Agency Background
Travel agencies are retail businesses that sell travel-related products and services to companies and individual consumers. They can be traditional walk-in or home-based, where all work is done online and by telephone. The walk-in agencies also work online and by phone, but they also have public facilities for foot traffic and can be located any place from small shopping centers to corporate offices in large buildings. Some agencies also serve as general sales agents for foreign companies, allowing them to have offices located outside of their headquarters. The United States has four different types of agencies: (1) Independent (usually home-based or those which cater to a niche market, such as those that are activity or socially-related), (2) Mega (such as AAA and American Express), (3) Regional (those that cater to smaller and private airports and specialized lodging arrangements) and (4) Consortium (a group of companies in voluntary association with agencies that share resources in order to gain a market advantage; usually suppliers that enter into "preferred supplier" relationships with agencies). In the UK, they consist of Multiples, Miniples (companies with a small number of branches in a particular geographical area) and Independents. Most travel agents work on commission, but some are salaried professionals, particularly those who work for corporate entities.
Approaches to Operating a Travel Agency
The two approaches of travel agencies are the traditional, multi-destination model and the destination-focused in-bound agency, which delivers expertise on a particular location. Though most agencies have lost some ground booking individual travel due to the advent of the Internet and the ease of online self-booking, they still dominate in areas such as cruises and all-inclusive vacation and holiday packages, where they represent 77% of bookings and 73% of packaged travel. The better agencies supply additional services for their clients, such as ways to obtain a passport, purchase travel and trip cancellation insurance, book rental properties (homes and condos) instead of hotels, or sometimes they provide discounts on events and venues at the traveler's destination point.
Third-party Relationships
Travel agencies transfer services and products from suppliers---basically acting as an intermediary or go-between. What makes the relationship work best is bulk selling, which offers the ability to sell at volume discounts rather than having to charge full rates for "piecemeal" (one at a time) services. The more is sold, the more it drives the pricing down. It's a win-win because the client gets bigger discounts and the agent gets larger commissions. Another thing that makes these relationships work is outsourcing. Suppliers (except for a few of the larger hotels) don't typically hire and keep the staff that it takes to consolidate and bulk-rate travel to individual consumers; and even the larger hotels serve only the public that is concerned with booking rooms and suites with their own particular company. Agencies are underwritten by corporations such as IATAN (a non-profit organization that appoints travel agencies and travel agents on behalf of its customer airlines), CLIA (the official trade organization of the cruise industry of North America), NACTA (The National Association of Commissioned Travel Agents), ASTA (an association of travel professionals and vendors), and OSSN (a support network for independent and home-based agents).
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