| Operations
As the name implies, their 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 stock 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. Thus, the agent's profit
is the difference between the supplier's price and the price at
which the product is advertised or sold to the customer. This profit
is called the agency commission, and varies a great deal. In Britain,
12% would be considered a good commission.
Other commercial operations are undertaken, especially by the larger
chains. These can include the sale of in-house insurance, travel
guides and timetables, car rental, 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. They will advertise the fact that
they are bonded (posting a financial bond with an organisation).
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 agencies (and tour companies too) are bonded
with IATA for those who issue their own tickets, ATOL for those
who order tickets in, or ABTA for those who sell package holidays
on behalf of a tour company.
Of course, a travel agent is supposed to offer impartial travel
advice to the customer. This function almost disappeared with the
mass-market package holiday, and some agency chains seemed to develop
a 'holiday supermarket' concept, in which customers chose their
holiday from brochures on racks and then booked it from a counter.
However, a variety of social and economic changes have now contrived
to bring this aspect to the fore once more, particularly the advent
of multiple no-frills airlines.
Types of Agency
There are three different types of agencies: these are Multiples,
Miniples and Independent Agencies. The former comprise a number
of national chains, often owned by international conglomerates (Thomson
Holidays is now a subsidiary of TUI, 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.
Independent Agencies usually cater for a special or niche market.
Some cater to the needs of residents in an upmarket commuter town
or suburb, or concentrate upon a particular area or group (catering
to the travel needs of Polish expatriates, perhaps), or an activity
such as sports(servicing the needs of football supporters).
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