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Travel agencies were and remain relatively easy to established for the
a. No product or raw material inventory is required
b. Offices can be leased, often in lower-rent areas
c. Office equipment can be leased
d. Business can be operated at a comparatively lower “break event
e. Licensing requirements are far less stringent than for many
professions (for example medicine, dentistry, law, accounting)
Given these factor and the perceived benefits of working in the
industry, it little wonder that, despite fierce competition, growth in the
number of travel agencies has remained close to 10 percent per year
over the past two decades.
Travel Agency Management
Need for a business plan
Planning is a major key to success for any travel agency, particularly a
newcomer. A business plan is essential for several reasons.
A financial backer assumes willingness to accept risk based on
a. The reputation of the applicant and his or her experience in the
travel agency industry
b. The applicant’s success and reliability in previous business
c. The personal financial net worth of the applicant
d. Assessment of the applicant’s business plan.
Anyone planning to open a travel agency is likely to be optimistic about
future success, but often the decision is based on emotional reasons
rather than objective analysis. A business plan forces the entrepreneur
to analyze the opportunity from a business perspective and possibly
avert potential disasters. After analyzing the situation, some may
decide not to enter the travel agency business.
The business plan is essentially a plan of operation, providing all
the information necessary to run the business. Specific components
of the business plan include:
Name of agency
Location and building
Philosophy and mission statement
Industry and market analysis
Licenses and certification
Name of Agency
It is important to select a name that has the following attributes:
It is easily remembered by clients.
It is easily pronounced
It is easily spelled and written
It looks impressive in print and on signs
It reinforces the desired image
It has permanence and is no trendy
It does not infringe upon the name of others and is not the
name as previous unsuccessful agency
On this last point, it is important to ensure that the proposed
name can be legally used and is not already the possession of
another person or business. This requires checking with the
state’s incorporation department.
Serious consideration must be given to the issue of ownership,
which may be in the form of an individual proprietorship, a
partnership, a limited partnership, or a corporation
Location and Building
A business plan includes a description of the location and the
building where the agency will be housed. Location can be critical factor
if walk-in traffic is expected. A ground floor location with a good window
area for displays, as well as location in a busy commercial area, is
essential to attract walk-in (it is mandatory in some countries). If walk-
in traffic is not an issue, allocation that requires lower rent and
maintenance may be suitable. Other factor to consider include adequate
parking, the number of other travel agencies located in the immediate
area, and proximity to business and middle and upper class
neighborhoods. Both location and the building itself must match the
objectives of the agency
Philosophy and mission statement
Successful business ventures operate under a statement of what
the business is intended to be and philosophical statement
concerning how the business will be operated, and these need to
be clearly thought out and written as a guide.
A. Industry and Market analysis
The business plan should include a description and analysis of
the travel agency industry. A good analysis requires interviews
with knowledgeable persons from associations that represent
travel agencies, suppliers such as hotel and airlines, government
agencies, and competitor. The analysis of the industry will
provide a “macro” perspective and enable an entrepreneur to
understand important trends and possible opportunities.
An analysis of the local market should contain the following:
a. Competition, all competitors, including nontraditional travel agents
such as discount travel agencies and department store travel club,
should be describe.
b. Market Trends. It is critical to have a clear understanding of the
local market and how it is changing.
c. Market Segments. Travel agency are increasingly being forced to
find market niches rather than attempting to serve the entire
general public as well as the commercial sector. Travel agencies
have been successful in selecting specialized market niches such as
an ethnic market or the religious market.
d. Barriers to entry, Barriers to entry exist in some markets. The
existence of too many large travel agencies or lack of affordable
office space in good location might prove to be significant barriers
and should be considered in the local market analysis.
Based on the industry and market analysis and the overall goals for
the agency, a business strategy must be selected. Strategy entails how
best to utilized limited resources to maximize profits and obtain other
agency goals given the environment and the competition. Strategic
planning then can be defined as the determination of the future
status of the business with specific reference to its product, its
profitability, its size, its rate of innovation, and its relationship with
owners, managers, employees and so on. The process of planning
assists travel agency management in reaching better decision
regarding all aspect of operation :
Product-Market Matrix, The product-market matrix is a major
component or outcome of the agency’s strategic planning. The matrix
identifies which product the agency will be selling and whom they will
Forecast of the future environment are a major basis of planning
and should be made explicit during the planning process.
Forecasting of collecting data can be measured by Delphi method,
Regression or other.
For both short-term and long-term planning, agency management
should determine future growth directions and the resources this will
require. There are basically three options available to agencies
seeking growth: market expansion, product expansion and vertical
Market expansion involves selling existing products to new market.
Product expansion means adding new product compatible with the
agency’s existing product line. For a strictly retail agency, vertical
integration involves expanding beyond retailing activities.
A travel agency business plan should include an estimated sales
forecast for each month of the year. Sales are likely to fluctuate quite
drastically between months and seasons, depending upon the location of
the agency and its clientele. Financial projections and determination of
future cash flows are based on these monthly estimates; therefore, the
sales forecast must be realistic. Sales forecast should include revenues
from all possible sources.
Licenses and Certification
To open a travel agency, individuals are not required to hold a college
degree or a professional certification. But must follow the rules which has
been stated by local government (ASITA). There are some requirements
for whom that work as a clerk or front liners (staff) in Travel Agency. The
requirement is the staff must have a certification standard that issued by
Travel agencies are required to obtain appointment from
associations representing international and domestic airlines.
Appointment authorize travel agencies to serve as sales agents for
carriers and allow the agencies to write tickets and collect
commission from the carriers.