Starting a Travel Agency or Tour Operator in the Philippines PDF

TH1804 Starting a Travel Agency or Tour Operator When starting up a travel agency (TA) or tour operator (TO) business, the following aspects must be considered: Infrastructure and financial requirements – It is significant to invest in the following requirements when setting up a ne...

TH1804 Starting a Travel Agency or Tour Operator When starting up a travel agency (TA) or tour operator (TO) business, the following aspects must be considered: Infrastructure and financial requirements – It is significant to invest in the following requirements when setting up a new business: o Office space o Office systems (Global Distribution System like Amadeus, Galileo, and Sabre) o Office furniture and furnishing o Equipment for communications, such as telephone, fax machine, and computers o Starting capital The location should always be considered when starting up a travel agency or tour operator business. Most of the time, TAs and TOs have their offices in big cities and branches in small towns. A travel agency must be located at the market place and near businesses and industry centers, institutions, offices, or in a residential area. Accreditation and registration from concerned bodies o International Air Transport Association (IATA) – A TA or TO can operate whether they are IATA accredited or not. These are the following requirements for IATA accreditation (International Air Transport Association [IATA], 2019):  Ensure to meet the local criteria as specified in the Travel Agent Handbook, a handbook that contains the Passenger Agency Conference decisions governing industry practices or relevant industry regulatory developments, as well as locally established criteria.  Select the country of application (on the IATA website) and understand the Application Guide.  Submit the application as specified in the Application Guide depending on the country of application.  Pay the accreditation fee. o Department of Tourism (DOT) – This is the governing body of the tourism industry. TAs and TOs would only be DOT accredited once they are able to secure a valid mayor’s permit or municipal license, DTI Business Name Registration Certificate (for Single Proprietorship only) or SEC Registration Certificate (for Partnership or Corporation only), and a valid visa from the Bureau of Immigration (BI) and employment permit (for foreign nationals only). Being accredited by the DOT yields benefits such as endorsement to embassies and travel trade association/s for the utilization of an establishment’s facilities and services, eligibility for participation in travel fairs, priority to DOT training programs, and free online/print advertising in national dailies. o Department of Trade and Industry (DTI) – This is where single proprietorship businesses (or businesses owned by a single person) are registered. This agency issues a certificate of registration of the business name with five (5) years validity. o Department of Labor and Employment (DOLE) – All travel agencies or tour operators registered in the Philippines hiring five (5) or more employees must register with DOLE to 04 Handout 1 *Property of STI  [email protected] Page 1 of 3  TH1804 avoid labor cases filed against them. This is also where foreign nationals can secure an employment permit. o Bureau of Internal Revenue (BIR) – This is where all businesses can secure a Tax Identification Number (TIN). o Bureau of Immigration (BI) – This is where businesses owned by foreign nationals can secure a valid visa. o Social Security System (SSS) – This is where businesses can secure an SSS certificate. All private businesses should have their employees become an SSS member as mandated by the Labor Code (the law-governing employment practices and labor relations in the Philippines). This system aims to protect its members for when they are unable to work due to these reasons: sickness, disability, maternity, old age, and death, or other contingencies not stated but will result in the loss of income or financial burden. o Securities and Exchange Commission (SEC) – This is where the certification and registration of partnership businesses (businesses owned by at least two individuals) and corporations (businesses owned by at least five people) happen. It issues an SEC certificate to the aforementioned types of businesses. o Local Government Unit (LGU) – This is where TAs and TOs can secure a valid mayor’s permit or municipal license. o Home Development Mutual Fund (HDMF) – It is mandatory under the Labor Code for employers to have their employees become members and contributors of the HDMF (also known as the PAGIBIG Housing Development Program). This provides TAs’ and TOs’ employees housing and loan benefits. o Philippine Health Insurance Corporation (PhilHealth) – It is mandatory under the Labor Code for employers to have their employees become members and contributors of PhilHealth. This provides TAs’ and TOs’ employees, as well as their dependents, a reduction of expenses during confinement or availing of selected health services. Acknowledgment from the principal suppliers – A TA or TO must have an acknowledgment of distribution of products from principal suppliers such as airlines, hotels, cruise lines, and car transports. Through this acknowledgment, consumers are more assured that every travel product a travel agency sells is all real and not fake or misleading. Challenges of Travel and Tour Operations Travel agencies or tour operators must be well prepared for economic and political disruption if they would like to make the most of future economic growth. These are the challenges that they need to prepare for: More options – People can simply research and arrange their own tour package called “do it yourself” (DIY). Increasing price transparency – Travelers can shop around and find not only the best deals but the most cost-effective ones. Greater traveler independence – Since people have an option to DIY tour packages, they no longer need travel agents or tour operators to have everything arranged for them. 04 Handout 1 *Property of STI  [email protected] Page 2 of 3  TH1804 Decreasing customer loyalty – The amount of trust consumers put in brands is decreasing all the time, and a typical consumer will switch brands without hesitation if they get a better offer. Rise of mergers and alliances – Most travel agencies or tour operators tend to join together to provide better options for their potential clients, thus diminishing the chance of individual growth. Only a few dominate the market – Not all companies have sufficient funds to get enough publicity, which results in bigger companies sucking the life out of smaller companies that haven’t established their name in the industry. Everything is just a click away – Before, people would directly seek their local travel agent or tour operator to ask questions about their destination or trip. But now that our technology is fast-paced, they can simply browse the Internet and get as many pieces of information they can get. It is very rare these days to bump into something that the Internet won’t be able to suffice. References: Claravall, B. G. (2013). Travel and tour operations in the Philippines. Sampaloc, Manila: Accumiro I.T. Solutions. Commision on Filipino Overseas (July 2007). Travel agency business registration requirements. Retrieved from Invest the Philippines website: http://invest.cfo.gov.ph/pdf/part3/BSMMED/BRR-travel-agency.pdf on 18 December 2018 Evans, N. (2015). Strategic management for travel and tourism. Taylor & Francis. International Air Transport Association (n.d.). How to become an IATA agent. Retrieved from IATA's website: https://www.iata.org/services/accreditation/accreditation-travel/Pages/application.aspx on 18 December 2018 Department of Tourism (1995, September 26). 1995 rules and regulations to govern the accreditation of travel and tour services. Retrieved from http://accreditationonline.tourism.gov.ph/Downloadables/Standards/1995%20Rules%20and%20Regulations%20t o%20Govern%20the%20Accreditation%20of%20Travel%20and%20Tour%20Services.pdf on 21 September 2018 Department of Tourism (n.d.). Benefits and incentives of accreditation. Retrieved from http://www.tourism.gov.ph/downloadable%20files/BenefitsAndIncentivesOfAccreditation2017.pdf on 19 February 2019 Kittelson Carpo Consulting (n.d.). Registration with the Department of Labor and Employment (DOLE). Retrieved from https://kittelsoncarpo.com/business-registration/government-agencies/dole/ on 19 February 2019 Sugano, D. (2015). Tour operators under state seller of travel and related statutes. Honolulu, Hawaii: Legislative Reference Bureau. Swain, S. K. (2014, February 26). Travel agency and tour operations management. Retrieved from Pondicherry University's website: http://www.pondiuni.edu.in/sites/default/files/travel-agency-op-mgt-260214.pdf on 21 September 2018 04 Handout 1 *Property of STI  [email protected] Page 3 of 3