IDEAL INDIAN SCHOOL, DOHA –QATAR

CLASS :XII - Subject: Tourism

NOTES- UNIT-1
INTRODUCTION TO TRAVEL & TOUR OPERATIONS BUSINESS
ANSWER THE FOLLOWING QUESTIONS:
1. What do you mean by travel agency and write the functions of a travel
agency.
A travel agency is an organization that makes arrangements for individuals or
groups to travel from one place to another for various purposes, such as leisure,
business, or education. Travel agencies facilitate the booking of transportation,
accommodation, and other travel-related services to meet the specific needs and
preferences of clients.
The functions of a travel agency include:
Arranging Transportation: Booking air, rail, road, or sea travel tickets.
Accommodation: Securing lodging arrangements based on client preferences.
Travel Documents: Assisting with passport, visa, and other required travel
documents.
Entertainment and Activities: Planning and booking activities, sightseeing tours,
and entertainment options.
Travel Insurance: Providing information and facilitating the purchase of travel
insurance.
Currency Exchange: Assisting clients with obtaining foreign currency for their
travels.
Advisory Services: Offering advice on destinations, travel itineraries, and other
travel-related matters.
Ticket Sales: Selling tickets for various modes of transportation.
Payment Handling: Managing financial transactions and accepting payments from
clients.
2. Describe the different types of travel agencies.
Different types of travel agencies include:
Retail Travel Agency: Sells tourist products directly to the public on behalf of
product suppliers, earning a commission.
Wholesale Travel Agency: Specialized in organizing package tours, selling them
to clients through retail travel agencies.
3. List out the differences between travel agency and tour operators.
Differences between travel agencies and tour operators include:
Function: Travel agencies assist in individualized travel arrangements, while tour
operators specialize in designing and selling packaged tours.
Scope: Travel agencies handle a wide range of travel services, from ticketing to
accommodation, while tour operators focus on comprehensive tour packages.
Sales: Travel agencies sell individual components like tickets and
accommodations, while tour operators sell complete tour packages.
Commission: Travel agencies earn commissions from service providers, while tour
operators may receive volume discounts and earn profits from selling packaged
tours.
4. Describe the integrative system in the travel and tour business.
The integrative system in the travel and tour business involves the collaboration
and coordination of various entities within the tourism industry. This integration
can be horizontal, occurring within the same level of the distribution chain, or
vertical, linking organizations at different levels. Horizontal integration includes
mergers or alliances among similar businesses, such as hotels or airlines. Vertical
integration involves the linkage of organizations at different levels, like a tour
operator owning its own chain of travel agencies or airlines. Integration aims to
achieve economies of scale, enhance efficiency, and offer competitive prices to
consumers.
5.What was the significance of the introduction of steamship services by the
Peninsular and Oriental (P&O) Steam Company in 1838?
The introduction of steamship services by the Peninsular and Oriental (P&O)
Steam Company in 1838 marked a significant development in travel trade as it
facilitated faster and more reliable transportation between Europe and regions like
India and the Far East.
6.How did Cox & Kings evolve from its origins as a military agent during the
18th century?
Cox & Kings, originally a military agent during the 18th century, evolved by
diversifying its services. It acted as an intermediary for military regiments,
organized provisions, and later ventured into banking through a partnership with
the Drummond family. Over time, it transitioned into a comprehensive travel
company, offering services such as Destination Management, Leisure Travel,
MICE, and more.

7.When did the organized travel business in India start, and what were the
key foreign and Indian companies involved in the early stages?
The organized travel business in India began with the establishment of the Travel
Agents Association of India (TAAI) in Mumbai in 1951. Prior to that, major
foreign companies like Thomas Cook and Sons, American Express, and Indian
companies like Jeena and Co., Lee and Muirhead India Pvt. Ltd., and N. Jamnadas
and Co. Ltd. were operating in India. Thomas Cook and Sons and American
Express predominantly handled the bulk of international tourists.
8.What is the concept of travel business, and why is it considered a complex
industry?
Travel business is an economic activity involving the continuous buying and
selling of travel-related services to satisfy human wants. It is a complex industry
due to its multifaceted nature, encompassing various activities such as hotels,
airlines, travel agencies, trekking agencies, and more. The complexity arises from
the diverse sub-sectors that collectively produce the tourist product—the travel
experience. Tourism, regarded as an experience industry, involves the sale of travel
experiences as commodities, contributing to the economy through the buying and
selling process.
9.What role does a travel agency play in the tourism sector, and why are they
often referred to as the "image builder" of a country?
A travel agency is a crucial organization in the tourism private sector responsible
for packaging and processing attractions, accesses, amenities, and ancillary
services of a country or destination. Travel agencies are often referred to as the
"image builder" of a country because they present and showcase these elements to
tourists. They make arrangements for travel tickets, documents, accommodation,
entertainment, and other related services. Additionally, they may secure travel
insurance and foreign currency for travelers, contributing significantly to the
promotion of tourism.
10. What are the main features of a travel agency's business, and what are the
different types of travel agencies mentioned in the text?
The main features of a travel agency's business include providing a range of
services such as arranging travel tickets, documentation, accommodation,
entertainment, and more. Types of travel agencies mentioned in the text include:
Retail Travel Agency: Sells tourist products directly to the public on behalf of
product suppliers, earning commissions.
Wholesale Travel Agency: Specialized in organizing package tours, purchasing
tourist product components in bulk, and designing package tours. Often sells to
clients through a network of retail travel agencies or directly.
11.What distinguishes a tour operator from a wholesaler, and why are tour
operators often referred to as "manufacturers of tourism products"?
A tour operator is an entity that combines various tourist product components,
obtained from suppliers, into a package tour. Unlike a wholesaler who buys goods
or services in bulk at their own account to prepare a tour package, a tour operator
may have their own components, such as cars, coaches, hotels, and other travel-
related services. Tour operators are often referred to as "manufacturers of tourism
products" because they formulate new tourist products, such as inclusive tours, by
combining and packaging different elements of a holiday experience.
12.What are the different types of tour operators mentioned in the text, and
what are their respective roles?
Inbound Tour Operators: Also known as incoming tour operators, they handle
arrangements in the host country for guests, clients, or tourists coming from
abroad.
-Outbound Tour Operators: Promote tours to foreign destinations, catering to both
business and leisure travelers.
- Domestic Tour Operators: Assemble and combine tourist components into
inclusive tours for domestic travelers within the boundaries of their home country.
- Destination Management Companies/Ground Operators: Commonly known as
handling agencies, they organize tour arrangements for incoming tourists on behalf
of overseas operators, ensuring that operations align with package tours or
agreements.
13.What factors determine the organization of a travel/tour company, and
how does the organizational structure differ between small and large-scale
companies in the travel industry?
The organization of a travel/tour company depends on the size and type of business
it handles. In small and medium-scale agencies, a more informal structure is
common, with individuals often performing multiple roles. In contrast, large-scale
companies like Thomas Cook, TCI, and SITA adopt a more formal organizational
structure, with clearly defined roles and formal divisions of labor. The size,
complexity, and formality of the structure are influenced by the scale and nature of
the travel business.
14.What are the key components of the organizational structure of a
travel/tour company, and how is the structure depicted?
The organizational structure of a travel/tour company includes the following
components:
- Hierarchy: Managerial hierarchy from top-level to junior-level managers and
assistants.
- Departments: Various departments such as research and planning, travel and tour
division, etc.
- Reporting Relationships: Important reporting and functional relationships within
the organization.
The structure is commonly depicted through an organization chart, which
illustrates the visible 'super structure' of departments and the relationships within
the organization. However, in some small and young companies, the structure may
be implicit rather than explicit, with a discernible hierarchy of authority, division
of work, specialization, and role specialization.
15.Explain the differences between travel agencies and tour operators,
highlighting their roles and functions in the travel industry.*
The primary difference between travel agencies and tour operators lies in their
functions and roles in the travel industry:
- Travel Agency:
- Acts as a distributor of travel products and services.
- Typically does not own travel assets like hotels or car rentals.
- Sells travel products and services directly to customers.
- May act as a handling agency or ground operator, providing services to tour
operators.
- Relies on commissions and may set higher prices for customers.
- Tour Operator:
- Purchases services from various suppliers (hotels, restaurants, etc.).
- Creates a complete tourist product by combining these services.
- Has its own pricing system and sells the product directly to the public or through
intermediaries.
- Often forms agreements with independent travel agencies to sell their tours.
- Aims to increase sales by having more partners in various countries and regions.

In essence, a travel agency primarily distributes travel products, while a tour

operator assembles and sells these products, often creating comprehensive tour
packages.

17.Explain the market trends and changes in the travel agency business
scenario, focusing on factors like changes in the commission system, the
impact of the Internet, and the shift in consumer behavior.
Several significant changes have impacted the travel agency business scenario:
1. Commission System Changes:
- Airlines stopped paying base commissions to travel agents in the early 2000s.
 - Agents had to develop new sources of income, leading to the introduction of
service fees.
2. Impact of the Internet:
- The Internet altered travel purchase behavior, enabling consumers to bypass
intermediaries.
- Airlines aggressively embraced e-commerce, reducing distribution costs and
building direct relationships with consumers.
- Online travel agencies invested heavily in improving their online presence.
3. Shift in Consumer Behavior:
- Consumers increasingly searched for information and booked travel online.
- Airlines attempted to bypass travel agents, selling directly to passengers
through their websites.
- The Internet became the preferred distribution channel for airlines.
4. Challenges and Opportunities:
- Travel agents faced challenges but remained relevant by delivering valuable
services and saving clients time and money.
The combination of changes in commission structures, the rise of the Internet, and
shifts in consumer behavior reshaped the travel agency landscape, emphasizing the
need for adaptability and value-added services.
18.Explain the concepts of horizontal and vertical integration in the tourism
industry, providing examples for each.
- Horizontal Integration:
- Definition: Integration occurring at one level in the distribution chain.
- Example 1: Merger of two competing hotels to form a larger entity.
- Example 2: Airlines on similar routes forming alliances to combine resources.
- Vertical Integration:
- Definition: Integration linking organizations at different levels of the
distribution chain.
 - Example 1:Tour operator purchasing its own chain of travel agents (forward
integration).
- Example 2: Tour operator buying its own airline (backward integration).
Horizontal integration involves collaboration or consolidation within the same
level, while vertical integration connects entities at different levels of the
distribution chain in the tourism industry.
II.MCQuestions:
1. What does forward integration in the tourism industry involve?
- A) Merging two hotels
- B) Tour operator purchasing its own airline
- C) Airlines forming alliances
- D) Tour operator buying its own chain of travel agents
Correct Answer:
A) Tour operator purchasing its own airline
2.What is a key function of tour operators in the travel industry?
- A) Acting as distributors
- B) Owning travel assets
- C) Assembling and selling comprehensive tourist products
- D) Providing services directly to customers
Correct Answer:
C) Assembling and selling comprehensive tourist products
3.What major factor contributed to the decline in the number of travel agencies,
according to the provided information?
- A) Introduction of service fees
- B) Changes in the commission system
- C) Increased emphasis on leisure travel
- D) Growing reliance on traditional distribution channels
4.What is the primary source of revenue for a retail travel agency?
- A) Wholesale purchases
- B) Mark-up prices
- C) Commissions from vendors
- D) Foreign currency exchange
Correct Answer:
C) Commissions from vendors
5.What distinguishes a wholesaler from a tour operator in the travel agency
context?
- A) Selling package tours
- B) Purchasing tourist products individually
- C) Receiving volume discounts from suppliers
- D) Assembling package holidays
Correct Answer:
b)Purchasing tourist products individually
6.Which type of tour operator is responsible for handling arrangements in the host
country for guests coming from abroad?
- A) Outbound Tour Operator
- B) Domestic Tour Operator
- C) Destination Management Company
- D) Inbound Tour Operator
Correct Answer:
D) Inbound Tour Operator
7.What is the main function of Destination Management Companies/Ground
Operators in the tourism industry?
- A) Selling tourist products directly to the public
- B) Organizing tour arrangements for incoming tourists on behalf of overseas
operators
- C) Purchasing goods or services in bulk for tour packages
- D) Assembling and combining tourist components into inclusive tours
Correct Answer:
b)Organizing tour arrangements for incoming tourists on behalf of overseas
operators
8.What influences the formality and complexity of the organizational structure of a
travel/tour company?
- A) Type of services offered
- B) Size and type of business handled
- C) Nature of customer-traveler corporation
- D) All of the above
Correct Answer:
D) All of the above
9.What is commonly used to depict the visible 'super structure' of departments and
relationships within a travel/tour company?
- A) Organization chart
- B) Role description
- C) Implicit structure
- D) Hierarchy chart
Correct Answer:
A) Organization chart