UNIT 8 MANAGING TRAVEL AGENCY

OPERATIONS – I
(Managing Internal Operations, Technology)
Structure
8.0 Objectives
8.1 Introduction
8.2 Travel Agency Operations
8.3 Departmentalisation of an Agency
8.4 Managerial Responsibilities
8.5 Use of Technology
8.6 Sources of Revenue
8.7 Operational Departmentalisation of an Agency (In-House)
8.8 Let Us Sum Up
8.9 Clues to Answers

8.0 OBJECTIVES
After going through this Unit you will be able to explain the:

• need for departmentalisation in a travel agency,

• various operations handled by a manager for running a travel agency,

• networking of travel agency operations,

• sources of revenue for a travel agency, and

• functional significance of domestic and international departments.

8.1 INTRODUCTION

You have already learnt about various travel agency operations in TS-1, TS-3 and
TS-6. By now, you must have gathered a fair knowledge about travel agency
functioning.

In this course, we have three Units dealing with managerial practices involved in
running successfully the travel agency operations. This Unit aims to familiarise you
with issues, such as, technicalities involved in operation handling, use of various
technologies and employee handling.

In this Unit, we also take a quick recap of what you have already studied in relation
to travel agency operations, to refresh your learning. This will also create a base for
you to comprehend the rest of the Units on travel agency operations. This Unit’s
point of focus will be on how to run a travel agency efficiently as an effective
Manager. It, therefore, will enable you to be a better and effective travel professional
in future. In fact various management aspects which you studied in MTM-1 to MTM-
4 are to be applied in Travel Agency Management.

You are aware that today the travel and tourism industry is one of the biggest and
most dynamic industries in the world. If you are planning to be a part of this dynamic
industry then you are required to know more about the travel agency operations than
just what happens within the walls of the office. Today, when the world hasn’t
become any bigger, the number of people who travel around has certainly gone up

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several hundred thousand times. This increase in the number of people leaving their
place of stay and visiting another place has resulted in the expansion of travel
agencies and their linkages with the principal suppliers.
8.2 TRAVEL AGENCY OPERATIONS
As you know that the travel agency is a link between the customers, i.e., traveller or
tourist and the principle suppliers, i.e., primary service providers such as tour
wholesalers, hotels, airlines, etc. It is the first stop for anyone considering travel,
especially to a distant place, i.e., tourist destination, in order to make travel
arrangements. The primary job of a travel agency is to provide easy and trouble free
travel to the traveller. It is also important for a travel agency to provide enough
information to the tourist so that the tourist is not cheated during his or her travel and
has a hassle free trip.
It was with the arrival of scheduled airlines that the face of travel agency business
began to change rapidly. Following World War-II, when the travel urge broke loose,
a large number of people set themselves up in business as travel agents. Initially,
teachers, clerks and housewives worked out of their homes as part time travel agents,
though such an arrangement would be almost impossible today. Until the nineteenth
century, discretionary travel was limited to a very small percentage of the people.
This changed dramatically as the industrial revolution gave millions of people in
North America and Europe some discretionary income. More importantly, the
railroad made travel comparatively cheap and convenient. In response to travel
demand, intermediaries, such as, Thomas Cook, Cox and Kings, etc., helped to
promote and make travel arrangements easier for mass tourists.
Even today the idea of opening a travel agency has natural appeal to many people,
who probably think that the business requires only limited capital and a minimum of
travel information.
Though everyone may want to open his/her travel agency with the above stated
objectives the important consideration is whether one possess relevant or required
experience and qualifications or not. Experience reveals that being a travel agent is
more complicated and expensive than it may seem to be.
In this business the services primarily provided to the tourist or traveller include
transport (road, rail, air and/or water), accommodation, passport and visa procuring
facilities, foreign exchange and also guidance and information regarding the place of
travel. Many travel agencies also sell the packages offered by inbound tour operators.
It is essential for all the personnel working or aspiring to work in a travel agency to
be well-versed with the phonetic alphabets as well as with various terms and
abbreviations used in the travel business. These universally applied alphabets, etc. are
the mode of communication for passing on any booking or reservation in a faster and
safer way. A seemingly small mistake like replacing the alphabet ‘i’ with the alphabet
‘K’ in an international ticket can cause a lot of problems and in extreme cases, the
passenger could very well be stopped from travelling on the ticket.
As an aspirant manager of a travel agency you should also have a fair knowledge of
various intricacies involved in ticketing, along with the actual ticketing process and
costing, etc. To issue or supervise ticketing process you are required to have good
knowledge of time differences among three time zones as well as world geography.
Many travel agencies also assist in acquiring the ‘visa’ and also getting a passport
made. The agencies which do not directly deal with the above usually provide
information or consultancy for the same and refer the enquiry to specialised travel
agencies. This type of specialised agencies mostly exist in metros, such as, Delhi,
Mumbai, Bangalore and Chennai, etc. where regional passport offices and consulates
of different countries are located.
A person well versed and acquainted with the travel agency products can manage a
travel agency better than a person with no or little background in tourism industry.
Thus, to be an able and efficient manager you should be properly informed. Since the

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information technology is changing very rapidly the face of travel industry, you must
keep track of the changing times and only this will and can help you to make your
business better.

8.3 DEPARTMENTALISATION OF AN AGENCY

As a manager of an agency you have to manage your employees well so as to ensure
coordination among all principal components of organisation, such as, men, material,
information and money. To achieve this objective you can choose from two optional
organisational structures, i.e., formal or informal structure of organisation. In formal
structures relationship or interaction is structured and well knit whereas in informal
no such structured accountability exists. If you look at the functioning of most of the
agencies, either big or small in their size, they have a defined structure. Today many
agencies, to combat present competitive scenario, have restructured their
organisational functioning. For instance, SITA India or SOTC, as a result of their
merger with KUONI, a Switzerland based tour operation group, have restructured
their organisational chart in order to redefine accountability.

Leisure/Holiday Travel Perspective Traveller Corporate/Business Tr

Travel Agents/Agencies

International Division Domestic D

(Outbound) (Inbou
(Linkages)

Transportation Travel Advisor Accommodation

• Air • Events • Hotels

• Destinations
• Rail • Motels
• Car Rentals
• Road • Insurance • Resorts

• Water • Currency • Other

• Travel
documentation • Supplementary
accommodation
• Education

Maintaining Linkages Maintaining Link

with overseas operators with Local Opera

Sightseeing and Excursions Touring Public Charter

Tourist Activities

Figure I: Ideal Departmentalisation Model of a Travel Agency

In your earlier MTM courses, you have read about the various qualities of a
professional manager along with the organisational structures and departments in an
organisation. In fact departmentalisation depends on the size and volume of
operations in your agency. Never hesitate in opening a new department but at the
same time do not rush for it. Look at the feasibility and not just the necessity.
Similarly, departments can be merged or closed as per the requirements.

As a manager operations of a travel agency you are required to be more energetic,

update with the corporate happening as well as aware of functioning of different

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segments of tourism industry since agency operations involve closer linkages among
these components. If you look closely at Figure I it would have been clearer to you
that besides various departments, how important are these linkages for improvement
in your efficiency as a manger.

8.4 MANAGERIAL RESPONSIBILITIES

You already have been told in previous Section that the successful travel agent’s
range of knowledge needs to be very vast and constantly growing. A job description
in this regard would include all of the following elements:
1) His/her prime responsibility is to negotiate the terms and conditions for
commission with principal suppliers. These commissions constitute major source
of revenue for any travel agency.
2) Recruitment of trained manpower from time to time is yet another important
responsibility of a manager in travel agency operations. Right kind of human
resources are considered as most valuable assets for any organisation.
3) Once the recruitment is over, the orientation/induction programmes shall be
arranged by the manager. For existing employees training and development
programmes must be arranged in areas which need regular upgradation. For
example, technological advancements have forced us to train our employees to
work on new technologies or day to day changes in visa regulation, airline/rail
schedules, airlines banking settlement plans, etc. require constant upgradation of
knowledge. Undoubtedly, training programmes in such areas would not only
improve the efficiency of the employees but would also add to the brand name of
the company in relation to efficiency and customer care.
4) It is also the responsibility of manager to departmentalise the agency for effective
functioning and accordingly deployment of required manpower can be done. It is
for you to assess that how many people will be required in international section
and how many for domestic section. In other words, it is for you to decide that
how many people shall form a part of operations, marketing or any other
department for that matter.
5) Scheduling of manpower and machines to be made available for the agency
operations will also be your responsibility, i.e., how many vehicles you will
require for pick ups and transfers or for your staff transportation, how many
personal computers to be installed and which one shall be connected with WAN
(Wide Area Networking) or LAN (Local Area Networking) to facilitate the
transfer of data without loss of time.
6) As a manager you need to gather and assess feedback from your suppliers and
consumers, which would also help you in designing your products. For example,
if your feedback reveals that your customers have more liking for activity packed
packages, you shall naturally prepare such packages. Your job doesn’t ends here.
You must also try to find out what was the level of satisfaction of your customers
after consuming your product/services. If some gap is suggested, the consumer
must be removed immediately.
7) Decision on selection of promotional strategies are another important function to
be performed by you. Here you need to address issues like what is the mission of
your agency with respect to the image building? What is your target market?
How much will be your promotion budget? What would be the most effective
means of promotion for your product, most suitable and effective for your target
market segment? Above all, how much time you have to build the desired image.
For example, many a times situation arises like riots hitting an area, military
coup, etc. wherein you have to decide fast on such decision otherwise losses can
be irreparable.

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8) As a manager you shall always believe in sharing information and knowledge
with your employees, about competitors, their strengths, weaknesses, corporate
business techniques. It is only after this that you can expect them to work more
efficiently. You must also subscribe them with various sources of information
like trade newsletters, documentary films/CDs, brochures and news bulletins of
principal suppliers, current affairs magazines, membership of trade associations,
familiarisation trips as well as travel advisories.
9) You must train your employees to maintain proper storing and updating
mechanism in the organisation. In a travel agency you make most of the bookings
on phone and when your customer is on phone line you have very less time to
refer to his/her history in your files.
10) For effective and efficient operations of a travel agency you need adequate
infrastructure. You must ensure that you have provided your staff with
equipments like telephones, fax, electronic mails, photocopier and computers in
right number and at right time so that they can carry out their functions
efficiently.
Product knowledge can be acquired through information which the travel agency
collects from various sources. This information should be stored properly and must
be constantly updated to meet the ever-growing customer needs. This could be filling,
storing data on computers, or both. Besides, everyone in the organisation must strictly
ensure that any change, addition, withdrawal, etc. has to be immediately taken note of
without any time lag, failing which can lead to irreparable losses to the company in
terms of revenue as well as image. While providing information to the customers
you must ensure that it is the current and complete information. Your sources of
information may include:
• Computer information systems produced for the trade,

• Brochures and news bulletins of principal suppliers,

• Newspapers,
• Television programmes,

• Documentary films,
• Travel trade magazines,
• Current affairs magazines,
• Familiarisation trips, and

• Travel advisories, etc.

As a manager you must always be updated on information and there should be
constant exchange of information between you and your employees. The existing
trend in travel agency business operation is to conduct regular meetings and training
sessions of employees being addressed either by own Senior Management members
or by external consultants.

8.5 USE OF TECHNOLOGY

The travel industry of today wears a different look. It is automated and high tech and
as a manager it is your prime responsibility to assure the availability of required
infrastructure and support systems for the adaptation of technological advancements
to manage your business profitably. The list of equipments available for use by your
staff may include:

• Telephones,

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• Fax,

• Electronic mail,

• Photocopiers, and
• Computers, etc.
These are essential communication equipments in a travel agency which are required
for:
• Requesting information,
• Receiving information,

• Making reservations,
• Confirmations, and

• Transmitting information to clients.

Proper use of communication technology saves time, reduces costs and thus,
contributes to the profitability of the agency. Having trained staff for operating them
and regular maintenance of the equipment are other managerial tasks meant for you.
Not only this but the staff should be trained for maintaining records on computers.
The newly emerging computer systems concept of information management can
prove to be very useful in delivering accuracy, timeliness, objectivity and relevance
to your decisions. More importantly, however, it will lead to the amplification and
acceleration of a phenomenon that we have already begun to experience – “creation
of a comparative business advantage through information”. In fact, the MIS in
your organisation should be developed through the latest technological advances.
To achieve desired goals both in terms of customer satisfaction and generating profits
for your company you should think of connecting various decision centres at various
levels, formal and informal, as an information network with the wide use of
computers. You must also acknowledge that the managers/supervisors working at
different levels in tourism operations require different types of information to take
decisions at right time. Hence, you will need an MIS catering to the
management/leadership styles, i.e., if there could be greater user involvement at all
stages of MIS lifecycle (MIS lifecycle is discussed at length in MTM-4) then the end
results would tend to be superior. As a result the MIS developed by you would help
each executive in his/her decision making process while identifying the problems,
generating and evaluating the alternative course of actions as well as to acquire
necessary feedback on implementing his or her decision and if the requirement arises
to take corrective actions.
Other important area where technology can be applied is in purchasing or procuring
procedures so that malpractices can be overcome as is given in Figure II.

Reorder Specification

Price
Issue Stock Level
Quotations
Store Selected Supplier
Check
Stock Level
Purchase Order

Receive

Check
Quality and Quantity
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 Figure II: Purchasing/Procuring Procedures

Inventory records can also be maintained with the help of computers. An example of
such a worksheet prepared on computer is shown in Figure III.
Figure III: Stock Record
Sl. Stock Opening Quantity Date Quantity Date Balance Stock Level Reord
No. Description Balance Received Issued to be Quan
maintained
1) Letter Heads 1,000 2,000 15.3.96 2,500 30.5.96 500 2,000 1,
2) Ticket Wallets 1,000 5,000 20.3.96 3,500 1.6.96 2,500 2,500 N
3)
4)
5)

However, it must also be noted that the basic management concepts of planning,
organising, directing and controlling are essential in travel agency business and
should be suitably carried out with the usage of technology as per the requirements.
Besides, the role of technology can also be witnessed in the tasks of planning
itineraries, ticketing, reservations, dealing with principal suppliers, marketing and
sales or deciding on further expansion, the management concepts are of much use in
providing guidelines to make best use of available resources.
8.6 SOURCES OF REVENUE
Any entrepreneur would expect his/her manager to generate as much as revenue
possible for the company and travel trade is not an exception to this golden principle
of setting up any business enterprises. Thus, it becomes imperative for you to
understand various traditional and modern avenues for revenue generation in order to
satisfy the very basic reason for your existence in the trade. The sources of revenue
can be classified in the following manner:

Source of Revenue

Traditional Sources Modern Avenue

Commission based Margin of profit based Niche markets

Consultancy

Booking of hotel Conferences

Passport services
Room/resorts Broadly covers packaging
and selling of tours both Convention Visa
services
Ticketing international and domestic
Exhibition
Other documentation
Car rental
Trade shows
Trade boards
Insurance
Educational tours
Promotional services
Medical
Seminars
Insurance

Events
Income Tax solutions

Thematic tours

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 Special interest tours

From the above given illustrations it becomes clear that the traditional sources and
commission based services in the area of accommodation, airline ticketing, rail
ticketing, car rentals, insurance services or even overseas mediclaim covers can
generate only the commissions fixed as per the trade norms. For example, if on a
hotel booking you may get as much as 20%, on an airline seat you can only manage
to get 9% to 10%. However, on car rental rate of commission can be as high as 30 to
35%. On domestic ticket commission rates vary from 4.5% to 5% in comparison to
commission on rail ticket booking of just 0.5% to 1%.
Traditionally and even today, travel agents largely depend upon these commission
earned from the sale of these services. Therefore, as a manager you must make it a
point to generate as much as sale possible for these services so that even when
revenue from other services start declining during off-season, revenue from
commission keep coming in your chest. Here it is important to underline one fact that
rate of commission offered by principal would vary according to volume of business
generated by you. For instance, if you are giving booking of 500 rooms to a hotel in
one season it is obvious that this particular hotel will offer you higher rate of
commission in comparison to a hotel who is given less bookings by you in a season.
Same principle applies to other services also which are being sold by you in return of
commission. Many a times rate of commissions also depends upon other factors and
not merely upon volume, e.g., your negotiations with the principal suppliers, your
physical location, your financial credibility, your previous performance record and so
on. All these factors centres around your performance as manager.
On the other hand, margin of profit-based services provide you complete freedom to
package and sell services both as specific and tailor-made up as profit margin. More
and more travel agents are moving in to the area of designing and packaging services
since it renders better opportunities for revenue generation. Here we can take up an
example of a resort located at a remote place, offering rooms at 40% of the rack price
to you. You in return package it and promote it through your brochures at rack rate
offering 20% discount to your sub-agent or partners of Global Distribution Networks
(GDN). In the end if we see selling such products prove to be more profitable than
commission based products/ services. Today you can negotiate with airlines or hotels
for bulk booking as consolidators and retail these services with your mark up to meet
your administrative expenses incurred as well as to earn reasonable profit margin.
Besides, the traditional sources of revenue, i.e., commission based and profit margin
based as discussed above, agencies have explored number of other areas which can
substantiate their revenue generation during lean period. These avenues may also be
termed as niche areas like meetings, incentive travels, conferences, exhibitions and
expositions (MICE); educational tours, event managers, thematic tours as well as
special interest tours. In each of the abovementioned category your job would be to
identify market segment with such special requirements, assess their specific
requirements and supply the same with expected level of satisfaction. In other words,
if you succeeded in planning, organising and managing these niche areas efficiently,
they would prove to be rich in revenue generation as compared to other components
of travel trade operation. MICE is one niche area which is catching the attention of all
travel agencies because it has proved its potential as a strong source of revenue
generation all over the world. How can you successfully handle the segment is
discussed at length in MTM-15. However, you must remember on thing that when
you are handling any event belonging to MICE you are expected to render a basket of
services, i.e., ticketing, hotel, transport, meeting planning, sightseeing, secretarial
services and other business related services to your client as desired by them from
time to time.
As a manager, therefore, your role would not only be to negotiate the terms and
conditions for each service required by your client but also to deploy well trained
people to deliver the services with an expected degree of satisfaction. Proper attention

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devoted to this fact can bring repeat and referral business from a lot of corporate
clients. You must, therefore, attach greater importance to the recruitment of best
people available in the job market.
In the post jet age, when hundreds of millions of people have started crossing
international boundaries, this has created the vacuum for travel agencies to play the
role of travel consultants too. In other words, more and more people are approaching
travel agents for passports, visa endorsements or for other documentation facilitation
services which otherwise prove to be quite time consuming for them. Consultancy
charges for such service vary from case to case and from agency to agency. But the
established fact is that the revenue coming from these services also contributes
significantly to total earnings of an agency. Another upcoming trend in travel trade is
to become a representative board of a particular tourist destination or for a set of hot
tourist destinations. In other words, you assume the responsibility of marketing and
selling these destinations in your country. The understanding aspect of this source is
that if negotiated well, you become the sole distributor of services in that destination.
As a result of these practices, destinations like Sri Lanka, Australia, Singapore,
Seychelles and Switzerland have gained grounds in India and as in consequent
outbound tourism from India to these countries has gone up drastically. For example,
Thailand is marketed and packaged so well in India by trade board representatives
that our outbound tourism has gone up to a figure of 2,00,000 tourists a year against
only 20,000 tourists coming to India from Thailand. Fortunately, Indian tourism
season is very well defined as a result revenue flows in evenly if well managed by
you.
In short, we can say that ample opportunities exist in travel trade for revenue
generation. You need to identify and harness these opportunities. If you are able to
identify any new area, you would be able to reap higher revenue in the initial stages.
Therefore, you are advised to look out for new avenues, either at your own or in
collaborative manner with destinations or their principal suppliers so as to achieve
not only maximum revenue yield but also to gain a brand image of an established
agency.

8.7 OPERATIONAL DEPARTMENTALISATION OF AN

AGENCY (IN-HOUSE)
As you have studied in your previous units that for smooth functioning of the agency,
departments have been created for domestic and international travellers. Both the
sections are placed under the charge of efficient managers.
8.7.1 Domestic Departments
Besides ticketing, travel agency also provides hotel and transport booking service to
their diversified clientele. Against the receipt of payments from clients necessary
vouchers are issued to them. Handling of vouchers is discussed at length in TS-1.
These service agents are paid commissions varying from 9% to 20% depending upon
type and volume of business. These commissions form the major portion of agents’
revenue generation. These sources are discussed in details in previous section of this
Unit.

8.7.2 International Department

You are familiar that International department deals with preparation and promotion
of tour packages both inbound and outbound. Most of the tour operators prefer to use
services of travel agencies to reach the desired target market segment. Thus, it
becomes imperative for you to establish coordination with travel agents. In other
words, you are not only required to keep track of various promotional activities
undertaken by tour operators but also you need to judge the selling aptitude and
potential of the employees of the travel agency because your commission largely

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depends upon the volume of business generated by your agents. You are also advised
to maintain close links with tour operators to know about various promotional
schemes and incentives being offered by them or by their principal suppliers. For
example, selling a package to Australia can get your clients free two days
accommodation at Malaysia or Singapore or Bangkok as an incentive.
It is important to remember that deal is not successful until and unless the client
returns from his/her tour satisfied. For this very reason, it is advisable for you to keep
in touch with your client and smoothen various transactions taking place at the place
of visit. Information about travel documents and other precautions like medical, etc.
should be conveyed to the client and any special request of the client should be
conveyed to the tour-operator. It is important to point out here the concept of
delegation of power which you have studied in MTM-01, can be achieved by
teaching your subordinates about the work process. A good service to any client, old
or new will ensure a lifetime relationship with them.
Similar mind set should be maintained while dealing with tour operators. Keep in
touch with them to ensure a pleasant and successful deal for both your client and the
tour operator. A good professional and personal relationship with your tour operator
will ensure that even in the time of high demand low supply periods, your principle
supplier will help you out.
As in the case of ticketing, do keep a record of your tour bookings. Record should tell
you at one glance about the name of the tour operator and tour, tour price,
commissions, clients’ name, address, profits and so on. Try to maintain a record of
after sale and tour feedback report from your client because it will help you in telling
your principle suppliers about the areas where they lack client insight. It will also
help you to know both your client and tour operator better. One way of ensuring that
your first time client becomes life time client is by making them feel special, say by
the way of word of welcome or thanks for your visit by the manager.

Check Your Progress

1) Discuss evolutionary stages of travel agency business.

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2) Discuss the various operations of Travel Agency Business.

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3) Prepare job description of an agent.

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4) What are the various sources of earning for an agency?
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5) Why do we need to departmentalise our agency as per the operations?

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 ……………………………………………………………………………………
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8.8 LET US SUM UP

Managing internal operations of a travel agency holds the key to success to not only
overall performance of the agency as well as for overall satisfaction of tourist and
thereby meeting their expectations. If the operations like issuing of a rail or air ticket,
or booking hotel room in appropriate advance is not carried out efficiently it is you as
a manager who will have to face the music from all fronts. Thus, before inducting any
new employee in this crucial section you need to give him/her proper orientation
towards how crucial would be there role. The functions of internal agency operation
department are not that easy as they appear to be. Moreover, this department has also
the responsibility of maintaining close and effective liaisoning with other players of
this sector so that entire operations can be carried out smoothly.

8.9 CLUES TO ANSWERS

Check Your Progress

1) Refer Sec. 8.2.

2) Refer Sec. 8.3.

3) Refer Sec. 8.4.

4) Refer Sec. 8.6.

5) Refer Sec. 8.7.

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