Travel Intermediaries and Tour Operations
Travel Intermediaries and Tour Operations
This domain covers travel agents and tour operators, the two main intermediaries that assemble and sell travel. The exam tests functions, principal relationships and simple commission or mark-up calculations.
Core rules and concepts
- A travel agent usually sells suppliers' products on their behalf, such as tickets, hotels and packages, and earns commission or a service fee.
- A tour operator assembles components into a package, sets the price and normally acts as principal. It takes the risk of unsold seats, rooms or poor sales.
- FIT means free independent traveller; GIT means group inclusive tour. Inbound operators handle foreign visitors; outbound operators send residents abroad.
- An itinerary is a day-by-day plan. It must be realistic about travel time, opening hours, meals and rest.
- Commission is a percentage of the selling price. Mark-up is added to cost to set the selling price.
Worked example
A tour operator buys hotel accommodation for 2,000, transport for 3,000 and guide services for 500, a total cost of 5,500. It adds a 500 mark-up and sells the package for 6,000. If a travel agent sells it on 10% commission, the agent earns 600 and the operator receives 5,400 before its own costs. The operator's mark-up is not the same as the agent's commission.
Traps that cost marks
Do not say an agent always bears the risk; the operator usually does. Commission is calculated on the selling price, not on cost. A package is more than a list of suppliers; it is priced and managed as one product. Overpacked itineraries lose marks for poor feasibility.