Unit 9 – P1
Describe the retail travel environment
Roles of a retail travel agency
The main task of retail travel agency is to supply the public the public with travel products and services. They do it on behalf of their suppliers. Basically we can say that a travel agency operators as a broker, bringing buyer and seller.
There are eight types of retail travel agents: Independents, Multiples, E-agents, Homeworkers, Call Centres, Holiday Hypermarkets, Miniples and Consortia
Independents – Independent travel agencies are single businesses that are not part of a chain and are often managed by the own. Examples of independent travel agency’s: Classic Travel and Abbots Travel
Multiple – Multiple travel agencies are travel agencies that are part of a national chain of retail outlets. Examples of multiple travel agents: TUI and Thomas Cook.
E-Agents – E-agents are companies that specialise in selling holidays and other travel products via the internet. Examples of E-agents are: Icelolly.com and lastminute.com
Homeworkers – Home working travel agencies are companies that specialise in employing people to sell holidays and other travel products from home. Examples of Homeworkers travel agencies are: Hays Travel and New Frontiers
Call centers – Miniples and multiples all have call centres, this means that they can have retail travel agencies in high streets but also people can book holidays via the phone.
Holiday Hypermarkets – are travel agencies that are in large premises and offer all products and services. An example of a holiday hypermarket is Thomas Cook
Miniples – miniple travel agents have a small number of branches (One or two) and they are often located in a particular region of the country. Examples are: Harridge business, Co-op and Dawson Sanderson
Consortia – a group of independent travel agencies forming one large company under one name. An example of a consortium is World Choice
Products and services
Travel agents offer a wide range of products and services, they fall under eight categories: information on holidays and travel, booking traditional package holidays, booking a tailor-made holiday or a dynamic package holiday, ancillary services/sale, booking flights – Scheduled and charter and booking accommodation.
Information on holidays and travel – Travel agents offer this free service, asking customers who come into their stores if they need help or any assistance with enquiring about a booking (past, present or future).
Booking traditional package holidays – Travel agents offer traditional package holiday product, the package holiday (flights, accommodation and transfers) is chosen from a brochure for a certain date flying from an airport at a certain time to a specific hotel. All of the details which the customer requires are in the brochure and then booked through the travel agent. The three well known tour operators: Thomas Cook, Co-op travel and Thomson all do traditional package holidays.
Booking a tailor-made holiday/ dynamic package holiday – A tailor made holiday is when a package holiday is booked but not through the same company, the agent may book accommodation, flights and transfers from three separate different companies, this means the customer gets the holiday at a cheap price as the travel agent could spend a day comparing prices on all three components. A dynamic package holiday is when the customer books all three components without the help of a travel agent, this affects travel agents as they are losing work and commission due to people being able to book their own package holidays on the internet. Kuoni offer the service of providing customers with a tailor-made holiday choice, allowing their customers to have the best kind of holiday on a personal level.
Ancillary services/sales – Travel agents offer ancillary services as extra products, the main things they try to sell are: holiday/ travel insurance, airport parking and currency exchange. Travel agents try to sell extra products so the customers do not have to worry about doing those things on their own and the agent will get some more commission. Many travel agencies (manly named ones) have a bureau du change in store making it easier for customers to change up their money without the hassle.
Scheduled flights – these are flights that are set to a timetable and often released 18 months before the flight actually takes off, no matter if the plane is half full it will depart. Scheduled flights are less likely to have delays (unless for a good reason).Travel agents can book scheduled flights for customers on many different websites and systems. The agent can also amend the booking if the customer needs to go to that destination earlier or later than originally booked. Virgin Atlantic, British Airways, American Airlines are airlines which have scheduled flights.
Charter flights – these are flights which vary on seasons, there will more flights in the summer season daily (sometimes three flights a day) whereas in the winter season there may be only one flight a day to the destination. Charter flights are more likely to be delayed and the flight times may change a bit, also if the plane is not very filled up the plane may not even go. Travel agents can book charter flights for customers the same way they book scheduled flights through internet and systems on their computer. Easyjet, Monarch and Ryanair are some airlines that offer charter flights.
Travel agents can book accommodation for customers who come in requesting the agent just to book accommodation for them, the main board bases that travel agents book for customers are self-catering and all inclusive.
Self-Catering accommodation is when the customer has to either go out to places to eat or cook in the accommodation, the accommodation are normally apartments that have a kitchenette/ kitchen or villas for a large number of customers.
All inclusive allows customers not to stress where they are going to eat their next meal or having to go to the supermarket to buy some food in, as customers can eat breakfast, lunch and dinner in the hotel/ resort. Travel agents can book the accommodation for the customer via the internet or software systems on their computers.
Travel agents need to have links with companies to be successful and to have competitive advantage over other travel agencies. The agents have to have links with: Accommodation providers, Tour operators, Transport providers and Ancillary service providers.
Accommodation providers – Travel agents have links with accommodation providers, whether it is with: hotels, self-catering accommodation and holiday centres. The better the link is between the accommodation provider and the travel agent, the more likely they are to have a higher chance of getting the better rooms and more chance of getting an incentive (if they sell 100 hotel rooms they may get an extra £100)
Tour operators – Travel agents have links with tour operators, these tour operators could be mass market (Thomson), specialist, domestic or inbound. The better the link between them to, the higher the commission rate will be .The current commission rate is 10%, the more holidays sold may increase the commission up to 12%
Transport providers – travel agents have links with transport providers, together they can offer customers the best deals whether it be on car hire or coach transfers. The main company’s travel agents work with for car hire is: Avis and Herts, having links with these two companies may allow the agent to sell Avis/Herts product for a discounted price. Travel agents may have links with some coach companies as well in case there is a big group booking or the customer wants to go on the free transfer included in the package holiday.
Ancillary services – travel agents have links with many companies that offer ancillary services, the main companies they do deals with are: travel/holiday insurance, extra luggage for customers, foreign exchange, tour guiding and theatre tickets. If the travel agent and the ancillary service provider have a strong link, they may have better offers for customers and good bonuses/incentives for the agent.
Integrated – vertical and horizontal
Integration occurs when organisations owns or controls a number of different linked business enterprises.
Vertical integration occurs in the retail travel industry when a company controls more than one level of the distribution chain for products and services, in order to gain a competitive advantage over other retail travel organisations. Example, each of the ‘big two ‘multiple travel agency companies are part of much larger travel group. Thomas Cook retail agencies are part of Thomas Cook PLC and Thomson holiday shops are owned and operated by Thomson/TUI.
Horizontal integration is when a company owns or controls other businesses at the same level of the distribution chain
These agreements are conducted by travel agents on behalf of principals and are strictly controlled by individual agency agreements, as they may be selling different products for the same tour operator but there will be an agency agreement on each product.
Preferred agents – travel agents may have a preferred agent they try to sell their products to the customers. Classic Travel in Loughton has three preferred agents: Club med, Sandals and Kuoni. These three have many booking from classic travel so they have put feature walls in the retail store in order to get more customers. The agents will also get higher commission levels if the holidays are sold a lot.
Travel agents get commission on products/services sold: 10% on package holidays and coach holidays, 0-9% on airline tickets, 9% on ferry bookings, 1% on travellers cheques, 25-40% on travel insurance and 9-15% on cruises. This is a rough guide and depends on the agreement.