Travel Agency: Definitions, Types, Functions & Source of Income


Table of Contents

Travel Agency: Definitions, Types, Functions & Source of Income


A travel agency is a firm qualified to sell services pertaining to tours, cruises, transportation, hotel accommodation, meals, transfer, sightseeing, and other elements to the general public. This business firm is set up for providing services and earning profits. The business of travel agency uses some of the important management practices like division of labor, hierarchical authority, and responsibility.

Travel agency plans, organizes, directs, controls, coordinates, and sets all resources together in such a manner that it can achieve objectives. When the functional areas of management are linked with organizational objectives, travel agency makes profits after satisfying customers. For example, Thomas Cook or Cox and Kings have become leaders in the travel agency business worldwide for their continuous efforts in ensuring quality for customer satisfaction and delight.

Travel agency: Definition

A travel agency is one of the most important organizations in the tourism private sector that plays a significant and crucial role in the entire process of developing and promoting tourism in the country or at the destination. It is a travel agency that packages and processes all the attractions, accesses, amenities, and ancillary services of a country and presents them to tourists. That’s why travel agencies are known as image builders of a country.

A prospective travel agency is one that makes arrangements of travel tickets (air, rail, road, and sea); travel documents (passport, visa, and other documents for travel), accommodation, entertainment, and other travel-related services from the principal suppliers. It may also secure travel insurance, foreign currency for the traveling people.

The main features of travel agency business are:

  • An important link between the clients and principal suppliers.
  • Image builder.
  • Ensures rapid travel service.
  • Provider of authentic and reliable travel information.
  • A social and continuous process.
  • Establishes good relationships with clients and vendors.

Travel Agent: Definition

An agent is a person acting for or employed by, the principal. If a company appoints another person to act for it in the course of business, that person becomes the agent, whether the appointment is full-time or part-time and whether or not the agent receives a fixed salary or a fee from the company. In a travel agent, any individual director or employee or a self-employed person acting for the travel agent is an agent of the company.

Travel agents work with clients, saving them time and money with a personal touch. Using the latest computer reservation technologies, travel agents are able to access the most up-to-date information.

A travel agent is thus an expert, knowledgeable in schedules, routing, lodging, currency, prices, regulations, destinations, and all other aspects of travel and travel opportunities. In short, the travel agent is a specialist and counselor.

Types of Travel Agency

Travel agencies are broadly divided into a wholesale and retail travel agencies for the distribution of sale of tourism services. In addition to this classification, the travel agency can also be classified as implant agency, conference organizer, meeting planners, trade fair organizer, etc

Types of Travel Agency
Types of Travel Agency

Retail Travel Agency: A retail travel agency sells tourist products directly to the public on behalf of the product suppliers and in return gets the commission. Some package tours are sold in two ways i.e. on a commission basis and mark-up price. When a travel agency sells a tour package at a marked-up price, it means that first, it marks up the cost of a tour and then sells it at a higher rate. The mark-up price is the difference between retail price and wholesale cost.

A retail travel agency is defined as a business that performs the following functions: quote fares and rates, make reservations, arrange travel tickets and accommodation, arrange travel insurance, foreign currency, documents and accept payments.’ The main source of revenue for a retail travel agency is the commission received from the vendors. However, the rate of commission differs from organization to organization and travel component to travel component. In India, retail travel agencies receive ninety-five percent of their revenue from the commission and the remaining five percent from consultancy services.

 Wholesale Travel Agency: These agencies are specialized in organizing package tours, which are marketed to the customers/tourists through the network of a retail travel agency or directly to the prospective clients (if the wholesale travel agency has a retail division). A wholesale travel agency purchases tourist product components in bulk and designs package tours. Sometimes, a wholesale travel agency buys travel components from a vendor in bulk and resells them to another travel business organization.

Wholesale travel agencies assemble package holidays and sell them to the clients by retail travel agencies. A typical package tour includes – air ticket, accommodation and sometimes other services may also be included in it such as entertainment, sightseeing, and sports activities etc.

These packages are referred to as ‘package tours’ as most of these tours include the services of escorts but a few are sold to people who wish to travel independently. How a wholesale travel agency generates profit? Generally, a wholesaler receives volume discounts from principal suppliers because a wholesaler might agree to purchase a large number of seats from a particular airline or reserve a large number of rooms at a particular hotel and resort.

Practically, a wholesaler who sells package tours is called a tour operator. However, technically there is a difference between a wholesaler and a tour operator. A wholesaler who sells tourist products individually without assembling them into package tours is called a consolidator. Mostly, these are specialized in a particular product component, such as air tickets, accommodation, conferences, conventions, etc.

Functions of travel agency

The functions of a modern travel agency have widened much after the introduction of air travel. The most important functions of a travel agency are described below

Travel Information:

A retail travel agency provides necessary travel information to the general public. The intending tourists come to the office of the travel agent and seek information regarding their proposed visit.

The travel agent should be a very knowledgeable man and should supply up-to-date and concrete information relating to travel.

He must have great communication skills and he should be thorough in the art of catching potential customers. The knowledge of a foreign language is a desirable qualification for those working in a travel agency.

Preparation of Itineraries:

A tourist journey involves the preparation of different types of itineraries. There are different means of transport with their respective advantages and disadvantages. A travel agent advises the potential tourist to choose the most convenient course.

Liaison with Providers of Service:

A travel agent should maintain constant contact with the providers of various services like the transport companies, hotel managers, and providers of surface transport like motor cars from the airport to the hotel and for sightseeing, etc.

Planning and Costing Tours:

The contracts and arrangements having been entered into, there comes the task of planning and costing tours, both for inclusive programs and to meet individual requirements. This job is intensely interesting and at the same time challenging.

This job calls for a great deal of initiative and drive. The job calls for travel to those places which are to be included in the itineraries.

This is essentially a job for a meticulously minded person and calls for considerable training and ability. Many agencies with the cooperation of airlines and other transportation companies take the opportunity of arranging educational tours for such staff to countries with which they deal.

Many agencies have people who are authorities in particular countries and, in addition to a general program, many will issue separate programs dealing with territories.

Separate programs dealing with holiday offers based on specific forms of transportation, e.g., air, rail, road, or sea, may also be prepared. Programs also have to be issued to cover different seasons of the year.

Publicity is an important part of the program. Having spent considerable time and money on preparing all that goes into the issue of a program, publicity must feature considerably in the activities of a travel agency and more so if the agency happens to be a large one.

The majority of large travel agencies have their own publicity departments under the management of a publicity expert.


Selling tickets to tourists for different modes of transport like air, rail and sea is a very important function of a travel agent. Ticketing is not an easy job as the range of international airfares is very complex.

The computerized Reservation System (CRS) has revolutionized the reservation system both for air and train tickets and also a room in a hotel.

Provision of Foreign Currencies:

Provision of foreign currency to an intending foreign tourist is an important function of a travel agent. The Government of India allows an Indian traveler to go abroad for 10,000 US $.

The travel agent will arrange for the purchase of foreign exchange on behalf of his intending travelers. This facility will save a lot of time and harassment for the intending tourists.


Insurance for personal accident risks and risk for loss of baggage is an important function of a travel agent.

The idea of buying a package of travel, accommodation, and perhaps some ancillary services such as entertainment became established in Western Europe in the 1960s. By 1970, tour operation had become a full-fledged part of tourism. Its growth was spectacular.

It succeeded in reducing the real price of travel abroad, in doing this; it brought holidays abroad to a segment of the market not reached by conventional methods of taking a holiday.

Today in most countries that are generators of tourism, tour operation is the dominating feature of the holiday market.

An inclusive tour is a package of transport and accommodation and perhaps some other services which are sold as a single holiday for a single all-inclusive price. The popular term, ‘package holiday’ describes the nature of a tour more accurately than the term ‘inclusive tour’.

The original demand for inclusive arrangements came from the convenience of buying a single travel product.

Source of income for travel agency

To facilities, the tour of travel is the objective a travel agency. For this purpose, they coordinate travel-related enterprises and customers. They develop the concept of pleasure of the tour. They want to reward for the pleasure they provide. A travel agent’s sources of income are as follows:-

  1. Commission on Sale: – As a commission agent collects commission by sailing the principal’s services such as hotel, airlines, transport.
  2. Commission on Services provided: – the travel agents collect commission from the customers on the facilities, services provided or by coordinating the customers and principals.
  3. Commission from Secondary: – The travel agencies also earn secondary services provided as depending as insurance, traveler’s cheque, etc.
  4. Income Earned from Short-term Investment: – Travel agents may invest money received from their customers as deposits and earn profit.
  5. Profit from the sale of his Own Tours: – Many travel agencies operate their own tours such as sightseeing tours, excursions, hikes, etc., and make profits.

Roles and Services of Travel Agency

The volume of business has increased so much and the areas of business operation have also been expanded in the post-globalization period. With the operation of more scheduled airlines in the domestic and international sector, the scope of business of travel agencies is more in terms of receiving benefits and returns. Customer satisfaction and delight is given top priority. A high degree of professional accuracy is needed to survive in the business. It is otherwise difficult to stay in the business. Most of the essential services are primarily provided by travel agents include transport (road, rail, air, and water), accommodation, passport, and visa procuring facilities, foreign exchange, and also guidance and information about the places of travel. Many travel agents sell packages on a commission basis offered by
inbound operators.

These are the following important roles and responsibilities of a large travel agent
➢ It works as a retailer and sells package tours on behalf of wholesalers. The sale of package tours involves the rate of commission fixed on the agreement.
➢ It ensures horizontal integration for the purpose of achieving a bumper sale.
➢ It is an intermediary between tour operators and tourists in terms of selling package tours in case of outbound tours and conducting sightseeing tours in case of inbound tours.
➢ It follows a tour itinerary and it does not have anything to do with the itinerary.
➢ Travel agents also provide destinations transfer services to the clients as per the tour itinerary.
➢ It acts as a local agent to confirm and reconfirm the services reserved by the tour wholesalers.
➢ It sorts out problems as per the directions of tour wholesalers.
➢ It prefers to become a member of national bodies like TAAI and IATO.
➢ It negotiates the terms and conditions for a commission with principal suppliers.
➢ It recruits trained manpower from time to time.
➢ It procures advanced technology for the operation of the business.
➢ It subscribes to publications like TIM for travel documentation.
➢ It distributes the work in the office for optimization.
➢ It arranges the vehicle in a systematic manner.
➢ It collects feedback from suppliers and consumers
➢ It shares information and knowledge

Tour Operators – Definition, Types, Roles & Characteristic

ORIGIN OF TRAVEL AGENCIES: The Essential Knowledge



Please enter your comment!
Please enter your name here