Role of a travel agency is to perform as an intermediary between the producers and consumers of tourism services. Suppliers in tourism industry such as airlines, tourist transport operators, tour operators, hotels etc work with travel agency for distribution of their services. Tourists also avail the services of travel agency for buying the services of the major suppliers. This does not mean that the travel agencies follow the strategies of the principal suppliers for marketing purposes. They have to chalk out their own strategy for promoting themselves.
Travel agencies make effort to add value to the products/services of the major suppliers. They go for their own market research to set the target market. They have to decide on discounts or service charges and finalise their product mix as well as sales and promotional strategies.
Understanding the Market
A travel agency has to take decision which market segment to target. The prospective market needs to be properly segmented. This segmentation could be done on the basis of the motive of travel or their budget. Timing of the travel decisions or services required by the customers could also be the base of segmentation. A customer could require services like tour packages, travel consultancy, ticket booking, handle travel documents (visa, passports etc), airport transfers, hotel bookings etc.
Travel agency business is more or less confined to sole proprietorship or partnership firms. Majority of businesses are of small level. A travel agency has to decide on the target market, determine on customer requirements and generate ideas to develop the product. One also has to do the business analysis considering costs, estimate future sales, and profit potential.
A travel agency could have product oriented or market oriented approach in the business. It could emphasise on products and services of tourism supply, disregarding customer needs. However, in a multi-player market, this approach will not work. A market oriented approach would always be better for an agency. It must look at the customer needs and accordingly design its products. Market survey has to be conducted to understand the customer needs and get information about the practices of other agencies. Only when a manager knows about market needs, he can take a decision on the product design of the company. For example, services provided to walk-in customers could be different than those offered to repeat customers.