3. Objectives
• Define the role of the travel agency and
tour operators in the tourism industry.
• Identify the difference between travel
agencies and tour operators.
• Outline their major functions.
4. The Tourism Industry
Business
Sector
Non Profit Goods and Tourism
Sector Services Product
Government
Sector
5. Business Sector
• Lodging Facilities
• Transportation Services
• Food and Beverage Operations
• Retail Business
• Activities and Events
• Travel Trade
6. Travel and Tour Agency
An entity engaged in the business of extending
to individuals or groups:
• travel services and assistance to include
documentation, ticketing, booking for
transportation and/or accommodation;
arrangements
•handling and/or conduct of tours within our
outside the Philippines
whether or not for a fee, commission or any
form of monetary consideration (Tourism Code
of 1980).
7. Travel Agency
A commercial enterprise where a traveler
can secure information and expertise, get
impartial counseling and make
arrangements to travel by air, sea or land to
any point in the world.
10. Traditionally…
• Travel agency acts as an agent for
different suppliers that cater to the need of
the travelers.
• Travel agency reacts to the needs of the
traveler while acting as an agent for the
supplier.
• The agency earns income in the form of
rate-minus or net-plus.
11. A Scenario
Suppose a passenger comes to you and
would like to visit Paris.
The following airlines fly to Paris:
CX
KL
TG
You are not an agent of CX and TG. Which
airline will you then recommend to the
passenger?
12. Rate Minus and Net Plus
Suppose a passenger comes to you and
would like to visit Paris.
The cost of a MNL-PAR-MNL ticket via TG
is USD 1,000.00 per ticket.
Rate Minus
Ticket Price: USD 1,000.00
Commission: 7% of the ticket price
TA’s income: USD 70.00
Payable to TG USD930.00
13. Rate Minus and Net Plus
Suppose TG gave you a special rate of
USD900.00 per MNL-PAR-MNL ticket.
Net Plus
Ticket Net Price: USD 900.00
TA’s Mark Up: USD 100.00
TA’s income: USD 100.00
Payable to TG USD 900.00
14. With the introduction of
the internet, do you think
travel agents will lose
their jobs?
15. Travel Management Companies
• TMCs become vendors and principal
selling travel services and solutions.
• TMCs form a tripartite alliance where all
partners (suppliers and consumers) are
treated equally.
• TMCs become partner to both suppliers
and consumers.
• TMCs evaluates the consumer’s
preferences and the suppliers’ assets to
determine the best travel arrangements.
17. Suppose a passenger would
like to visit Singapore. He
checked the internet for the
airlines, hotels and activities
and other information.
He then call the TMC to
request for a proposal. The
TMC will now prepare a
proposal that will me the
requirement of the client.
19. Client will choose from
different proposals given. If
acceptable the client and
TMC will agree on
professional fee.
TMC manages the client’s
needs while capitalizing on
the available suppliers so as
to have a win-win situation for
all the 3 parties involved.
20. Functions of Travel Management
Companies
Provides information and expertise.
21. The travel consultant
must be knowledgeable
in order to provide the
The initial exchange of
information needed by
information is important
the client.
because it is during this time
the travel consultant can
accurately assess the needs
and requirements of the
client.
22. Functions of Travel Management
Companies
Recommends destinations, products
and services best fitted to the needs of
the client.
There are two airlines flying
to LA. One is a direct flight,
arriving evening, same day
and the other is with a
stopover in Narita arriving
afternoon of same day. Since
you would like to arrive early,
I would suggest that you take
the second option.
23. Functions of Travel Management
Companies
Provide assistance in securing travel
documents.
26. Reservation and Confirmation
A reservation is a A confirmation is a
request made to any written reply from the
supplier for a particular supplier that the
service (i.e. ticket, hotel reservation for a
room). All reservations particular service is
are subject to accepted and will be
availability. delivered to the client by
the supplier.
27. Functions of Travel Management
Companies
Assist in cases of refunds and
cancellations.
If claims are
legitimate.
28. Sources of Revenues of TMCs
• Negotiated handling
fee (cost plus)
• Fixed commission
(Rate minus) or Mark
Up (Net plus)
• Service fees for other
service/s
• Production incentives
and rebates.
29. Characteristics of TMCs
• Retailer
• Counselor to the end-user,
agent/intermediary for the suppliers
• Derives revenues from fixed commission
or professional fees
• Charges fees for ancillary services
34. Tour Operators are
usually called
Destination In the Philippines,
Management
most of the TMCs
Companies (DMCs).
expand their
services into tour
operations.
35. Functions of Tour Operators
Conceptualize, plan and develop tour
packages.
Tailor made
packages
(Ad hoc)
Based on specific client’s needs
36. Functions of Tour Operators
Conceptualize, plan and develop tour
packages.
Regular
Packages
Based on perceived
needs of market
37. Functions of Tour Operators
Negotiates with suppliers of travel
services.
Special
Rates
Suppliers
Special
conditions
38. Functions of Tour Operators
Assemble and integrate the various
travel components into a single tour
package.
Airline
Hotel Tour
Package
Activities &
other services
39. Functions of Tour Operators
Delivers the tour package.
• Overseeing the
operation of the tour.
40. Sources of Revenues of Tour
Operators
• Variable mark up
• Sales of optional tours,
excursions and extensions
• Shopping commissions
41. Characteristics of Tour Operators
• Wholesalers
• Intermediary and integrator
• Income is variable
• Generates additional
income from sales of
optional tours, excursions
and extensions.
