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Travel Agency and Tour Operation Business

travel distribution channels


A travel agency is a travel consultant, tour organizer and a middle-man between the tourism service suppliers (hotels, car rentals, cruises, airlines, buses etc.) and the travelers. They are a one-stop travel solution provider who provides information on anything related to travel like information about travel formalities, visa information, accommodation, accessibility and other recreational facilities etc. They work on a commission basis and are an important establishment as they help provide business to the suppliers of services. Today’s Men are too busy to organize their travel itineraries personally. For example: A person wanting to travel to Thailand has to book tickets for airlines, sightseeing, hotels, land transfers, water-sports, recreation and other stuffs; which actually is time-consuming and a hectic one. He has to find out the best prices on the market, best time to visit, compare prices and so on. This headache is handled by the travel agencies using their industry expertise and guiding the travelers before and during the tour minimizing the disorderliness.

Travel Agency Functions:-

  1. Organizes travel services from many suppliers bundling into a single package which we call it as a Tour Package.
  2. Acts as a Travel Consultant.
  3. Suppliers do not have to reach the end customers directly. Huge costs that could have been spent on marketing these services are been minimized by the help of travel agents.
  4. Helps the travelers with their Travel Requirements like Visas, Currency Exchange and other formalities.
  5. Works on Commission basis.
  6. Customizes tour packages according to the client’s needs and wants. E.g.: choice of destinations, hotels, activities etc.
  7. They do FIT (Free Independent Travel) and GIT (Group Inclusive Travel) for budget tourists, luxury tourists or groups.
  8. Arranges a Tour Escort to assist a group of travelers during the entire trip. This person is normally a Tour Leader.
  9. Keeps a latest update of information related to the travel industry


Retail Travel Agencies

These are the distributors who sell tourism products directly to the people. They act as the mediator between the principle suppliers and the end customers. They bundle up the tourist products into a package or sometimes sell them independently as per the needs of the people. These packages are sold on a commission basis or on a mark-up price. Mark-up pricing is the price selling at a higher rate than the cost of the tour. Summarizing, they perform reservations, arrange travel services (tickets, accommodation, travel insurance, currency exchange, processing travel documents and other services) for the people. Example: The Wonder Asia

Wholesale Travel Agencies/ Tour Operators

Normally, they can be referred to as Tour Operators. They purchase the tourist products in bulk from the principle suppliers and do the tour package designs, selling them to another to other travel business firms or retail travel agents. Their profit is generated from their bulk purchase phenomena. Due to their huge buying power, they receive volume discounts. They purchase large number of seats of airlines, hotel rooms and other tourist services.

Example: Make My Trip, Yatra, Thomas Cook, Cox & Kings, SOTC, KUONI, TCI, Mercury Travels (Oberoi) are to name a few.

Tour Operator Types

Inbound Tour Operators

By inbound tourism we mean any tourist visiting a destination in a country from a different country of origin. Example: A tourist coming to India (Destination) from USA (Origin) is an inbound tourist. The tour operators who deal with such kinds of tourists are referred to as Inbound Tour Operators. They do all the travel arrangements in the host country for their clients. These firms require aggressive marketing strategies to create interest in the minds of their prospective travelers and persuade them to visit the host country.

Example: Creation of the Buddhist Circuit in India has attracted many foreign tourists from Japan, China and other south-eastern countries. One of the major players dealing with the inbound clients to India is the TCI.

Outbound Tour Operators

The tour operators who deal with the tour operations and promotion to destinations beyond their country are called Outbound Tour operators. For instance, if a tourist wants to go out of his/her country (e.g. India) to a new country (e.g. Thailand), he/she would have to go for these kinds of tour operators for their travel requirements.

Domestic Tour Operators

They are the firms who do all the tour handling for the tourists within the geographical boundaries of a country. They handle all travel services inside the tourist’s native country.


  • A tour operator is a bigger business establishment than a whole sale travel agency.
  • Whole Sale Travel Agencies do not deal directly to the public, instead they use retail travel agents for distribution of their packages, while the tour operators may use the services of a retail travel agent or sell directly to the public. Example: VIA (Tour Operator) in India channelize their services through retail travel agents as well as directly through their website and direct selling.
  • Whole Sale Travel Agency is limited with their travel product components whereas a tour operator is offering a very much varied level of tour services.
  • Tour operators are very much organized in terms of ground handling, service monitoring, research, and organizational structure as well.

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