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Michelle Anne Tayoba TM 4-1 Page 1 6/30/2010

Starting a Travel Agency

There is no generic approach to opening a travel agency. This is in part due to the fact that the laws or regulations can vary from
country to country and state to state.

The travel industry has been in the news a lot recently – for obvious reasons. So the idea of starting up in the business yourself might
seem ill timed, to outsiders. In fact, according to those in the industry, things are definitely on the up and the service that an
independent agency can offer is very appealing to a discerning public.

You won’t be able to compete with the big brands on price so it is all about what you can offer over and above that. This is where
customer service is so important, what differentiates your business from others. Overall quality of service is a key aspect.

The current market

Setting up as a travel agent shouldn’t be confused with being a tour operator. The difference is that the former sells the holidays while
the latter organises them. It’s possible to set up as an independent tour operator but there is a lot of competition for big firms that have
the buying power to keep prices lower.

This isn’t to say travel agents are any less competitive but most are doing good business at the moment and apparently looking
forward to a boom year next year. If this proves to be the case it would appear to be as good a time to start as any.

Who is it suited to?

By choosing a competitive industry you are inevitably resigning yourself to a high degree of hard graft. And you may not have the
time to take advantage of the attraction of free or discount holidays at the start – so don’t have that as your only motivation.

Having said that, there are few, if any, small businesses which afford you much respite in the first couple of years. So your motivation
needs to be linked with the work and the service you are providing.

Whichever way look initially you will be dealing with people from whom you want something. You want tour operators to sell you
good deals and you want your customers to buy them from you – not from any other person up the road.

This means you will be actively dealing with people all day either on the phone or in person – which is demanding even if you are
naturally interested in people. But if you don’t have the stamina or inclination for this kind of work you may wish to think on a career
outside travel.

Travel agencies are more about selling advice to your clients than holidays. Your customers want to be reassured they will easily be
able to hire a car, go walking or get vegetarian food. You will need to care about providing this personal touch.

And you don’t necessarily need to have experience of the industry. As with most things it may help but the most important thing is to
be prepared for a steep learning curve.

Rules and regulations

Unusually, you don’t need any qualifications to set up as a travel agent so in effect anyone could do it. Neither is it governed by
hundreds of rules and regulations although it will greatly increase your chances of success if you join a trade association. That is,
customers and industry are unlikely to take you seriously without.

Membership of a trade association tells suppliers that you have a strong and supported business and customers will be reassured
knowing their money is protected.

Trade associations

Trade associations are clearly important to the success of a travel business – if you want customer and industry confidence it seems
you can’t really start up without one. But what is actually involved where it counts – in your wallet?

How to start

It’s quite possible to start out as a travel agent from home with a desk, PC and a telephone line. You can start to build up a client base
from among friends and family so it isn’t technically difficult to get started.

But you do need to think bigger than this if you want the business to survive. Competing on a local level or around the high street are
both non starters to a successful business. A truly local business won’t survive in such a changing market and the high street will bring
you up against the big names. You need to open up to a national audience.
Michelle Anne Tayoba TM 4-1 Page 2 6/30/2010

Look into an area that isn’t well served already by travel agents. If you can find no obvious reason for this and there is apparently a
need for your business, set up there. Alternatively, start a business that isn’t office based and that provides something of a niche
service.

How much does it cost?

Premises:
If you’re starting from a secondary location rather than prime retail site, rent will obviously be reduced. As above, specialised travel
services are more likely to work with you remotely so it matters less where you’re based

Staff:
Although a remote – if cheaper – location may be a turn off when it comes to recruiting staff. This is not generally an industry where
staff is highly paid but there is competition to recruit good people in the first place so additional perks may work well.

Look for people who’ve worked in the industry before who’ll be attracted to the discounted holidays and offer them good working
conditions. Roughly speaking, salaries are on a par with office work but as with all jobs you should expect to pay more for extra
talents (such as languages) or experience.

Advertising:
Getting your name known is as important as in any new business. Local newspapers, yellow pages and Teletext are all good ways –
although decent regular adverts aren’t cheap.

Word of mouth is effective but be aware this isn’t an industry where repeat business necessarily follows. An established client base
will pass on word of your excellent service to its friends but intense competition for price means people will always shop around –
even if they end up coming back to you. You will have to constantly address and re-address service, quality and value for money and
let people know about it.

Internet:
The buying public has grown used to shopping around online even though it doesn’t always want to buy online. Use the internet as an
additional advertising or information tool to bring people in and answer basic questions. Then offer personal service and advice for
their queries.

That way both you and your potential clients save time and effort by having all information to hand when sorting out the details of the
holiday.

How much can you earn?

The travel industry is commission based so every time you sell a holiday for a tour operator they give you a percentage of the fee. This
is where getting your name known will be important, though, as international tour operators aren’t going to offer an unknown business
favourable rates. Commission varies a lot.

Striking an agreeable commission agreement will become easier once you are a member of a trade association – in fact they’re
unlikely to look at you without. Travel agents don’t give out individual commission rates for obvious reasons but there is a general
idea within the industry.

Minimum commissions start at around 10% but the high street names will be getting around 18%. So you’ll find it very difficult to
compete if you are at the lower end of the scale.

Cash management is another issue of which you need to be aware. The customer will pay you a deposit on the holiday when they book
it but the remaining amount won’t be paid until about eight weeks before date of departure. Only then will you receive your
commission from the tour operator. However good cash management in the booking season of January and February will see you
better off in the summer months.

Overall you need to be aware that being independent will not yield big money initially unless you can find a niche market that pays
well. If you can find a consistent market for specialist holidays to far-flung destinations this may happen sooner.

The amount you earn really does depend on a simultaneous ability to sell to customers and to strike deals with the suppliers. So at the
forefront is the need for excellent service to both of your customers: the holidaymakers and the tour operators.

Get the balance right and you might just have the ticket for success.

TIPS FOR SUCCESS

Look after your staff:


Reduced rate holidays will prove a powerful incentive to lots of people wanting to work in the travel industry. But you need to attract
and retain good people who are interested in the work and who can communicate with customers and represent you business well.
Offer training and incentives and if you can, pay above average salaries. You’ll be rewarded with loyalty in a competitive industry
Michelle Anne Tayoba TM 4-1 Page 3 6/30/2010

Have a national focus:


Although you may be a local independent travel agent it doesn’t mean you should have a narrow local focus. You need to appeal to a
national audience to ensure success because the market changes so fast. A national focus will mean tour operators will be keener to
deal with you and therefore your holiday selection will be more extensive

When to go for profit:


Don’t look for profit in the first couple of years but go all out to make your name known and get as much business as possible. Once
this is achieved you’ll have increased bargaining power for your commission rate and access to a greater number of holidays – and
hopefully will be able to start looking at profit and budgeting

Purchasing a turnkey solution for online travel agency

Company #1: YTB Travel Network

A Referring Travel Agent (RTA) is a person who has purchased an Online Travel Agency ($399.95) in an agreement with YTB Travel
Network and pays a $49.95 monthly fee for a personalized website with travel booking engine and its Back Office management tools.
An RTA refers people to their Online Travel Agency to book travel and earns travel commissions on travel booked though their
personalized site.

Total RTA Cost $449.90 (Includes first month license fee).


Visit www.ytb.com for more info.

Company #2: Crossover Consulting

If you’ve researched website booking engines, you can quickly see how spending $99 or more each month, in addition to website
hosting and e-mail costs can quickly add up – with no guarantee that you’ll ever see that investment back! We have a better solution –
no upfront or ongoing charges for booking engines. Your booking engine keeps your clients in your hands where they belong and
includes air, car, hotel, cruise, vacations, last minute deals, weekly deals and much more.

You only pay for the booking engines when they are used! If a client wants to book online through your website, the commissions
paid for the reservation pay for the cost of the booking engine. Of course, you can use your website for your own research, and then
book through normal channels for full commissions – but you don’t lose bookings to other sites that have online booking capabilities –
including supplier websites! Visit www.crossoverconsulting.com/turnkey.html

Travel Agency Business Tips For Getting Started

The cool thing about running a travel agency business is really the opportunity to help people plan their dream vacations.

A Low Cost Investment

With the internet, starting your own travel agency business has become a much more low-cost investment than it used to be. A travel
agency business can be run from the comfort of your own home for very little startup costs.

The list of equipment you'll need to start up your own home based travel agency business is surprisingly short:

• A good computer
• Some good home office software

You don't need a top of the line home computer for a simple travel agency business. It's a safe bet to assume that whatever you already
have can handle the job.

All your home based travel agency business computer requires is high speed internet to browse websites to book flights and hotel
rooms, and enough storage space to keep folders for your various clients.

travel agency Licensing?

A question that comes up often with those looking to start their own travel agency business is whether or not this is a job you need a
license for. As of the time of this writing, Rhode Island is the only state that requires a travel agency business owner be in possession
of a travel agent's license.

What you should research, though, is what your state requires of home based businesses. This applies to all home based business
owners, not just travel agency business people.
You probably won't have to delay setting up your travel agency business while getting your ducks in a row, as it were, but you'll need
to read up on tax regulations regarding home based business owners.
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The skills required are basically something that anyone who's ever set a budget will be more than equipped with. If you know how to
get great deals on tickets and reservations, you're equipped to start a travel agency business.

Getting the Good Travel Deals

Of course, to many of us, getting a deal just requires common sense and patience. The reason many are eager to employ a service to
help find these deals generally comes down to free time, which many travel agency business clients just don't have enough of (it goes
without saying that the people enlisting the aid of a travel agency business need a vacation!).

What you should be looking for is a host agency. Host agencies are established travel agency businesses through which most home
based travel agency businesses make their bookings.

Building Steady Business Relations

At first, your travel agency business dealings with your host travel agency businesses will be one-offs, as you're not likely to see your
travel agency business having hundreds of clients on day one.

Once you've been booking with a certain travel agency business for some time, though, you should be able to work out a better deal
with regards to your commission (and getting paid on a timely basis).

What you should look out for is a travel agency business that tries to rope you into an exclusivity agreement. Your responsibility to
your clients is to get them the best deals you can, and an exclusivity agreement can limit your options and keep your travel agency
business from growing as strongly as you'd like.

Independent Contracting As A travel Agent

Remember that your travel agency business doesn't belong to your host agency or agencies. You're an independent contractor.

It should be noted that the travel agency business is one of those businesses where word of mouth can be more important than strong
advertising. Of course, you'll probably want to buy a bit of banner ad space and maybe set up some classified ad listings, but the
majority of travel agency business clients are looking for a strong recommendation, not a flashy banner ad.

A Final Note About The Travel Agency Business

One final piece of advice for anyone looking to start their own travel agency business: Travel a lot! With a laptop, you can even get
work done from anywhere in the world.

Oftentimes, a client comes to a travel agency business with only a vague idea of their dream vacation, without even a destination in
mind. By having first hand experience, your travel agency business can provide the kind of honest recommendations that just can't
come from reading a lot of travel brochures.

Travel Agency Business Resources:

Minimum Start Up Cost $500-3,000

Minimum Start up Equipment Mobile phone, late-model computer with broadband connection.

Optional or Advanced Equipment Image manipulation software, offices, festival and show booth

Courses Small businesses courses are helpful, as are vocational courses in


travel.

Reference Sites Becoming a Travel Agent

Home Based Travel Agent Information Center

Issues in the Travel Agency Business – PDF


Michelle Anne Tayoba TM 4-1 Page 5 6/30/2010

Requirements in setting up a travel agency

SEC Registration:
- Incorporation Papers/By-Laws
- Capitalization, Subscribed shares, Paid-Up Shares (minimum of P .5M)
- List of Stockholders & Citizenship, ther addressesm respective Community Tax Certificates and TIN
- Latest General Information Sheet
- Board Resolution of Authorized Signatories
- Corporate Address
- Appointed Corporate Treasurer-in-Trust
- Bank Certificate for Corporate's paid up capital

DTI Certificate of Business Registration


- Certified photocopy of the Articles of Incorporation
- Application Form

Local Government License and Mayor's Permit


- Articles of Incorporation
- DTI Certificate
- Barangau Clearance
- Corporate Community Tax Certificate
- Other Local Gov't Clearances ( employees' health certificate, ID, Barangay, Police, NBI clearances, 4 1x1 photos of all company employees, etc.)
- General Liability Insurance

BIR
- Corpopate Registration
- articles of inc
- DTI certificate
- Mayor's Permit & Business Licenses
- Corporate Logo
- Contract of Lease
- Incorporators/Employess Registration and TIN
- 1 pc passport size colored picture in white background
- Civil registry documents; i.e. birth, marriage certificates

SSS/Pag-Ibig/Philhealth
- Articles of Inc
- DTI Cert
- Mayor's Permit and BUsiness Licenses
- BIR Registration
- Employees' Alpha List, SSS number, Pag-Ibig Number, Philhealth Number

DOT Accreditation
Legal
1. Mayor's Permit/Municipal License
2. Business Name Certificate for Single Proprietorship
3. Articles of Incorporation/ Partnership & By-Laws for
Corporation/Partnership and Business Name Certificate, if applicable.

Financial
1. Latest Income Tax Return and Audited Financial Statements

Physical
1. Contract of Lease of office space/Certificate of Title

Other DOT Documentary Requirements


1. Application Form
2. List of Officials and Employees
3. Valid visa and labor permit for foreign nationals
4. Board Resolution/letter form owner/partners authorizing its bonafide employee to sign/file/transact business with DOT

DOT Requires:
- a P .5M cash revolving fund for operation
- Travel and Tours Seminar of Manager/Owner
- at least 1 Tourism Graduate employee

Others:
*You will need at least P70,000.00 to process and file these requirements, aside from the required P .5M paid up capital.

**IATA/DITS Registration/Seminar
Source(s):
www.sec.gov.ph
www.dti.gov.ph
www.tourism.gov.ph

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