Tourism Business as the World’s Largest Industry and Employer

Types of Agencies
There are three different types of agencies in the UK: Multiples, Miniples and Independent Agencies. The former comprises of a number of national chains, often owned by international conglomerates, like Thomson Holidays, now a subsidiary of TUI AG, the German multinational. It is now quite common for the large mass-market tour companies to purchase a controlling interest in a chain of travel agencies, in order to control the distribution of their product. (This is an example of vertical integration.) The smaller chains are often based in particular regions or districts.
In the United States, there are four different types of agencies: Mega, Regional, Consortium and Independent Agencies. American Express and the American Automobile Association (AAA) are examples of mega travel agencies.
Independent Agencies usually cater to a special or niche market, such as the needs of residents in an upmarket commuter town or suburb or a particular group interested in a similar activity, such as sporting events, like football, golf or tennis.
There are two approaches of travel agencies. One is the traditional, multi-destination, out-bound travel agency, based in the originating location of the traveler and the other is the destination focused, in-bound travel agency, that is based in the destination and delivers an expertise on that location. At present, the former is usually a larger operator like Thomas Cook, while the latter is often a smaller, independent operator.
Consolidators
Travel consolidators or wholesalers are high volume sales companies that specialize in selling to niche markets. They may or may not offer various types of services, at a single point of access. These can be hotel reservations, flights or car-rentals, for example. Sometimes the services are combined into vacation packages that include transfers to the location and lodging. These companies do not usually sell directly to the public, but act as wholesalers to retail travel agencies. Commonly, the sole purpose of consolidators is to sell to ethnic niches in the travel industry. Usually, no consolidator offers everything, they may only have contracted rates to specific destinations. Today, there are no domestic consolidators, with some exceptions for business class contracts.
Criticism and Controversy
Travel agencies have been accused of employing a number of restrictive practices, the chief of which is known as 'racking'. This is the practice of displaying only the brochures of those travel companies whose holidays they wish to sell, the ones that pay them the most commission. Of course, the average customer tends to think that these are the only holidays on offer and is unaware of the possible alternatives.
Conversely, by limiting the number of companies that a travel agency represents, this can bring a better and more profitable, working relationship between the agency and its suppliers. Travel agencies can then obtain special benefits for their customers, from a supplier, by concentrating their bookings with that supplier. Some examples of these special benefits would be room upgrades or the waiver of change and cancellation fees.
The Internet Threat
With general public access to the Internet, many airlines and other travel companies began to sell directly to passengers. As a consequence, airlines no longer needed to pay the commissions to travel agents on each ticket sold. Since 1997, travel agencies have gradually been disintermediated, by the reduction in costs caused by removing layers from the package holiday distribution network. However, travel agents remain dominant in some areas such as cruise vacations where they represent 77% of bookings and 73% of packaged travel.
In response, travel agencies have developed an Internet presence of their own by creating travel websites, with detailed information and online booking capabilities. Several major online travel agencies include: Expedia, Travelocity, Orbitz, CheapTickets, Priceline, CheapOair and Hotwire.com. Travel agencies also use the services of the major computer reservations systems companies, also known as Global Distribution Systems (GDS), including: SABRE, Amadeus CRS, Galileo CRS and Worldspan, which is a subsidiary of Travelport, allowing them to book and sell airline tickets, hotels, car rentals and other travel related services. Some online travel websites allow visitors to compare hotel and flight rates with multiple companies for free. They often allow visitors to sort the travel packages by amenities, price, and proximity to a city or landmark.
Travel agents have applied dynamic packaging tools to provide fully bonded (full financial protection) travel at prices equal to or lower than a member of the public can book online. As such, the agencies' financial assets are protected in addition to professional travel agency advice.
All travel sites that sell hotels online work together with GDS, suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site will try to get a confirmation for this hotel. Once confirmed or not, the customer is contacted with the result. This means that booking a hotel on a travel website will not necessarily result in an instant answer. Only some hotels on a travel website can be confirmed instantly (which is normally marked as such on each site). As different travel websites work with different suppliers together, each site has different hotels that it can confirm instantly. Some examples of such online travel websites that sell hotel rooms are Expedia, Orbitz and WorldHotel-Link.
The comparison sites, such as Kayak.com, TripAdvisor and SideStep search the resellers site all at once to save time searching. None of these sites actually sell hotel rooms.
Often tour operators have hotel contracts, allotments and free sell agreements which allow for the immediate confirmation of hotel rooms for vacation bookings.
Mainline service providers are those that actually produce the direct service, like various hotels chains or airlines that have a website for online bookings. Portals will serve a consolidator of various airlines and hotels on the Internet. They work on a commission from these hotels and airlines. Often, they provide cheaper rates than the mainline service providers as these sites get bulk deals from the service providers. A meta search engine on the other hand, simply culls data from the internet on real time rates for various search queries and diverts traffic to the mainline service providers for an online booking. These websites usually do not have their own booking engine.