Laying The Foundation

Chapter 1: Laying The Foundation

Understanding the Basics

What is a Travel Agency?

A travel agency is a business that operates as the intermediary between the travel industry (providers of accommodation, flights, cruises, etc.) and travelers. It offers travel-related services and products, assists in securing travel arrangements, and often provides tailored travel planning and packages. For those looking to start their own agency, understanding this intermediary role and its responsibilities is key to defining the business’s operational framework.

Types of Travel Agencies: Retail vs. Wholesale

  1. Retail Travel Agencies

    • Definition: Retail travel agencies deal directly with the public to make travel arrangements on behalf of their clients. These agencies earn commissions by booking elements like hotels, flights, tours, and car rentals.
    • Services: Beyond bookings, retail travel agents provide consultations, plan itineraries, and offer customized travel advice based on individual client needs.
    • Client Interaction: Direct interaction with clients is a hallmark of retail agencies. This includes in-person consultations, phone calls, and email communications.
    • Examples: Typical examples include storefront travel agencies and specialized agents who focus on niche markets like luxury travel, cruises, or adventure tours.
  2. Wholesale Travel Agencies

    • Definition: Wholesale travel agencies operate by purchasing travel services in bulk and assembling them into packages, which are then sold to travelers via retail travel agencies or directly to the client at a package price.
    • Services: These agencies negotiate directly with providers (hotels, airlines, car rental companies) to secure lower rates and then bundle these services for resale.
    • Client Interaction: Wholesalers typically do not deal with travelers directly but through other agencies. Their focus is on creating relationships and contracts with suppliers to procure favorable rates.
    • Examples: Wholesalers are often behind large-scale travel operations and are key players in international and specialty travel markets.

Why This Matters

Understanding the difference between retail and wholesale travel agencies will help you determine the right business model for your agency. Each type has distinct operational, marketing, and customer service strategies, which should align with your business goals and expertise in the travel industry.