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University of Waterloo
Recreation and Leisure Studies
REC 280
Stephen Smith

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 th  Began in the early 17 century  Le grand tour was designed to educate sons in the ways of the civilized world st  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 Wholesaling  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 packaging it  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 customers.  Tickets usually have restrictions e.g. minimum stay requirements, non- endorsable. 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 be negotiated 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, especially sales.  Meal costs  Accommodation type  Length and stay in principal cities – pacing of a tour is important for sales  Sight seeing  Attractions 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. Tour categories  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 political/environmental atmosphere.  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 departure date 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)  Safety  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 bankruptcy 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. Travel agencies  Is a retail business that arranges for travel services with suppliers; requires a relationship with customer  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 benefits.  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. Agency operations  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 ticket sold o Internet has become a competitor o New self-ticketing devices allow travelers to book and ticket themselves on flights and check-in 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 tickets  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 ticketing agent) 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 traveler  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
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