Travel Management Companies PDF

THSH2103 TRAVEL MANAGEMENT COMPANIES The Department of Tourism (2015) defines a travel agency as any person or entity engaged in the business of providing travel-related services such as transportation or accommodation reservations/bookings, documentation of t...

THSH2103 TRAVEL MANAGEMENT COMPANIES The Department of Tourism (2015) defines a travel agency as any person or entity engaged in the business of providing travel-related services such as transportation or accommodation reservations/bookings, documentation of travel papers, sale and/or issuance of tickets, and selling of outbound tours for a fee, commission, or any form of remuneration. A travel management company (TMC) is a travel agent that manages the travel programs of an organization. It is also known as a business travel agency or corporate travel provider. A TMC provides ongoing services intending to offer cost savings, keeps control of a travel policy, and allows the client to spend less time on time- consuming travel arrangements. Kinds of TMC Travel management companies are classified into two (2) kinds based on how they conduct the business of travel, as follows (Claravall, 2013): The Traditional Way o In the Philippines, most TMCs are still practicing the traditional way. o In the traditional way of conducting business, a TMC acts as a middleman between the vendor (travel suppliers such as airlines, hotels, and tourist attraction operators) and the vendee (clients/tourists). The middleman responds to the needs of the vendee while acting as an agent of the vendor. o Figure 1 shows the traditional linkage between the vendor and vendee where the TMC/travel agency is the middleman. Vendor Middleman Vendee Figure 1. The Traditional Linkage Source: Travel and Tour Operations in the Philippines (3rd Ed.), 2013. p. 41 Computerized reservations systems and global distribution systems have emerged, allowing the reservation of airline seats, hotel rooms, rental cars, and other travel-related products and services all in one. In addition, the Internet as a source of travel information, e-rates, online bookings, and confirmations directly from the vendors have further expanded the volume of data and choices available to travelers today. These advances in information and communications technology have eradicated the traditional way of doing business (Claravall, 2013). The New Way o In the new way, a TMC harnesses available technology, expands the travel industry linkages with the organization's expertise and professional service orientation, and evolves into a principal and vendor of travel solutions (Claravall, 2013). o The TMC forms an alliance wherein all parties are treated as partners, equally sharing data and information and mutually benefitting from open communication and information exchange. o The TMC acts as a partner to both the vendor and the vendee. It does not act as an agent of the vendor or procure for the vendee, as shown in Figure 2. 02 Handout 1 *Property of STI  [email protected] Page 1 of 7  THSH2103 Vendee Travel Management Vendor Companies Figure 2. The New Linkage Source: Travel and Tour Operations in the Philippines (3rd Ed.), 2013. p.41 In the new way, TMCs need to discard the role of brokers and evolve to the role of principals whose main service is travel information, advice, and facilitation of travel. Hence, travel agents are now called travel counselors, travel consultants, travel advisors, or travel planners. Functions of a TMC Most consumers do not believe in a cruise, resort hotel, or airline advertisement. In which case, they would see a travel agent known to be knowledgeable and experienced in recommending the best travel products to its client/s. There are five (5) main functions of a TMC (Claravall, 2013): Provide information and expertise – Travelers today prefer to surf online and acquire travel information consuming most of their time due to numerous resources available. For the TMC, the amount of travel information available on the Internet can enhance its capability to provide service. They can use such information to update their existing data with the changes and give accurate assessments to the needs and requirements of their client/s. Recommend destinations, products, and services best suited to the clients' needs – This function of the TMC is not available from various travel websites on the Internet. It presents the best example of the personalized aspect of travel management. The recommendations of a TMC are best suited and solely based on the travelers' needs. The Internet will never substitute the personalized recommendations provided by humans. Process travel arrangements – This starts once the traveler decided and accepted the recommendations of a TMC. The process includes placing reservations, obtaining confirmations, and issuing corresponding e-tickets and/or tour vouchers on behalf of the suppliers. Assist in securing travel documents – Although processing travel documents such as passports, visas, and immigration clearances can be made online, the advice provided by the TMC staff can never be replaced. The key operative word here is to assist since respective government agencies and foreign embassies process these documents. One integral component of this function is to monitor the travel documentation process and its outcome. Assist in case of refunds and cancellations – In the event where the travel arrangements made for the client's trip were not availed of in full or in part due to circumstances beyond anybody's control, a travel management company assists in processing the corresponding refund and/or cancellation. 02 Handout 1 *Property of STI  [email protected] Page 2 of 7  THSH2103 Characteristics of a TMC A travel management company is different from a regular sales agent based on the following main characteristics (Claravall, 2013): It serves as a retailer. A retailer transacts business and sells directly to the end-user, and TMCs are considered retailers since their clients are the end-users. TMCs are the retail part of the tourism distribution chain. It acts as a counselor. It acts as a counselor to the end-user and as an agent and/or intermediary for the suppliers. TMCs recommend the best destinations based on the client's preferences and interests. It derives revenues from commissions/professional fees. Its revenues are from a predetermined fixed commission dictated by the suppliers of travel services or from a professional fee negotiated with the client. Most travel agents do not have a monthly salary but are paid based on their commission. It charges for ancillary services. It usually has additional fees for ancillary services such as purchasing travel insurance, foreign exchange, airport parking, equipment hire, and luggage transportation. Organizational Structure The organizational structure of a TMC usually depends on its size (number of employees). For small to medium- scale TMCs, their organizational structure is simple. In large-scale TMCs, their organizational structure is more complex. The General Manager typically undertakes the supervision of the legal aspects, insurance needs, and purchase and maintenance of the organization for a small-scale TMC. S/He is also in charge of the formulation of the company policy, standard operating procedures, and electronic data and information processing systems. The following are the departments of a typical TMC (Claravall, 2013). Refer to Figure 3 for the organizational structure. Administration - This Department is common to all commercial enterprises and business entities and must conduct day-to-day business activities. Its activities involve the effective management of a company in terms of record-keeping, monitoring finances, the well-being of the staff, and the up-keep of the office premises and equipment. o Bookkeeper. The following are the responsibilities of a bookkeeper:  Check and process all bills for payment from suppliers based on the contracts;  Prepare and file cash vouchers while ensuring that all payments made are duly received with an official receipt;  Prepare and control a record of all advance and deposit payments to suppliers; and  Prepare monthly reports of accounts receivable. o Cashier. The following are the responsibilities of a cashier:  Receive all payments and issue official receipts;  Ensure that all collections are duly deposited to the bank;  Process duly approved and documented petty cash disbursements and cash advances with proper liquidation;  Prepare and release payments with proper documentation; and  Prepare financial reports. 02 Handout 1 *Property of STI  [email protected] Page 3 of 7  THSH2103 o Utility Personnel. S/He is responsible for the day-to-day operations of the organization that includes security, sanitation, and maintenance. Operations – It is the core of a TMC business. This Department handles the overall operations of the TMC related to delivering the travel product, which includes positions such as travel counselor, reservations officer, ticketing officer, and liaison officer. o Travel Counselor. The following are the responsibilities of a travel counselor:  Provide all necessary information and recommends products/services that will best suit the preference of his/her client;  Relay to clients all the changes and confirmations for their travel;  Process refunds and cancellations in the event of unwanted circumstances; and  Monitor and ensure that all travel documents are in order before these are released to clients. o Reservations Officer. The following are the responsibilities of a reservations officer:  Place all necessary reservations with different suppliers and follow-up until confirmed;  Adjust reservations if itineraries have changed; and  Check alternative suppliers with similar products/services in case the preferred supplier is no longer available. o Ticketing Officer. The following are the responsibilities of a ticketing officer:  Issue purchase orders based on the client's itinerary and correctly calculates fares;  Issue air tickets and reissue them if necessary; and  Inspect the accuracy of all travel documents needed by clients for their trips. o Liaison Officer. The following are the responsibilities of a liaison officer:  Identify the travel documents required for a trip and checks all submitted documents and other pertinent papers; and  Ensure that the travel documents filed will be released on schedule. Sales and Marketing – This Department handles the promotion of the travel products/services of the TMC. It focuses on disseminating the information that will create opportunities for sales, bringing in revenues to the company. The account executive has the following tasks: o Prepare the annual sales and marketing plans, including the sales goals for the year. o Handle proposal letters and contracts and meet with the clients for the presentation of the proposal. o Maintains an updated client database and performs regular sales calls to major accounts and suppliers. Travel management companies may have a pool of tour guides or none at all. Tour guides are usually available in tourist destinations/attractions, whose services are coordinated and requested by TMCs. 02 Handout 1 *Property of STI  [email protected] Page 4 of 7  THSH2103 General Manager Sales and Administration Operations Marketing Travel Account Bookkeeper Counselor Executive Reservations & Cashier Ticketing Utility Liaison Officer Personnel Figure 3. Small-sized TMC Organizational Structure Source: Travel and Tour Operations in the Philippines 3rd ed., 2013. p.63 Duties and Responsibilities The Internet opened the global marketplace for consumers/travelers. They now have the opportunity to shop and make their travel arrangements instead of seeking service from a travel agent. However, the personal attention that a travel agent can give to its clients is still irreplaceable. Travel agents can suggest destinations that fit leisure travelers' preferences, offer the best location for meetings and conferences to business travelers, inform them about local laws, customs, and climate, and assist them with travel documentation. They can also help clients rebook or make alternative travel arrangements, for instance, in the event of bad weather that is less stressful than standing in line at a ticket counter waiting to be rebooked. Travel agents can also take care of any special requests a client may have, such as having low- fat meals on a flight or a specific floor at a hotel. Although these requests may be made online, in most cases, these get lost in the translation, unlike when done by travel agents. The following are the duties and responsibilities of a travel agent (Society for Human Resource Management): Determine the client's preferences for travel destinations through personal meetings; Provide various transportation and lodging options to clients; Estimate the costs for a trip, which may include transportation, lodging, accommodation, and entertainment; Collect payments from the clients for the travel products/services they purchased; Make lodging arrangements for clients; Plan and arrange tour inclusions based on the itinerary, including plane tickets, rental cars, accommodation, tours, excursions, and/or other activities; 02 Handout 1 *Property of STI  [email protected] Page 5 of 7  THSH2103 Inform clients of travel documents required for their trips, such as passports and visas; and Recommend pre-trip preparation by informing clients about the local culture, customs, weather, and attractions in the destination to be visited. Travel Agency Accreditation Under Republic Act No. 9593 or the "Tourism Act of 2009", travel and tour services, which include inbound travel agencies and tour operators, local tour operators, ecotour operators, and tour guides, are classified as Primary Tourism Enterprises. Hence, these enterprises shall be periodically required to obtain accreditation from the Department of Tourism ("DOT") as to the quality of their facilities and standard of services. The DOT accreditation is a certification issued to a tourism enterprise that officially recognizes it as having complied with the minimum standards for the operation of tourism facilities and services. Based on the Revised Rules and Regulations to Govern the Accreditation of Travel and Tour Services, these are the requirements for the accreditation of travel agencies and tour operators by the DOT: Who May Apply for Accreditation. The following may apply for accreditation as a travel agency/tour operator: Resident Filipino citizen registered as a single or sole proprietorship. Partnership organized under Philippine laws, at least 60% of its capital is owned by a Filipino citizen. Corporations organized under Philippine laws, at least 60% of the subscribed common or voting shares of stocks of which is owned by Filipino citizens, and the composition of its Board of Directors being at least 60% Filipinos. In the case of more than 40% foreign-owned Corporations, they shall have at least US$200,000.00 paid- in capital. Cooperative duly organized under Philippine laws. Mandatory Documentary Requirements for New Applications. For purposes of accreditation, the following documents shall be submitted online by the applicant: Valid Mayor's/Business Permit. Proof of working capital of Php500,000.00. For Corporation/Partnership, Php500,000.00 Paid- up/partners' capital; for single proprietorship, original copy of bank certification with cheque writer. For General Manager, documents to prove a minimum of three (3) years managerial experience in travel and tour agency operations or proof of passing a Travel and Tour Agency Management Course or its equivalent. Notarized List of Names of all Officials and Employees (with office designation and nationality). Minimum Office Requirements. The applicant enterprise shall comply with the following office requirements: It shall be located in a commercial area and/or building. It must be easily identifiable and shall be used exclusively for the travel and tour operation business. It shall be adequately furnished for the conduct of its business, with basic furniture and equipment such as but not limited to the executive table, chairs, computer, printer, and telephone. The office floor area shall be a minimum of 18 square meters. Provided, however, that "Branch Office" (an office or outlet/tour desk which is located other than the travel and tour agency main office location that sells, offers, or conduct tours) shall be exempted from the minimum office size requirement. It shall have a minimum of three (3) employees to include a General Manager, a reservation officer, and a tour/product development officer. All offices shall be ventilated or have temperature control initiatives and maintain a temperature between 20-25-degree year-round, except in areas where elevation is 2000 ft. above sea level. 02 Handout 1 *Property of STI  [email protected] Page 6 of 7  THSH2103 Validity of Accreditation. Certificate of Accreditation shall be valid for two (2) years, provided that the required Mayor's/Business permit and other pertinent documents shall be renewed upon expiration and shall be submitted to the Department. Online Travel and Tour Agency. All Online Travel and Tour Agencies applying for accreditation shall comply with all the basic requirements of a regular travel and tour agency (as discussed above). References: Claravall, B. (2013). Travel and tour operations in the Philippines (3rd ed.). Paul Lim So Publishing House. Department of Tourism. (2017). OnlineAccreditationProcess2017.pdf. Retrieved July 1, 2021, from Tourism.gov.ph: http://www.tourism.gov.ph/Downloadable%20Files/OnlineAccreditationProcess2017.pdf Department of Tourism. (2017). Who May Apply For Accreditation. Retrieved June 29, 2021, from Department of Tourism: http://www.tourism.gov.ph/downloadable%20files/WhoMayApplyForAccreditation2017.pdf Department of Tourism. (2019). Citizen's Charter. Retrieved August 31, 2021, from http://www.tourism.gov.ph/files/Charter.pdf Department of Tourism. (n.d.). Accreditation fees. Retrieved July 1, 2021, from Philippines.travel: https://philippines.travel/data/accreditation_downloads/PrimaryTourismEnterprises.pdf Department of Tourism. (n.d.). RequirementsforAccreditationofPrimaryTourismEnterprises.pdf. Retrieved July 1, 2021, from Philippines.travel: https://philippines.travel/data/accreditation_downloads/RequirementsforAccreditationofPrimaryTourismEnterprises.pdf DOT Memorandum Circular No. 2016-06, Series of 2015. Revised Rules and Regulations to Govern the Accreditation of Travel and Tour Services [PDF file]. Retrieved on March 30, 2021, at http://dotregion1.com/wp-content/uploads/2019/03/Revised- Standards-for-Travel-and-Tour-Agencies.pdf Lim, R. (2017). Understanding travel & tours essentials. Mindshapers. Mancini, M. (2013). Access: Introduction to travel and tourism (2nd ed.). Cengage Learning. Morelock, J. (n.d.). What are the duties of a travel agent? Retrieved June 29, 2021, from USA Today: https://traveltips.usatoday.com/duties-travel-agent-20723.html Society for Human Resource Management. (n.d.). Travel agent. Retrieved June 30, 2021, from SHRM: https://www.shrm.org/resourcesandtools/tools-and-samples/job-descriptions/pages/travel-agent.aspx 02 Handout 1 *Property of STI  [email protected] Page 7 of 7