Travel and Tourism - Unit 9 (Assignment 1)

P1

The Roles of a Retail Travel Agency 

The main role of a retail travel agent is to supply their customers with travel products and services. They do this on the behalf of the suppliers that work closely with the agency. There are eight different types of retail travel agents which are: 

1. Independents 

2. Multiples  

3. Homeworkers 

4. E-agents 

5. Call Centres 

6. Miniples 

7. Holiday Hypermarkets 

8. Consortia 

Independents – independent travel agencies are businesses that are not part of a chain, they are single businesses that are often managed by their owner and a small team of staff members that works closely with the destinations which they offer. These are often more personal in their services and are able to give their customers insider information on destinations as they have most likely been there themselves. Independent agencies are not part of a chain or company meaning they are free to browse for the best deals from a variety of different suppliers rather than having to stick to one specific agency/supplier. Examples of independent travel agencies: Abbots Travel & Classic Travel. 

Multiple – Multiple agencies are part of a national chain of retail outlets, under a single name brand which are often the most familiar or well-known companies in the UK within travel and tourism. they often rely on having a lot of customers and advertise on a lot of public platforms such as TV, newspapers and the internet. Due to their larger size and impact these agencies are able to negotiate the best deals on travel operations and often receive the best commission from suppliers. Multiple agencies have increased visibility giving them better opportunities for passing customers as they will be drawn to the successful and well-known brand image and high street store.  Examples of multiple travel agencies: Thomas Cook & TUI 

Homeworkers – Homeworkers are agents that specialise in employing people to tell their products and services from home. They can do this due to new developments in technology meaning that travel agents don’t have to work for a branch and are able to work from home. They are able to sell leisure and business travel as it is easy to do from home, this kind of work also offers flexibility to the companies staff members and they then have the benefit of lower costs to travel agencies. One of the biggest homeworkers in the UK is Future Travel which is a part of the United Co-op Travel Group, a company which also benefits from their high street branded stores.  Examples of homeworker agencies: New Frontiers & Hays Travel 

E-Agents – E-agents are companies that specialise specifically in selling holidays and other travel products over the internet. The increased use of the internet has led to a growth in the number of E-agents in the travel industry, these agents offer both business and leisure services to travellers. E-agents have no branches and are based soley online, working with IT systems and technology equipment.  Examples of E-agent agencies: Lastminute.com & Expedia 

Call Centers – Both miniple and multiple agencies have call centers. This means that their customers are able to book their holidays in the high street stores as well as over the phone via the call centers.  

Miniples – Miniple travel agents have just one or two branches and are usually in a certain location of the country they are based in. Examples of miniple agencies: Co-op and Dawson & Harridge Business  

Holiday Hypermarkets – Holiday hypermarket agencies are travel agencies that operate in large premises and offer the whole range of products and services available within travel.  Examples of holiday hypermarket agencies: Thomas Cook 

Consortia – A consortia travel is a group of independent travel agencies that work together to form one larger company that operates under one name.  Examples of consortia travel agencies: World Choice 

Products and Services  

Travel agencies offer a wide range of products and services. These services fall under eight separate categories, which are: 

1. Information on holidays, travel services and products offered 

2. Booking traditional package holidays 

3. Ancillary services 

4. Booking tailor-made holidays/dynamic package holidays 

5. Booking flights 

6. Scheduled Flights 

7. Chartered Flights 

8. Booking accommodation 

Information on holidays, travel services and products offered – Travel agents offer this as a free service to all of their customers that come into their branches or enquire online/over the phone. If a customer is unsure or needs help when thinking about booking or planning their holiday, then help is readily available from agents with a lot of knowledge in the area.  

Booking traditional package holidays – Travel agents offer traditional package holidays as a product. A package holiday means that the fights, accommodation and transfers are all included in the price, the holiday is often chosen from a brochure or advertisement online for a specific date, from a certain airport to a chosen destination in a set hotel. All of the details that the customer needs are available when choosing the package holiday and choices are often made based on this information, the travel agent then books the holiday for the customer. Three well-known travel agencies that offer traditional package holidays are Thomas Cook, Thomson & Co-Op Travel. 

Ancillary services – Travel agents offer ancillary services as extras on a customer's holiday. These services include: Travel insurance, airport parking, rental cars, extra baggage and currency exchange. Travel agents sell these extra services in order to make their customers' holiday more enjoyable and relaxing as they don’t have to worry about things such as being over on their luggage allowance or their travel insurance, as well as this the agent will receive commission from companies for booking these services. A lot of travel agencies have currency exchange locations within their stores to make it easier for their customers when changing their money to go on holiday. 

Booking tailor-made holidays/dynamic package holidays – A tailor made holiday is a type of package holiday, however a tailor-made holiday is booked through various companies rather than just one, like a package holiday. When booking a tailor-made holiday the agent may book flights, transfers and accommodation through different companies and providers, this means that the customer will get the best price available by comparing prices. A dynamic package holiday is when the customer independently books all three components (flights, transfers, accommodation), without the help of a travel agent. This type of holiday has a negative effect on travel agents as they are losing business and commission as potential customers are able to book their own holidays via the internet. Kuoni is a travel agency that offers their customers with a tailor-made holiday that allows their customers to have their holiday on a personal level and tailored specifically to them.  

Booking flights Scheduled flights – Scheduled flights are flights that are on a specific, set timetable and are often released at least 18 months before the flight takes place, even if the flight is only half full it will still take off on the set date and time. Scheduled flights are less likely to be delayed, unless it is due to an unforeseeable occurrence. Travel agents are able to book scheduled flights for their customers on different systems and websites. The agent is able to change bookings if the customer needs to leave either earlier or later than they originally planned. Virgin Atlantic, American Airlines and British Airways are all airlines which offer scheduled flights. 

Chartered flights – Chartered flights vary by seasons, for example, there will be more flights in summer as it is a busy holiday season. In the summer there may be as many as three flights a day to a certain destination whereas in winter there may only be one flight to the same place. Charter flights are more likely to be delayed, change times or possibly not even take off if the flight isn't full. Travel agents can book charter flights for their customers in the same way that they book scheduled flights (via the internet and travel systems). EasyJet, Ryanair and Monarch are some popular airlines that offer charter flights.  

Booking accommodation – Travel agents book accommodation for their customers that come into the agency. The main board bases that travel agents are able to book for their customers include self-catering, half-board and all inclusive.  Self-catering accommodation is when the customers have to provide their own meals either by going out to eat or cooking for themselves if the facilities are available in the accommodation. The accommodation in which this is available are often apartments or villas that have a kitchen or a kitchenette.  Half-board accommodation is when the customers have one main meal provided for them at the hotel but their other meals have to be provided by themselves. The meal at the hotel can be either breakfast, lunch or dinner but only one is available.  All-inclusive accommodation allows customers to eat all of their meals in the hotel in which they are staying as well as have all of their drinks and snacks for free in the hotel. This is a popular choice for holidaymakers as it is the most stress-free way to enjoy their holiday as they don’t have to worry about the cost of a meal in a restaurant or buying food in to make as everything is provided by the hotel.  

Links 

Travel agents have links with companies to be successful and gain competitive advantage over competing travel agencies within their area. The agents benefit from having links with businesses such as: 

• Accommodation providers 

• Tour operators 
• Transport providers 
• Ancillary services 

Accommodation providers – Travel agents have important links with accommodation providers to give their customers the best deals on hotels and other accommodation. Whether the link is with hotels, self-catering accommodation or holiday centers. The link between the accommodation and the travel agent is important as they are more likely to have a better chance of getting higher quality rooms for their customers. The accommodation will offer the travel agents an incentive, for example: if the agent sells 100 rooms in a specific accommodation they will get an extra bonus as commission.  

Tour operators – Travel agents must have links with tour operators as these tour operators offer mass market tourism with companies such as Thomson, but also specialist, domestic and inbound tourism. By working with these operators allow agents to receive a higher commission rate from the holidays they sell which will make them more money to invest and develop their agency. The basic commission rate currently stands at 10%, however as the relationship between the tour operator and travel agent grows this can increase.  

Transport providers - Travel agents have to have good links with transport providers so that they can offer their customers the best deals when hiring cars or providing transfers. The biggest companies that travel agents work with are Avis and Hertz, by having a link with these two companies it allows the agent to sell their services to their customers at a discounted rate. When travel agents have links with coach companies they are able to book group bookings for their customers which will be cheaper to book through the agent than independently. Agents are also able to offer free transfers through links with coach companies with their package holidays.  

Ancillary services – Travel agents have links with a lot of companies that provide and sell ancillary services to offer to their customers at a discounted price. The companies that travel agents work closely with are to make deals and offer services such as: travel insurance, foreign exchange, extra luggage allowance, entertainment tickets and car hire. If the travel agent has a strong link with the ancillary service provider, they will receive better deals for their customers plus extra bonuses and commission for the agents. 

Relationships 

Integrated – Integration happens when organisations own or controls a large amount of different linked businesses Vertical integration happens in retail travel when a company controls multiple levels of the distribution chain for their products and services. This is in order to gain competitive advantage over other competing organisations. For example, both of the 'Big Two' multiple travel agency companies are a part of a larger travel group. Thomas Cook retail travel agencies are part on the Thomas Cook PLC and Thomson Holiday stores are owned and operated by TUI.  Horizontal integration is when a company owns and/or controls other businesses within the same level of the distribution chain. 

Agency agreements – These agency agreements are conducted by travel agents on behalf of principals and are controlled by an individual agency agreement. There will be an individual agreement on each product that the agent sells as they might be selling a variety of different products for the same operator. 

Preferred agents – Travel agents often have a preferred agent which they work with to try and sell their products and services to their customers through. These preferred agencies will work closely together to provide the best services and deals for customers. Agencies will often put advertisements for their preferred agencies in their retail stores to help sell holidays from their company, this will get more business for the agency as well as a higher commission rates for the agent.  

Commission levels – Travel agents receive commission on the products and services they sell. Agents receive 10% commission on package holidays, up to 9% on flights and ferry bookings, between 25 and 40% on travel insurance, 1% on travellers cheques and between 9 and 15% on cruises. These figures depend on the individual agreement between the agent and the provider.  

M1

M1 – The importance of links between travel agents and providers 

Accommodation Providers: Travel agents have important links with accommodation providers such as hotels, holiday centres and self-catered accommodation. The stronger and more established the link between the agent and provider is, the more likely they are to sell large quantities of rooms to that accommodation whilst receiving a large commission; for example, if an agent sells 100 rooms in a specific hotel they may get £100 commission from the accommodation provider for making the sale. A travel agent's link with an accommodation provider grows over time and is often based on the quality of business served. The link is important as the stronger it becomes the more likely the accommodation provider is to sell large numbers of rooms to their preferred agents due to their positive business links and their rooms being sold faster by this agency than others, giving the agent a competitive advantage over other agencies. If the link is poor, then both the retail agent and the accommodation provider will suffer as they will lose out on money and competitive advantage amongst other agencies and providers in the same area.  

Tour Operators: Travel agents gain links with tour operators in many different areas such as mass-market tourism, domestic tourism, inbound tourism and specialist tourism. The more established the link between the agent and the tour operator is the higher the agent's commission rate will be. The current commission rate from companies such as Thomson is 10% when package holidays are sold, however if an agency has a specifically strong link with Thomson, this rate could change to benefit the agent and solidify the link. When there is a solid link between tour operators and agents, the agents are more likely to receive better deals and offers on new products and services before other agencies, giving the linked agency a competitive advantage. Tour operators also offer incentives such as extra money or free holidays to their preferred agents which inspires them to work harder to sell their package holidays to customers. If there is a weak link between a tour operator and a travel agency it is often the agency that will suffer for it, the tour operator can choose to pull out and stop allowing the agency to sell their products and services, giving other agencies competitive advantage over the specific agency.  

Transport Providers: Travel agents have links with transport providers as they can then offer their customers the top deals on services such as car hire and hotel/airport transfers. When working with transport providers, travel agents often choose to work with companies such as Hertz or Avis as having links with these two main transportation companies allows travel agents to offer their services to their customers at a discounted rate. It is important for travel agents to have this link with transport providers because if they are dealing with a large or group booking, a link with coach companies can be important for booking group transfers which are often included in package holidays. When there is a strong link between agencies and transport providers then the customers of the retail agent will benefit as they will receive services at a discounted price in comparison to other agencies who may not have such a strong link. On the other hand, if the link is weak then the agency might not be able to offer the deals which competing agencies, with strong links, can. Another downside to having a weak link with transport providers is that agencies may not be able to offer their customers a high-quality service when it comes to transfers as they have had to find a cheaper option. 

Ancillary Providers: The links between travel agents and ancillary providers has to be strong to that agencies can offer their customers products and services such as: extra luggage, travel insurance, foreign exchange, excursions and car hire. If the travel agent and the provider of ancillary services have a strong link then they might be able to offer better deals to their customers as well as receive bonus incentives for the agents themselves. For example, if an ancillary provider is offering travel insurance through a specific agency then those agents may be able to offer the insurance at a discounted rate for their customers once they have booked their holiday. If the travel agent then continues to sell from the same insurance company they might receive a bonus from the ancillary provider for their service. It is important for travel agents to have this link so that they are able to offer their customers the best deals on ancillary services, working closely with one provider will gain the agency more incentive and commission which will encourage the agents to sell more products with that certain provider. If the link is weak they might have to offer their customers a lower quality or more expensive service if the ancillary provider decided to pull out and the previous deals are revoked. This will lead to a loss of competitive advantage.  

Vertical Integration: Vertical integration happens in retail travel when a company controls multiple levels of the distribution chain for their products and services. This is in order to gain competitive advantage over other competing organisations. For example, both of the 'Big Two' multiple travel agency companies are a part of a larger travel group. Thomas Cook retail travel agencies are part on the Thomas Cook PLC and Thomson Holiday stores are owned and operated by TUI. 

Horizontal Integration: Horizontal integration is when a company controls or owns other businesses that are of the same level in the distribution chain. The benefit of the relationship in this type of integration is to avoid them having competitive advantage with other organisations therefore if a company is horizontally integrated the competition can be brought out if said competition is on the same level within the distribution chain. 

Agency agreements: These agency agreements are conducted by travel agents on behalf of principals and are controlled by an individual agency agreement. There will be an individual agreement on each product that the agent sells as they might be selling a variety of different products for the same operator. The importance of agency agreements is to ensure that retail agents are correctly selling products and services offered by their providers, it is important that this is done in a professional way. It is also important as it is evidence that the products that the agency is selling has been approved. 

Preferred Agents: Travel agents often have a preferred agent which they work with to try and sell their products and services to their customers through. These preferred agencies will work closely together to provide the best services and deals for customers. Agencies will often put advertisements for their preferred agencies in their retail stores to help sell holidays from their company, this will get more business for the agency as well as a higher commission rates for the agent. Peferred agents are important as it means that there will be more reliable business for the providers as well as repeat customers for the agency as they are able to save their customers money.  

Commission levels: Travel agents receive commission on the products and services they sell. Agents receive 10% commission on package holidays, up to 9% on flights and ferry bookings, between 25 and 40% on travel insurance, 1% on travellers cheques and between 9 and 15% on cruises. These figures depend on the individual agreement between the agent and the provider. Commission levels are important because a sudden decline in sales will negatively affect the travel agents commission rates and therefore have an effect on their wages. It has come into practice that agents will now earn a basic, minimum salary which they can build up with their commissions.