Insights

The difference between being a travel agent and a tour operator (and how you can do both as a Travel Counsellor)

New to the world of travel? Here we tackle two well-known terms that are taken for granted in the industry, but which sometimes cause confusion. Then we explain why understanding the difference between the two is so important for Travel Counsellors.

What’s the difference?

Travel Agent

The clue here is in the word agent. A travel agent acts as just that; an intermediary or broker advising on and selling the products (holidays) that are created by other companies (sometimes referred to as tour operators or third parties). Travel agents are often referred to as ‘retailers’.

Tour Operator

A tour operator is a company that creates and operates a holiday. In the case of a larger tour operator, this may mean that have their own aircraft or other transportation services, their own hotels, and/or their own ground staff.

Tour operators are responsible for the fine detail of the operation of your travel arrangements and have a defined duty of care towards you. Tour Operators are often referred to as ‘wholesalers’.

How is this difference relevant for Travel Counsellors?

When you become a Travel Counsellor, our unique booking platform, Phenix, allows you to act as both a travel agent and as a tour operator. Find out more about Phenix here.

You can sell holidays created by and bought from other companies (by acting as a travel agent) and you can create your own holidays by combining flights, hotels, transfers and more from the huge range of components in Phenix (meaning you act as a tour operator).

The company that creates the holiday is responsible for the licensing and protection of that holiday, so we have our own ATOL licence and a unique customer financial protection trust so that every package you create is fully protected.

What difference does this make to me, and how can I benefit from it?

When acting as an agent, selling other companies’ holidays, you’ll normally earn a fixed commission on the whole holiday. That commission normally ranges between approximately 8 and 13%, dependent on the supplier you use and the current agreed commission levels.

But by using our in-house Phenix system to build your customer’s holiday from scratch, both you and your customer stand to gain.

Firstly, you earn a commission on each element or component that you pull in from our system, rather than on the package as a whole.

Secondly, you control the overall margin that you apply to that holiday, rather than accepting the fixed commission the third party pays.

For example, a Tour Operator may pay you 10% commission to sell their holiday as an agent.

But using Phenix, you may pull in the same elements of that holiday using our own directly negotiated hotel contracts, with perhaps a different transfer or your customers’ preferred airline, and then you can control the margin up or down to find a price point that suit both you and your customer.

Is it all about money?

No, margin is one thing, but there a couple of other benefits to acting as a Tour Operator.

First, by acting as a tour operator, your customer gets a bespoke itinerary tailored to their specific requirements, rather than an off-the shelf-package that might not quite suit them.

Secondly, by acting as a Tour Operator, you are becoming more self-sufficient and less reliant on third parties who could choose to cut out the agent and start selling directly to customers, like Virgin Holidays did a few years ago.

Do I always have to act as a Tour Operator?

The simple answer is no. We always encourage Travel Counsellors to sell what is right for the customer. So, if your customer wants a third-party holiday bought straight off-the-shelf, that’s fine, you can sell it.

But remember that by acting as the tour operator, you can piece together the same components as the off-the-shelf package and find items which might suit your customer even better.

That way, you are creating a bespoke holiday experience, whilst keeping control of all elements of your customer’s booking.

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