Travel Agency and Tour Operations
Domain 4 tests the difference between a travel agency and a tour operator, the functions of each, and basic package costing. You must know who acts as an agent, who assembles products, and how commission differs from markup.
Core rules and concepts
- A travel agency sells principals' products such as airline tickets, hotel rooms, insurance and visas. It usually earns commission and may charge a service fee.
- A tour operator assembles packages using transport, accommodation, guides and activities. It takes commercial risk and adds a markup to cost.
- Functions include reservations, ticketing, itinerary preparation, visa and passport assistance, forex, insurance, tour escorting and customer service.
- Tour types include escorted, hosted and independent; FIT and GIT; inbound, outbound and domestic.
- Documentation rules: passports must be valid, visas must match purpose and dates, and tickets must show correct name spelling. Never guarantee a visa.
Worked example
A two-day land package costs Rs 8,000 per person: hotel Rs 3,500, transport Rs 2,500, guide Rs 1,000 and meals Rs 1,000. The operator adds 20 percent markup, then 5 percent GST. Reasoning: markup is 20 percent of Rs 8,000 = Rs 1,600, so pre-tax price is Rs 9,600. GST is 5 percent of Rs 9,600 = Rs 480. Selling price is Rs 10,080. If the agency instead sold the hotel for commission, it would not own the package risk. That is the key distinction.
Traps that cost marks
- Confusing commission (paid by principal) with markup (added by operator).
- Forgetting GST or quoting a price that is not inclusive.
- Promising visa approval or ticket refunds the supplier has not confirmed.
- Misspelling names against the passport.
- Ignoring cancellation and payment deadlines.