A travel agency is a retail business, that sells travel related products and services, particularly package tours, to end-user customers, on behalf of third party travel suppliers, such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and tour companies. In addition to dealing with ordinary tourists, most travel agencies have a separate department devoted to making travel arrangements for business travelers, and some travel agencies specialize in commercial and business travel only. There are also travel agencies that serve as general sales agents for foreign travel companies, allowing them to have offices in countries other than where their headquarters are located.

Origins

The British company, Cox & Kings,is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the nineteenth century. Thomas Cook, in addition to developing the package tour, established a chain of agencies in the last quarter of the nineteenth century, in association with the Midland Railway. They not only sold their own tours to the public, but in addition, represented other tour companies. Other British pioneer travel agencies were Dean and Dawson, the Polytechnic Touring Association and the Co-operative Wholesale Society.

Travel agencies became more commonplace with the development of commercial aviation, starting in the 1920s. Originally, travel agencies largely catered to middle and upper class customers, but the post-war boom in mass-market package holidays resulted in travel agencies on the main streets of most British towns, catering to a working class clientèle looking for a cheap overseas beach holiday.

Operations

As the name implies, a travel agency's main function is to act as an agent, that is to say, selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they do not keep a 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. The profit is 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. A British travel agent would consider a 10-12% commission as a good arrangement.

In some countries, airlines have stopped giving commission to travel agencies. Therefore, travel agencies are now forced to charge a percentage premium or a standard flat fee, per sale. However, some companies still give them a set percentage for selling their product. Major tour companies can afford to do this, because if they were to sell a thousand trips at a cheaper rate, they still come out better than if they sell a hundred trips at a higher rate. This process benefits both parties.