Are you looking to start your own travel company? Do you have a particular hobby or interest that you enjoy and would like to earn money for as a job on a full or part time basis? If the answer is yes then starting a niche travel company in the Travel Industry could be something to consider.
What are the main differences between starting a Tour Operator or Travel Agency?
There are a number of differences between the two options and considering which one your business will fit into really depends on what type of travel you are looking to sell. The main differences are outlined below:
Tour Operator
A tour operator typically combines tour and travel components to provide a holiday. The most common example of a tour operator’s package would include a hotel, a transfer from the airport, a specific activity and possibly a flight. Niche tour operators may specialise in specific destinations, e.g. Italy, India, UK, activities and experiences, e.g. skiing, music trips, special interest tours, or a combination of both.
For profit, tour operators usually negotiate net rates with suppliers and then add their own margins onto the package on a percentage or per passenger basis.
As tour operators act as principle for the packages they provide they also have to provide financial protection in line with the 1992 Package Travel Regulations or ATOL.
Travel Agent
A travel agent is a private retailer that provides travel related services to the public on behalf of suppliers such as hotels, flights, car hire or package holidays (tour operators).
A travel agency’s main function is to act as an agent selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they do not keep any stock in hand. A package holiday or a ticket is not purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount and profitis therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission.
As agents sell packages on behalf of tour operators financial protection is generally not required as the consumer’s contract is direct with the financially protected tour operator. However, many travel agents now wish to provide financial protection to provide their customers with an added level of protection and piece of mind.
Why start a Tour Operator over a Travel Agency?
Ultimately the decision is up to you. Whilst both have their benefits if you want the flexibility to design your own packages using your own carefully selected suppliers, be in control of your own profit margins and put your own personal touch on each trip you sell then starting business a tour operator is probably the best option for you.
If you have decided on starting a tour operator then please see our page regarding Starting a Travel Company.Alternatively, please see our other pages if you would like to find out more regarding the UK Travel Laws and Regulations.
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