TTRAVL UNIT 1 - INTRODUCTION TO TRAVEL AGENCY AND TOUR OPERATIONS.pdf

Unit 1. Introduction to TRAVEL AGENCY & TOUR OPERATIONS  Learning Objectives: This unit provides you with concepts that will enable you to: ✔ Define travel management companies ✔ Comprehend the importance of the history of travel and tour ✔ Understand the function of a travel and tour agency ✔ En...

Unit 1. Introduction to TRAVEL AGENCY & TOUR OPERATIONS  Learning Objectives: This unit provides you with concepts that will enable you to: ✔ Define travel management companies ✔ Comprehend the importance of the history of travel and tour ✔ Understand the function of a travel and tour agency ✔ Enumerate the requirements to set-up a Travel Management Company (TMC) ✔ Differentiate an LGU License from DOT Accreditation ✔ Explain the revenue sources of a Travel Management Company  What is a TRAVEL AGENCY? ❑ A commercial enterprise where a traveler can secure information and expertise, get impartial counseling and make arrangements to travel by air, sea or land, to any point in the world. HISTORY OF TRAVEL AGENCY  Thomas Cook Trivia: ❖ (22 November 1808 – 18 July 1892) was an English businessman. ❖ He is from Melbourne, Derbyshire, England, UK. ❖ On 2 March 1833, he married Marianne Mason. ❖ John Mason Cook, their only son, was born on 13 January 1834. ❖ Thomas Cook died on 18 July 1892, having been afflicted with blindness in his declining years. Thomas Cook “Father of Travel Agency Business”  Thomas Cook Key Dates ❑ 1808 Thomas Cook is born on 22 November in the village of Melbourne in Derbyshire. ❑ 1834 John Mason Cook is born on 13 January in Market Harborough, near Leicester. ❑ 1841 Thomas Cook organizes his first excursion, a rail journey from Leicester to a temperance meeting in Loughborough. On Monday 5 July a special train carries some 500 passengers a distance of 12 miles and back for one shilling. He founded the agency by his name. ❑ 1845 Thomas Cook conducts his first trip for profit. It is a railway journey to Liverpool from Leicester, Nottingham and Derby. He established the “World’s First Travel Agency” to organize excursions.  Thomas Cook Key Dates ❑ 1855 Thomas Cook’s first continental tour. He personally conducts two parties from Harwich to Antwerp, then on to Brussels, Cologne, Heidelberg, Strasbourg and, finally, to Paris for the International Exhibition. Thomas Cook offers a complete holiday “package” (comprising travel, accommodation and food) for the first time. Thomas also offers a foreign exchange service for the first time. ❑ 1863 Thomas Cook visits the Alps for the first time and helps to establish Switzerland as a summer holiday destination. A journal of his first trip, written by Miss Jemima Morrell, survives in the Thomas Cook Archives. ❑ 1864 John Mason Cook, aged 30, joins his father in business. ❑ Thomas Cook Group is a British global travel company listed on the London Stock Exchange. It was formed on 19 June 2007 by the merger of Thomas Cook AG, itself the successor to Thomas Cook & Son, and MyTravel Group plc. ❑ The group owns a number of tour operators, as well as airlines based in the United Kingdom, Germany, Belgium and Scandinavia. Thomas Cook also owns the booking website Hotels4u.  The Tourism Code of 1980 defines a travel and tour agency as… ❑ an entity engaged in the business of extending to individuals or groups travel services and assistance to include documentations, ticketing, booking for transportation and/ or accommodation arrangements, handling and/ or conduct of tours within or outside the Philippines whether or not for a free, commission or any form of monetary consideration.  The Tourism Code of 1980 defines a travel and tour agency as… ❑ It acts as an agent of the different suppliers in the tourism industry (also known as travel components), namely: ✔ Transportation companies ✔ Hotels/resorts ✔ Car rental companies ✔ Tour operators ✔ Sightseeing companies  The Tourism Code of 1980 defines a travel and tour agency as… ❑ It acts as an agent of the different suppliers in the tourism industry (also known as travel components), namely: ✔ Transportation companies ✔ Hotels/resorts ✔ Car rental companies ✔ Tour operators ✔ Sightseeing companies What kind of information & expertise? What type of counseling? TRADITIONAL WAY Travel Agency - Mainly helps individual customers book leisure trips, like vacations, flights, hotels, and tours. They focus on personal travel. TMC (Travel Management Company) - Specializes in managing travel for businesses or organizations, handling corporate travel needs like business trips, expense tracking, and travel policies. They focus on corporate or business travel.  TRADITIONAL WAY VS. NEW WAY TRAVEL AGENCY OR TMC TRADITIONAL WAY Manual Processes - Bookings were often done over the phone or in person, with agents manually entering details. Paper Tickets - Printed tickets and itineraries were common, with documents physically mailed or picked up. Limited Technology - Travel agents relied heavily on phone calls, faxes, and basic computer systems. Human Interaction - Clients interacted directly with agents for advice and bookings. Fixed Office Hours - Services were generally available only during office hours, limiting access to assistance. NEW WAY Digital Processes - Bookings are now done online through websites or mobile apps, with automated systems handling much of the work. E-Tickets - Electronic tickets and digital itineraries are sent instantly via email or apps. Advanced Technology - Travel agencies and TMCs use sophisticated software, AI, and data analytics to optimize bookings and offer personalized recommendations. Self-Service Options - Clients can book, modify, and manage their travel plans online 24/7, with less need for direct agent interaction. Global Access - Services are available anytime, anywhere, with online support, chatbots, and virtual agents. FUNCTIONS OF A TRAVEL AGENCY ❑ It provides information and expertise in country/ies you would like to visit. ❑ It impartially recommends particular destination, suppliers, products and services best suited to the needs of the traveler. ❑ It provides assistance in securing travel documents, such as passport and visas, and immigration clearances. ❑ It processes travel arrangements by placing reservations, obtaining confirmations and issuing corresponding tickets or tour vouchers in behalf of the suppliers. ❑It assists in cases of refunds and cancellations. CHARACTERISTICS OF A TRAVEL AGENCY ❑ Retailers ❑ Acts as counselor to the end-user, and is an agent for the suppliers ❑ Derives a fixed income from predetermined commission schemes dictated by the suppliers ❑ Charges fees for ancillary service such as travel documentation ❑ Is limited to direct selling to end-users  Travel Agent & Tour Operator TRAVEL AGENT TOUR OPERATOR Retailers. Wholesalers. Deals with the travel agent. Act as consultant or advisers to the Act as middlemen between the suppliers and travelers the vendors Revenues are fixed and pre-determined Have variable but limited revenue income and by suppliers profit margin Charges fee for documentation and Sells optional products and services and makes ancillary services use of deposits Revenue sources of TMC ❑ Charges from an open and negotiated professional or handling fee (cost plus), which can be fixed amount or percentage ❑ Fixed commissions on regular fares and other travel services (rate minus) or allowed a reasonable mark-up on a net fare (net plus) ❑ Service fees for certain ancillary services ❑ Production incentives and rebates from suppliers  COST-PLUS ❑ TMC determine the exact cost of travel arrangement, they add a certain percentage or fixed amount to the actual cost. ❑ Some add 20 to 30% ❑ Others add Php300-Php 2,000 depending on the load of work done for the transaction ❑ These mark-ups are paid for professional fees such as the booking fee, travel information and advice, processing fees and for the assistance rendered to them.  COST-PLUS Sample scenario Friends Gemma and Rina approached Mario of Explorers Travel and Tours. They told him they want to visit another friend in Auckland, New Zealand. They asked about visa requirements and the costs of airfare and tours. Mario gave them an estimate of the airfares, hotel rates, and tour packages. Furthermore, they were very glad about the suggestions, advice and recommendations of Mario and so they requested him immediately lodge their visa application and book their flights.  COST-PLUS Sample scenario Here are the flight details of the airfares: PAL OCT2 Manila-Sydn Dep:10:15p Arr: OCT3 8:45 am ey m Virgin OCT3 Sydney-Auckl Dep: 4:30 pm Australia and 3:00pm Airfare: Php 34,592 + Php 1,620 Philippine Travel Tax  COST-PLUS Sample scenario Mario adds 25% for professional fees for all the expert advice, assistance to some documents and bookings that he did. 34,592 x 25%= 8, 648 34,592 + 8, 648= 43, 240 PHP 43,240 + 1,620 (PTT) = PHP 44,860.00  RATE – MINUS When the TMCs get commissions. RATE – MINUS  RATE – MINUS Example: A hotel room’s published rate is Php 4,000 / night and the fixed commission is 10%, the commission of the TMC is Php 400/night. How much should the TMC pay the hotel?  RATE – MINUS Mario of Explorer’s Travel and Tours is able to get a rate-minus of 10% from the North Sydney Harborview Hotel where he booked Gemma and Rina. The total bill is AU$ 330 for 3 nights. How much is the total commission of Mario? SETTING- UP A TRAVEL AGENCY Sole or Single Proprietorship - owned by a single or sole individual. In terms of documentation and capitalization, the requirements are as follows: 1. Bureau of Domestic Trade Registration a. Trade Name Registration b. Bank Certificate for Company’s Capitalization c. Tax Identification Number of the Owner 2. Local Government Unit a. DTI’s Certificate of Business Name Registration b. Copy of the Lease of Contract Agreement of the Premises c. Bank Certificate of the company’s paid- up capital d. Financial projections for the next three years e. Bio-data of the General Manager f. List of the company’s employees with respective bio-data g. Duly accomplished application form h. Proof of payment of application fee i. General liability insurance policy (varies according to the LGU) j. Surety Bond from an accredited insurance company (varies according to the LGU) k. Barangay clearance Partnership This is a travel agency owned by at least two individuals. The requirements in terms of documentation and capitalization are the following: 1. Securities and Exchange Commission (SEC) a. Articles of Partnership b. Bank certificate of capital fund paid-up 2. Department of Trade and Industry Registration a. Articles of Partnership b. Bank certificate of capital fund paid-up 3. Local Government Unit (LGU) a. SEC- approved Partnership document b. Copy of the Lease of Contract Agreement of the Premises c. Bank Certificate of the company’s paid- up capital d. Financial projections for the next three years e. Bio-data of the General Manager f. List of the company’s employees with respective bio-data g. Duly accomplished application form h. Proof of payment of application fee i. General liability insurance policy (varies according to the LGU) j. Surety Bond from an accredited insurance company (varies according to the LGU) k. Barangay clearance Corporation - the most common form of business set-up for travel agencies. It requires a minimum of five investors. The following are the documents and required capitalization 1. Security and Exchange Commission a. Articles of Incorporation b. By- laws c. Bank Certificate of the capital fund paid-up d. Incorporator’s Bio-data 2. Department of Trade and Industry Registration a. Articles of Incorporation b. By- laws c. Bank Certificate of the capital fund paid-up d. Incorporator’s Bio-data