CHAPTER 10 – TRAVEL SERVICES
Travel services make up a major component of the tourism’s sales force
Tour operator – sells travel at a wholesale level
o Sell packages through retail travel counselors (not to them)
o Pay retail travel counselor a commission (volume incentive aka override)
o Sell travel they have contracted ahead of time
Travel counselor –sells travel at the retail travel
o Sell any travel packages
39,000 Canadians work in this industry (usually highly educated)
The history of tours
Began in the early 17 century
Le grand tour was designed to educate sons in the ways of the civilized world
1 travel package – made by a minister
Thomas Cook – left ministerial calling to form 1 travel agency
Early tours – individually designed for the rich
Jet travel made travel affordable to middle class
Tours are also prepaid, so traveler doesn’t worry about running out of money
Tour wholesaler acts as an intermediate between the supplier and travel agency
o Suppliers request pre-purchase of the products to guarantee low prices.
Tour operators are willing to invest in advance – purchase all the components of a tour prior to
Consolidator – act as wholesalers or intermediaries between the airlines and travel agencies and
pay a commission on tickets sold
o Buy seats in bulk and sell them to travel agencies, who pass on the savings to the
Tickets usually have restrictions e.g. minimum stay requirements, non-
o Canada’s largest – Aventours
5 types of tour operators in Canada
o Independent tour operator – large (Am Ex) or small (sunquest)
o Travel agency – packages tours and sells them to clients
o In-house tour operator – owned/operated by large companies
o Strictly online – provide no glossy brochures or sales representatives
o No sale to public – sell to clubs, associations, travel groups
Tours are designated as either outbound or inbound.
o Inbound – brings guests from a foreign country to Canada
o Outbound – Canada tourism dollars are spent in a foreign country Tour development
Tour- services on a tourist’s itinerary
o Entirely reserved in advance, and fully prepaid
Tours are divided into 2 major categories:
o Independent tours – opt out of travel agency and use online resources to book travel
that they created independently
o Packaged tours – set itinerary with all of its components in place. They may or may not
have an escort; sold to individuals and groups.
Usually target the single traveler, the economy-minded traveler, or the high
value traveler – willing to spend more on the trip and looks for quality sites and
products to be supplied.
4 steps to creating a tour
1. The tour idea – creativity, listen to what people want, market research needed, most
developed around a central theme or destination
2. Negotiations – once destination and attractions in place, prices/rooms/guides need to
3. Costing and pricing
o Costing – process of determining the total cost of providing the tour for an
anticipated number of customers.
Direct cost of each component of the tour must be determined then
indirect costs are added.
Correct costing requires an accurate assessment of certain variables,
Length and stay in principal cities – pacing of a tour is important
o Pricing – process of deciding the amount each customer should pay to cover
costs, including a markup, operating expenses, and profit.
4. Promotion – glossy brochures, online etc. Without good promotional material, even the
best tour product may find itself without customers.
2 main types of prearranged packaged tours
o Independent tours
Travel counselors and tour operators can arrange this or customers can arrange
their own package using online tour companies Agencies likely know the reputation of the tour company, and the destination’s
Travel agents are a link to home in case things go wrong
Vary in flexibility and complexity
Key to success is flexibility and cost saving
Disadvantage – you are on your own, no company rep
o Group tours
True group – club or society that wished to take a trip (traditionally)
Group tours are usually based on a given number of participants and may be
cancelled or delayed
There are 2 types of group tours:
Group/land package – include land arrangements (not airfare)
All inclusive – can be:
o Fully escorted (with tour director travelling with the group, or a
step on guide from the city who answers questions etc)
o Partially/hosted tour (group travels without the director and at
each destination they meet a rep)
o Unescorted tour (group has an itinerary and no company rep)
Types of tours
May be identified by the destination:
o Adventure tours – whitewater rafting
o Religious tours – religious sites
o Ethnic tours – immersed in a different culture
o Educational tours – learn something new (museums, historic sites)
o Soft adventure tours – thrill while comfortable
o Sports and recreational tours – golfing, biking
o Ecotourism tours – expert guides, wildlife, rainforest
o Special interest tours – gambling, wineries, stampede
Special needs tours – special medical problems
Incentive tours – created for a company as a reward for employees who have
done outstanding work (gifts, not taxable)
May be defined by their duration:
o Newest trend – 3 day weekend tour
The travel counselor’s responsibility of tours
Many tours are sold through travel counselors
Tour wholesalers provide a commission to the travel agency for each tour sold
Travel counselor is responsible for:
o Validity dates – tour brochures show when a tour is available at stated price and
o Gateway city – point from which the flight will leave or where client can join tour
o Itinerary and amenities – see or visit = see from bus window
o Price – depend on season, transportation, length, accommodation, meals, sightseeing,
service charges (must know included and additional charges) o Name of the tour operator – both client and travel counselor should know this (some
provinces it is a legal requirement)
Basically relay reliable and accurate info to client
Regulating the tour industry
Need air/rail component – approval from NTA
Tour operators also licensed by the individual province
Interests of the purchaser protected by provincial consumer affairs.
Performance bond – insurance policy that guarantees payment to all parties in case of
o BC, Ontario and Quebec all require that tour operators maintain trust accounts and
compensation funds and provide the province with detailed financial statements.
IATA approved – air transport on an IATA carrier, accommodations for the duration of the tour,
and at least 1 additional feature
The advantages of taking a packaged tour
More popular – offer one-stop shopping
Brochures show facilities available
Choice of reputable firm assures high quality tour components
Everything is prearranged
Need for individualization is recognized and built preferences in package
Important motivator – companionship
Disadvantages of taking a packaged tour
Dissatisfaction if you don’t get what was promised in brochure
Inflexible because it was prearranged
Dependent on the operator's integrity and financial stability.
Is a retail business that arranges for travel services with suppliers; requires a relationship with
Serves as a vital link between traveler and supplier - difference is the amount and quality of
personal service provided at a travel agency.
Travel agent - now replaced with the term travel counselor - advice is important part of job
o Knowledgeable and persuasive about the products they sell
Types of travel agencies:
o Categorized by size:
Small - annual sales of millions or less and employ 1-3 travel counselors; word of
mouth business thus small but loyal customer base.
Medium - 8-10 staff; rely on word of mouth and invest in local promotion; focus
on both business and pleasure travel.
Larger - diversified; have departments that specialize in specific travel market
segments. Are competitive because they can afford top of the line equipment
and have larger marketing budgets.
o Categorized by services they offer: Full-service - business typically divided 60% leisure travel, 40% business travel =
combination provides more consistent customer base
Corporate - specializes in business travel
Nature of client's business dictates when and where travel will occur
Counselor responsible for finding the best-priced airfare, convenient
hotel, and car rental usually in a day.
Usually charge management fee or a per-ticket fee and change fee
Counselors working directly for a corporation get higher pay and better
Specialty - exist in large urban centers
Can be certified cruise specialists (cruises with themes such as country
and western or big band music)
Can specialize in exotic trips for both hard and soft adventurers
(adventure travel is rising), senior travel, and disabilities.
Ethnic agencies focus on creating connections between immigrants or
the children of immigrants and their countries of origin.
o Categorized by ownership:
Private - in early days was most common; now the serve local clientele and
provide a high level of service.
Chain - operate under one corporate ownership and one management policy;
employees get better fringe benefits and more training, better opportunities
Franchises - popular and rigidly controlled thus have difficulties filling the special
needs of local clientele
Consortiums/co-ops - similar to hotel referral systems such as Best Western.
Agency keeps its independence and personal identity but joins with other
independents to get large scale advertising campaigns, better purchasing power
and brand name.
Each member pays initial membership fee and continuing services fee.
Travel agencies form an important distribution channel for all our tourism products.
Most suppliers of tourism products pay the agency a commission on every sale.
Most income used to come from airline ticket sales - dropped. Now agencies charge service fee
($35-100) per ticket
Receive commission from consolidators, cruise lines, tour operators etc; revenue from sale of
insurance policies or travel accessories
Override commission - paid at a higher rate once an agency reaches a set sales total over a given
period of time.
Factors changing the way agencies earn revenue:
o After deregulation, airlines reduced then eliminated amount of commission paid per
o Internet has become a competitor
o New self-ticketing devices allow travelers to book and ticket themselves on flights and
o Expenses that might have been absorbed by the agency 10 years ago are now being
charged to the client e.g. booking a bed and breakfast, long-distance calls, and passport
applications. Travel counselors save clients money.
Most web fares are non-refundable, non changeable, with restrictions.
Regulating travel agencies
Must obtain appointment - a form of permission to conduct business. There are 2 major
conference appointments required:
o ATAC - Air Transport Association of Canada - represents commercial aviation in Canada,
and inter-airline standards, ticketing, and passenger and baggage processing
o IATA - International Air Transport Association - regulates the sale of international airline
Agency must be open/operating to apply for ATAC and IATA certification.
o Must have cash to purchase tickets directly from airlines, or must have an agreement
with fully accredited agency.
o New agencies must have at least 2 FT employees (qualified management and also
o Location must be visible to public, and be clearly identified as travel agency
o Must have sufficient financial backing to continuation and maintain records according to
BSP accounting regulations.
o Must show that its actively promoting travel through any method of advertising.
o In Ontario, BC, Quebec - must register with provincial registrar - legislation to protect
Ontario's travel act - includes specific section to protect the consumer.
CITC works with the travel trade focusing on training and instructional materials,
and ensuring professional