TATO (Travel agency and Tour Operation) Presentation

1. Diversification of Travel Agency
and Tour Operation Business
Dr. Sumit Kumar Singh

2. Introduction
• The traditional travel agents and tour operators are no longer limited to the
periphery of business with the ticketing, hotel bookings, package retailing, etc.
• They have switched over to the new upcoming business areas like insurance,
corporate travel, foreign exchange, cargo and MICE.
• Airlines have stopped paying fixed commissions to the travel agents for the sale of
tickets.
• Hundreds of IATA-accredited travel agents were forced to shut down the ticketing
business and majority of them have moved to some other business.

3. Need for Diversifications
• Travel has become easier and more enjoyable with the innovative methods of
providing personalized services to the customers.
• The role of modern travel agency and tour operation units has also become
increasingly important.
• Travel agency business has solved many travel related problems.
• It is now the easiest way of making travel arrangements and making the
journey, tour and stays enjoyable and memorable.

4. Significance of Diversifications
• A travel agency is a retail business entity to sell travel related products and
services to customers.
• The most significant area of business is the package holiday, car rental, hotel
bookings, travel insurance, foreign exchange and MICE.
• The main objective of diversification is to increase the volume of business
and immunity.

5. Special Incentive Travel Division
• In the era of globalization, many companies promote the incentive travel as
an important source to attract and retain employees through exotic holiday
trips.
• Travel incentive programme includes the development of intra-company
communications, sales promotion campaigns and establishment of quotas.
• Compensation on the sale of travel services such as transportation and hotel
for a full-service company is usually received in the form of professional
fees, expenses, and normal commissions.

6. Travel Insurance
• Travel insurance covers against unexpected events during the tour.
• It may occur as many things do not have in the control of human beings.
• Problems during the tour can be as small as a biting an insect to as big as
facing fatal accidents.
• Travel insurance can help in overcoming all these problems.
• It may catch an infection or a delay in flight, a hijack or an emergency
medical assistance required.

7. MICE
• More people are travelling to India for business since the opening of Indian
economy in 1991.
• Even the India Tourism offices overseas put a greater emphasis now on to
promote MICE segment over leisure as this ensures volume and increased
revenue.
• It is estimated that 25% of the overall tourist arrivals in India could be from
MICE segment.

8. Foreign Exchange
• Forex is the biggest financial market in the world, It is a source of income to
many traders and banks of the world.
• It is not tied to any stock exchanges in the world. In fact, it is over-the-
counter (OTC) market. It helps international trade and investment.
• Market participants have also been provided with greater flexibility to
undertake foreign exchange operations and manage their risks.
• This has been facilitated through simplification of procedures and availability
of several new instruments.

9. Courier Service
• The EDS (Express Delivery Sector) industry provides services that include
integrated door-to-door transport and quick delivery of time-definite
shipments of documents, samples, parcels, etc.
• Although it generally facilitates transportation of documents, samples, gifts
and other high-valued time-bound items.
• One of the key features of this industry is that it handles custom clearances
and reduces the requirements of multiple agents such as freight forwarders
and customs house clearance agents.

10. Coffee Shops
• Some agencies begin to offer other services, and a very recent example has
been the launch of Café de Voyage in Milton Keynes,
• where the growing public trend towards using coffee shops has been
matched with the opportunity to offer a higher level of customer service
• (including a free cup of coffee) to differentiate this particular travel agency’s
product offer from that of the major multiples.

11. SMS Marketing
• SMS marketing is an effective strategy for service businesses to connect with
their clients with the aim of improving sales.
• Service based businesses require a high level of personal connection.

12. Short Message Service (SMS)
• Short Message Service (SMS) is a communication tool that provides a
convenient means for people to communicate with each other using text
messages via mobile devices or Internet connected computers.
• Solutions for e-Marketers are available to deliver bulk of SMS messages to
large group of people, instead of sending SMS messages one by one
manually.

13. SMS Alerts
• Through the SMS alerts, the business is able to contact their clients through
text message alerts.
• These alerts assist the clients to stay informed about the company products
or services, news, sales and virtually any other information that the company
would want to share with its clients.
• For instance, Sender can send an SMS reminding them when they should
book their next appointment or when they should expect a discount offer.

14. Text to Screen
• As the clients are engaging with the service, the travel agency can create
additional attraction by encourage them to text their opinions,
recommendations and suggestions.
• This approach is particularly effective when trying to analyse and understand
the behaviour of consumers.
• This is an interactive and exciting method in which clients are able to
participate.

15. Text to Win
• The text to win campaign is also very exciting.
• The clients are encouraged to text a keyword or phrase to the SMS short
code of the campaign in order to win something.
• The prize should be alluring enough to encourage enough participation from
the clients.

16. Mobile Coupons
• Utilize the mobile coupons with the aim of retaining the clients.
• One major advantage of the mobile coupons is that they are very simple to
set up and quick to send out.
• They work instantly and are very effective when sales are slow.
• By simply sending out the mobile coupons, clients will begin lining up for
your service.

17. Miscellaneous Services
• A travel agent is a one stop solution to add efficiency to professional
destination management services and a host of leisure activities (It caters to
all aspects of conferences, business meetings, event management meets,
seminars, exhibitions, and launch of new products and incentives.
• Every event is customized to suit the specific requirements of the customers.

18. Diversification Strategies
• Diversification strategies are used to spread out firms’ operations by adding
markets, products, services, or stages of production to the existing business.
The intention of diversification is to allow the company to enter lines of
business that are different from current operations. When the new venture is
strategically related to the existing lines of business, it is called concentric
diversification and when there is no common thread of strategic fit or
relationship between the new and old lines of business are unrelated it is
called conglomerate diversification.

19. Horizontal Diversification
• Horizontal diversification means to diversify into new tourist products, but
targeting the existing customer base as the potential customer base as the
potential customer. Often firms feel that they have established a brand
loyalty with current customers or a certain knowledge of their markets which
allows them to introduced new products. For example: If a travel agent, who
normally books holidays, diversifies by purchasing a company selling travel
insurance. The travel agent is serving those same customers, but in a new
manner.

20. Concentric Diversification
• Concentric diversification entails the introduction of a new tourist product
to a new but related market. By related we mean that the tourist market must
be somewhat similar to the firm’s existing market in either a marketing sense
(e.g. - customers demographics needs) or an operational sense.

21. Conglomerate Diversification
• Conglomerate diversification is also known as lateral diversification. It
involves marketing of tourist products. This is not a usual method of
expanding the business. It occurs when a travel agency or tour
• operator diversifies into new areas of business. The primary purpose of
conglomerate diversification is to ensure profitability. It can be possible with
the help of synergetic approach. This can be achieved through the
application of management expertise or financial resources. Attention is
given to use diversification strategy in marketing travel products or
production of synergy with conglomerate diversification.

22. Summary
• The traditional travel agents and tour operators do not have more options
and they only focused on the ticketing, hotel bookings, package retailing, etc.
• In the competitive environment, emerging business areas like insurance,
corporate travel, foreign exchange, cargo and MICE.
• Managers from different divisions may have different backgrounds and may
be unable to work together effectively.
• Competition between strategic business units for resources may entail
shifting resources away from one division to another.