Travel agents, tour operators and wholesalers are distinct sectors of tourism (King and Hyde, 1989, p. 41). The terms “tour operator” and “wholesaler” are often used interchangeably. However, Howard and Harris (2001) argue that in tourism industry jargon, the two denote different types of businesses.
Tour wholesalers
A tour wholesaler is defined as a firm that purchases travel and tourism services in bulk and combines two or more of these services into a ‘package of travel’, often called a tour for sale through travel agencies or direct to consumers (King & Hyde, 1989; Howard & Harris, 2001). These services include airline seats, car rental, hotel rooms, sight seeing tours etc.
Tour wholesalers play a prominent role in the tourism industry by developing package tours, which normally include viable destinations and combinations of attractions, accommodation and transport (Dickman 1989, p. 144). They have a responsibility of ‘selecting’ and
‘combining’ services in a manner that would appeal to a target market. Packages provided by these tour wholesalers therefore vary considerably depending on the number and nature of ingredients included. Howard and Harris (2001, p. 359) argue that by providing ‘ready made’ travel and tourism packages “tour wholesalers make it easier for individuals, or groups, to travel to and experience other areas or countries.” They also secure substantial price discounts by buying in bulk from different service providers and then design a brochure to promote the package and distribute it for sale either through travel agencies or to consumers.
Tour wholesalers do not usually own the services they package. However, evidence exists to the effect that some companies employ their own tour escorts or managers rather than purchasing these services from specialist companies or individuals (Howard & Harris, 2001). Through forward integration, some airlines, particularly QANTAS, Jetstar and the now defunct Ansett operated wholesaling and travel agents divisions as a way of increasing the sales of their seats (King & Hyde, 1989; Howard & Harris, 2001). For example,
QANTAS runs its wholesaling division QANTAS Holidays while Ansett used to own Traveland, one of Australia’s biggest travel agents chains. In Australia tour operators such as Jetset, Thomas Cook and Express also act as travel agents, prepared to book their own or other tours for a customer. Traditionally they have been classified as domestic, inbound and outbound tour operators.
Tour operators
A tour operator is a “company or individual that provides tours within a particular destination area. These tours can range from simple sightseeing journeys (e.g. harbour cruises) to extensive journeys of many weeks” (Harris & Howard, 1996, p. 153).
There are two broad types of tour operators, namely Local tour operators and Inbound tour operators. Local tour operators are tour operators that conduct tours within a particular destination and are located primarily in a traveller’s or tourist’s destination region. Howard and Harris (2001) argue that these operators’ services might also be used while en route to these areas by inbound tourists. Howard and Harris (2001, p. 361) further observe that while most local tour operators sell directly to consumers as well as through travel agents, many of them also “seek to have their services incorporated into the packages out together by tour wholesalers and inbound tour operators. In acting this way they are able to greatly increase their ability to sell their services to interstate and overseas travellers.”
Inbound tour operators are organisations, which arrange and oversee tour packages bought by inbound tourists to Australia. They do not only put together packages of services for use in a destination area by overseas travellers but also coordinate travel arrangements in Australia for overseas wholesale tour operators and retail travel agents. Their services include planning an itinerary in Australia, operating the tour, costing the tour components - including transfer, accommodation, sight-seeing, domestic transport, airport transfers, entertainment and meals (Stirling, 1993). Howard and Harris (2001) observe that service packages developed by Inbound tour operators in Australia are not sold directly to overseas
travellers but are purchased by tour wholesalers, travel agents and incentive houses located in the traveller’s home country who in tern would incorporate the packages into their own product offerings which they would then sell directly or via travel agencies, to consumers.
Travel agents
Travel agencies are intermediaries between principals (airlines, coach companies, hotel, vehicle, rental firm, tour wholesalers and cruise lines) and consumers (tourists). Travel agents evolved from pioneer travel agents such as Stewart Moffat Travel in Melbourne and World Travel Headquarters in Sydney in the 1950s even though there were a handful of agencies set up just to handle travel much earlier (Richardson, 1999). These pioneers were both wholesalers, retailers and inbound operators at the same time, and “…as time went on and markets became bigger, specialists developed either as separate companies or as subsidiaries or divisions of large ones” (Richardson, 1999, p. 252). Travel agents became more important when air travel increased popularity. Airlines viewed the use of travel agencies as a cheap and effective method of widening their distribution network in order to reach new and expanding markets (Vasudavan & Standing, 1999, p. 214). Furthermore, as more people travelled greater distances it became essential to have someone who knew about overseas destinations and regulations which became important to the overseas traveller (Dickman, 1989, p. 140). This led to the use of travel agents as brokers between tourism industry operators (principals) and consumers. Howard and Harris (2001, p. 24-26) argue that travel agencies in Australia can be grouped into four types, namely independent travel agencies, corporate chains, franchise agencies, and corporate buying groups.
Travel agents act not only to assist principals to distribute their services to those people who wish to purchase them (Howard & Harris, 2001), but also provide information, promotion and booking service to the market place (Stirling, 1993) in return for a commission “which is generally expressed as a percentage of the sale price of the travel product” (Howard &
Harris, 2001, p. 18). They also offer their clients a range of consulting services, including advice on travel services to purchase, and assisting clients in organising their trips. French et
al. (2000, p. 75) see agents as assuming a dual role. The first role being contractual between the agent and the principal8 and the second being responsibility to the client in offering a service9.
Leiper (2003) sees travel agents as performing a number of responsibilities to their clients:
motivating sales prospects, informing consumers, making and confirming reservations, selling, planning clients’ trips, organising clients’ trips and supporting the management of clients’ trips; and principals: representing principals, selling and other promotional roles for principals, collecting information on booking, providing financial services and gathering market data. They also play an important intermediary role in the Australian tourism system. Given this duality of roles, Howard and Harris (2001, p. 18) argue that travel agencies are best defined as intermediary firms that derive financial gain (in the form of commission) by linking suppliers of tourism services with consumers through the provision of reservation, ticketing and other services.