Travel agency
Encyclopedia
A travel agency is a retail
business
that sells travel
related products
and services to customer
s on behalf of suppliers
such as airline
s, car rental
s, cruise line
s, hotel
s, railways
, sightseeing tours
and package holiday
s 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 office
s in countries
other than where their headquarters
are located.
is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the 19th century. Thomas Cook
, in addition to developing the package tour
, established a chain of agencies in the last quarter of the 19th century, in association with the Midland Railway
. They not only sold their own tours to the public, but in addition, represented other tour companies. Other British pioneer travel agencies were Dean & Dawson, the Polytechnic Touring Association
and the Co-operative Wholesale Society
. The oldest travel agency in North America is Brownell Travel; on July 4, 1887, Walter T. Brownell led ten travelers on a European tour, setting sail from New York on the SS Devonia.
Travel agencies became more commonplace with the development of commercial aviation, starting in the 1920s. Originally, travel agencies largely catered to middle and upper class customers, but the post-war boom in mass-market package holidays resulted in travel agencies on the main streets of most British towns, catering to a working-class clientele, looking for a convenient way to book overseas beach holidays.
in hand. A package holiday or a ticket is not purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount. The profit
is therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission
. In Australia, all individuals or companies that sell tickets are required to be licensed as a travel agent.
In some countries, airlines have stopped giving commission to travel agencies. Therefore, travel agencies are now forced to charge a percentage premium or a standard flat fee
, per sale. However, some companies still give them a set percentage for selling their product. Major tour companies can afford to do this, because if they were to sell a thousand trips at a cheaper rate, they still come out better than if they sell a hundred trips at a higher rate. This process benefits both parties.
Other commercial operations are undertaken, especially by the larger chains. These can include the sale of in-house insurance
, travel guide books
and timetables
, car rental
s, and the services of an on-site Bureau de change
, dealing in the most popular holiday currencies.
The majority of travel agents have felt the need to protect themselves and their clients against the possibilities of commercial failure, either their own or a supplier's. They will advertise the fact that they are surety bond
ed, meaning in the case of a failure, the customers are guaranteed either an equivalent holiday to that which they have lost or if they prefer, a refund. Many British and American agencies and tour operators are bonded with the International Air Transport Association
(IATA), for those who issue air tickets, Air Travel Organisers' Licensing (ATOL)
for those who order tickets in, the Association of British Travel Agents (ABTA)
or the American Society of Travel Agents (ASTA)
, for those who sell package holidays on behalf of a tour company.
A travel agent is supposed to offer impartial travel advice to the customer. However, this function almost disappeared with the mass-market package holiday and some agency chains seemed to develop a 'holiday supermarket' concept, in which customers choose their holiday from brochures on racks and then book it from a counter. Again, a variety of social and economic changes have now contrived to bring this aspect to the fore once more, particularly with the advent of multiple, no-frills
, low-cost airlines
.
s, car rental
s, cruise line
s, hotel
s, railways
, sightseeing tours
, tour operator
s, etc., is expected in the form of a commission from their bookings. Most often, the commission consists of a set percentage of the sale.
In the United States, most airlines pay no commission at all to travel agencies. In this case, an agency usually adds a service fee to the net price. Reduced commissions have taken place since 1995, when first commission reductions hit North America: a cap of US$50 on return trips and US$25 on one way.
In 1999 European airlines begin eliminating or reducing commissions, while Singapore Airlines
goes to zero in parts of Asia
.
In 2002 Delta Airlines announces a zero commission base for USA and Canada; after few months United Airlines, American Airlines, Continental Airlines, Northwest Airlines
, US Airways
and American Trans Air join Delta Airlines in zero commission base.
, now a subsidiary of TUI AG
, the German multinational. It is now quite common for the large mass-market tour companies to purchase a controlling interest in a chain of travel agencies, in order to control the distribution of their product. (This is an example of vertical integration
.) The smaller chains are often based in particular regions or districts.
In the United States, there are four different types of agencies: mega, regional, consortium and independent agencies. American Express
and the American Automobile Association
(AAA) are examples of mega travel agencies.
Independent agencies usually cater to a special or niche market
, such as the needs of residents in an upmarket commuter town or suburb or a particular group interested in a similar activity, such as sporting events, like football, golf or tennis.
There are two approaches of travel agencies. One is the traditional, multi-destination, out-bound travel agency, based in the originating location of the traveler and the other is the destination focused, in-bound travel agency, that is based in the destination and delivers an expertise on that location. At present, the former is usually a larger operator like Thomas Cook
, while the latter is often a smaller, independent operator.
s and other types of travel consolidators and wholesalers are high volume sales companies that specialize in selling to niche market
s. They may or may not offer various types of services, at a single point of access. These can be hotel reservations, flights or car-rentals. Sometimes the services are combined into vacation packages, that include transfers to the location and lodging. These companies do not usually sell directly to the public, but act as wholesalers to retail travel agencies. Commonly, the sole purpose of consolidators is to sell to ethnic niches in the travel industry. Usually no consolidator offers everything; they may only have contracted rates to specific destinations. Today, there are no domestic consolidators, with some exceptions for business class contracts.
, many airlines and other travel companies began to sell directly to passengers. As a consequence, airlines no longer needed to pay the commissions to travel agents on each ticket sold. Since 1997, travel agencies have gradually been disintermediated
, by the reduction in costs caused by removing layers from the package holiday distribution network. However, travel agents remain dominant in some areas such as cruise vacations where they represent 77% of bookings and 73% of packaged travel. In 2009, the market size for travel agencies experienced a sharp decline, dropping from $17 billion the previous year to $14.5 billion.
In response, travel agencies have developed an internet presence of their own by creating travel website
s, with detailed information and online booking capabilities. Several major online travel agencies include: Expedia
, Voyages-sncf.com
, Travelocity
, Orbitz
, CheapTickets
, Priceline
, CheapOair
, and Hotwire.com
. Travel agencies also use the services of the major computer reservations system
s companies, also known as Global Distribution Systems (GDS), including: SABRE
, Amadeus CRS
, Galileo CRS
and Worldspan
, which is a subsidiary of Travelport
, allowing them to book and sell airline ticket
s, hotel
s, car rental
s and other travel related services. Some online travel websites allow visitors to compare hotel and flight rates with multiple companies for free. They often allow visitors to sort the travel packages by amenities, price, and proximity to a city or landmark.
Travel agents have applied 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 travel sites that sell hotels online work together with GDS, suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site 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 necessarily result in an instant answer. Only some 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. Some examples of such online travel websites that sell hotel rooms are Expedia
, Orbitz
and WorldHotel-Link
.
The comparison sites, such as Kayak.com
, TripAdvisor
and SideStep
search the resellers site all at once to save time searching. None of these sites actually sell hotel rooms.
Often tour operators have hotel contracts, allotments and free sell agreements which allow for the immediate confirmation of hotel rooms for vacation bookings.
Mainline service providers are those that actually produce the direct service, like various hotels chains or airlines that have a website for online bookings. Portals will serve a consolidator of various airlines and hotels on the internet. They work on a commission from these hotels and airlines. Often, they provide cheaper rates than the mainline service providers as these sites get bulk deals from the service providers. A meta search engine on the other hand, simply culls data from the internet on real time rates for various search queries and diverts traffic to the mainline service providers for an online booking. These websites usually do not have their own booking engine.
. In this regard, travel agents can remain competitive, if they become "travel consultants" with flawless knowledge of destination regions and specialize in topics like nautical tourism
or cultural tourism
.
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
that sells travel
Travel
Travel is the movement of people or objects between relatively distant geographical locations. 'Travel' can also include relatively short stays between successive movements.-Etymology:...
related products
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
and services to customer
Customer
A customer is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services...
s on behalf of suppliers
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
such as airline
Airline
An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...
s, car rental
Car rental
A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
s, cruise line
Cruise line
A cruise line is a company that operates cruise ships. Cruise lines have a dual character; they are partly in the transportation business, and partly in the leisure entertainment business, a duality that carries down into the ships themselves, which have both a crew headed by the ship's captain,...
s, hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
s, railways
Rail transport
Rail transport is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on...
, sightseeing tours
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
and package holiday
Package holiday
A package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country...
s that combine several products. In addition to dealing with ordinary tourists
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
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
General Sales Agent
A general sales agent is a sales representative for an airline in a specific country or region. Typically, the GSA is responsible for selling all products of the airline in its region which includes flight tickets and cargo space...
for foreign travel companies, allowing them to have office
Office
An office is generally a room or other area in which people work, but may also denote a position within an organization with specific duties attached to it ; the latter is in fact an earlier usage, office as place originally referring to the location of one's duty. When used as an adjective, the...
s in countries
Country
A country is a region legally identified as a distinct entity in political geography. A country may be an independent sovereign state or one that is occupied by another state, as a non-sovereign or formerly sovereign political division, or a geographic region associated with a previously...
other than where their headquarters
Headquarters
Headquarters denotes the location where most, if not all, of the important functions of an organization are coordinated. In the United States, the corporate headquarters represents the entity at the center or the top of a corporation taking full responsibility managing all business activities...
are located.
Origins
The British company Cox & KingsCox & Kings
Cox & Kings is the longest established travel company in the world, its history stretching back to 1758 when Richard Cox was appointed as regimental agent to the Foot Guards. Cox & Kings is now an independent tour company with offices in the United Kingdom, India, the United States and Japan...
is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the 19th century. Thomas Cook
Thomas Cook
Thomas Cook of Melbourne, Derbyshire, England founded the travel agency that is now Thomas Cook Group.- Early days :...
, in addition to developing the package tour
Package holiday
A package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country...
, established a chain of agencies in the last quarter of the 19th century, in association with the Midland Railway
Midland Railway
The Midland Railway was a railway company in the United Kingdom from 1844 to 1922, when it became part of the London, Midland and Scottish Railway....
. They not only sold their own tours to the public, but in addition, represented other tour companies. Other British pioneer travel agencies were Dean & Dawson, the Polytechnic Touring Association
Lunn Poly
Lunn Poly was the largest chain of travel agents in the United Kingdom. The company originated from two successful travel agencies which had been established in 1890s; The Polytechnic Touring Association and Sir Henry Lunn Travel. Both firms were acquired in the 1950s by the British Eagle airline...
and the Co-operative Wholesale Society
Co-operative wholesale society
A Co-operative Wholesale Society, or CWS, is a form of Co-operative Federation , in this case, the members are usually Consumers' Co-operatives...
. The oldest travel agency in North America is Brownell Travel; on July 4, 1887, Walter T. Brownell led ten travelers on a European tour, setting sail from New York on the SS Devonia.
Travel agencies became more commonplace with the development of commercial aviation, starting in the 1920s. Originally, travel agencies largely catered to middle and upper class customers, but the post-war boom in mass-market package holidays resulted in travel agencies on the main streets of most British towns, catering to a working-class clientele, looking for a convenient way to book overseas beach holidays.
Operations
As the name implies, a travel agency's main function is to act as an agent, that is to say, selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they do not keep a stockInventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
in hand. A package holiday or a ticket is not purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount. The profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
is therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission
Commission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
. In Australia, all individuals or companies that sell tickets are required to be licensed as a travel agent.
In some countries, airlines have stopped giving commission to travel agencies. Therefore, travel agencies are now forced to charge a percentage premium or a standard flat fee
Fee
A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup.Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account...
, per sale. However, some companies still give them a set percentage for selling their product. Major tour companies can afford to do this, because if they were to sell a thousand trips at a cheaper rate, they still come out better than if they sell a hundred trips at a higher rate. This process benefits both parties.
Other commercial operations are undertaken, especially by the larger chains. These can include the sale of in-house insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
, travel guide books
Guide book
A guide book is a book for tourists or travelers that provides details about a geographic location, tourist destination, or itinerary. It is the written equivalent of a tour guide...
and timetables
Public transport timetable
A public transport timetable is a representation of public transport information to assist a passenger with planning a trip using public transport. A timetable details when vehicle will arrive and depart specified locations and may be organised for by route or for a particular stop...
, car rental
Car rental
A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
s, and the services of an on-site Bureau de change
Bureau de Change
A bureau de change or currency exchange is a business whose customers exchange one currency for another. Although originally French, the term bureau de change is widely used throughout Europe, and European travellers can usually easily identify these facilities when in other European countries...
, dealing in the most popular holiday currencies.
The majority of travel agents have felt the need to protect themselves and their clients against the possibilities of commercial failure, either their own or a supplier's. They will advertise the fact that they are surety bond
Surety bond
A surety bond is a promise to pay one party a certain amount if a second party fails to meet some obligation, such as fulfilling the terms of a contract...
ed, meaning in the case of a failure, the customers are guaranteed either an equivalent holiday to that which they have lost or if they prefer, a refund. Many British and American agencies and tour operators are bonded with the International Air Transport Association
International Air Transport Association
The International Air Transport Association is an international industry trade group of airlines headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organization is also headquartered. The executive offices are at the Geneva Airport in SwitzerlandIATA's mission is to...
(IATA), for those who issue air tickets, Air Travel Organisers' Licensing (ATOL)
Air Travel Organisers' Licensing
Air Travel Organisers' Licensing is a United Kingdom Civil Aviation Authority scheme to protect people who have purchased package holidays and flights from a member tour operator....
for those who order tickets in, the Association of British Travel Agents (ABTA)
Association of British Travel Agents
-History:Previously known as Association of British Travel Agents, its name was changed on 1 July 2007 to ABTA, The Travel Association to reflect its wider representation of the travel industry.On 1 July 2008 it merged with the Federation of Tour Operators ....
or the American Society of Travel Agents (ASTA)
American Society of Travel Agents
The American Society of Travel Agents is a business improvement organization which represents and defends the business and regulatory public policy interests of travel intermediaries including travel agencies and tour providers The American Society of Travel Agents (ASTA) is a business...
, for those who sell package holidays on behalf of a tour company.
A travel agent is supposed to offer impartial travel advice to the customer. However, this function almost disappeared with the mass-market package holiday and some agency chains seemed to develop a 'holiday supermarket' concept, in which customers choose their holiday from brochures on racks and then book it from a counter. Again, a variety of social and economic changes have now contrived to bring this aspect to the fore once more, particularly with the advent of multiple, no-frills
No frills
No-frills or no frills is a term used to describe any service or product for which the non-essential features have been removed to keep the price low. The use of the term "frills" refers to a style of fabric decoration...
, low-cost airlines
Low-cost carrier
A low-cost carrier or low-cost airline is an airline that generally has lower fares and fewer comforts...
.
Commissions
Most travel agencies operate on a commission-basis, meaning that the compensation from the airlineAirline
An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...
s, car rental
Car rental
A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
s, cruise line
Cruise line
A cruise line is a company that operates cruise ships. Cruise lines have a dual character; they are partly in the transportation business, and partly in the leisure entertainment business, a duality that carries down into the ships themselves, which have both a crew headed by the ship's captain,...
s, hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
s, railways
Rail transport
Rail transport is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on...
, sightseeing tours
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
, tour operator
Tour operator
A tour operator typically combines tour and travel components to create a holiday. The most common example of a tour operator's product would be a flight on a charter airline plus a transfer from the airport to a hotel and the services of a local representative, all for one price. Niche tour...
s, etc., is expected in the form of a commission from their bookings. Most often, the commission consists of a set percentage of the sale.
In the United States, most airlines pay no commission at all to travel agencies. In this case, an agency usually adds a service fee to the net price. Reduced commissions have taken place since 1995, when first commission reductions hit North America: a cap of US$50 on return trips and US$25 on one way.
In 1999 European airlines begin eliminating or reducing commissions, while Singapore Airlines
Singapore Airlines
Singapore Airlines Limited is the flag carrier airline of Singapore. Singapore Airlines operates a hub at Changi Airport and has a strong presence in the Southeast Asia, East Asia, South Asia, and "Kangaroo Route" markets...
goes to zero in parts of Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
.
In 2002 Delta Airlines announces a zero commission base for USA and Canada; after few months United Airlines, American Airlines, Continental Airlines, Northwest Airlines
Northwest Airlines
Northwest Airlines, Inc. was a major United States airline founded in 1926 and absorbed into Delta Air Lines by a merger approved on October 29, 2008, making Delta the largest airline in the world...
, US Airways
US Airways
US Airways, Inc. is a major airline based in the U.S. city of Tempe, Arizona. The airline is an operating unit of US Airways Group and is the sixth largest airline by traffic and eighth largest by market value in the country....
and American Trans Air join Delta Airlines in zero commission base.
Types of agencies
There are three different types of agencies in the UK: multiples, miniples and independent agencies. The former comprises a number of national chains, often owned by international conglomerates, like Thomson HolidaysThomson Holidays
Thomson Holidays is a UK based travel operator and part of TUI Travel PLC. The company was founded as part of the Thomson Travel Group in 1965 following the acquisition of three package holiday travel agencies and the airline Britannia Airways by Roy Thomson...
, now a subsidiary of TUI AG
TUI AG
TUI AG is a German multinational travel and tourism company headquartered in Hanover. Until 2001 it was an industrial and transportation company named Preussag AG, which in the mid-1990s decided to reinvent itself as a tourism, shipping, and logistics company...
, the German multinational. It is now quite common for the large mass-market tour companies to purchase a controlling interest in a chain of travel agencies, in order to control the distribution of their product. (This is an example of vertical integration
Vertical integration
In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or service, and the products combine to...
.) The smaller chains are often based in particular regions or districts.
In the United States, there are four different types of agencies: mega, regional, consortium and independent agencies. American Express
American Express
American Express Company or AmEx, is an American multinational financial services corporation headquartered in Three World Financial Center, Manhattan, New York City, New York, United States. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial Average. The company is best...
and the American Automobile Association
American Automobile Association
AAA , formerly known as the American Automobile Association, is a federation of 51 independently operated motor clubs throughout North America. AAA is a not-for-profit member service organization with more than 51 million members. AAA provides services to its members such as travel, automotive,...
(AAA) are examples of mega travel agencies.
Independent agencies usually cater to a special or niche market
Niche market
A niche market is the subset of the market on which a specific product is focusing; therefore the market niche defines the specific product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact...
, such as the needs of residents in an upmarket commuter town or suburb or a particular group interested in a similar activity, such as sporting events, like football, golf or tennis.
There are two approaches of travel agencies. One is the traditional, multi-destination, out-bound travel agency, based in the originating location of the traveler and the other is the destination focused, in-bound travel agency, that is based in the destination and delivers an expertise on that location. At present, the former is usually a larger operator like Thomas Cook
Thomas Cook
Thomas Cook of Melbourne, Derbyshire, England founded the travel agency that is now Thomas Cook Group.- Early days :...
, while the latter is often a smaller, independent operator.
Consolidators
Airline consolidatorAirline consolidator
An airline consolidator is a specific kind of airline ticket reseller. Consolidators work through contracts with major carriers to manage blocks of airline seat inventory at reduced prices which they then sell. The main benefit being that fares through consolidators will be lower than published...
s and other types of travel consolidators and wholesalers are high volume sales companies that specialize in selling to niche market
Niche market
A niche market is the subset of the market on which a specific product is focusing; therefore the market niche defines the specific product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact...
s. They may or may not offer various types of services, at a single point of access. These can be hotel reservations, flights or car-rentals. Sometimes the services are combined into vacation packages, that include transfers to the location and lodging. These companies do not usually sell directly to the public, but act as wholesalers to retail travel agencies. Commonly, the sole purpose of consolidators is to sell to ethnic niches in the travel industry. Usually no consolidator offers everything; they may only have contracted rates to specific destinations. Today, there are no domestic consolidators, with some exceptions for business class contracts.
The Internet threat
With general public access to the InternetInternet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
, many airlines and other travel companies began to sell directly to passengers. As a consequence, airlines no longer needed to pay the commissions to travel agents on each ticket sold. Since 1997, travel agencies have gradually been disintermediated
Disintermediation
In economics, disintermediation is the removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate , companies may now deal with every customer directly, for example via the Internet...
, by the reduction in costs caused by removing layers from the package holiday distribution network. However, travel agents remain dominant in some areas such as cruise vacations where they represent 77% of bookings and 73% of packaged travel. In 2009, the market size for travel agencies experienced a sharp decline, dropping from $17 billion the previous year to $14.5 billion.
In response, travel agencies have developed an internet presence of their own by creating travel website
Travel website
A travel website is a website on the world wide web, that is dedicated to travel. The site may be focused on travel reviews, the booking of travel, or a combination of both. Approximately seventy million consumers researched travel plans online in July 2006...
s, with detailed information and online booking capabilities. Several major online travel agencies include: Expedia
Expedia
Expedia is an Internet-based travel website based in the US with localised sites for 21 countries...
, Voyages-sncf.com
Voyages-sncf.com
Voyages-sncf.com, founded in June 2000, is an Internet travel agency website, subsidiary of the French SNCF and Expedia. It is the first French Electronic commerce website in volume...
, Travelocity
Travelocity
Travelocity is an online travel agency and wholly owned subsidiary of Sabre Holdings Corporation, which was a publicly traded company until taken private by Silver Lake Partners and Texas Pacific Group in March 2007...
, Orbitz
Orbitz
Orbitz Worldwide, Inc. is an Internet travel company headquartered in the Citigroup Center in Near West Side, Chicago, Illinois. Through its primary web site Orbitz.com, Orbitz Worldwide enables travelers to research, plan and book a broad range of travel products, facilitating 1.5 million flight...
, CheapTickets
CheapTickets
CheapTickets is an online travel services company focusing on the leisure market, offering airline tickets, hotel and Vacation rentals, rental cars, customized vacation packages, and cruises...
, Priceline
Priceline
Priceline may refer to:*Priceline.com, a commercial website which helps users obtain discount rates for travel-related items such as airline tickets and hotel stays*Priceline , a chain of health and beauty retail stores in Australia...
, CheapOair
CheapOair
CheapOair is an online travel company established in September 2005. The company has created a branded budget travel site for US and Canadian travelers. This site offers airfares on all major and smaller airlines in North America, Central and South America, Europe, Asia, Pacific, Indian...
, and Hotwire.com
Hotwire.com
Hotwire is a discount travel website that offers low prices on airfare, hotel, rental cars, and vacation packages by selling off unsold travel inventory at discounted prices....
. Travel agencies also use the services of the major computer reservations system
Computer reservations system
A computer reservations system is a computerized system used to store and retrieve information and conduct transactions related to air travel. Originally designed and operated by airlines, CRSes were later extended for the use of travel agencies...
s companies, also known as Global Distribution Systems (GDS), including: SABRE
Sabre (computer system)
Sabre Global Distribution System , owned by Sabre Holdings, is used by more than 55,000 travel agencies around the world with more than 400 airlines, 88,000 hotels, 24 car rental brands, and 13 cruise lines...
, Amadeus CRS
Amadeus CRS
Amadeus is a computer reservations system owned by the Amadeus IT Group with headquarters in Madrid, Spain. The central database is located at Erding, Germany. The development center is located at Sophia Antipolis, France...
, Galileo CRS
Galileo CRS
Galileo is a computer reservations system owned by Travelport. As of 2002, it had a 26.4% of worldwide CRS airline bookings.In addition to airline reservations, the Galileo CRS is also used to book train travel, cruises, car rental, and hotel rooms...
and Worldspan
Worldspan
Worldspan is a provider of travel technology and content and a part of the Travelport GDS business. It offers worldwide electronic distribution of travel information, Internet products and connectivity, and e-commerce capabilities for travel agencies, travel service providers and corporations...
, which is a subsidiary of Travelport
Travelport
Travelport is a broad-based business services company and a leading provider of critical transaction processing solutions to companies operating in the global travel industry...
, allowing them to book and sell airline ticket
Airline ticket
An airline ticket is a document, issued by an airline or a travel agency, to confirm that an individual has purchased a seat on a flight on an aircraft. This document is then used to obtain a boarding pass, at the airport...
s, hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
s, car rental
Car rental
A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
s and other travel related services. Some online travel websites allow visitors to compare hotel and flight rates with multiple companies for free. They often allow visitors to sort the travel packages by amenities, price, and proximity to a city or landmark.
Travel agents have applied dynamic packaging
Dynamic packaging
Dynamic packaging is a method that is becoming increasingly used in package holiday bookings that enables consumers to build their own package of flights, accommodation, and a hire car instead of a pre-defined package...
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 travel sites that sell hotels online work together with GDS, suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site 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 necessarily result in an instant answer. Only some 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. Some examples of such online travel websites that sell hotel rooms are Expedia
Expedia
Expedia is an Internet-based travel website based in the US with localised sites for 21 countries...
, Orbitz
Orbitz
Orbitz Worldwide, Inc. is an Internet travel company headquartered in the Citigroup Center in Near West Side, Chicago, Illinois. Through its primary web site Orbitz.com, Orbitz Worldwide enables travelers to research, plan and book a broad range of travel products, facilitating 1.5 million flight...
and WorldHotel-Link
WorldHotel-Link
Worldhotel-link.com Limited is an online travel-services booking network. The company is incorporated in Hong Kong and has offices in Ho Chi Minh City, Prague, Cape Town, Belo Horizonte, Sydney and Seattle....
.
The comparison sites, such as Kayak.com
Kayak.com
KAYAK is a technology company providing online travel tools through its global family of websites and mobile applications. Started by cofounders of Expedia, Orbitz, and Travelocity, KAYAK allows users to compare information from hundreds of other travel websites in one display when booking travel...
, TripAdvisor
TripAdvisor
TripAdvisor.com is a travel website that assists customers in gathering travel information, posting reviews and opinions of travel-related content and engaging in interactive travel forums. It is part of the TripAdvisor Media Group, operated by Expedia, Inc. TripAdvisor is a pioneer of...
and SideStep
SideStep
- Description :SideStep is a metasearch engine for travel: it searches and consolidates results from more than 200 travel websites. The site searches more than 150,000 hotels and 600 airlines in the United States and worldwide...
search the resellers site all at once to save time searching. None of these sites actually sell hotel rooms.
Often tour operators have hotel contracts, allotments and free sell agreements which allow for the immediate confirmation of hotel rooms for vacation bookings.
Mainline service providers are those that actually produce the direct service, like various hotels chains or airlines that have a website for online bookings. Portals will serve a consolidator of various airlines and hotels on the internet. They work on a commission from these hotels and airlines. Often, they provide cheaper rates than the mainline service providers as these sites get bulk deals from the service providers. A meta search engine on the other hand, simply culls data from the internet on real time rates for various search queries and diverts traffic to the mainline service providers for an online booking. These websites usually do not have their own booking engine.
Careers
With the many people switching to self-service internet websites, the number of available jobs as travel agents is decreasing. Most jobs that become available are from older travel agents retiring. Counteracting the decrease in jobs due to internet services is the increase in the number of people travelling. Since 1995, many travel agents have exited the industry, and relatively few young people have entered the field due to less competitive salaries. However, others have abandoned the 'brick and mortar' agency for a home-based business to reduce overheads and those who remain have managed to survive by promoting other travel products such as cruise lines and train excursions or by promoting their ability to aggressively research and assemble complex travel packages on a moment's notice, essentially acting as a very advanced conciergeConcierge
A concierge is an employee who either works in shifts within, or lives on the premises of an apartment building or a hotel and serves guests with duties similar to those of a butler. The position can also be maintained by a security officer over the 'graveyard' shift. A similar position, known as...
. In this regard, travel agents can remain competitive, if they become "travel consultants" with flawless knowledge of destination regions and specialize in topics like nautical tourism
Nautical tourism
Nautical tourism is an increasingly popular way to combine love of sailing and boating with vacation and holiday activities. First defined as an industry segment in Europe and South America, it has since caught on in the United States and the Pacific Rim....
or cultural tourism
Cultural tourism
Cultural tourism is the subset of tourism concerned with a country or region's culture, specifically the lifestyle of the people in those geographical areas, the history of those peoples, their art, architecture, religion, and other elements that helped shape their way of life...
.