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      Consolidators and wholesalers sell airline tickets either at a discount or at a much higher commission than the airlines will give you. These companies provide a means for the airlines to sell large numbers of tickets at one time. Essentially, the wholesaler makes a commitment to sell a certain volume of tickets in return for a lower price, negotiating the best deal directly with the airlines. Although the airline is, in a sense, setting up competition for itself, the economics of the arrangement are worth the lost revenue.

      Airlines never used to admit they engaged in such practices and would tell you, without blinking, that only they sold the airline tickets and that pricing was completely standardized. Airline employees would intimate that tickets not supplied by the airline were probably illegal imports from some distant country. Now, however, some airline reservation departments will tell you that you can get a better price from XYZ Consolidator and Wholesale Company. In effect, consolidators and wholesalers have become the reservation department for some of the airlines, who can then reduce staffing expenses.

      1.3 Tour operators

      Tour operators are companies that put together two or more travel suppliers’ products. For example, a tour operator may commit itself to filling a large number of hotel rooms in Hawaii and a certain number of airline seats during a specific time period to get a preferred price. By combining these two purchases into a “package,” the tour operator can sell it to the public for less than if the pieces were purchased separately from each of the travel suppliers. Sometimes it is possible to get the same airline seat through either the airline or a tour operator, but the tour operator’s seat may be cheaper!

      Tour operators come in all sizes and their products range from escorted tours to airline seats. Packaging tours is a fiercely competitive business with thin margins. Rules change quickly and agreements are canceled with little or no notice.

      Many of the major airlines have their own tour companies — legally separate companies with a different address, staff, and administration. These firms are dedicated to the airline, however, and use the parent company’s equipment most of the time.

      If you are just starting to run tours, you may decide to use existing packages instead of designing your own. One of the advantages of working through large tour operators, especially airline-owned ones, is the clout they have with the airlines. As a matter of policy, you may want to play it safe and book your clients only with major tour companies. In a crunch (if you are stranded in a foreign country, for instance), you may be able to count on the tour operator’s connections for help. Smaller tour companies, on the other hand, sometimes pay you more than the large companies to entice you to deal with them. In the end, you will have to decide whether the added risk is worth the extra profit. Although it often is, this is far from a hard and fast rule — sometimes security is priceless.

      Tour operators generally specialize in either inbound or outbound markets. As the name implies, inbound tours originate in another country and come to the local area. Outbound tours leave the local area and go to another country. Whether focusing on inbound or outbound, tour operators offer their clients several different types of packages ranging from simple combinations of airfare, hotel, and transfers between the airport and hotel to all-inclusive, fully escorted extravaganzas. Here are the basic divisions you should be aware of.

      (a) Group Inclusive Tour (GIT)

      A Group Inclusive Tour (GIT) includes transportation to and from the destination, plus transportation needed while traveling, hotel-airport transfers, accommodation, sightseeing, and usually at least some of the meals. These highly structured tours offer western-style accommodation and dining, English-speaking staff at all stops, and limited free time. They are ideal for travelers on their first trip to truly foreign destinations such as the Far East or Muslim countries where customs and cultures are radically different from the tourist’s home, or for the person who simply wants to have the comfort of familiar surroundings.

      (b) Foreign Independent Travel (FIT)

      Foreign Independent Travel (FIT) is a customized group tour. A group of wine connoisseurs might arrange a FIT tour of the Loire Valley of France. Several members of the group would work out the details, tailoring the itinerary to the group’s interests, then leave it up to the tour operator to arrange appropriate bookings and local guides.

      (c) Independent Tours (IT)

      Independent Tours (IT) are for people who want prearranged rates for the basics (airfare, accommodation, and ground transportation) but complete freedom and no guide at the destination. A couple honeymooning in Acapulco on an IT know their hotel and rental car are waiting on arrival at the airport but are free to explore (or stay at the hotel) as they fancy.

      (d) FAM

      FAM trips are just one of the marvelous perks of being in the tour guiding business. These are subsidized or free trips to a destination or attraction which FAMiliarize tour operators, directors, and tour guides with its features. For example, a new theme park might provide several nights’ accommodation and admission to all rides and exhibits so that tour professionals will promote and show off the park to maximum advantage throughout the season.

      1.4 Hotels and car rental agencies

      Hotels and car rental agencies sell not only to the public through their own offices and toll-free telephone numbers but also to tour operators. Commission rates range from 5 percent to 12 percent.

      1.5 Insurance

      Insurance suppliers generally provide medical, accidental death, lost baggage, and cancellation insurance to the industry. This is a wonderful source of revenue as commission rates vary from 10 percent to more than 40 percent on a policy. It is also a necessary protection for you and your clients, especially for travel in foreign countries. Many tour operators insist their clients carry complete insurance in order to join a tour, while others require clients to sign a waiver if they choose to travel without insurance.

      1.6 Cruises

      There are more cruise ships being built now than at any time in the last 50 years. As a floating luxury resort, each line tries to set itself apart from the others by stressing price, quality, luxury, or differences in the exotic destinations and sidetrips they offer. Ticket prices for a cruise are normally above $1,000 per person, so commissions for each sale start at $100.

      2. Agency Specialties

      If you are going to run your own tour operation, you will need to find a travel agency to work with. You may deal directly with airlines and hotels in some states and provinces, but in others it is illegal to accept money for travel unless you are either a registered agency yourself or are working under an existing agency’s license. (For more information on working with a travel agency, see chapter 11; on laws and registration procedure, see chapter 15.)

      The days of the general full-service travel agency are not over. However, the complexity of the industry today has spawned thousands of agencies specializing in particular areas and types of travel. It is to your advantage to focus on those agencies that best represent what you are aiming for. If you want to put together a tour of England, don’t go to an agency specializing in African safaris. Keep in mind that the contacts of the travel agency you have chosen will make all the difference to the quality of your tour and to the amount of money you make. If you are going after a certain kind of client, a specialized travel agency may be able to do a better job at a better price than a full-service agency. The specialized agency will have clearly defined target markets and will aim its marketing at these potential clients. This will work to your advantage as you try to fill seats for your tour.

      3. Travel Regulators — IATA, BSP, IATAN, AND ARC

      In the United States, the accreditation

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