Starting a Travel Agency Business

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Questions and Answers

What is a crucial factor to consider when starting a travel agency or tour operator business?

Hiring a large staff immediately

Setting up an office in a rural area

Using only offline marketing techniques

Selecting an appropriate location (correct)

Which office system is NOT mentioned as necessary for setting up a travel agency or tour operator?

Office communication equipment

Basic office furniture

Financial software (correct)

Global Distribution System

What is one requirement for IATA accreditation?

Submitting a travel plan

Obtaining a local travel tourist license

Understanding the Application Guide (correct)

Establishing online booking functionality

What document is required for DOT accreditation for a travel agency or tour operator?

Mayor's permit or municipal license Signup and view all the answers

Starting capital for a travel agency is categorized under which aspect of business setup?

Infrastructure and financial requirements Signup and view all the answers

Why is it important for a travel agency to be located near businesses and industry centers?

To facilitate easier client access Signup and view all the answers

What type of office communication equipment is essential for a travel agency?

Telephones, fax machines, and computers Signup and view all the answers

What must a foreign national acquire to work in a travel agency or tour operator?

A valid visa and employment permit Signup and view all the answers

What benefit does accreditation by the DOT provide for establishments?

Endorsement to embassies for service utilization Signup and view all the answers

What is the primary function of the Department of Trade and Industry (DTI) regarding businesses?

Registering single proprietorship businesses Signup and view all the answers

What is mandatory for employers under the Labor Code regarding the Home Development Mutual Fund?

Ensure employees are members and contributors of the fund Signup and view all the answers

Which agency must travel agencies register with to avoid labor issues if they have five or more employees?

Department of Labor and Employment (DOLE) Signup and view all the answers

Which agency is responsible for issuing Tax Identification Numbers (TIN) to businesses?

Bureau of Internal Revenue (BIR) Signup and view all the answers

Which entity issues a valid mayor’s permit for travel agencies and tour operators?

Local Government Unit (LGU) Signup and view all the answers

What benefit does PhilHealth provide to employees of travel agencies and tour operators?

Reduction of expenses during confinement Signup and view all the answers

What type of businesses require registration with the Securities and Exchange Commission (SEC)?

Partnerships and corporations Signup and view all the answers

What challenge do travel agencies face due to increased options for consumers?

Increased competition from DIY tour arrangements Signup and view all the answers

Which agency oversees employment permits for foreign nationals seeking work in the Philippines?

Department of Labor and Employment (DOLE) Signup and view all the answers

What is a primary function of the Social Security System (SSS) for businesses?

Providing SSS certificates to businesses Signup and view all the answers

What is one of the implications of greater price transparency for travel agencies?

Travelers can compare and find more cost-effective deals Signup and view all the answers

What must a travel agency or tour operator obtain from principal suppliers?

Acknowledgment of distribution of products Signup and view all the answers

What are the reasons that the SSS protects its members from financial burdens?

Covers maternity, old age, and death Signup and view all the answers

How has traveler independence impacted the role of travel agents and tour operators?

It has reduced the necessity for travel planning services Signup and view all the answers

What type of products must travel agencies ensure are real and not misleading through supplier acknowledgment?

All travel-related products Signup and view all the answers

What impact does brand loyalty have on consumer behavior?

Brand loyalty increases the chance of consumers switching to competitors for better offers. Signup and view all the answers

How do mergers and alliances affect travel agencies?

They provide better options for potential clients, reducing individual agency growth. Signup and view all the answers

What challenge do smaller companies face in the travel industry?

Lack of funds for publicity limits their visibility in the market. Signup and view all the answers

What effect has technology had on the role of travel agents?

Technology has made it easier for consumers to obtain information online. Signup and view all the answers

Which of the following statements best describes the current state of consumer trust in brands?

There is a significant decrease in the trust consumers place in brands. Signup and view all the answers

What is a direct consequence of consumers being able to browse information online?

It is increasingly rare for consumers to rely on travel agents solely. Signup and view all the answers

Why do larger companies thrive in the travel industry?

They often have enough funds for effective publicity. Signup and view all the answers

What might be the effect of decreasing consumer loyalty on the travel industry?

It creates an environment where agencies must continuously innovate. Signup and view all the answers

Study Notes

Starting a Travel Agency or Tour Operator

Infrastructure and Financial Requirements:
- Office space
- Office systems like Amadeus, Galileo, and Sabre
- Office furniture and furnishing
- Communications equipment including telephone, fax machine, and computers
- Starting capital

Location

Travel agencies and tour operators often have offices in large cities with branches in smaller towns.
Location should be considered, aiming for a market place or near businesses, industry centers, institutions, offices or a residential area.

Accreditation and Registration

International Air Transport Association (IATA):
- Not required for operation, but accreditation offers benefits.
- Requirements include meeting local criteria outlined in the Travel Agent Handbook, selecting the country of application, submitting the application based on the Application Guide, and paying the accreditation fee.
Department of Tourism (DOT):
- Accreditation requires:
  - Valid mayor’s permit or municipal license
  - DTI Business Name Registration Certificate (for sole proprietorships)
  - SEC Registration Certificate (for partnerships or corporations)
  - Valid visa from the Bureau of Immigration (BI) and employment permit (for foreign nationals)
- Benefits include endorsements to embassies and travel trade associations, eligibility for travel fairs, priority to DOT training programs, and free online/print advertising.
Department of Trade and Industry (DTI):
- Registers sole proprietorships.
- Issues a 5-year certificate of registration.
Department of Labor and Employment (DOLE):
- Required for travel agencies employing 5 or more employees to avoid labor cases.
- A resource for foreign nationals to obtain an employment permit.
Bureau of Internal Revenue (BIR):
- All businesses need to obtain a Tax Identification Number (TIN).
Bureau of Immigration (BI):
- Businesses owned by foreign nationals need to secure a valid visa.
Social Security System (SSS):
- Businesses should register and have their employees become members.
- Provides protection against loss of income or financial burden due to sickness, disability, maternity, old age, death, or other contingencies.
Securities and Exchange Commission (SEC):
- Certification and registration of partnership businesses (owned by at least two individuals) and corporations (owned by at least five people).
- Issues an SEC certificate to these businesses.
Local Government Unit (LGU):
- TAs and TOs must obtain a valid mayor’s permit or municipal license
Home Development Mutual Fund (HDMF):
- Employers are required to have employees as members.
- Known as the PAGIBIG Housing Development Program, it provides housing and loan benefits.
Philippine Health Insurance Corporation (PhilHealth):
- Employers are required to have employees as members.
- Provides employees and dependents with reduced health expenses during confinement or when availing selected health services.

Acknowledgment from Principal Suppliers

Requires an acknowledgment of product distribution from airlines, hotels, cruise lines, and car transports.
This assures consumers of the legitimacy and authenticity of travel products.

Challenges of Travel and Tour Operations

Increased options and price transparency: Travelers can research and book their own tours directly.
Greater traveler independence: DIY options mean less need for travel agents and tour operators.
Decreasing customer loyalty: Consumers are more willing to switch brands for better offers.
Mergers and alliances: Agencies and tour operators are joining forces, reducing independent business opportunities.
Market domination: Larger companies have advantages in funding and publicity, making it difficult for smaller companies to compete.
Accessibility of information: The internet has made it easy for travelers to find information and book trips without relying on travel professionals.

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Description

This quiz covers essential aspects of starting a travel agency or tour operator, including infrastructure and financial requirements, location selection, and accreditation processes. Understand the key components needed to establish a successful travel business and the regulations involved in the industry.