Start & Run a Tour Guiding Business. Barbara Braidwood, Susan Boyce & Richard Cropp

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      Whether you are putting together your own tours, guiding tours for someone else, or starting a tour company, you will need to know the players in the travel industry. Knowing what goes on behind the scenes will put you in a better position to solve problems when they arise and give you some understanding of what your employer deals with. And of course, if you are running your own tours, this information is essential.

      1. The travel suppliers

      A travel supplier is any company or person selling a travel product. Airlines offer airline seats, travel insurers offer travel insurance, and tour guides offer escort services. But as you will see, definitions are flexible and it is not uncommon to find one company acting as several different kinds of supplier. A tour operator may also be a retail travel agency as well as a wholesaler of airline tickets or a consolidator, all under one roof! When you are designing your own tours, you may deal with a number of these suppliers individually or choose to work through an existing tour operator who offers an already assembled package.

      1.1 Airlines

      Airlines come in all sizes and use a multitude of equipment. Some, such as the national airlines and megacarriers, serve hundreds of locations, are well known, and maintain their own sales staff to sell directly to the public. Good examples are American Airlines or Air Canada. Some large airlines do not sell to the public at all, but charter their planes to other companies that in turn sell seats to tour operators, travel agencies, and the public. They receive little public recognition, but these charter airlines have a major impact on seat availability, especially to popular destinations during peak times (e.g., to Europe during the summer months or to hot spots during the winter).

      Most airlines selling through tour operators and agencies adhere to the rules and regulations of the International Air Transport Association (IATA), which governs everything from commission rates to ticketing restrictions. Typically, airlines pay a commission to the tour operator or travel agency that sells tickets on its flights. Commissions for selling tickets start at 5 percent with a cap on the maximum amount you can earn that varies for domestic and international tickets. Be aware that there are many exceptions. As well, airlines are notorious for changing commission rates. You may find a profitable tour is suddenly no longer worth the effort because the airline changed its commission structure overnight. Keep current.

      Some airlines (particularly charter companies) use net pricing, a method of selling in which the airline acts as a wholesaler, setting a ticket price for an intermediate buyer (a tour operator or travel agency, not the general public). The buyer then sells the ticket for whatever price the market will bear or packages the ticket with one or more other travel products and resells this package to the public after adding a profit. In the end, a tour operator will earn about the same amount from commissions or net pricing.

      Airlines also pay higher incentive commissions, called overrides, if an agency’s volume is high enough or if it belongs to a consortium (a group of agencies acting as one high-volume buyer to get higher commission rates). Usually overrides are on a sliding scale and open to negotiation. They are also subject to sudden termination or modifications as market conditions change.

      If you are an independent contractor running someone else’s tour, you probably will not know what kind of commission your company gets. However, when you put your own tours together, the rate of commission will be all-important when you decide what price to charge for the tour package. You must be sure you are making enough per ticket to cover all your expenses and still make a profit. If you are putting together your own tours through a travel agency, the override commission rate is something you should take into consideration when you are selecting an agency to work with (for more on this, see chapter 11). Overrides allow you to make a little extra money to compensate for other elements of your tour that may not generate much cash.

      1.2 Consolidators and wholesalers

      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, СКАЧАТЬ