World-wide, tourism is one of the fastest-growing industries; Looking back to 1950 approximately 25 million people travelled abroad worldwide. That figure grew to 700 million by 2001. The World Tourism Organisation predicts that this will increase to over one billion by 2010.
The local travel industry has been boosted by a growing number of foreign tourists coming to South Africa each year and the FIFA 2010 World Cup is expected to boost the industry even more.
The retail travel agency business offers a variety of options. There are three sectors to this industry: retailers (travel agency), wholesalers (selling bulk product to retailers) and tour operators (handle group travel).
A retail travel agency sells everything from airline bookings, accommodation, guided tours, cruises, adventure holidays, car hire reservations and more to the public. One can also operate a home based agency or buy a franchise.
Traditional retail travel agencies
Traditional retail travel agencies are still an option but recent changes in the industry (airlines no longer pay commission to travel agents for booking flights) have seen a growth in home-based travel businesses mushrooming all over South Africa.
Many successful small agencies or home bases businesses focus on a particular area of the industry. Here are just some of the many sectors a small business can focus on:
- Cruise holidays
- Honeymoon packages
- Snow skiing tours
- Adventure trips
- Eco tourism
- Golfing holidays
- Medical recuperation holidays
- Spa Getaways
- Luxury holidays
- Business travel
- Sports events
- Airport/hotel transfers
- Travel guides
Passport and visa services
“We are seeing more and more retailers opening, especially BEE agencies in the Eastern Cape, Limpopo and Mpumalanga and they are running good sound businesses,” says Robyn Christie, CEO of ASATA.
“From a travel prospective securing corporate business is very lucrative, but it is imperative that your business is seen as credible.”
What training is required?
If you plan to sell air tickets through a retail travel agency, then you will need the International Air Travel Association (IATA) Diploma. This has become the benchmark for the travel industry, and provides credibility to deal with airlines and other partners in the travel sector.
The diploma will give you a broad understanding of travel agency and airline operations, equip you to advise clients, make travel arrangements and reservations, calculate airfares, and complete international travel documents so that they comply with IATA rules and procedures.
The best route to take is to get the correct qualification to operate in this industry:
- You will need to do the diploma at a recognised educational institution; have completed Grade 12 to be admitted to the course.
- Tourism (N4 to N6) diploma and certificate courses are offered at a number of Further Education and Training (FET) colleges. Contact the FET College in your area and ask about their courses.
Travel and Tourism diploma courses are offered by universities.
Are there formal bodies that a travel agency must register with?
Airlines have moved away from a commission system, so travel agencies are essentially retail service providers who charge a mark-up fee for their professional services. Credibility is therefore become very important.
Christie explains that The South African Association of Travel Agents (ASATA) is the regulator of the industry.
“Members are bound by the ASATA constitution. The national and international airlines and ASATA enjoy excellent co-operation and we are also very involved with the environmental aspect of the travel industry.”
Being part of the industry association such as ASATA will give your customers more confidence in your skills and your reliability.
And because of the strong influence ASATA has over the industry, potential customers will not consider you as a fly-by-night operation.
ASATA Members are engaged in travel business as either a retail travel agent or as a tour operator or wholesaler. Full ASATA Membership may only be obtained if your business has been operating for a period of one year or more.
In order to encourage membership of new travel businesses, Provisional
Membership may be obtained by start-up companies
Within the travel and tourism industry there are a number of organisations and associations that support small business to establish themselves.
They also regulate the industry and ensure that local tourism offers a professional and world-class service to tourists visiting South Africa.
When applying for finance, it’s advisable to have training or experience in the tourism industry or have a partner who does have the necessary experience. These organisations provide funding or funding advice to start-ups in the tourism industry.
1. Tourism Enterprise Programme (TEP)
The TEP is a partnership between the Department of Environmental Affairs and Tourism and the Business Trust. This programme supports the growth of tourism SMMEs, often by establishing links between SMMEs and customers.
2. Business Partners
Business Partners supports entrepreneurs with regard to the buying of hotels, guesthouses, game lodges, starting or expanding a travel agency, tour operating business, tourist information centre, a curio shop or entertainment facilities for tourists.
3. IDC Tourism Fund
The IDC Tourism Fund aim is to establish good quality hotels in South Africa and the rest of Africa. It also covers other sectors such as cultural and heritage products, arts & crafts and business tourism.
It supports BEE projects with significant development impact in townships and rural areas while adhering to the Tourism BEE Charter requirements.
It also aims to increase participation in projects related to the 2010 FIFA Soccer World Cup.
4. Khula Credit Indemnity Scheme
The Khula Credit Indemnity Scheme fund helps entrepreneurs who wish to start or expand small to medium sized businesses but do not have collateral/security qualify through traditional financing institutions such as banks.
The Scheme is open to all race groups; however the fund focuses on Black (African, Indian and Coloured) and female entrepreneurs. All the major banks, such as FNB, Standard Bank, Absa and Nedbank can provide more information.
Is a website necessary for a travel agency?
Consumers are using the Internet more and more to search for travel options and to make bookings. It’s vital that you have a website that attracts customers.
It might be too expensive to build and maintain a site where visitors can make bookings and payments online, but you can at least develop a site with information about what travel options you offer and what special deals are available.
This information can prompt a consumer to contact you by phone or email to make a booking. Beware the virtual world of travel is a highly contested one and ensuring that your website has an online presence will require a large investment.
Search Engine Optimization and online advertising using a medium such as Google Adwords will pay off, but do your research first to ascertain whether you are willing to invest the time and money.
Travel Agency Franchises
If you go the franchise route you will be your own boss and own your own business, but have the professional support of one of an experienced and respected franchisor, such as Harvey World Travel, not just for travel knowledge, but with business practice and financing. FASA is the Franchise Association of Southern Africa.
Franchising is universally accepted as one of the most successful business formats. FASA, therefore, defines how to franchise and ensures that all parties follow internationally accepted franchise business principles
Tourism support and resources
These associations can provide useful information with regard to marketing and promoting an enterprise in the tourism industry
1. Fair Trade in Tourism South Africa (FTTSA)
Their aim is to facilitate access to tourism markets for disadvantaged tourism enterprises.
Visit FTTSA’s website for more information.
2. Southern Africa Tourism Services Association (SATSA)
SATSA represents major role players including airlines, coach operators, tour operators, accommodation establishments, car-hire companies and more.
3. Tourism Grading Council of South Africa (TGCSA)
TGCSA is responsible for the star grading system to ensure improvement and high standards across all areas of the tourism industry. If you wish to get your B&B graded, you would have to contact the TGCSA.