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Travel agency
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A travel agency is a retail business, that sells travel related products and services to customers, on behalf of suppliers, such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and package holidays that combine several products. In addition to dealing with ordinary tourists, most travel agencies have a separate department devoted to making travel arrangements for business travellers and some travel agencies specialize in commercial and business travel only. There are also travel agencies that serve as general sales agents for foreign travel companies, allowing them to have offices in countries other than where their headquarters are located.
Origins. The British company, Cox & Kings, is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the 19th century. Thomas Cook, in addition to developing the package tour, established a chain of agencies in the last quarter of the 19th century in association with the Midland Railway. They not only sold their own tours to the public, but in addition, represented other tour companies.
Travel agencies became more commonplace with the development of commercial aviation, starting in the 1920s. Originally, travel agencies largely catered to middle and upper class customers, but the post-war boom in mass-market package holidays resulted in travel agencies on the main streets of most British towns, catering to a working class clientele, looking for a convenient way to book overseas beach holidays.
Operations. As the name implies, a travel agency 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. The profit is therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission. A British travel agent would consider a 10-12% commission as a good arrangement.
Other commercial operations are undertaken, especially by the larger chains. These can include the sale of insurance, travel guide books and timetables, car rentals, 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’s. They will advertise the fact that 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.
A travel agent is supposed to offer impartial travel advice to the customer. However, this function almost disappeared with the mass-market package holiday and some agency chains seemed to develop a «holiday supermarket» concept, in which customers choose their holiday from brochures on racks and then book it from a counter.
Types of agencies. There are three different types of agencies in the UK: Multiples, Miniples and Independent Agencies. The former comprises a number of national chains, often owned by international conglomerates, like Thomson Holidays. 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. The smaller chains are often based in particular regions or districts.
In the United States there are four different types of agencies: Mega, Regional, Consortium and Independent Agencies. American Express and the American Automobile Association are examples of mega travel agencies.
Independent Agencies usually cater to a special or niche market, such as the needs of residents in an upmarket commuter town or suburb or a particular group interested in a similar activity, such as sporting events, like football, golf or tennis.
The Internet threat. With general public access to the Internet, many airlines and other travel companies began to sell directly to passengers. However, travel agents dominate in some areas such as cruise vacations where they represent 77% of bookings and 73% of packaged travel. Many travel agencies have developed an Internet presence of their own by posting a website, with detailed travel information. Some online travel sites allow visitors to compare hotel and flight rates with multiple companies for free.
All travel sites that sell hotels online work together with suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site will try to get a confirmation for this hotel. Once confirmed or not, the customer is contacted with the result. This means that booking a hotel on a travel website will not necessarily result in an instant answer. Only some hotels on a travel website can be confirmed instantly (which is normally marked as such on each site). As different travel websites work with different suppliers together, each site has different hotels that it can confirm instantly.