Usually a tour operator is a comparatively large company in comparison with a travel agency. It has its main office and several subsidiaries in order to offer their services to more potential customers. Many big tour operators have subsidiaries in different countries. Irrespective of the number of subsidiaries a tour operator usually concludes agent agreements with independent travel agencies that then sell the operator’s tours to their customers. The more partners a tour operator has in as many countries and regions as possible, the more the sales volume is, and, correspondingly, the more tourists will buy its tours and the more profit it will gain.
Tour operators and travel agencies may have different patterns of ownership. They may be private, state, joint-stock companies – the essence of their entrepreneurial activity is the same in all cases. Their major goal is gaining profit on the basis of differentiation of the tourist market and finding their niches.
The major difference between tour operators and travel agencies is in the system of providing service to customers. A tour operator is a company that buys certain services from different companies (like hotels, restaurants, cafes, beauty salons) and forms a single tourist product out of them using its own pricing system. A travel agency acts like an independent reseller. Its profit is the commission for the sale of the operator’s tours to customers. That’s why the agent’s price is usually higher, although there are moments when agents deliberately understate their prices.
