4.2 TOUR WHOLESALER QUOTATION:

The price the tour wholesaler quotes will be complete per person price
based on the terms and conditioned statement attached to the itinerary.
The only thing the travel agent must add is the mark-up to cover its
expenses and profit. A typical tour price would include;

 Hotels
 Meals
 Transfers
 Sightseeing
 Baggage handling
 Entrance fees, theatre tickets, and so forth
 Tips and taxes
 Transportation (motor coach and driver, rail tickets, ferry tickets,)
 Local guides
 Services of a tour manager
Suppose a group of tourists from Australia ask you to prepare a tour
itinerary between Delhi- Agra- Srinagar - Delhi. Suggest them a tour
price? The name of your company is Rose Tours Ltd.

Date/ Day Sector Flight Local Time Activities

01 Delhi AI 401 0630 Arrival at Delhi Airport. Transfer to the hotel.

Afternoon city tour. Overnight at hotel.

02 Delhi ------ Full day sightseeing by A.C Coach

03 Agra IC301 0630 Flight to Agra, Transfer to Hotel Taj, Agra.

Afternoon city tour. Overnight at hotel.

04 Fatehpur ---- Excursion to Fatehpur Sikri in the afternoon,

Sikri transfer to the airport to leave for Delhi.
Overnight at hotel.

05 Delhi IC 500 0600 Transfer to airport to leave for Srinagar. Arrive

at Srinagar and transfer to houseboat.
Afternoon excursion to city, overnight stay at
hotel.

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06 Srinagar ------- City sightseeing, overnight at hotel.

07 Delhi IC 408 0730 Transfer to airport to leave for Delhi. Arrival at

Delhi airport and leave for New Zealand.

Suggested tour itinerary

Once the itinerary is finalized, the next step is to negotiate with suppliers
at each destination to start costing and pricing of a tour package;

 Identify the tour components

 Identify the cost of each tour component
 Segregate total cost into fixed and variable costs.
 Find out fixed and variable costs per passenger.
 Calculate break-even point in total and per passenger.
 Add fixed costs and variable costs.
 Multiplying the total cost by budgeted percentage of profit, one will
get the total sales price.
Name of the tour – Group Inclusive Tour Period: Oct 10 to 16
The variable or product cost of the Delhi-Agra-Srinagar- Delhi tour is
$1342 per pax. But to find out total cost of this tour, one needs to add the
fixed cost. In this tour, the fixed cost is the marketing cost, tour planner’s
cost, tour manager’s salary etc. It means one has to add the
administrative costs and the marketing costs to find out the cost of
package sold. Suppose after allocation of fixed cost to each tour, the cost
of the portion Delhi-Agra – Srinagar-Delhi is $250 per pax., then total cost
of package sold will be:
Variable cost + fixed cost i.e. = $1342 + $ 250 = $ 1592

11.5 COSTING THE ELEMENTS OF A TOUR PACKAGE

11.5.1 Transportation:
11.5.1.1 Airfare:
Commercial air tickets sold on a regularly scheduled flight are a simple
pricing procedure. Prices quoted include all applicable taxes, so all the
tour operator has to worry about is airport transfers. A tour operator also
owning a travel agency license would receive a commission, usually 9 to
11 percent, depending on annual gross volume, on the gross (or
unreduced) price of a ticket. Sometimes the operator has a choice
between the commission on the gross rate or a mark-up applied to a net
rate. If a discounted net rate (also known as net non commissionable) has

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been given to the tour operator, a small mark-up can be applied.
Discounted net rates are often given for 20 tickets or more. Whether or not
the tour operator marks up the ticket, the client should not have to pay
more for the ticket by purchasing through the tour operator than by
purchasing the ticket to travel individually. Because the margin on air
tickets is small, and because many tour operators sell air tours to clients
throughout the nation, it is common for tour packages to be sold without
airfare, allowing the clients who are located throughout the nation, to work
through a local travel agent for the lowest airfare. The client arranges with
a travel agent to arrive at the departure point of the tour at the appropriate
time. Airfares are also unpredictable, and many require advance payment;
therefore, many operators choose to limit their involvement with scheduled
flights and allow travel agency experts to handle this component of their
tours.
Pricing charter flights is a little more complicated. Again travel agents
often handle charter flights. Airplanes used for charter purpose range
anywhere from five seats to several hundred. The number of people for
which thee charter is being reserved is therefore critical. Typical motor
coach groups of 35 to 40 are normally better served by scheduled flights;
however, if there are multiple groups of 35 to 40 individuals, the price
could be drastically reduced by chartering a flight. The greatest risk in
chartering flights is in the number of customers and how certain the tour
operator is that the group(s) will materialize. In the case of pre-formed
groups numbering in the hundreds of people, chartering almost always
provides a cost savings. The tour operator from 15 to 25 percent,
depending on the comparable cost of flying individually, can mark up
charter flights.
11.5.1.2 Motor coach pricing:
Most motor coaches have 46 to 48 seats, although the Euro styling
concepts popular in the 1980s and 1990s are removing some of the seats
in order to add amenities. Many tour operators are also motor coach
owners, and therefore price their motor coaches based on driver,
maintenance of coach and garage, mortgage, licenses, and other
operating costs. Most recent net non-commissionable prices of motor
coaches to tour operators have ranged from $450 per day to $600 per
day. The number of people, who will be on the tour of course, divides this
cost. The price should be somewhat higher for a motor coach company
selling directly to a preformed group, because of the higher annual volume
a tour operator can bring to a motor coach company, allowing for volume

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discounts. Also, motor coach operators are expected to protect tour
operator rates by giving them deeper discounts than they give end users.
A tour operator needs to translate the daily fee for a motor coach into a
price per person. This translation is the difficult part, because the number
of people on tour is not known at the time of the reservation. Exhibit 8.1
shows that the daily cost of the motor coach is strongly influenced by the
number of clients on board.
Because the cost of the motor coach is so drastically affected by how
many passengers are on board, tour operators set parameters when
pricing tours. When dealing with a tour designed for pre-formed groups,
tour operators often set a minimum limit of 30, 35, or 40 passengers,
depending on their needs. The minimum number required on the tour is
called the break point. Setting a minimum number of 30 on a tour is called
breaking the tour at 30. The group leader is informed that if their numbers
fall below the required minimum, the tour will have to be reprised or
canceled. This method of pricing puts a little bit of pressure on the group
leader to make sure that the group meets the required minimum.
For individual tours, the task is more complicated. Individual tours are
often priced for fewer people, such as 15 to 25. Obviously, this raises the
price, which is one reason why preformed groups tend to get lower prices
than individual tour passengers. By breaking the tour at lower numbers,
the tour operator limits risk but raises the price each customer must pay. If
the break point is reached, the tour operator makes the minimum
acceptable profit margin on the tour that he/she is willing to take. If more
customers take the tour, there is an additional profit per tour called
breakage. If fewer people reserve for the tour, the operator has to make a
very critical decision.
Does he/she cancel the tour, or run the tour, potentially at a loss? Some
operators will run the tour as loss leader so as not to disrupt a series are
running heavy load factors. A heavy load factor assumes two things to be
true: that the tour is running over the breakage figures (it is profitable) and
that the tour is fairly full. Some may offer a special, or try to sell a “light”
tour to small groups, or offer it at a reduced rate to “preferred customers”
who wait for last-minute travel bargains.
Motor coach Costs (Daily Basis):
Based on Number of Participants
And a $ 500 Daily Charge
Cost per participant

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Number of Participants One-day tour Eight-day tour

15 $33.33 $266.67
20 25.00 200.00
25 20.00 160.00
30 16.67 133.33
35 14.29 114.29
40 12.50 100.00

Some operators offer guaranteed departures in their brochures and must

run the tour regardless of the load factor. Some are forced to cancel the
departure, by attempting to move those with reservations to departures
with other dates or other destinations. There is no more critical
element that affects tour profitability than fixed tour costs. All fixed tour
costs the same amount regardless of how many people take the tour. All
fixed tour costs must be “broken” by the minimum number of people on
the tour. The total cost of that element is divided by the minimum number
of people (break point) on the tour as determined by the tour operator. The
relationship between break point and load factors cannot be
overestimated. Examples of tour fixed costs include transportation
charges and fees. They cost the same for 1 or 40 passengers.

11.5.2 LODGING:
Hotels, motels, and most lodging establishments utilize similar pricing
methods when working with the public and with the tour operator. Many
lodging establishments utilize European plan pricing. Which is based on a
price per room that excludes meals, baggage handling, tax, and so on? All
charges but the room itself is an additional charge. The rack rate is the
price charged to someone who walks in to the establishment without the
benefit of any discounts; it is the highest price for a room. Tour operators
should receive a discounted or wholesale rate, in the form of a net no
commissionable rate. The price for rooms at the same property may vary
by season, location of room size of room, number and type of beds per
room, or by the number of occupants in each room. Tour operators
typically prefer to deal with hotels whose prices are flat with respect to the
number of occupants. Occupancy terms include single (for one occupant)
double or twin (for two occupants), triple 9 for three occupants and quad

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or quadruple (for four occupants). An example of a flat rate or fixed rate is
$50 double. This flat rating structure is often combined with a run – of –
the –house arrangement, which allows the hotelier to decide which room
within the price structure is assigned to each guest on a best available
basis. Tour operators usually prefer a fixed rate because they realize a
savings on doubles and triples when the rate is flat. A spread rate allows
the hotel to charge different rates depending on which rooms are assigned
to the guests. Examples of different rate structures would be for location,
room size, size and number of beds, and so on.
An example of a spread rate is.
$50/60 single $60/70 double
A hotel quoting a tour operator a rate of $50/60/70/80 is starting with $50
rate for one person, and adding $10 per person. Another method of stating
the same rate in writing would be “ $50/+ 10pp.” If a spread rate were
used, the contract might state;
$50/60/70/80 single
$60/70/80/90 double
The more “spread” the rates, the more difficult they become for the tour
operator to work with. Tour operators need to be able to anticipate their
expenses exactly, and therefore they hesitate to work with hotels that will
not guarantee a rate before a tour checks in.
Almost all hotel rate quotes are pretax quotes, or not including tax. If tax is
included in a hotel quote, the term “tax, incl,” or “inclusive of tax” should
follow the quote. The hospitality industry does not utilize terminology
consistently; therefore it is always best to ask.
It is important to understand the difference between the room rate and a
package rate. To quote a price of $50 per double room and quote of $50
pp double occupancy mean two completely different things.
Understanding Hotel Rate Quotes
Room Rates versus package Rates
Note the difference between a double room and double occupancy
(package rate) quote: A quote of $50 for a double room means:
$50 for the room divided by two people = $25.00 per person
$50 per person double occupancy = $50 per person or $100 per room

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Calculating Room Charges
For a quote: $50/50/50/50, assume a 10% tax rate
Single occupancy $50/one person x 110% =$55.00
(Or $50 +10% of 50) = $55.00 per person
Double occupancy $50/two people = $25 x 110% =$27.50 per person
Triple occupancy $50/ three people = $16.67 x 110% = $13.75 per
Person
Quad occupancy $50/four people = $12.50 x 110% = $13.75 per
Person
For a quote: $50/60/70/80, assume a 10% tax rate
Single occupancy $50/one person x 110% =$55.00
(Or $50 +10% of 50) = $55.00 per person
Double occupancy $60/two people = $30 x 110% =$33.00 per person
Triple occupancy $70/ three people = $23.33 x 110% = $25.67 per
Person
Quad. occupancy $80/four people = $20 x 110% = $22.00 per Person
10.5.2.1 Lodging Meal Plans:
Some lodging properties utilize meal plans in their pricing structures like
AP, MAP, CP. BP, EP etc. Lodging properties that use meal plan pricing
are package rates and quote prices per person, not per room. Room
prices that factor in meal plans can deceive the tour operator. Because
tour operators are accustomed to pricing elements separately, hoteliers
should be asked to cooperate and do the same. Some hotels, particularly
resorts, hesitate to price rooms separately. Some tour operators choose
not to work with such hotels.

11.5.2.1.1 Restaurants:
Restaurant pricing is usually priced on a per person basis, except in the
case of hotels that deal with great numbers of convention clients. Most
banquet coordinators or salespeople will be willing to work out a price per
person for the menu desired. The biggest problem with banquet and

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restaurant pricing is in the price of the entrees. Tour members want to be
able to choose among several entrees. Some want to order off a regular
menu. If the entrée prices vary drastically and the tour demands that
clients get to choose between at least two entrees, the tour operator will
be forced to pay wildly fluctuating prices based upon each client’s choice
of entrees. Tour operators should consider this problem when planning
menus and attempt to minimize fluctuating prices. Choosing entrees with
the same or similar prices help the situation but sometimes result in
unimaginative choices. Salespeople can be negotiated with to control
these fluctuations. Sometimes weighted average prices can be negotiated.
Restaurant prices should always be quoted inclusive of tax and tip.
Because sales tax varies by state or even by country, and the restaurant
can charge whatever gratuity they deem fair. The tour operator must be
certain to determine what taxes apply and the amount of taxes. Some
restaurants do charge more than the standard 15 percent, so that amount
should also be confirmed. Normally, at least one complimentary meal is
granted per motor coach; sometimes an additional is given to the driver.

11.5.3 ATTRACTIONS:
Attraction prices are normally quoted on a per person basis. The
exception to this rule is ion the case of a transportation charter, such as a
boat or plane. It is wise to determine if the price is inclusive of tax. At least
one complimentary is usually granted per 20 to 25 pax (people) or per
motor coach. Some drivers do not participate in the attractions, so if a
complimentary is given to the driver, it can be used toward a paying
passenger.

11.5.4 Sightseeing and Guide Service:

While there is seldom a charge for sightseeing, certain charges must be
anticipated. Many cities require a motor coach to be licensed to drive
through or to park. Other cities charge parking fees. In some areas, a small
admission fee for the motor coach only may be charged.

Guide service is very complicated to price. If a guide is on the company daily

guide service would be charged at the rate that is paid to the guide plus an
amount equal to the benefits (also known as payroll burden) paid to the guide.
Benefits can range between 20 and 40 percent of basic wage and includes taxes
matched payroll, by the employer an allocation for worker’s compensation,
insurance for life and health purposes, and the operator provides. Some tour
operators utilize tour directors/escorts on an independent contractor basis. An
independent contractor does not pay taxes at the time of receiving payment.
Neither does the employer pay benefits. However, for these reasons independent
contractor rates are usually more expensive because the independent escort has

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to provide medical insurance and income taxes out of pocket. The total amount is
divided by the break point (minimum number of people expected to be on the
tour).

Tour operators that utilize step – on or daily guide service from receptive
operators or guide service companies, do not have to pay taxes and other
benefits and will be charged a variety of hourly, half – day and daily rates. The
guide service company becomes an independent contractor of the tour
operators. A half – day rate is usually for 4 hours or less, and a daily rate is for 5
to 8 hours. Daily rates vary anywhere from $50 daily to $300 + daily. These rates
must also be “broken” by the number of the people on the tour.

The operator provides lodging, meals, and admission to attractions for the tour
directors/escort, and is usually required to provide admission to attractions for a
step-on guide. Meals are usually negotiable. Lodging is not needed for a step-on
guide. In addition depending on the practices of each individual tour operator
tipping by tour members may or may not be allowed. If a tour operator prices a
tour inclusive of gratuities, a gratuity should be budgeted.

Check your progress-II Answer the following questions.

1. What are the factors affecting the tour cost.

2. What do you mean by cost sheet?

3. How the costs of accommodation affect the package cost?

4. Explain the influence of transportation modes on a package cost?

Check your answer with the one given at the end of the unit.

11.6 SUMMARY:
The cost of a package tour is affected by many factors. Usually, the cost is
determined in a structured manner by using a cost sheet, which helps to avoid
confusion and complication. There are many elements in a package. All theses
have direct impact on the cost of the tour. The cost of the package is often lower
than the combined cost of the same services if purchased separately. Some tour
operators offer tour based fares, special group airfares, from selected origin
points. However, the cost varies with the type of transportation, accommodation,
transfer, meal plan, sightseeing options etc.

Answers to check your progress

1) See sec no.11.2

2) See sec no 11.3

3) See sec no 11.5.2

4) See sec no. 11.5.1

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11.7 GLOSSARY:
- Cost sheet - Tour cost sheet is a statement designed to show the total costs
along with the break up of tour costs.

- Tour wholesaler – Tour operator who combines the different components

together and sells it as a package to the clients at a reduced all inclusive
price.

- Double occupancy – Two people in one room.

- Triple occupancy – Three people in a room.

- Quad occupancy – Four people in a room.

11.8 REVIEW QUESTIONS:

1. What are the factors affecting the tour cost?

2. Describe cost sheet and prepare cost sheet for an itinerary.

3. How will you cost a tour package?

4. Write a note on costing accommodation.

5. Explain the influence of transportation modes on a package cost?

11.9 SUGGESTED READINGS:

 Mohinder Chand, (2000), Travel Agency Management, Anmol Publicationa
Pvt. Ltd.

 Jagmohan Negi, (2001), Travel Agency and Tour operation, Kanishka

Publishers and Distributors.

 Betsy Fay, (1999), Essentials of Tour Management, Prentice- Hall.

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UNIT12-
PROCEDURE FOR SETTING UP OF TRAVEL
AGENCY AND TOUR OPERATION IN INDIA A
BRIEF OVER VIEW
Structure:
12.0 Objectives
12.1 Introduction
12.2 Travel Agency Business – Meaning and Definition
12.3 Tour Operation Business –Meaning and Definition
12.4 Setting Up of Travel Agency and Tour Operation Business-
Procedure
12.4.1 Guidelines for Recognition or Approval of a Travel Agency
12.4.2 Guidelines for Recognition or Approval of a Tour Operator
12.5 Summary

12.0 OBJECTIVES:
After reading this unit, you will be able to:
- Explain the concept of travel agency and tour operation business;
- Describe the procedure laid down by the ministry of tourism, Govt. of
India for approval of travel agency and tour operation business; and
- Discuss the various types of tour operators.

12.1 INTRODUCTION:
In the previous blocks you have learnt about the meaning, concept and
functions of travel agency and tour operation business and about the
hospitality sector. It is clear that a travel agency works as retailer as well
as whole seller. In fact, due to the structure of tourism industry a travel
agency or tour operator performs multiple functions. It has to deal with
various sectors or sub-sectors of tourism and hospitality industry,
therefore for smooth functioning it must be recognized or approved by the
Ministry of Tourism, Govt. of India and IATA. In this unit an attempt has
been made to appraise you about the setting up of a travel agency and

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tour operation business and their recognition from Ministry of Tourism
Govt. of India.

12.2 TRAVEL AGENCY BUSINESS – MEANING AND

DEFINITION:
Travel agency is responsible for organizing travel. In fact it is a travel
consultant and organizer for tourist. At the same time it provides a link to
the suppliers of services with the tourists/travellers. Hence it is concluded
that a travel agency is like a retail store, the uniqueness being that it acts
on behalf of both, the suppliers as well as the clients. For example, a
tourist visits a Travel Agency to meet his travel demands. The Travel
Agency makes reservation for accommodation, air tickets, arranges for his
pick from the airport and so on. Now at the surface it appears that it is only
the tourist who is being catered to or looked after by the travel agency. On
the other hand, a travel agency has also served the airline by booking
the seat or the hotel by booking the room. In all these services the Travel
Agency has provided business to the suppliers of services while serving
the tourist at the same time. This demonstrates the importance of the
Travel Agency whose role is growing more and more in the modem world.
Not every traveller has the energy or time to organize all travel
arrangements. The suppliers too don’t have the reach to every prospective
customer. Hence, the travel agency plays a vital role between the tourists
and the traveler suppliers. In fact, it is the link between tourists and the
suppliers. The figure 1.1 illustrates the role of travel agency.
Airline
Tourist
Railway

Road Transport

Facilitation Accommodation Hotel

Travel Agency
Package Tour
Figure: 12.1 linkage of Travel Agency between tourists and travel
Ground suppliers.
operators
Before we go further to explain the various functions and operations
involved there in let us look at some of the basic qualities the personnel
working in a travel agency should have. One should be:

 Courteous and helpful,

 Able to look at minute details,
 Ready to work under pressure,

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 Prepared to work for solving problems
 Proficient in languages etc.
 Sound knowledge of geography – particularly map reading
and seasonality,
 Fair knowledge of customs and practices in different countries
or at the destinations one is dealing with,
 Information about health, visa, permit and foreign exchange
rules, knowledge of arithmetic as fares are to be calculated or
worked out,
 Should know typing or working on computers, and
 Have proficiency in communicating skills.

12.3 TOUR OPERATION BUSINESS – MEANING AND

DEFINITION:
You must have seen advertisements in the newspapers or magazines
regarding three day or one week tour that mentions the total price of the
tour along with the itinerary. For example, one week in Kerala Rs. 2000
(Rs. 350 worth healthcare coupons free or ten days in Goa inclusive
meals. etc. These are the offers of package tours which are available to
individuals as well as groups. But have you ever paid attention to this that
who packages such tours and why? Or how they are marketed? Well
many individuals work out their own details of travel and pleasure. But this
is a time consuming process. There are many who don't want to bother
themselves regarding planning and organising their journeys, stay etc.
Rather they want this to done by some one else. It is the tour operator
who packages all attractions of a destination into one composite product
and retails it through the travel agents or directly to the tourists. He
creates the demand, travel, market and image of the destination. Thus, it
is precisely this demand that led to the origin of package tours. Today,
many tourists buy these package tours as per their interests, priorities and
budget at a price that is pre-determined. The complete holiday package
tour includes travels (air/surface) accommodation, escort/guide and so on.
The person who puts together all these aspects into a package is known
as the Tour Operator.
In other words we can say that Tour Operator is a person who provides
information, plans and coordinates travel with various agencies to create a
package or service. At the same time he also ensures smooth operation of
the tour He can thus, also be called a Tour/Travel consultant or Tour
Coordinator. The tour Operator may or may not necessarily have any
product of his own but act as an intermediary to tailor a package to meet
the needs of a traveller. In fact, a tour operator plays an important role in
organizing explorations, research expeditions and holidays. We must
remember here that tour operations originated ever since people wanted

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to explore new areas, go on pilgrimages or trade expeditions, individually
or in groups. The above fact indicate that a tour operation involves:
1) Information of the area of operation i.e. in-depth knowledge of the
places of interest, the accommodation, transport facilities and other
logistics required for planning a tour.
2) Planning of a tour in the most efficient manner.
3) Coordination with allied industries or services such as hotel
reservations, airline, rail or road transport reservations, local
assistance, guides, etc.
4) Operations of tour mean a close monitoring of the tour i.e. all that is
packaged together is working in smooth coordination. In case of
break in the circuit an alternate is to be organised with least
inconvenience to the client. This is another vital segment in the
planning and operation of a tour.
Over the years, due to the rapid changes in the global tourism
marketplace, tour operators are playing pivotal role in the tourism market
and catering the requirements of all types of tourists. Thus, in order to
meet the tourism market requirements tour operators are classified into
the following categories:

 Individual/independent tour operator,

 In house Tour Operators like an airlines doing the functions of tour
operator also,
 Incentive tour operators who deal only with the sponsors and not
with individual clients.
 Outbound who operates tours to other countries is called an Out
Bound Tour Operator.
 Domestic who handles tours of people of mine country for travel
within the country is called a Domestic Tour Operator.
 Inbound Tour Operators: The Wholesaler who markets the tour
consolidates the members of the group through many retailers.
Finally the group thus formed is given by the wholesaler as a
package to Inbound Operator of that country or that region. The
coordination of hotels, transport and other allied services is then
undertaken by the Inbound Operator. In fact, Inbound Tour
Operators further pass on the services of the group to some body in
the city of visit known as the Excursion agent. He coordinates with
hotel reservations, organizes transport, guides tourists and generally
meets the needs of the tourists in that city.
It is not necessary that these have to be separate or one does not operate
the other types. But it is seen that since the markets and the style of
operations in each one are distinctly different then the other the operators
prefer to stay in their own specialized field.

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The following illustration clarifies the concept and functioning of tour
operators:
A group of 10 members in UK wants to visit India but does not know ho to
go about. The group leader walks in the Travel Agency (Retailer) which he
normally uses or thinks that it can help him. He meets the Travel Consular
who talks to him and finds out his interest, the tune he could spend for
travel, the tour he could afford, the luxury he is looking for and the season
of travel. The Travel Consular then shows him the brochures of the
various types of tours which he could recommend with the cities or areas
of interest, type of facilities, etc. Such tours have a schedule date of
departure and a set programme. He then books the name of his group on
one such group... The wholesaler collects people from all over the country
and forms a group. The detail of whole with names, itinerary and flight
details etc. is sent to an Inbound Tour Operator who has organised
reservations for hotel, transport and other services all over the country.
This Inbound Tour Operator then gives message to Excursion Agents in
each city of visit about the groups strength, arrival and departure details
and request for services to be arranged in that city. Normally the following
information required by the tour operator:
1) Receiving the group at the airport and taking them to the hotel and vice
versa.
2) Provide appropriate transport for the group to travel in the area.
3) Provide Guide for sightseeing tours.
4) Provide tickets for entrance fee at places of visit.
5) Any special services for the group.
6) Reconfirm hotel reservations.
7) Reconfirm onward flight/train/bus reservation confirmation.
And so the group moves from one excursion agent to another while the
Inbound Tour Operator is closely monitoring the movement being the chief
coordinator. This way an Inbound Tour Operator is able to provide pickup
service and transport and excursions at each city in India even though he
does not have an office in more than one city.

Tourist

Retailer Wholesaler Inbound Tour Excursion Agent

Operator

At the same time there are different categories of Package Tours:

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1) Escorted Tours- this is an organized and planned tour in which
a tour escort serves the group or individual by accompanying
throughout the tour.
2) Unescorted Tours- though organized and planned: there is no escort
accompanying the tour. Instead the group or individual is taken care of at
every destination by Tour Host/Excursion Agent whose services have
been taken for that particular destination.
From the above discussion, it is clear that before setting up of travel
agency or tour operator business one must be aware about the
functioning, activities and the product\ service of these organizations.
Moreover, before entering into travel business one must finds the answer
of various questions:

 size of the organization,

 scale of business,
 product line,
 market,
 competitions,
 legal requirements,
 professional staff,
 name of travel agency
 Location of the travel agency or tour operator
 Financial requirements and so forth.

CHECK YOUR PROGRESS – I:

Answer the following questions.
1. What is a travel agency?
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2. What are the duties of a tour operator?

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Check your answer with the one given at the end of the unit

12.4 PROCEDURES FOR THE RECOGNITION OR

APPROVAL OF A TRAVEL AGENCY AND TOUR
OPERATOR
Thus, the above steps are crucial for planning to set up a travel agency
and tour operator. Beside this one more crucial step is the approval
obtains from the Ministry of tourism, Govt. of India. This approval helps the
travel agency or tour operator to avail various financial and non-financial
incentives from the govt. The procedure for recognition of travel agency
and tour operator from govt. of India follows as:

12.4.1. Guidelines for Recognition or Approval of a Travel Agency:

1. The aims and objectives of the scheme for recognition shall be to

promote travel and tourism in India. This is a voluntary scheme open to
all bonafide travel agencies.

2. Definition: A travel agency is one which makes arrangements of tickets

for travel by air, rail and ship; passports; visas, etc. It may also arrange
accommodation, tours, entertainment and other tourism related
services.

3. All applications for recognition as a travel agent shall be addressed to

the Director General of Tourism, Transport Bhawan, 1 Parliament
Street, New Delhi — 110001.

4. The following conditions must be fulfilled by the travel agency for grant
of recognition by the Ministry of Tourism:

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i. The application for grant of recognition should be in the prescribed

form and submitted in duplicate.
ii. The travel agency should have a minimum paid-up capital (or
capital employed) of Rs. 5.00 lakh duly supported by the Audited
Balance Sheet/chartered accountant’s certificate.
iii. The travel agency should be approved by International Air
Transport Association (IATA) or should be a General Sales Agent
(GSA) of IATA member airlines.
iv. The minimum office space should be 250 sq ft. Besides, the office
should be located in a neat and clean surrounding and equipped
with telephone, fax, computer reservation system, etc. The office
may be located preferably on a ground floor or first floor, if situated
in a residential area with sufficient space for reception and easy
access to toilet facilities.
v. The travel agency should be under the charge of a full time
member who is adequately trained, experienced in matters
regarding ticketing, itineraries, transport, accommodation facilities,
currency, customs regulations and travel and tourism related
services. Besides this, greater emphasis may be given to effective
communication skills and knowledge of foreign languages other
than English. There should be a minimum of four qualified staff
members out of which at least two should have a Diploma/Degree
in Travel and Tourism from a recognised university, IITTM or
institutions approved by AICTE. The academic qualifications may
be relaxed in case of exceptionally experienced personnel in case
of airlines, shipping, transport, PR agencies, hotels and other
corporate bodies and for those who have worked for three years
with IATA/UFTAA agencies.
vi. The travel agency should have been in operation for a period of
one year after IATA approval at the time of filing the application.
vii. The travel agency should be an income-tax-assessee and should
have filed Income Tax Return for the current assessment year.
5. Recognition as travel agency will be granted for three years and
renewed thereafter for five years on an application made by travel
agency along with fee.

6. The travel agency is required to pay a non-refundable fee of Rs 2,000

while applying for the recognition. The fee will be payable to the Pay &
Accounts Officer, Ministry of Tourism, in the form of a Bank Draft. Fee
for recognition of each branch office will be Rs 1,000. Fee for renewal
will be Rs 1,000 and Rs 500 for Head and each Branch Office
respectively.

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7. Recognition will be granted to the Head Office of the travel agency.
Branch Offices will be approved along with the Head Office or
subsequently provided the particulars of the branch offices are
submitted to the Ministry of Tourism and accepted by it.

8. The decision of the Government in the matter of recognition shall be

final. However, the Government may in their discretion refuse to
recognize any firm or withdraw/withhold at anytime the recognition
already granted with the approval of the competent authority. Before
such a decision is taken, necessary Show Cause Notice would
invariably be issued and the reply considered on merit. This will be
done as a last resort. Circumstances under which withdrawal is resorted
to would also be brought out.

9. The travel agency granted recognition shall be entitled to such

incentives and concessions as may be granted by the Government from
time to time and it shall abide by the terms and conditions of recogiution
as prescribed from time to time.

10. The travel agency should employ only regional guides trained and
licensed by the Ministry of Tourism, Government of India and state
level guides approved by State Governments.

Application Form for Recognition or Approval of Travel Agency:

1. Name and address of Head Office & Branch Offices.
2. Nature of the firm and the year when it was registered or commenced
business, with documentary proof.
3. Names of directors/partners, etc. The details of their interests, if any,
in other business may also be indicated.
4. Give particulars of staff employed, their qualifications, experience,
salary and length of service with the firm.
5. Give details of office premises like space in sq ft location whether
commercial or residential area, floor of the building, reception area
and accessibility to toilets.
6. Name of Bankers (Please attach a reference from your bankers).
7. Name of Auditors. A balance sheet and profit & Loss statement
pertaining to the travel business, as prescribed under Company Law,
must be submitted by each applicant. These audited statements
should be in respect of your establishment for the last completed
financial year or for the calendar year immediately preceding the date
of submission of your application. Also, furnish details of your turnover
in the following Performa:

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Particulars of the Travel Agency concerned:

(a) Paid-up capital (or capital employed)
(b) Loans
i. Secured
ii. Unsecured
(c) Reserves
(d) Current liabilities and provision
(e) Total (a to d):
(f) Fixed assets (excluding intangible assets)
(g) Investments
(h) Current assets
(i) Intangible assets
(j) Total (f to i):
Notes:
(i) Reserves should include balance of profit & loss account and
exclude taxation reserve.
(ii) Current liabilities and provisions should include taxation reserve.
(iii) Current assets should include debts, loans, advances, cash and
bank balance.
(iv) Intangible assets should include goodwill preliminary expenses,
tenancy and business rights, deferred revenue expenditure,
accumulated loss, etc.
8. Copy of the acknowledgement certificate in respect of income tax
return for the current assessment year should be enclosed.
9. Whether any other activities are undertaken by the firm besides
travel related activities.
10. Please indicate the air/shipping/railway ticketing agencies held by
the firm.
11. Please indicate membership of International Travel Organization, if
any.
12. Letter of approval of IATA and Certificate of accreditation for current
year should be enclosed. GSAs of IATA airlines should enclose
documentary proof in this regard.
13. Please enclose a Demand Draft of Rs 2,000 for Head Office and Rs
1,000 for each Branch Office as fee for recognition and Rs. 1,000
and Rs.500 for Head Office and each Branch Office respectively if
the application is for renewal of recognition. (Please mention the DD
No., date and amount.)

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Signature of Proprietor/Partner/Managing Director

Rubber Stamp:
Place:
Date:

12.4.2 GUIDELINES FOR RECOGNITION AS AN APPROVED TOUR

OPERATOR:
1. The aims and objectives of the scheme for recognition shall be to
promote tourism in India. This is a voluntary scheme open to all
bonafide tour operators.
2. Definitions: A tour operator is one which makes arrangements for
transport, accommodation, sightseeing, entertainment and other
tourism related services for tourists.
3. All applications for recognition as a tour operator shall be addressed
to the Director General of Tourism, Transport Bhawan, 1 Parliament
Street, New Delhi - 110001.
4. The following conditions must be fulfilled by the tour operator for grant
of recognition by the Ministry of Tourism:
(i) The application for grant of recognition should be in the prescribed
form and submitted in duplicate.
(ii) The tour operator should have a minimum paid up capital (or capital
employed) of Rs. 2.00 lakh duly supported by the latest audited
Balance Sheet/Chartered accountant’s certificate.
(iii) The turn over in terms of foreign exchange or Indian rupees by the
firm from tour operation only should be a minimum of Rs 10.00 lakh
duly supported by Chartered Accountant’s certificate.
(iv) The tour operator should have an office under the charge of a full
time member of the staff, who is adequately trained/experienced in
matters regarding transport, accommodation, currency, customs
‘regulations and, general information about travel and tourism
related services. However, greater emphasis may be given to
effective communication skills and knowledge of foreign language
other than English. There should be a minimum of four qualified staff
members out of which at least two should nave a Diploma/Degree in
travel and tourism from a recognized university, IIITM or an
institution approved by AICTE.
The academic qualifications may be relaxed in case of exceptionally
experienced personnel in airlines, shipping, transport PR agencies

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hotels and other corporate bodies and for those who have two years
experience with the Ministry of Tourism approved tour operators.
(v) The tour operator should have been in operation for a minimum
period of two years before the date of application.
(vi) The minimum office space should be of 250 sq ft. Besides, the
office should be located in neat and clean surroundings and
equipped with telephone, fax, computer reservation system, etc.
The office should be located prefer ably on a ground floor or first
floor, if situated in residential area with sufficient space for
reception and easy access to toilets.
(vii) The tour operator should be an income tax assesses and should
have filed Income Tax Return for the current assessment year.
5. The recognition as an approved tour operator shall be granted
for three years and renewed thereafter every five years on an
application made by the tour operators along with the fee. .
6. The tour operator is required to pay a non-refundable fee of Rs
2000 while applying for the recognition. The fee will be made
payable to the Pay & Accounts Officer, Ministry of Tourism in
the form of a Bank Draft. The fee for recognition of each branch
office will be Rs 1000 Fee for renewal will be Rs. 1000 and Rs.
500 for the Head and Branch Offices respectively.
7. Recognition will be granted to the Head Office of the tour
operator. Branch Offices will be approved along with the Head
Office or subsequently, provided the particulars of the Branch
Offices are submitted to the Ministry of Tourism and accepted
by it.
8. The decision of the Government of India in the matter of
recognition shall be final. However, the Government of India
may in their discretion refuse to recognise any firm or
withdraw/withhold at any time, recognition already granted with
the approval of the competent authority. Before such a decision
is taken, necessary Show Cause Notice would invariably be
issued and the reply considered on merit. This will be done after
careful consideration and generally as a last resort.
Circumstances under which withdrawal is resorted to would also
be brought out.
9. The tour operator granted recognition shall be entitled to such
incentives and concessions as may be granted by the
Government from time to time and shall abide by the terms and
conditions of recognition as prescribed from time to time by the
Ministry of Tourism, Government of India.
10. The tour operator should employ only regional guides, trained
and licensed by the Ministry of Tourism, Government of India,
and state level guides approved by State Governments.

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Application Form for Recognition or Approval of a Tour Operator
1. Name and address of Head Office and Branch Offices.
2. Nature of the firm and the year when it was registered or
commenced business, with documentary proof.
3. Names of directors/partners, etc. The details of their interests, if
any, in other business may also be indicated.
4. Give particulars of the staff employed, their qualifications,
experience, salary and length of service with the firm.
5. Give details of premises, viz., space in sq ft location (whether in
commercial or residential area), floor of building, reception area and
accessibility to toilets.
6. Name of Bankers (please attach a reference from your Bankers.)
7. Name of Auditors. A Balance Sheet, profit and loss statement
pertaining to tour operation business, as prescribed under Company
Law, must be submitted by each applicant. These audited statements
should be in respect of your establishment for the last completed
financial year or for the calendar year immediately preceding the date
of submission of your application. Also furnish details of your turnover
in the following statement:

Particulars of the Tour Operator Concerned

a. Paid up capital (capital employed)
b. Loans
i. Secured
ii. Unsecured
c. Reserves
d. Current liabilities and provisions
e. Total (a to d)
f. Fixed assets (excluding intangible assets)
g. Investments
h. Current Assets
i. Intangible Assets
j. Total (f to i)
8. Copy of acknowledgement in respect of Income tax return for the
current assessment year should be enclosed.
9. Whether any activities are undertaken by the firm besides tour
operation.
10. Membership of International Travel Organizations.
11. (a) Give details of volume of tourist traffic handled up to the date of
application showing foreign and domestic tourist traffic separately.
(Please submit a certificate from a chartered accountant. This
certificate should show the receipts from tour operation only during
the financial year or the calendar year immediately preceding the
date of submission of your application).

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(b) Clientele: Special tourist groups handled, if any, their size,
frequency, etc.
(c) Steps taken to promote domestic tourist traffic and details of the
groups handled, if any.
(d) Special programmes if any, arranged for foreign tourists.
12. Number of conferences handled, if any, and the total number of
passengers for such conferences with details of locations, etc.
13. Number of incentive tours handled.
14. Please enclose a Demand Draft of Rs. 2000 for Head Office
and Rs 1000 for each Branch Office as fee for recognition and
Rs 1000 and Rs 500 for Head Office and each Branch Office
respectively if the application is for renewal of recognition.
(Please mention the DD No., date and amount).
Signature of Proprietor/Partner/Managing Director
Rubber Stamp of the Firm\ company
Place: Date:

CHECK YOUR PROGRESS – II:

Answer the following questions:
1. Give the steps for establishing a travel agency.
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2. How a tour operator is approved by the Ministry of Tourism?

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Check your answer with the one given at the end of the unit.

12.5 SUMMARY:
In this unit we attempted to give you an idea about the setting up of travel agency
and tour operation business as an entrepreneur. There are ample opportunities
for those who are planning to enter this vital sector of the tourism industry. Even
many of you have huge opportunities right in your own location if your area is a
tourist destination. In this unit you must understood about the procedure for the
approval of travel agency and tour operator from the Ministry of tourism, Govt. of
India.

12.6 ANSWERS TO CHECK YOUR PROGRESS:

Check Your Progress - I

1) See Sec. 12.2

2) See Sec. 12.3

Check Your Progress - II

1) See Sub-Sec. 12.4.1

2) See sub- Sec. 12.4.2

12.7 SUGGESTED READINGS:

 Chand Mohinder (2006) Travel Agency Management-An Introductory
Test, 2nd.(Ed.), Anmol Publications Pvt. Ltd., New Delhi.

 Hollway (1999) The Business of Tourism, Pitman.

 Ministry of Tourism, Govt. of India, Annual Report 2005, 2006.

 Negi J.M., (2001) Travel Agency and Tour Operator - Concepts and
Principles, Kanishka Publications, New Delhi.

12.8 REVIEW QUESTION:/

1. Explain the procedure for approval of a travel agency lay down by the
Ministry of Tourism, Govt. of India.

2. Discuss the procedure to establish a travel agency.

3. Discuss the procedure for approval of tour operator by the Ministry of

Tourism, Govt. of India.

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4. Discuss the how you would establish a travel agency after passing
this course in the hill area.

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Unit 13
TAAI & IATO
Structure:
13.1 Introduction
13.2 Objectives
13.3 Tourism Organization
13.4 Private Sector Tourism Organization : India
13.4.1 IATO
13.4.2 TAAI
13.5 Summary
13.6 Glossary
13.7 Answer to check your progress
13.8 References
13.9 Suggested Readings

13.1 OBJECTIVES:
After reading this unit you will be able to-

 Understand the need for tourism organization

 Familiarize yourself with various types of tourism organizations
 Know about the main objectives of tourism organization.
 Learn about the functions and relevance of some of these
organizations.

13.2 INTRODUCTION:

Travel trade in India is relatively new. At the time of independence there

was hardly any travel company in India worth the name in present
context. The travel business in India in an organized manner started with
the setting of the TAAI, Travel Agents Association of India in Mumbai.
The Travel Agents Association of India (TAAI) was formed towards the
end of the year 1951 by a group of twelve leading Travel agents, who felt
that the time had come to create an Association to regulate the Travel
industry in India. The primary purpose was to protect the interests of

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those engaged in the industry, to promote its orderly growth and
development and to safeguard the rights of the traveling public. TAAI
represents all that is professional, ethical and dynamic in our nation's
Travel related activity and has been recognized as the voice of the Travel
and Tourism industry in India.

With a membership data base of over 1800 Active; Allied and Associate
members comprising of IATA accredited Travel Agencies; Airlines &
General Sales Agencies; Hotels and Tour operators; TAAI is the largest
Travel Association of India. Prior to it there were two major companies
Thomas Cook and Sons and The American Express with their main
branches and Indian companies, Jeena and Co., Lee and Muirhead India
Pvt. Ltd., and N. Jamnadas and Co. Ltd., operating in India. However the
bulk of international tourists were handled by Thomas Cook and sons and
the American Express. In 1920, Jeena and Company, the first Indian
travel agency organized group tours abroad and in India for Indian
travelers and it handled the first group of foreign tourists in 1950.
However Jeena and Company and other two Indian travel agencies were
merged into one composite travel company known as Travel Corporation
of India Ltd, popularly known as TCI in 1961. After this there were a
number of travel companies established in Indian such as SITA (1963)
Thomas Cook India Ltd, American express, Cox and Kings, Ind. Travel
and so forth.

Presently there are more than 500 travel companies on the approved list
of Department of Tourism, government of India which are located in 50
cities of the country and many have promotional offices in abroad too. In
addition of this there are a large number of non-recognized travel
agencies or registered with respective states, scattered in the country. In
India there are more than 400 travel companies approved by the IATA,
International Air Transportation Association and a number of them have
more than one office or branches.

Association of an organization with a particular discipline with similar such

organizations becomes a combined effort to develop the discipline. This
association can be at various levels – Local, Regional, National and
International. The tourism organizations emerged with the objective of
developing and promoting the subject of tourism. The role of tourism
organization in strengthening tourism by way of combined efforts is
therefore of vital importance.

13.3 TOURISM ORGANISATIONS:

Over the years a number of organizations have emerged in tourism. They
have played a vital role in tourism policy formation, planning, promotion,

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infrastructure and resort development, protecting the rights of tourists,
negotiations etc. Factors like importance of tourism in generating foreign
exchange, employment prospects, national interests and at times the
stage of development have determined the need for such organizations
and accordingly influenced their growth and functions.
These organizations exist in public sector as well as private sector and at
different levels i.e. global, national, state and local. For example, World
Tourism Organization, Indian Tourism Development Corporation,
Uttarakhand Tourism Development Board etc. A recent addition has been
of some NGO’s devoting full time to issues concerning tourism. Different
segments of the industry also have their own organizations to defend and
promote their rights like the Travel Agents Association of Tourist Guides
Association.

13.4 PRIVATE SECTOR ORGANISATIONS IN INDIA

In this section we discuss the most prominent organizations of the private
sector in tourism.

13.4.1 INDIAN ASSOCIATION OF TOUR OPERATORS (IATO)

The Indian Association of Tour Operators (IATO) was established in the
1981. The idea has been “to promote international understanding and
goodwill to the ultimate advantage”. A joint forum of tour operators, the
association promotes and aids the development of tourism in India. This is
done either directly or through discussions and meetings with other bodies
and agencies.
The membership is open to organizations of good professional reputation
and standing who have been connected with tourism and / or travel
industry for at least one year. However, there are certain other conditions
also as per the category of membership.
Membership:
IATO has five categories of membership: Active, Allied, Associate,
Overseas and Honorary. All its active members are recognized and
approved by the Indian Government’s Department of Tourism and have at
least three years experience of handing International Tourists to India,
before being admitted to the IATO Fraternity.
Active Member:
Eligibility for this category includes:
- A firm or company having an established place of business in India.

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- recognized by the department of tourism as a tour operator / travel
agent for a minimum period of one year, and
- its major substantial part of activity of promotion of tourism and foreign
exchange earning in a year is minimum Rs. 10,00,000/-
Allied Member:
Any firm or company, which is regularly engaged or associated with the
tourism and travel industry and is recognized by the state or central
government or by their trade association such as carrier companies,
hoteliers, caterers, excursion agents, transport contractors, forwarding and
clearing agents, shipping companies, state tourist organizations and trade
publications.
Other Categories:
Other categories of members include Overseas Allied Members,
Associate Members and Honorary Members.
Aims: To promote international understanding and goodwill to the ultimate
advantage was the general objective of the establishment of IATO. All
income of the association shall be utilized towards the promotion of the
aims and objectives of IATO. The IATO main aims to:
- Promote national integration, international welfare and goodwill.
- To take all steps which may be necessary for promoting, encouraging
and assisting in the development to tourism throughout the country and
to take initiatives to secure the welfare of the tourism trade in all
respects.
- To set up and maintain high ethical standards in the industry.
- To promote equal opportunities for all visitors to enjoy the tourism and
travel facilities without distinction of race, colour, creed or nationality.
- To try to amicably settle the disputes of the members of this association
by referring the disputes for settlement to a sub-committee to be
constituted for such purpose by the executive committee.

13.4.2 TRAVEL AGENTS ASSOCIATION OF INDIA (TAAI):

Travel Agents Association of India (TAAI) was established by a group of

twelve leading travel agents in 1951, is perhaps the largest Travel
Association of India. Now TAAI has got a staggering 2400 members under
its banner with the objective to regulate the travel industry in India. Down
the years, TAAI has earned the reputation as the voice of the Travel and
Tourism industry in India by dint of their dedicated, dynamic and
professional service. The primary purpose was to:

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- Protect the interests of those engaged in the industry,
- Promote its orderly growth and development and
- Safeguard the travelling public from exploitation by unscrupulous and
unreliable operators.

TAAI is a professional coordinating body consisting of various segments of

the travel and tourism industry. It is recognized as the main representative
body of the travel industry in India. It is a non political, non-commercial
and a non-profit making body. It is very much aware of the unprecedented
pace in which the travel industry is growing. Therefore, to keep a check on
any unethical practices by the member agencies, TAAI has got a strict
Code of Ethics that sets certain parameters for the members. These
norms ask the travel agents and tour operators to maintain an honest and
clear relation with the travellers with proper information on deals, schemes
and monetary issues. Apart from the rapport with the travellers, TAAI
makes sure that the members keep the spirit up with the Fellow Members
and other Travel Agents.

Objectives:
The set of primary objectives for TAAI has been clearly mentioned as:

- Apply superior technical skills to the job on hand.

- Deliver the highest quality of service.
- Act with responsibility within sound financial parameters.
- Build trust and credibility in the marketplace.
- Helping promote, maintain and stimulate the growth of travel and tourism
in the country.
- Maintaining close contact with world bodies and representing matters
affecting the travel and tourism industry of India.
- Educating and equipping members to meet future challenges through
seminars, conventions and sharing of thoughts and experiences.
- Gathering and disseminating useful information on travel and tourism
among members for their guidance.

The membership spot of TAAI is multi-faceted with Active, Allied and

Associate members comprising of IATA accredited Travel Agencies,
Airlines and General Sales Agencies, Hotels and Tour operators. The
membership criteria for each category differs as the Active members
(travel agent) need to be an IATA Agent; whereas the Inbound Tour
Operators must be recognized by the Department of Tourism,
Government of India.

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CHECK YOUR PROGRESS:

1. Discuss the role and functions of IATO.

2. Discuss the functions of TAAI.

13.5 SUMMARY:

After completion of this unit, we have understood that The Indian

Association of Tour Operators (IATO) works to promote international
understanding and goodwill to the ultimate advantage. A joint forum of tour
operators, the association promotes and aids the development of tourism
in India. This is done either directly or through discussions and meetings
with other bodies and agencies. And the membership is open to
organizations of good professional reputation and standing who have
been connected with tourism and / or travel industry for at least one year.
However, there are certain other conditions also as per the category of
membership. In case of TAAI on other hand the various functions
performed by it are Apply superior technical skills to the job on hand,
Deliver the highest quality of service, Act with responsibility within sound
financial parameters, Build trust and credibility in the marketplace, Helping
promote, maintain and stimulate the growth of travel and tourism in the
country, Maintaining close contact with world bodies and representing
matters affecting the travel and tourism industry of India, Educating and
equipping members to meet future challenges through seminars,
conventions and sharing of thoughts and experiences, Gathering and
disseminating useful information on travel and tourism among members
for their guidance.

13.6 GLOSSARY:

 Agent: one who acts or has the power to act as the representative
of another. Most frequently in travel anyone other than a principal,
such as a retail travel agent, receiving agent, ticket agent, local
operator or wholesaler.
 Air Coupon: One flight coupon that allows passengers to fly
internationally on several airlines.
 Infrastructural Facilities: These include facilities like: Airport,
Roads, Drainage, and Buildings etc. at a destination.
 Promotion: All activities such as advertising, publicity, personal
selling and public relations which are carried out to enhance sales.

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 Travel Agent: An individual or a firm who is authorized by the
airlines, hotels, etc. to enhance the sale of all travel related
services.
 Tour Operator: A company or a firm which designs tour packages
and makes them available to customers through travel agents.

13.7 Answer to check your progress:

Check Your Progress 1
1. See Section 13.4.1
2. See Sections 13.4.2

13.8 References:
 Bhatia, A.K.: International Tourism Management; Sterling
Publishers Pvt. Ltd., New Delhi.

 IGNOU: Tourism As An Industry: New Delhi.

 Mishra, L.K.: Basics of Tourism; Agrawal Publications, Agra.

 Roday, Sunetra ……et al: Tourism operations and management;

Oxford University Press.

 Sati and Kumar: Uttaranchal- Dilemma of Plenties and Scarcities; A

Mittal Publications

13.9 SUGGESTED READINGS:

 Rob Davidson: Tourism; London, 1983.

 Roday, Sunetra ……et al: Tourism operations and management;

Oxford University Press

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UNIT - 14
IATA AND WATA
Structure:
14.0 Objectives

14.1 Introduction

14.2 History and Organization

14.3 Security

14.4 Tariff coordination process

14.5 World Association of Travel Agencies (WATA)

14.6 Summary

14.0 OBJECTIVES:
After reading this unit, you will be able to:

 Explain the role and importance of IATA and ICAO in development

of Air Transport Industry;

 Familiarize yourself with various types of tourism organizations; and

 Discuss the functions and relevance of some of these

organizations.

14.1 INTRODUCTION:
The International Air Transport Association-IATA is the world organization
of scheduled airlines. Its members carry the bulk of the world’s scheduled
air traffic under the flags of over 100 nations. For the airlines, IATA
provides machinery for finding joint solutions to problems beyond the
resources of any single company. It has become the means by which

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they knit their individual networks into a worldwide public services system,
despite differences in languages, currencies, laws and measurements. Its
secretariat is a pool of
experience and information, and the administrator of many common
services and enterprises.
For the governments, IATA furnishes a forum for developing industry-
working standards and, as appropriate, coordinating international fares
and rates. It provides the most practical way of drawing upon the
experience and expertise of the airlines. It helps to carry out the fast and
economical transport of international airmail and to make certain that the
needs of commerce and the safety and convenience of the public are
served. For the general public, IATA simplifies the travelling process.
Thanks to airline cooperation through IATA, individual passengers can, by
one telephone call and payment in a single currency, arrange journey that
may include many countries and the services of several scheduled
airlines.

14.2 HISTORY AND ORGANIZATION:

IATA was founded by airlines in 1945 to meet the problems anticipated in
the expansion of civil air services after the Second World War. It is the
successor in function to the previous International Air Traffic Association,
organized at The Hague at the very dawn of regular air transport in 1919.
The aims of IATA are clearly set down in its Articles of Association: to
promote safe, regular and economical air transport for the benefit of the
peoples of the world, to foster air commerce and to study the problems
connected therewith, to provide means for collaboration among air
transport enterprises engaged directly or indirectly in international air
transport service, to cooperate with the International Civil Aviation
Organization (ICAO) and other international organizations.
As an organization, IATA is voluntary, non-exclusive, non-political and
democratic. Membership is automatically open to any operating company,
which has been licensed to provide scheduled air service by a government
eligible for membership in ICAO. Airlines engaged directly in international
operations are Active Members, while domestic airlines are Associate
Members.
All members are involved in Trade Association activities, while
participation in the coordination of international fares and rates is optional.
The basic trade association activities of IATA include such aspects as,
technical, Medical, Legal, Security, procedures and administrative matters.
All of the activities grouped under the heading of “Trade Association”
support the very existence of an integrated worldwide system to the

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ultimate benefit both of the general public and of airlines, irrespective of
whether they are members of IATA or not.
Management information, staff training, automation projects and finance
services for airlines also form part of IATA’s work.
IATA’s contribution comes in only after governments have completed
negotiating traffic and other rights (air service agreements) among
themselves and have authorized airlines to perform such services. But
from that point on, the activity of the association spreads through most
phases of air transport operations. The basic source of authority in IATA
is the Annual General Meeting in which all the Active Members have an
equal vote. Year-round policy direction is provided by an elected
Executive Committee (of airline Chief Executives) and its creative work is
largely carried out by its traffic, Technical, Financial and Legal
Committees. Coordination of fares and rates agreements is entrusted to
the IATA Tariff Coordination Conferences, with separate meetings
considering passenger and cargo matters. Members of IATA committees
are nominated by individual airlines and, subject to the regulation and
review of the Executive Committee, serve as experts on behalf of the
entire industry. In the Tariff conferences, however, delegates act as
representatives of their individual companies. While the Executive
Committee fixes the terms of reference of these Conferences, their
decisions are subject only to the review of governments and cannot be
altered by any other part of the association. The association has two main
offices, one in Montreal and the other in Geneva. Regional Directors are
based in Singapore, Geneva, Buenos Aires, Beirut and Washington, and
the Regional Technical Directors in Bangkok, Dakar, Geneva, London,
Nairobi, and Rio de Janeiro. IATA’s budget is financed from the dues paid
by its members, largely in proportion to the part of the total international air
traffic carried by each airline. Some of the activities are self-supporting
through charges for services rendered.
IATA member airlines are registered in over 100 nations. Their routes
cross almost every country, IATA’s operational task is to ensure that the
aircraft utilized to carry the world’s passengers and goods are able to
operate with maximum safety and efficiency, under clearly defined and
universally understood regulations. IATA’s commercial objective is to
ensure that people, cargo and mail can move on this vast global network
as easily as if they were on a single airline within a single country.
Obviously, these activities relate to the cost of airline operation and the
prices carriers charge the public, plus the desire to keep both of these as
low as possible, commensurate with safety. There is a constant and
progressive effort to simplify and standardize procedures and
documentation--within the airlines themselves, among governments and
manufactures, and in collaboration with other international organizations.

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Cooperation of the airlines in operational and technical matters is
channeled through the IATA Technical Committee, and its various global
and regional working groups. The Association’s technical activity is
founded upon full exchange of information and experience among all the
airlines. Out of this data the airlines distil common requirements, which
guide the standardization of their own activities, determine their practical
advice and assistance to governments, and act as a guide to future
development in transport technology. IATA has played, and continues to
play, an important role in the drafting of the ICAO standards and
recommended practices, which comprise the technical regulation of civil
aviation, and the association cooperates closely with ICAO to encourage
governments to implement them fully and keep them up-to-date. The
Association works in much the same way with their organizations such as
the International Telecommunications Union, the World Meteorological
Organization and the International Standards Organization.
Current activities can be grouped under seven broad headings: Avionics
and Telecommunications, dealing with air-to-ground and ground-to-air
communications, radio navigation and landing aids, all of which contribute
to cost-efficient, on-time journeys. Engineering and environment, covering
the latest technology, both on-board aircraft and on the ground, and also
developing airline policy on important environmental issues including
aircraft noise, aviation fuel standards and emissions from aircraft engines.
Airports, with responsibility for defining IATA policy on airline requirements
for airport terminals, the expansion of existing airports or the development
of new ones. Since airlines are the prime users of such facilities, whose
costs are in turn reflected in the price of an airline ticket, their objective is
to ensure that no expenditure beyond that required for functional efficiency
is incurred. Flight operations, including factors worldwide that affect the
safe operation of aircraft, such as air traffic control systems, procedures
for operating in low visibility, operational equipment to be provided at
airports, and flight crew training, all with emphasis on greater
effectiveness and cost control. Many millions of dollars are saved each
year in fuel costs, and journey times shortened, by persuading authorities
to allow airlines to fly the shortest possible routes between one point and
another. Medical, encompassing the monitoring of health standards for
flight crews, hygiene and sanitation in aircraft catering, and making air
travel easier for disabled passengers. Facilitation, meaning simplification
of bureaucratic procedures. The objective at airports worldwide is to
reduce to the minimum time-consuming government formalities such as
customs and immigration; speeding up the flow of inbound and outbound
passenger and cargo traffic not only improves customer service by
eliminating frustrating bottlenecks but also enhances airline productivity by
saving time and money.

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14.3 SECURITY:
Security, one of IATA’s most vital activities, is conducted relatively
discreetly, for obvious reasons. While the public at large may think of
security services as meaning only anti-hijacking measures, they also
include effort to counteract fraud and theft in a variety of forms. Activities
are coordinated by the Security Advisory Committee, which groups them
under: Property Crimes (theft), Revenue Crimes (fraud) and Airport and
Aircraft Protection (terrorism). The IATA security services work in close
liaison with Interpol, local police forces, and airport and airline staff. The
Security Advisory Committee has sent teams to study equipment, layout
and procedures at dozens of airports around the world.
The Legal committee of IATA, composed of experts in air law drawn from
more than 20 airlines, is concerned with all legal matters having a bearing
on international air transport. One of its main activities is the formation of
the airlines’ views in the development of international conventions
affecting such matters as the liability of air carrier’s vis-à-vis their
customers and other parties, the commission of offences on board aircraft,
the carriage of potentially hazardous materials and the carriage of airmail.
Another important side of the committee’s work is the legal aspect of
airline documents. Since the sale of a passenger ticket or the issue of a
cargo waybill creates a contract between an airline and its customer,
international airline documents must be effective under many different
systems of law. The committee has prepared the legal foundation for the
present system of uniform traffic documents and procedures that can be
used throughout the worldwide network of IATA member’s routes. New
legal questions have been arising with the growing use of automated
systems by the airlines, but these, too, are being resolved successfully.
The IATA financial committee deals with all aspects of accounting and
settlements between airlines in respect of business they do with one
another or on one another’s behalf. It is also concerned with data
collection and with many of the airlines common problems in regard to
currency and exchange, taxation charges, insurance and statistics. An
outstanding example of the association’s financial work is the IATA
clearing house through which the airlines settle monthly accounts for
interline revenue transactions. It enables them to collect and pay their
worldwide debts simultaneously by single cash settlement in either dollars
or convertible sterling, regardless of the number of national currencies
involved. Clearing house operation began in January 1947. Since, then,
the IATA clearing house’s participation has broadened to include over 300
airlines--many of them not members of the association-- carrying out 12
billion dollars’ worth of transactions annually.

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Interest in data collection was a direct consequence of the increased
government involvement in civil aviation, particularly because of ICAO’s
needs for statistical information. IATA and ICAO worked out an
agreement to avoid unnecessary duplication. However, it soon became
evident that member airlines had additional requirements for data
collection, notably for market analysis and forecasting purposes, which are
now being fulfilled. IATA has become active in several other fields, with
the specific objective of saving money for the industry. A recent
development has been the establishment of a captive insurance company
for subscribing airlines. International air transport creates special
problems in the field of taxation. Although there are many tax conventions
that take account of the particular nature of the industry, IATA monitors
developments to ensure that airlines are not unfairly taxed and to make
representations to national authorities if necessary. There has been
general acceptance of the free transferability of an airline’s earnings back
to its home country. However, economic difficulties in certain areas of the
world during the past decade have caused shortages of hard currency and
hampered such transfer of locally earned airline revenues. Currency
remittance has thus become a priority of the IATA Financial Committee,
and many missions have been undertaken to attempt to ease the
situation. The association’s financial activities also include the monitoring
of “user charges” – the costs to airlines of using enroute navigation and
airport facilities. Frequent discussions are held with government and
airport authorities to ensure that user charges are not excessive, that they
are cost-justified and equitably applied. These discussions have been
helpful in controlling airline industry costs over the past decade.

14.4 TARIFF COORDINATION PROCESS:

The Tariff coordination process--the negotiation of international fares and
rates for submission to governments--arises from the special nature of air
transport. Any country in the world is accessible by air, and the airlines fly
between most major cities over a maze of inter-related routes. Most
governments reserve control over their own airspace and what air carriers
may charge the public. International fares and rates and the conditions,
which underline them, are the subject of discussions in which virtually
every country has some direct or indirect concern. However, participation
in such activity by IATA member airlines is optional.
The tariff coordination framework is intended to provide considerable
flexibility and since members used to respond quickly to market changes,
provision has been made for them to introduce innovative passenger
fares, or cargo rates rapidly without necessarily affecting other tariffs in
their area of operation. Unlike most IATA activities, where consensus is
the keyword, airline representative attend tariff coordination meetings as

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independent agents for their companies. Obviously, compromise is
desirable but in the final analysis, governments may need to resolve major
disputes relating to passenger fares and cargo rates. Tariff coordination
activities, which are within the purview of the traffic committee, are open to
input from representative third parties and arrangements have been made
for the presence at fares and rates meetings of observers from ICAO,
national governments, and from regional organizations. Worldwide tariff
coordination meetings (“Traffic Conferences”) are held as and when the
members consider necessary, usually once a year. Meetings to review
fares and passenger tariffs are normally held in the autumn, and those for
matters involving air cargo in the spring. Special meetings can be held in
the interim, and action can be taken by mail vote, subject to the voting
requirements and government approval.
Although tariff activities are the most visible of the various responsibilities
concerning the traffic committee, they are not the only ones of
considerable importance for the international air transport industry. Of
crucial significance for the worldwide system is the whole series of
standardization measures-- ticket format, air waybills and other
documents, plus uniform procedures for passenger, baggage and cargo
handling. These activities are grouped under the generic heading of
“Traffic Services”. The traffic services work falls into three main areas:
Passenger Services, Cargo Services and Airport Handling. These
combine to permit the world scheduled air transport system to handle
about one billion passenger journeys annually.
Traffic services’ most significant accomplishment has been the creation of
the Multilateral Interline Traffic Agreements (MITA). These have
integrated the routes of individual airlines into a coordinated world air
network over which passengers, baggage and cargo can be carried, on
very complex itineraries with a minimum of documentation. The
International Air Transport Association worked closely with the US-based
Air Transport Association (ATA) in developing MITA. More than 200
airlines belong to the agreements, accepting each other’s passenger and
cargo traffic, tickets and waybills on a routine basis. Today it normally
takes only one telephone call-to an airline or agent to obtain confirmed
space aboard any flight. This is followed by the issue of a standard
interline passenger ticket, permitting travel anywhere in the world,
regardless of how many airlines participate in the carriage. This is made
possible by extensive airline-owned communications networks run by
individual carriers or special companies such as SITA (Societe
Internationale de Telecommunications Aeronautiques) and ARINC
(Aeronautical Radio Inc.)

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The emphasis of passenger services is on speeding travellers through
airport terminals and on to their flights at the lowest possible cost, but with
due regard to many individual requirements. Automation has already
facilitated reservations, ticketing and the associated accounting
procedures, but even greater progress can be expected in the years to
come. The world’s airlines have been carrying incapacitated passengers
for many years. During this time, precise industry standards for the
guidance of airlines, physicians and handicapped people themselves have
been developed by the carriers to simplify matters as much as possible.
The industry now handles over a billion pieces of checked baggage each
year. Despite the development of elaborate mechanical systems, some
baggage is still handled manually. From time to time some are
mishandled and there are standard procedures for their tracing, including
the IATA/SITA BAGTRAC system.
No airline can afford to set up sales offices in every city of the world and
the air transport industry has traditionally relied on sales agents as
intermediaries in the market place. Originally, there was a single
worldwide agency programme run for the airlines by the IATA secretariat.
Passenger sales agency and cargo sales agency activities were
administered under two sets of rules, in view of the differing nature of the
two types of business.
The rules laid down the rights and obligations of both airlines and agents,
as well as the procedures for agents seeking industry accreditation. Each
agent was required to meet certain criteria relating to financial soundness,
proficiency of staff and suitability of premises, particularly with regard to
security. Over the years, IATA has built up a working relationship with
both UFTAA (Universal Federation of Travel Agents’ Associations) and
FIATA (International Federation of Freight Forwarders’ Associations). As
the commercial environment has evolved so has the agency programme.
Procedures to simplify agent accreditation have been developed and
conditions tailored to meet local requirements. In the United States of
America, the classic agency rules involving accreditation have been
replaced by a new system whereby intermediaries are registered on a
central record for member airlines to use or not, depending on their
commercial policy and judgment. In other areas of the world, the agency
programme is being liberalized as the industry’s competitive environment
develops. During the next few years, Europe, Asia and Australia are all
expected to modify the classic airline/agent relationship to varying
degrees, without abandoning the basic principle of setting certain business
criteria for agents

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14.5 WORLD ASSOCIATION OF TRAVEL AGENCIES (WATA):

World Association of Travel Agencies (WATA) is an international body that

seeks to improve and rationalize the international tourism industry. The
history of WATA dates back to May 5th 1949 when several professional
travel agents from France, Italy, Belgium and Switzerland joined hands to
create WATA in Geneva. Since then, WATA has come up with new
developments and has built a reputation to be envied of and an image to
get awed by.

14.5.1 MISSION:

The prime mission and objective of WATA are related to each other:

 To enhance the professionalism and profitability of member agents

 To sort out strategies that helps mutual cooperation
 To work on global networking to achieve the uniform growth for the
tourism industry

14.5.2 Who can be its Member:

WATA accepts membership request of travel agents, tour operators and

several other allied travel service providers who fill the membership
criteria of the organization. Today, WATA has members from various
countries like USA, France, Germany, Italy, China, India, UAE, Russia and
many more. All these members are committed to the highest standards of
business ethics and quality of service to the travellers.

14.5.3 Industry Standards:

WATA is very much particular about the Code of Conducts that it shares
with the members. The motive of WATA is to be a worldwide network of
agencies with quality service that is unmatched. To ensure the fulfillment
of this aim WATA implements several norms for the travel agents in
dealing with the traveller, member to member interaction and member to
WATA transactions. The General Assembly and the WATA Executive
Committee are the two monitoring bodies

CHECK YOUR PROGRESS:

Answer the following questions.
1. Write the full form of IATA? When was it founded?________________

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___________________________________________________________
2. What is the full form of ICAO? _________________________________
3. IATA member airlines are registered in over ______________________
nations.
4. The traffic services work falls into three main areas________________
Cargo services and_________________________________________
Check your answer with the one given at the end of the unit.

14.6 SUMMARY:
In fact tourism industry has different constituents related to various
services. Most of these constituents have their representative
organizations. In tourism we find organizations at International and
national levels in both private as well as public sectors. These
organizations represent and help in coordinating certains services along
with standardizing them.

ANSWER TO CHECK YOUR PROGRESS:

1. International Air Transport Association. It was founded in 1945.
2. International Civil Aviation Organization.
3. 100
4. Passenger Services, Airport Handling

14.6 SUGGESTED READINGS:

 Bhatia, A.K. (1991). International Tourism Fundamentals and Practices,
New Delhi, Sterling.

 Kaul, R.N. (1992). The Dynamics of Tourism, New Delhi, Sterling.

 Webpage: http://www.hellotravel.com/associations/wata

14.7 REVIEW QUESTIONS:

1. Describe the aims and objectives of IATA.
2. Define the role of IATA and ICAO and their inter-relationship.

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3. What has been the role and importance of IATA in developing Air
Transport Industry?

14.8 GLOSSARY:
 Infrastructural facilities: These include facilities like, airport, roads,
drainage building etc., at a destination.

 Interline: Between two or more transportation lines.

 Tariffs: The published fares, rates, charges and or related conditions of

carriage of a carrier.

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UNIT 15
THOMAS COOK & COX AND KINGS
Structure:
15.1 THOMAS COOK: HISTORY AND INTRODUCTION

15.1.1 A BRIEF HISTORY

15.1.2 EARLY TOURS

15.1.3 THE GREAT EXHIBITION

15.1.4 ACROSS THE CHANNEL

15.1.5 SWITZERLAND AND ITALY

15.1.6 HOTEL COUPONS AND CIRCULAR NOTES

15.1.7 THOMAS COOK TODAY

15.2 HISTORY OF COX & KINGS

15.3 SUMMARY

15.1 THOMAS COOK: HISTORY AND INTRODUCTION:

Thomas Cook is the world’s best-known name in travel, thanks to the

inspiration and dedication of a single man. Thomas Cook began his
international travel company in 1841, with a successful one-day rail
excursion at a shilling a head from Leicester to Loughborough on 5 July.
From these humble beginnings Thomas Cook launched a whole new kind
of company – devoted to helping Britons see the world.
View key dates of Thomas Cook history.

15.1.1 A BRIEF HISTORY:

On 9 June 1841 a 32-year old cabinet-maker named Thomas Cook

walked from his home in Market Harborough to the nearby town of
Leicester to attend a temperance meeting. A former Baptist preacher,

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Thomas Cook was a religious man who believed that most Victorian social
problems were related to alcohol and that the lives of working people
would be greatly improved if they drank less and became better educated.
As he walked along the road to Leicester, he later recalled, 'the thought
suddenly flashed across my mind as to the practicability of employing the
great powers of railways and locomotion for the furtherance of this social
reform'.

At the meeting, Thomas suggested that a special train be engaged to

carry the temperance supporters of Leicester to a meeting in
Loughborough about four weeks later. The proposal was received with
such enthusiasm that, on the following day, Thomas submitted his idea to
the secretary of the Midland Railway Company. A train was subsequently
arranged, and on 5 July 1841 about 500 passengers were conveyed in
open carriages the enormous distance of 12 miles and back for a shilling.
The day was a great success and, as Thomas later recorded, 'thus was
struck the keynote of my excursions, and the social idea grew upon me'.

15.1.2 EARLY TOURS:

During the next three summers Thomas arranged a succession of trips

between Leicester, Nottingham, Derby and Birmingham on behalf of local
temperance societies and Sunday schools. Within these limits many
thousands of people experienced rail travel for the first time, and Thomas
was able to lay the foundations of his future business. He later described
this period as one of 'enthusiastic philanthropy' since, beyond the printing
of posters and handbills, he had no financial interest in any of these early
excursions.

Thomas Cook's first commercial venture took place in the summer of

1845, when he organised a trip to Liverpool. This was a far more
ambitious project than anything he had previously attempted, and he
made his preparations with great thoroughness. Not content with simply
providing tickets at low prices - 15 shillings for first-class passengers and
10 shillings for second. Thomas also investigated the route and published
a handbook of the journey. This 60-page booklet was a forerunner of the
modern holiday brochure.

15.1.3 THE GREAT EXHIBITION:

By the end of 1850, having already visited Wales, Scotland and Ireland,
Thomas Cook began to contemplate foreign trips to Europe, the United
States and the Holy Land. Such thoughts had to be postponed, however,
when Sir Joseph Paxton, architect of the Crystal Palace, persuaded

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Thomas to devote himself to bringing workers from Yorkshire and the
Midlands to London for the Great Exhibition of 1851. This he did with great
enthusiasm, rarely spending a night at home between June and October,
and he even produced a newspaper, Cook's Exhibition Herald and
Excursion Advertiser, in order to promote his tours. By the end of the
season Thomas had taken 150,000 people to London, his final trains to
the Exhibition carrying 3,000 children from Leicester, Nottingham and
Derby.

15.1.4 ACROSS THE CHANNEL:

Thomas continued to expand his business in Britain, but he was

determined to develop it in Europe too. In 1855 an International Exhibition
was held in Paris for the first time and Thomas seized this opportunity by
trying to persuade the companies commanding the Channel traffic to allow
him concessions. They refused to work with him, however, and the only
route he was able to use was the one between Harwich and Antwerp. This
opened up the way for a grand circular tour to include Brussels, Cologne,
the Rhine, Heidelberg, Baden-Baden, Strasbourg and Paris, returning to
London via Le Havre or Dieppe. By this route, during the summer of 1855,
Thomas escorted his first tourists to Europe.

15.1.5 SWITZERLAND AND ITALY:

Thomas visited Switzerland for the first time in June 1863. Although this
initial tour was little more than an information-gathering trip, a party of
more than 60 ladies and gentlemen accompanied Thomas as far as
Geneva. Among these pioneering tourists was a young woman called
Jemima Morrell, who maintained a written account of each day's events.
Her original diaries may be studied today in the Thomas Cook Archives.
Thomas organised further trips to the Continent in 1863, and by the end of
the season he had taken nearly 2000 tourists to Paris, some 500 of whom
had continued to Switzerland. With the co-operation of the Paris, Lyons
and Mediterranean Railway, Thomas began to issue circular tickets (in
both English and French) between Paris and the Alps. He then
established the first circular tours of Switzerland, which were such an
immediate success that he decided to extend his arrangements across the
Alps. The first Italian tours took place in the summer of 1864, when
Thomas escorted two large groups, one to Florence and parts of central
Italy, the other to Rome and Naples.

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15.1.6 HOTEL COUPONS AND CIRCULAR NOTES:

Thomas's travellers to Switzerland and Italy were from the growing middle
classes and they expected better accommodation than his earlier working-
class customers had. He therefore set out to negotiate with innkeepers
and hotel proprietors to provide rooms and meals at good prices. His
friendship with hoteliers, who were pleased to get his business, enabled
Thomas to develop two important travel systems: one was the hotel
coupon, launched in 1868, which travellers could use to pay for hotel
accommodation and meals instead of using money; the other was his
circular note, first issued in 1874 and a forerunner of the travellers cheque,
which enabled tourists to obtain local currency in exchange for a paper
note issued by Thomas Cook.

BEYOND EUROPE:

Building on his successes in Europe, Thomas made an exploratory trip to

North America in 1865 and set up a system of tours covering 4,000 miles
of railways. Four years later, in 1869, he hired two steamers and
conducted his first party up the Nile. The climax of his career, however,
came in September 1872 when, at the age of 63, he departed from
Leicester on a tour of the world that would keep him away from home for
almost eight months. It had long been his ambition to travel 'to Egypt via
China', but such a trip only became practicable at the end of 1869
following the opening of the Suez Canal and the completion of a rail
network linking the east and west coasts of America.

Thomas and his small party crossed the Atlantic by steamship and made
their way through the United States from New York to San Francisco by
rail. They travelled by Pacific steamer to Japan, then across the Inland
Sea to China, and afterwards visited Singapore, Ceylon and India.
Leaving Bombay, they crossed the Indian Ocean and the Red Sea to
Cairo, from where most of the party travelled back to London. Thomas
himself, however, set off on an extended tour of Egypt and Palestine,
finally returning home via Turkey, Greece, Italy and France after an
absence of 222 days. The conducted world tour quickly became an annual
event, but many additional tickets were issued to independent travellers,
some of whom went via Australia and New Zealand rather than China and
Japan.

JOHN MASON COOK:

While Thomas was travelling round the world, his son, John Mason Cook,
successfully completed the firm's move to a new head office at Ludgate

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Circus. However, father and son argued over certain aspects of the project
and in 1878 their partnership ended. John was a better businessman than
Thomas, and he set about expanding the company internationally. In an
age when telegraphy was in its infancy and there were no telephones or
fax machines, this was far from easy.

John created overseas editions of The Excursionist, the newspaper

started by his father in 1851, to inform customers in places such as
France, Germany, India, Australasia, America and the Far East about the
services he offered. (This newspaper, which became known as The
Traveller's Gazette in May 1902, continued to be published until 1939.) He
also kept up a continuous stream of correspondence with his offices
abroad, checking on their work and complaining if anything went wrong.
Like many successful businessmen, John Mason Cook combined a flair
for grasping business opportunities with a remarkable memory for small
details.

THE GORDON RELIEF EXPEDITION:

In 1884 John Mason Cook was asked by the British Government to

organise a relief expedition up the Nile to rescue General Gordon from
Khartoum. Arrangements were made for the movement of 18,000 troops,
nearly 40,000 tons of supplies, 40,000 tons of coal and 800 whaleboats.
To transport the coal from Tyneside to Boulac and Assiout via Alexandria,
28 large steamers and 6000 railway trucks were required. An additional
7000 railway trucks were needed for the military stores, while on the Nile
27 steamers and 650 sailing boats were used to carry the troops and
supplies. John and his Egyptian managers acted as overseers of the
entire operation, which relied on the labour of 5000 local men and boys,
and completed their side of the contract in November 1884. Despite all the
efforts, however, Khartoum fell in January 1885 and Gordon was killed.

FRANK, ERNEST AND BERT:

Thomas and John Mason Cook both died during the 1890s and the
business was inherited by John's three sons: Frank Henry, Ernest Edward
and Thomas Albert ('Bert'). During the first quarter of the twentieth century
- a period which saw the introduction of winter sports holidays, tours by
motor car and commercial air travel - the firm of Thos Cook and Son
dominated the world travel scene.

The company was incorporated as Thos Cook & Son Ltd in 1924, and in
1926 the headquarters moved from Ludgate Circus to Berkeley Street,
Mayfair, a once aristocratic area which was now the centre of London

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society. Then, in 1928, the surviving grandsons, Frank and Ernest (Bert
having died in 1914), unexpectedly sold the business to the Belgian
Compagnie Internationale des Wagons-Lits et des Grands Express
Européens, operators of most of Europe's luxury sleeping cars, including
the Orient Express.

FROM WAGONS-LITS TO BRITISH RAILWAYS:

Shortly after the outbreak of World War II, the Wagons-Lits headquarters
in Paris was seized by occupying forces, and Cook's British assets were
requisitioned by the British Government. To save the company from
complete financial collapse in its centenary year, a deal was brokered and,
fittingly, the organisation was sold to Britain's four mainline railway
companies. Thos Cook & Son Ltd settled its affairs with Wagons-Lits
(which retained a 25% share in Cook's overseas) immediately after the
war, and in 1948 the firm became state-owned as part of the nationalised
British Railways.

THE FIFTIES AND SIXTIES:

Thomas Cook & Son Ltd benefited from the post-war holiday boom, which
saw one million Britons travelling abroad by 1950. The company set up a
Business Travel Service and refurbished its holiday camp at Prestatyn
(which had opened shortly before the outbreak of war). Although Cook's
remained the largest and most successful company in the industry, its pre-
eminence was now being challenged by new travel firms that were able to
undercut Cook's prices and offer cheap package deals. In 1965 the
company's net profits exceeded £1 million for the first time, but in an
increasingly cut-throat marketplace Thomas Cook began to fall behind its
younger rivals.

BEYOND EUROPE:

Building on his successes in Europe, Thomas made an exploratory trip to

North America in 1865 and set up a system of tours covering 4,000 miles
of railways. Four years later, in 1869, he hired two steamers and
conducted his first party up the Nile. The climax of his career, however,
came in September 1872 when, at the age of 63, he departed from
Leicester on a tour of the world that would keep him away from home for
almost eight months. It had long been his ambition to travel 'to Egypt via
China', but such a trip only became practicable at the end of 1869
following the opening of the Suez Canal and the completion of a rail
network linking the east and west coasts of America.

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Thomas and his small party crossed the Atlantic by steamship and made
their way through the United States from New York to San Francisco by
rail. They travelled by Pacific steamer to Japan, then across the Inland
Sea to China, and afterwards visited Singapore, Ceylon and India.
Leaving Bombay, they crossed the Indian Ocean and the Red Sea to
Cairo, from where most of the party travelled back to London. Thomas
himself, however, set off on an extended tour of Egypt and Palestine,
finally returning home via Turkey, Greece, Italy and France after an
absence of 222 days. The conducted world tour quickly became an annual
event, but many additional tickets were issued to independent travellers,
some of whom went via Australia and New Zealand rather than China and
Japan.

15.1.7 THOMAS COOK TODAY:

Thomas Cook UK & Ireland is the second largest leisure travel group in
the UK with around 19,000 employees and is part of Thomas Cook Group
plc (www.thomascookgroup.com)

Thomas Cook UK & Ireland has a network of more than 800 high street
stores (Thomas Cook and Going Places), a leading website
(www.thomascook.com) and some of the world’s favourite travel brands.

These brands include Airtours, Club 18-30, Cresta, CruiseThomasCook,

Direct Holidays, Elegant Resorts, Essential Travel, Flexibletrips,
flythomascook.com, Gold Medal, hotels4u.com, Manos, Medhotels,
Neilson, Netflights.com, Pure Luxury, Sentido, Style Holidays, Sunset,
Sunworld Holidays Ireland, Swiss Travel Service, The Big Reunion, The
Big Snow Festival, Thomas Cook, Thomas Cook Essentials, Thomas
Cook Signature, Thomas Cook Tours and Thomas Cook Sport.

The Company’s airline, Thomas Cook Airlines, operates a fleet of 44

aircraft and flies from various regional airports to destinations worldwide.

Thomas Cook offers a range of financial services, including foreign

exchange, the Thomas Cook Cash Passport (a prepaid currency card),
the Thomas Cook Credit Card, the ‘what’s the rate’ foreign currency app
for Android phones and iPhones and a wide range of travel insurance
policies. It is regulated for its travel insurance, which is underwritten by its
insurance division, White Horse Insurance Ireland Ltd. Thomas Cook in
the UK is the world’s leading retailer of the Cash Passport prepaid
currency card.

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An Official Supporter of the London 2012 Olympic Games and Paralympic
Games, Thomas Cook is the exclusive partner for UK short breaks and
trips to the Games. Thomas Cook’s London 2012 packages will go on sale
in spring 2011 and will include accommodation, transport and event
tickets.

Its leading publishing division offers a comprehensive portfolio of more

than 300 independently authored travel guidebooks to 150 worldwide
destinations.

15.2 HISTORY OF COX & KINGS:

INTRODUCTION:
Cox & Kings is the longest established travel company in the world. Its distingu
history began in 1758 when it was appointed as general agents to the regiment o
Guards in India under the command of Lord Ligonier.

By 1878, C&K were agents for most British regiments posted overseas, includin
Royal Cavalry, Artillery and Infantry, as well as the Royal Wagon Train an
Household Brigade. The Royal Navy was next and in 1912, The Royal Air Force
under its wings.

Between 1750's and 1950's, Cox & Kings was witness to an exciting era in Indian h
and, in its own way, helped to shape it. In 1947, the British administration departe
bound by strong ties to India, Cox & Kings stayed on and flourished. Today, Cox &
is a premium brand in all travel related services in the Indian subcontinent, emp
over 800 trained professionals.
Its India operations are headquartered in Mumbai and has the status of a
company. It has over 12 fully owned offices in India across key cities such as New
Chennai, Bangalore, Kolkata, Ahmedabad, Kochi, Hyderabad, Pune, Goa, Nagpu
Jaipur.

The worldwide offices are located in UK, USA, Japan, Russia, Singapore and Du
has associate offices in Germany, Italy, Spain, South Africa, Sweden and Australia.
The principal services offered by the company are:

 Destination Management
 Outbound Tourism
 Business Travel
 Incentive & Conference Solutions
 Domestic Holidays
 NRI
 Trade Fairs, Foreign exchange and insurance etc.

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Founded in 1758
250th Year Countdown Celebration:

Cox & Kings holds pride of place as the world’s longest established travel
company. Our journey began when Cox & Kings was appointed as
general agents to the regiment of Foot Guards in India. Today, more than
249 years later, Cox & Kings is the ‘Destination Management Company’ of
choice in India, a one-stop travel solutions provider. Cox & Kings offers a
comprehensive range of conference arrangements in the subcontinent,
pertaining to every aspect of travel, anywhere around the globe and to suit
every budget.

At your Service:
Cox & Kings are truly the subcontinent experts, organizing travel to India
since 1758. Our two hundred and forty nine years of grand history gives
us an unrivalled experience at organizing travels throughout the
subcontinent.

One-stop-shop:
Cox & Kings presents the answer to all your needs under one roof, right
from Business and Corporate Travel to Destination Management for
groups and individuals and Incentive holidays, from Charters and Cruises
handling to Outbound and Domestic Tourism. We also have our in-house
foreign exchange division and a specialized cell for Conferences,
Conventions and Exhibitions & Trade Fairs.
Cox & Kings promises an enriching journey, familiarizing the traveller with
a wide diversity of exotic leisure options. Meticulous planning, emphasis
on safety, efficient staff and state-of-the-art equipment form the foundation
of each of our programmes.

Network:
Cox & Kings has a network of 14 offices and 44 associate offices offering
round the clock quality service. We have a strong web of International and
domestic marketing arms for effective and successful worldwide congress
promotion. Cox & Kings, India has over 25 associated offices connecting
the length and breadth of India.

Cox & Kings International Offices And Representatives:

Cox & Kings has international offices and representatives in UK, USA,
Japan, Germany, Spain, South Africa, Russia, Italy, Sweden and
Australia. Cox & Kings worldwide business associate is Radius, with a
network of over 4,640 branches around the world.

Worldwide Business Associates:

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RADIUS, with a network of over 4,640 branches around the world. A
global service that has set benchmarking standards in the corporate travel
community.

Memberships that guarantee excellence:

Cox & Kings is members of some of the highest standards of excellence
like TAAI, IATA, PATA, ASTA, IATO, ICCA and ICPB Charter, which
guarantee the quality of services Cox & Kings offers.

Hall of Fame:
Cox & Kings is undoubtedly the best destination manager in the country. It
has won seven National Awards for being the ‘Best Conference Agent’, of
the country of which seven were in a consecutive row. This prestigious
award has been constituted by the Government of India, Department of
Tourism to honour the best company in the field of conferences and
incentives. Enjoy the Best of India & Beyond.

15.3 SUMMARY:

After completion of the Unit 15, we have now understood about the two
oldest travel agencies of the world .In case of Thomas Cook which is thw
is the world’s best-known name in travel, thanks to the inspiration and
dedication of a single man. Thomas Cook began his international travel
company in 1841, with a successful one-day rail excursion at a shilling a
head from Leicester to Loughborough on 5 July. From these humble
beginnings Thomas Cook launched a whole new kind of company –
devoted to helping Britons see the world.

View key dates of Thomas Cook history. Whereas, in case of Cox &
Kings which is the longest established travel company in the world. Its
distinguished history began in 1758 when it was appointed as general
agents to the regiment of Foot Guards in India under the command of
Lord Ligonier. By 1878, C&K were agents for most British regiments
posted overseas, including the Royal Cavalry, Artillery and Infantry, as
well as the Royal Wagon Train and the Household Brigade. The Royal
Navy was next and in 1912, The Royal Air Force came under its wings
and the key operations of the C & K are Destination Management
Outbound Tourism ,Business Travel ,Incentive & Conference Solutions
Domestic Holidays, Trade Fairs, Foreign exchange and insurance etc.

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SUGGESTED READING:

 W. Fraser Rae, The Business of Travel - A Fifty Years' Record of Progress

(Thos Cook & Son, 1891).
 John Pudney, The Thomas Cook Story (Michael Joseph, 1953)
 Edmund Swinglehurst, The Romantic Journey - The story of Thomas
Cook and Victorian Travel (Pica Editions, 1974)
 Edmund Swinglehurst, Cook's Tours - The Story of Popular Travel
(Blandford Press, 1982)
 Piers Brendon, Thomas Cook - 150 Years of Popular Tourism (Secker &
Warburg, 1991).
 Robert Ingle, Thomas Cook of Leicester (Headstart History, 1991)
Derek Seaton, The Local Legacy of Thomas Cook (self-published, 1996)
 Lynne Withey, Grand Tours and Cook's Tours - A History of Leisure
Travel, 1750 to 1915 (Aurum Press, 1998).
 Andrew William son, The Golden Age of Travel - The Romantic Years of
Tourism in Images from the Thomas Cook Archives (Thomas Cook
Publishing, 1998).
 Paul Smith, The History of Tourism - Thomas Cook and the Origins of
Leisure Travel [boxed set of four volumes] (Routledge/ Thoemmes Press,
1998).
 Jill Hamilton, Thomas Cook - The Holiday Maker (Sutton, 2005).
 http://www.thomascook.com/about-us/thomas-cook-history/
 http://www.coxandkings.com/live/products/mice/index.php?link=view&CM_
ID=122&CP_ID=297

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