Tourism and Travel Industry

:-. ... K.K. SHARMA The major components of tourism are hotel industry and travel industry. The book has the fol...

Author: K. K. Sharma

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K.K. SHARMA

The major components of tourism are hotel industry and travel industry. The book has the follow ing chapters in it. I. lntroduction.and Overview Fulfilling the Dream 2. Travel Agents and Travel Agencies.. 3. Corporate Travel Management

4. Tour Operations 5.

Franchisin~

Your ~ream

6. Investment in Tourism

7. The Experts 8. Systems and Controls 9. Personnel 10. Travel Writing 11. Start, Buy or Franchise 12. Starting up 13. The Legal Structure 14. The Physical Structure 15. Staffing the Travel Agency 16. Representatives 17. Training 18. Employees and the Law 19. Professional Tools : The Reference Library and Association Memberships. It is hoped the book will be of much use to

planners, government officials, businessmen and the academicians alike.

Rs.600 Elements sous drot!S d auteur

Tourism and Travel Industry . '

/

Elements sous drot!S d auteur

Tourism and Travel Industry

K.K. Sharma

Sarup & Sons New Delhi-110002

Published by

Sarup & Sons 4740/23, Ansari Road Darya Ganj, New Delhi-110002 Ph. :23281029, 23244664


ISBN: 81-7625-106-2

C Reserved

First edition 2000 Ist Reprint, 2006

Printed in India

.

.

Published by Prabhat Kumar Sharma for Sarup & Sons, Laser Typsesetting at Manas Typesetter and Printed at Roshan Offset Printers


Preface The editor is gratefu l to various travel and hotel industry managers for their kind cooperation in giving infdnnations about Indian Tourism. The editor is thankful to the Ministry of Tourism and Ch·il Aviation, Go,·t. oflndia and the Planning Commission Gm1. of India for providing necessary infomtation and data about Indian Tourism. 1l1e editor is thankful to various libraries in Fortworth, Austin and Dallas of USA who have been very helpful in pro,·iding useful material for the present volumes. Research material in India on tourism is Yery much lacking and as such most of the background material for the preparation of these books has been dramt from American sources.

lltc editor is grateful to various other sources who have l1elped very profusely in the preparation of these volumes.


Cont I. 2. 3. 4.

5. 6 7. 8. !)

I 0. 11. I 2. 13. 14 15. I (i. 17. I X. 19.

!'reface Introduction and o,·en iew Fullilling the Dream Tra,·cl Agents and Trm·cl Agencies Corporate Tra,·cl Management Tour Operations Franchising Your Dream hwestment in Tourism The Experts SYstems and Controls Personnel Tra,·cl Writing Start. Bu,· or Franchise Starting up The Legal Structure The Physical S1nu.:turc Stanim; the Trm·el Agenc,· Rcprcsentati, cs Training Emp)o,·ccs and the Low Professional Tools: The Reference Libraf\ and Association Memberships

Elements .ous dro1tS d'auteur

Introduction and Overview Fu1filling the Dream A Dynamlcand Challenging Career Most people dream of working at something that they fmd to be interesting, challenging, and fun-something that they enjoy doing even after work hours arc over. Travel is such an activity. For many travel is a dream of a lifetime and working at a job that makes it possible to travel can be a dream come true. This book is about fulfilling this dream.

But it is first necessary to dispel the illusions. that surround travel careers. A career in travel is condidered very glamorous and adventurous. Once inside the industry, however, some . - people fmd that the reality of hard work, long hours, and low pay dulls the glow. Most people who have not simply fallen into a career in travel seek it because they love to travel. If this is your main reason for entering the business, you are better off staying in some other field where you \ire likely to earn 20 to 40 per cent more in salary and have three or four weeks of paid vacation a year to travel as your wish. For you are not apt totravel as

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2 Tourism and Travel Industry

frequently, as cheaply, or as spontaneously as you might expect in the travel industry-especially now since free and reduced rate travel are becoming more restricte~ and the federal government is hoping to tax free trips as frings benefits. Also, most people in the industry who travel do so for business purposes to the point where traveling can become too much of a good thing, bringing more stress than satisfaction. You should pursue a career in travel because of the business and the producJ itself, namely, travel. Travel and tourism is one of the most dynamic industries any where, offering extraordinary opportunties for mobility, creativity and personal satisfaction Having a role in the betterment of society and contributing to world peace are not just ideals, they are integral to an endeavour that brings disparate peoples and Ideas together. In many ways, the travel industry is a business like any other, with many of the same concerns and problems that arise in selling groceries, making women's shoes, or designing office buildings. There are the same concerns for profit and loss and for accounts receivable and payables; there are the same problems of productivity, market share, and high cost of investment capital that affect most industries. But people who have had an opportunity to experience other occupations fmd something special in the travel industry-energy, creativity, fast pace, diversity, challenge, and growth-that they had not found elsewhere. In fact, so often in this book people refer to their particular part of travel as "fun" and "showtime." And when for one reason or an other, people are forced to leave the industry, many feel a sense of withdrawal. The industry's product-travel-os like no other. Travel becomes addictive; it is for good reason that prople say they have been bitten by the "travel bug." Travel is "a life-chaging, life-enhancing experience." explained travel agent Rechard Dixon. Working in and with "travel" brings an excitement to the job that airline people feel even if they work miles away form the airport and that travel agents feel as they sit for hours on end searching the computer display for schedules and fares. There is a sense of sharing in some marvelous adventure.


Introduction and Overview 3

Travel is·very much a" people" business. No matter how sophisticated airplanes or computer reservations systems of videotext systems become, there is no getting away from the fact that the business is all about sevicing people. The industry attracts People -people individuals who are energetic and open to new experiences, ideas, and most of all, people. Because people tend to stay in the industry, even if they move from one area of work to another, a dose camaraderie usually develops even among those who work for competitors. In some respects, travel is a service; in others, it is a commodity, just as any item you but. off a shelf if the price is right. Yet, unlike most other commodities, travel-a seat on an alrplane of a room in a hotel-cmnot be stored away. The hight perishability makes for high risk challenging industry professionals to be brilliant forecasters and marketers, to excel at information management and to be efficient operators. On the other hand, the potential for the industry is unlimited, for unlike a VCR, which you might buy once and have for many years, travel is an experience that has to be renewed each time, and each time will be different. Moreove, there are unlimited possibilities in the style of travel. The same customer might take one trip or a dozen trips in a year, traveling for business vacations, and weekends, to visit family and friends or to take part in an event And people travel differently during the course of a lifetime: as a college student backpaking through Europe; a single, young prfessional looking for sun or snow; a newlywed; a professional couple; a family with young children; a chief executve officer on an expense account; the couple whose children have left the •nest"; a retiree; a widow or widower. The customers for travel are not conftned to any particular stratum of society. A passenger on a $6,000 trek of the Himalayas might be a secretary or a mailman as easily as a stockbroker. The travel industry is expanding and changing constantly, and new job titles and specialites arc bing crated all the time. Few industries provide as much opportunity for someone with limited formal education to rise as quickly through the randks

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- 4


to positions of enormous responsibility and prestige; to be an entrepreneur; to work for some of the largest or smallest companies; and to see almost instant results from an innovation. Few industries provides as much mobility-moving up in an organization or to other companies or other fields and even to live and work virtually any where in the world. A Vital and Necessary Service The term tourism may conjure up stereotypical images of paunchy, balding men in Bermuda shorts and blue-haired grannies in tennis shoes, disembarking from a tour bus with instant cameras in hand. In this context, travel and tourism seems frivolous and non-essential. Nothing could be further from the truth. Travel and tourism forms a complex network of vital and necessary sevices that touches virtually every individual and every business in the world. Leisure travelvacations for rest and relaxation, cultural prusuits, adventure, or visits with friends and relatives-is only half of what the travel and tourism industry does, but even these seeming luxuries have become necessities of modem life. Nonetheless, the same airplanes, hotels, car rentals, and trains that are in place to serve the tourist also transport and house the business person negotiating deals, the diplomat,the politician, and the artist, the travel and tourism industry makes commerce, diplomacy, and exchanges of ideas and cultures possible. Faceto-face contacts between people at any distance whatsoever could not take place without the diverse services provided by travel and to urims . "The world is becoming a ·global village," Pope John Paul 11 told a private audience of 7,000 travel professionals in 1985, "in which people of differents continents are made to feel like neighbours. Modern transportation ha-; removed the obstacles of distance, enabling people to appreciate each other, engage in the exchange of ideas and commerce. Tourism can help overcome real prejudices and foster bonds. Tourism can be a real force of world peace." Tr.lVel and tourism play a criiical role in the economies of tiny villages and huge countries. In countries like Mexico,


Introduction and Overview 5

Jamaica, and Spain, tourism is the linchpin for the economy. For countries lacking valuable resources or heavy industry, tourism represents hope in breaking a spiral of poverty and misery. Closer to home, there are countless examples of communities where tourism is the base for the economy, including Orlando, Atlantic City, and Las Vegas. In a world where so many make theif living by selling people what they' do not want or should not want or could care less about, most travel industry professionals derive tremendous satisfaction from selling people a •good time.• They sense that what they do is important and t11at they are contributing in a real way to the betterment of society through facilitating people-to-people contacts. In short, people feel good about working in the travel industry and promoting tourism. Many are found of saying that travel dates back to Noah or Moses or the Pilgrims. The travel industry, however, is a phenomenon of the Industrial Revolution, with its social revolution of minimum wages and paid vacations, coupled witll the technological revolution that made for buses, jet planes, elevators, and air conditioning. Mass travel and the annual vacation ritual only date from the end of World War 11, witll the jet plane and the packaged tour; in polls, travel ranks just after a home and an insurance policy as a necessary expense. Travel has not only changed from a luxury to a necessity in the American lifestyle, but the trend toward greater affiuence, the effect of mo.-e leisure time, and the maturing of the Baby Boomers into their peak earnings (and travel) years. all prompt forecasters to predict fantastic growth (or the industry in year to come. Indeed, many expect travel and tourism to become tlle single largest industry in the world by the year 2000-and not just in dollars, but in jobs. All of this bodes extremely well for the jobs outlook in the travel and tourism industry, Indeed, despite all the technological ·developments, travel and tourism remains a business of se1ving people, so is people-intensive. Six million Americans already make their living in the industry. Another two million are employed in related fields. The travel and tourism industry has



shown an uncanny ability to generate new jobs even when the rest of the economy is in the doldrums, and the industry is expected to show some of the strongest growth rates in new jobs in the future. lt is not just the quantity of jobs that is appealing, but the quality and diversity. Travel and tourism is so dive:rsified that it entails virtually every kind of activity and employs almost every kind of worker. It is common to think of the industry in tenns of "travel agent," "flight attendant," "airline pilot,'' "tour esd5rt," and •front-desk clerk." People readily recognize airlines, hotels, car rentals, and tour companies as travel and tourism businesses. But the industry is also real estate, ecology, urban planning, architecture, interior design, engineering, computer science, politics, public relations, marketing, personnel, publishing, telecommunications, finance, law, and scores of other fields. Travel and tourism employs archaeologists, sociologists, lawyers, doctors, teachers, computer specialists, artists, writers, marine scientists, actors, musicians, and countless other professionals. Indeed, the industry offers an alternate path to fulfill any number of professional dreams. Moreover, industry leaders express concern about a shortage of workers during this decade. "We will have to b e more flexible in establishing split time and flex time for our employees," said a hotel industry executive, •and exert a recn1iting effort beyond anything we have seen before, because if we can't service that market, we will lose it." Overcoming the Catch-22 Ironically, the tremendous demand for workers will not make getting into the travel business any easier; if anything, getting in will be tougher. Already, t11ere are about 100 applicants for eve•y job. In the travel agency business, newcomers are having such a difficult time that they are o ffering to work for free in exchange for the training ::tnd experience. The demand for new employees is concentr.ued among the experienced, or middle-management layers, while the increased reliance on sophisticated computer systems , the extrao rdinary pace, and the low profit margins havl' m:tdc il difficult for comp::tni~ers. They are also moving to a "ticketless ticket" which could m..:~e it easier still for passengers to book arir tickets directly with airi:•1es. ' Travel agents, meanwhile, are moving into several new areas. They are working with banks to ~et up retail travel agencies; beginning to sell their services through personal computers; installing satellite printers o~;~tside the agencies; establishing travel clubs, promotional programme and frequent uaveler clubs, and generally becoming much mo re marketing and sales oriented. Many are establishing travel schools not only as a source of new staff but also for the substantial profits the schools generate. The radical changes unfolding in the industry are producing more jobs, more specializaion, and more professionalism. The industry is becoming much more marketing and sales oreiemed as well as much more computer oriented. New methods of retailing (or merchandisin) travel have been introd uced, and aents are beginning to take advantage or them. Negotiations sk ills, forecasting, and preplanning are becoming an increasing part of travel agency operatios and will result in new kinds of jobs. The cmeregence of massive travel agency o rganizations,

I

I l


Travel Agents and Travel Agencies 47

may with global links, will result in new tiers of managemet new specialties, and greater opportunities for graduates of four-year and business administration programme. •y ou get satisfaction in making someone's dreams come true, of doing things for people they can't do as well for themseleves,• concluded Joseph Hallissey, presidient of Hallissey Travel, a founder of Conlin Hallissey Travel Schools and a former chairman and chief executive officer of the American Society of Travel Agents. Added Hallissey, who entered the travel business in 1968 after being a social worker for 18 years, "We are dream makers, still." Contacts and Sources Leading trade associations that can provide information about the industry and contacts include: American Society of Travel Agents (ASTA), PO Box 23992, Wash ington, D.C. 20026, tel. 703-739-2782. Association of Ret.'lil Travel Agents (ARTA), 1745 Jefferson Davis Highway, Ste. 300, Arlington, VA 22202 tet 703-5537777. Airlines Reporting Corporation (ARC), 1709 New York Ave. r-.rw, Washington, DC 20006, tel 202-626-4076. lntemaitonal Airlines Travel Agent Network (IATAN), 300 Garden City Plaza, Ste. 418, Garden City, NY 11530, tel. 516747-4716. Institute of Certified Travel Agents, 148 Linden St., PO Box 82-56, Wellesley, MA 92181 , tel. 617-237-0280. Society of Travel Agents in Government: 6935 Wisconsin Ave NW (#200), Washington, D.C. 20815, tel. 301-654-8595. Leading travel industry publications include. Travel Agent Magazi1w Travel \'(leekly Tour & Trcwel News T1-avel Mangement Daily

n·avellife .tlSTA A£<mcy Mc111gement



•

Corporate Travel Management A Career in Its Own Rights

Corporate travel management, a career path aod ~ steppingstone for commercial tra\•Cl agents, is emerging as a career in its own right. "Corporate travel management is the growth i.ndustry for the decade," declared Mary Kay Dauria, director, Worldwide Travel Services, American International Group (AIG), New York. "The field is just Coming into its own." Currently, the responsiblity of overseeing corporate travel is ususlly left to the company's purchasing or personnel departmem or put under the controller's office or, sometimes, under the purview of a secretary (who often emerges as the corporate travel manager). Only a little more than half of the Foutune 500 compaines have travel managers at all . Though in the past the corporate travel manager's position in the corporation had little clout, the spiraling increase in travel expenses and the recognition the travel i~ the third g reatest controllable expense (after personnel :md data processing) have catapulted the job to higher st:nus


Corporate Travel Management 49

"Corporations recognize the need for the position when they start realizing how big the travel expenditure is and that they have an ability to impact on that expenditure," said Ed Rathke, corporate travel manager for Aetna Insurance Company, Hartford, er, and a former president of the National Business Travel Association (NBTA), the Alexandria, VA-based trade association for corporate travel manager. "The larger the company, the more the emphasis, and the higher the position." No longer Just a service for the employees, corporate travel management is becoming appreciated as a means for a company to achieve its business goals, help other departments reduce their costs, and, increasingly, serve as a profit centre. Moreover, following the Persian Gulf War, corporate travel manager were recognized as critical advisers on safety and security concerns. Staffing

Members of a company's corporate travel depam1ent are generally employed by the company itself and receive comparable salaries and the same benefits as other employees. They are responsible for arranging travel for the company's employees, arranging meeting and conventions, and managing travel budgets that can amount to millions of dollars. Companines may employ a single individual to be reponsible for setting·up a travel budget, establishing policies for employees to follow (such as who can trael first-class), and acting as the liaison with an outside travel agency that actully handles the arrangements. Or, an entire staff may be organized.to function much like a commerical travel agency. Sometimes, an outside travel agency establishes an "inplant" on the company's premises, which operates like a branch oiTice of the travel agency to handle the company's travel ammgements exclusively but is staffed by the company, the agency, or a combination of both. This arrangement enables the company to recover some of the travel expense. Corporate agents do not have the reduced-rate travel privileges of agency pers(mal, but their salaries and employees benefits are the higher, better one:-; of a big business. On the



other hand, the corporate travel department (because it is typically perceived as a service and not as a profit centre) is one of the fii'St to be pruned during business downturns. Moreover, mobility can be limited (but~ improving considerably): Within the department, there are generally few senior positions and only one corporate travel manager. Agents tend to move up to a higher position by transferring to the corporate travel department of another company. Broad Responsibilities The responsibilities of corporate travel management go well beyond booking airlines and hotels for executives. When they are part of the personnel department, the responsibilities may also include personnel relocation and coordination of training programmes. They may involve meeting and convention planning. Many corporate travel departments also administrate corporate aircraft, car pools, and possibly group recreational trips or vacations for employees. The manager may also negotiate barter deals and discounts with travel suppliers. A strong business backgorund is desirable for a corporate travel manager (who may also be called a travel administrator or a transportation specialist). The manager has to oversee staff and forecast budgets; handle accounting and reconciliation; choose preferred vendors; negotiate contracts for lower rates on airlines, hotels, and car rentals; establish travel policy; select a travel agency through a bidding process; and help implement complex management information systems (MIS). "You have to follow and understand travel jargon, read the trade press, keep up with industry trends and forecasts which change daily," advised Dauria. For example, you have to be alert to an impending airlines strike or new service or a change in oil prices that could affect fares, as well as who is buying aircraft and who is paying bills on time. You also have to be the neutral arbitrator standing between the company and the travel agency :tnd othe vendors. "Sometimes I am accused of being on the payroll of the travel agency, but you can't automatically assume that the agencey is wrong, " said Daruia, whose company generates S 100 million



in travel. AlG is one of the largest international insurance companies, with 130 offices (125 in the United States) and more than 500 locations of travel. Dauria is working on a pilot project to globalize and consolidate travel as was done in the United States. The 125 different U.S. locations that worked with 100 different travel agencies now work with one. Dauria is working next to bring in the foreign locations. But corporate travel mangement is very much a service business. "you have to be someone who gets self-gratification and not live for pats on the back," observed Dauria. "You don't hear form people except when there is a mistake. "You need to be a self-starter, someone who is hardworking but likes changes." "You can work for months on somellhing, and then something changes. "You need excellent communications skills, a "calm spirit," and diplomacy. While companies used to promote people from other departmets into travel managemet positions, this is becoming less and less possible as corporate travel managemet is increasingly becoming a specialized profession. "Corporate travel tests your business acumen. It is a fastmoving, changing specially area of business. It is fun because the people are fun." said Dauria. who started out in urban planning and moved into corporate travel management more than 12 years ago. "People in the industry have open minds; they are well-treveled. They help each other, even if they don't know somebody. Its is a tight network." Advantanges and Disadvantages The disadvantages for someone in Dauria's position is that 80 per cent of the time is spent on the road. "It is not fun. It is not a vacation. When I am on the road, I am working from 8 A.M. to 8 P.M. It is a minsunderstood industry-and you have to be able to explain it'' and continually fight the perception that you are out sightseeing when traveling. On the positive side, there is tremendous growth opportunity ahead because so many companies have yet to designate a curpo rnte l!~IVel man:tget· and bee~ use other avenues for mobility

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are opening up. "You have access to every department and access to the highest offices. There is high visibility, great contacts," Dauria noted. Other career paths are into consulting, into large corporate travel agencies, or into vendor companies like airlines. Also, there are more and more training programmes, particularly through NBTA. Salaries Salaries for in-house reservationists range from $15,000 to $40,000 managers, directors, and vice presidents can make between $20,000 and $100,000. Dauria took a $10,000 cut in salary when she moved to corporate travel from an airline, but she tripled her salary in a 1:ix-year period. Corporate travel management has been an excellant field for women. According to a survey by NBTA, 56 per cent of coporate travel managers are woman. Also, while 57 per cent have a four-year collage degree, 31 per cent have only a high school diploma. Salary medians, according to the survey, are as follows: Low

Higb

Average

West $82,500 $32,500 $52,000 Midwest 21,000 1,10,000 47,500 South 27,000 82,500 47,000 47,000 Northeast 21,000 82,500 An Example: Aetna Insurance Company Aetna Insurance Company its corporate travel function into three areas: ex~cutive travel (which handles the tqp 50 executives in the conutry, scheduling corporate aircraft and ground transportation); conference services (which handles the company's v:~st meeting and convention planning and speci:ll f~unctions and administers the Aetna Institute, an apartment complex for the company's trainess in what amounts to a 300-room hotel); and corporate travel (which arranges travel for employees at headquarters as well as hundreds o f fields offices throughout the country). Thc r corporate travel department is a 540-million operation induding 530 million in airline sales (booking 4,000 tick cL~ a



month) . The department, which utilizes Thomas Cook as its agency, has a staff o f 40 Cook employees plus 9 Aetna

management people at the headquarters and a regional office in Dallas.

Aetna

hires its reservationists directly from commerical,

trave l agencies. A minimun of two years of experience is required, but seven years · of experience is more typical. A starting reservationist (with Sabre experience) earns $19,000 in Hartford (more in New York City). A reservationist ca.n make

up to $27,000 in Hartford (more in New York City). In the past, those who tended to move into corporate

travel management at Aetna were agents (usually women) who had been working for ten years or so and were no longer entranced by the travel benefits but were lured by the better salaries, security, and retirement benefits afforded in a coporate environment. This distinction has blurred somewhat

since the mega-agencies and large, regional travel agencies that specialize in corporate travel have come much closer in

salaries and benefits. Contacts and Sources Trade associations for corporate travel managers that can

provide information include: National Business Travel Association (NBTA), 1650 King

St., Alexandria, VA 22314, tel. 703-684-0836; offers a Certified Corporate Travel Executive programme as well as education programs. Association of corporate Tr.avel Executives (ACTE), P.O. · Box 5394, Parsippany, MJ 07054, tel 800-ACTE-NOW (201-379-6444); h:1s instituted an executive recruitment service through The 111:1nagemcnt Network, inc., Millbum, NJ. Leading trade journ:1ls for corpot~tte travel indude: Business TraiX!I News

Corporate T1'Cn et Trend \\'leekly 7i'CIIX!l A,gl'ut

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Tour Operations Dream Makers or Merchants

Whale-watching in Baja, California; ballooning across the chateaux country of France; riding a wagon train through the Bad Lands of South Dakota; climbing the Himalayas; or camping in a Mongolian yurt-these are no-longer wild fantasies. Nor are the Pyramides of Egypt, the Great Wall of China, the lncan city of Machu Picchu, the North Pole, or even outer space beyond the reach of ordinary people. The dream makers who turn these fantasies ihnto realities are tour operators- a small, highly specialized segment of $350-billion travel and tourism industry. Typically, tour operators are people who have been smitten by the lr'.Jvel bug themselves. Possessed by an insatible desire to see and experience new places, ne w cultures, and new ideas, they being their entrepreneurial talents, creativity, "gamesmanship," and love of travel together in the business of d esigning, producing , and marketing trips for other people. Tour operators put together all the elements Qf a triptmnspo ttation , accommodations, meals sightseeing and the like. They work with o th er segments of the industry-hotel comp~m ies, a ir lines, c:n rental firms , bus companies, cru iselines, local


Tour Operations 55 ground operators, and government tourist offices.They gegotiate rates and block space, coordinating all the intricate details of an itinerary so that every moment of tinle can b e accounted for. Then they "package" the product (the tour) in a brochure for sale through retail travel agents to the public. Tour operators (who create as well as market the package) or wholesalers (who do not operate the programme but rather dis'tribute it ) then market the product, generating awarencess and brandname identification among retail agents and the public.

Foreign and Domestic Tours Much more common in Eurpe, tours have never gained truly wide acceptance in the United States. According to the U.S. Travel Data Centre, packaged tours account for about 22 per cent of all person-trips of five nights or more duration, and foreign tour packages account for 20 per cent of all U.S. foreign travel. The industry is still evolving. Tour companies developed in an era of the Grand Tour of Europe and there has always been a core of deluxe tour companies. But the packaged tour business really took off in the jet age. Opcrmors devised the GIT (group inclusive tour) as a device to obtain a low fare, and the mass travel business was bo rn. Sometimes, the land package was only an excuse to qualify for the low fare-a "throwaway" and the acconunodations provided might have been at some isolated inn for ten nights. When the airlines introduced low fates that did not require a tour package, the price-oriented operators had to come up with packages that people really wanted to use. "The idea of a package tour evokes a mental picture of a group of geriatric doddereres in rimless glasses and cast-iron pem1anent getting on and off a tour bus," quipped one tour operator. Another popular image arose when a trip to Europe was considered a once-in-a-lifetime event and travclers sought to cram as much into a sangle trip as possible. Tour-goers were Lrealed to what seemed to be seven countries in eight days, giving rise to the express ion , "If it's Tu esd::~y , it must be Belgium."



But tour products have changed considerably since then. "Tour operators don't do 'packages' anymore'" asserted Raymond M. Cortell, who grew up in his father's tour company and who now heads RM Cortell & Associates, New York. "Seventy-five per cent of the products are independent and only 25 per cent are escorted. The American mentality i$ antagonistic to groups." Most people who take escorted tour packages want the security and convenience of having everything done for themtransportation accommodations, meal arrangements. Other people look to a different sort of package, one that offers economy. Still others take tours because they provide access to places and sights not easily visited by individual (China and the Soviet Union are examples).New-syle programmes cater to a traveler's sophistication and desire for independence and adventure. The market for the tours i$ growing along with the expansion of the product offerings. There are tours for every budget, taste, interest, age group and lifestyle. Examples are a journey by covered wagon (Wagons Ho, Phoenix); a mystery tour by bus where the destination is a surprise (Bixler Tours, Hiram, OH); a "Flight Through Fantasia" in the American Southwest (Special Expeditions, New York); ballooning in France (Bombard Society); an archaeological expedition (Crow Langon Archaeological Centre, Cortez, CO; Dinamation International, San juan Caistrano, CA); bicycling (Backroads Bicycle Touring, San Leandro, CA); an agricultural tour (Farm Tours, Etc., Tulare, CA); travel for women only (Mariah Wilderness Expeditions, El Cerrito, CA); travel for the d isabled (Flying \XIheels, Owatonna, MN); health and fitness enthusiasts, (Global Fitness Adventures, Aspen CO); and tours for the young (Contiki Holidays, Anaheim, CA) and the o ld (American Epress's programme for the American Association of Retired People). There are religious tour (Western World Tours, Sam.1 Barbara, CA); professional tours; ethnic tours; reunions for veterans; ~md tours for musicians (Performing Arts Abroad, Richland, Ml). There are also tours for artists, runners , students (Voices of the Future, Ne''' York), gardeners, nudists, and people who collect doll hollses, study caves, or want to go d for current customers) and market development (finding new customers for current products). Few focus on market penetration tselling existing products to cuJTent customers) or diversification (creating new products targeted at new markeL~). but these represent growth areas for the future. The industry is made up of a few large firms with a substantial number of employees and hundreds of smaller enterprises with fewer than 10. Most tour companies are relatively small: More than two-thirds have ~10n ual gross sales of less

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than $1.7 million; nearly one-fourth are mid-sized with sales from $1.8 to $7.5 million; only 8 per cent have sales of $7.5 million or more, according to the l'ITF membership survey. The vast majority (of NTA members at least) have been in business for 10 to 16 years. The average company usually employs 4 people plus 2 part timers, operates 81 tour departures. and handles 2,500 customers a year. The largest compan ies employ more than 200, operate 10,000 departures, and handle 100,000 customers a year. The vast majority draw their customers come from far away, making it necessary for operators to have links with travel agents. In most of the tour companies, the owner is mainly reponsible for tour development. Then the programme is given over to a tour planning department to fmd hotel rooms, negotiate rates, and figure out what attractions or sightseeing to include. The field is beccoming more professional Oess "Mom and Pop"), along with most segments of the travel industry. In the domestic tour business, too, there are some consolidations into larger corporations (but not to the same degree as in other segment'>), greater sophistication in business operations, and more automation. Automation is playing a growing role, making management more efficient by enabling managers to keep track of reservations, how tours are selling, load factors, and the like. Domestic tour operations is also becoming much more sales and marketing oriented. Fi,eld sales people are being hired to call upon travel agents and groups (senior citizens clubs, church groups and schools). High Mobility, Low Pay

Though there tends to be little trunover of staff (less than 1 per cent), considerable mobility exists within companies, probably more so than in internationl tour companies, mainly because domestic tour companies are not yet larg,e enough to hire specialists; Lhey hire generalists instead. It is ,common for tour escorts 1.0 r.ise within the company to the highest levels.


Tour Operations 67

According to the NTF suJVey, no consistent effort is made to recruit managers and employess with previous experience and provide them with competitive wages and incentives. This field is still one where people can get in with relatively little experience; however, salaries reflect it. Consequently, people can stay in a company, taking on enormous responsibility, and still earn modest salaries. Consider the following examples: • A woman with 12 years of experience with a company, rising up from a clerk typist to operations manager, was earning $30,000. • The director of operations for a company, who rose up from a tour escort over a seven-years period, was making $30,000. • Another person, with 11 years with the same company, rising from air tour coordinator to manager of tour development, was making $25,000. • Anotl1er perons, who was witl1 a company for six years, rising from tour escort to supeJVisor of tour and development, was earning $ 23,000. • The vice president and general manager of a company, with 24 years at the company, was making $47,000. Domestic tour operations is one of the lowest-paying fields in the industry. Indeed, the NTF's ftrst-ever salary suJVey disclosed: President-only 52 per cent earn over $ 40,000, 17 per cent earn .$ 30,000 to S 39,000, and 20 per cent earn under S 20,000. Vice President-42 per cent eam over 540,000. General Manager-24 per cent earn over S 40,000, and 38 per cent earn between S 20,000 dna $ 29,000. Operations Manager-41 per cent eam between $ 20,000 and S 29,999, and another 32 per cent earn between S 30,000 and S 39,999. Sales and Marketing-only 8 per cent earn over S tiO,OOO, 30 per cent earn S 30,000 to S 399,999, and .39



per cent eam $ 20,000 to $ 29,999. Reservations Manager--only 4 per cent earn over $ 20,000, 33 per cent earn $15,000 to S 19,999, and 62 per cent earn under $ 20,000. Tour Planner--only 7 per cent eam over S 30,000, 27 per cent eam $ 20,000 to $ 29,999, and ;3 per .cent earn under $ 20,000. The rewards, however, come from having considerable responsibility, the diversity of tasks, the product, and the people you deal ·with. What compels people to stay? As one tour professional exclaimed. "In the tour business, you work with all components of tourism-hotel, restaurants, events, attraction •. destination marketing organization. You never get bored!" Contacts and Sources

The National Tour Association (NTA) has a listing of members and further details about the dometic tour operations industry. NTA provides some placement assistance via notices in its "Tuesday" newsletter (for $50 fee). National Tour Association (NTA), 546 E. Main St. , Lexingtion, KY 40508, Tel, 606-253-1036. The National Tou r Foundatio n (NTF) assists students with intemship placements in the tour business. NTF manages the Certified Tour Professional (CfP) progranm1e, the premier certification for tour professionals. It offers professional development seminars at its convention. Major trade publications include: Courier(NTA's magazine) Tour Trade Tours/

Tours & Trave News Travel \17eekfy Travel Agent

lnbound and Reception Services, Grow1d Handlers, and Sightseeing Companies


Tour Operations 69

Americans generally think in terms of outbound travel and rarely realize that there are people at the other end to service the travelers with transportation, sightseeing, and other facilities . Those that handle incoming visitors, coordinating their stay and escorting them about, are called "inboun," "reception services" or "ground handlers." Most U. S. teravel agencies are solely involved with sending visitors out from their areas to other states or countries, whereas most foreign travel agendes handle both outbound and inbound services. In this country, reception services are usually carred out by specialists, though many travel agencies are moving into the field . Handling reception requires some specialized skills and services-multilingual guides, for example, and contacts with travel agents abroad-for handling foreign groups. But groups also come from other parts of this country. The key ingredients are a through knowledge of your locality and contacts with local attractions and facilities. A Coral Gables, FL, agent, for example, handled a group of Norwegian zoo owners who were visiting to learn about faciltities for captive animals in southern Florida. Besides arranging visits to such facilities, the agent also had to coodinate matters concerning passports, visas, lost luggage, and sickness among the tour members. The reception service works in concert with the tour packager or the travel agent sending the group. Frequently, the travelers ar€. completely unaware that they are being handled by an agent for the tour company with which they booked. Many large compaines, particularly motorcoach operators, specialize in receptions services (sometimes know as Visit USA operators.). Among them are American Express and Greyhound. Many small companies, including travel agencies, however, are getting into this area. Convention and visitors bureaus arc excellant sources for names of companies operating in your area. The New York Convention and Visitors Bureau (2 Clumbus Circle, New York, NY 10019), for example, publishes a directory, geared for travel agents, which includes listing of reception companies.



In addition to full-service sightseeing and transportation companies, there are specialized reception services. For example, New Your Fashion Works specializes in a ''shipping extraveaganza" in New York's garment district and department and specialty stores; Overseas International Tours hosts groups from abroad; Accent-on-Theatre Parties obtains bloks of tickets to theatre, dance, music, and special events; Art-in-Action arranges for art programmes as well as shopping; Behind-the-Scenes looks into New York lifestyles, antiques, fashion, fmance, food, and interior design; Doorway to Design "opens doors to spectacular design" and arranges visits to "trade" interior design and fashion showrooms; and Harlem Spirituals is one of several companies specializing in tours of that celebrated district. Cary Frederick, a Hoosier from Indiana who made his home in New York, knew what it was like to be an out-oftowner in the Big Apple-the fears, confusion, edxpense, wondem1ent, and delight. So, he set up his own personalized guide service, appropriately named "Rent-A-New-Yorker," to help visitors to the city, individually or in small groups. He draws upon his skills as a trained librarian to research and plan itineraries and to prearrange hotel accommodation, restaurants, theatre and events tickets, and sightseeing. He even stand on line at the TKTS booth to obtain Broadway theatre tickets at half price for his clients. "Everyon e talks about personal service," he said. "l am like a friend in town." As companies like Frederick's expand, due to repeat business and referrals, they generally take on associates or add staff. The American Society of Travel Agents (ASTA) has been actively working to help its member travel agencies to cultivate reception services, and several hundreds have already entered the field, with several hundreds more moving in the same d irection. This usually involves adding staff. ASTA member Rex Fritsehi, president of Rex Travel, Chicago, launched a reception service a decade ago, providing sightseeing p rograms in Chicago . His company, Chicago Welcomes, handles grou ps mainly from overseas, including England , France,


Tour Operations 71

Germany and Switzerland. "It's a completely different ball of wax from the travel agency," said Fritschi, "different selling, marketing approach, and different handling. The wants, needs, expectation of foreign travelers are different." It takes several. years to become established in receptive services, to develop the contacts abroad, to gain the name recognition. Help in penetrating markets is available from the U. S. Travel and Tourism Administration, a se you franchise, they will want to interview you and check you out fin :u1cilly and


Franchising Your Dream 91

personally to see if you the type person want to operate one of their locations. But, in turn, you should do the same thing. Here are some of the questions you should ask, and then check out: 1. Who are the principals of the company and what are their backgrounds in the foodservice industry? 2. How long has the company been in business, particularly in your area? 3. How quickly has the compay grown? Is it a steady planned growth, or a rapid uncontrolled expansion? 4. How many failures h as the company had and why? S. What sort of training and backup does the company provide and what is their staff structure to administer this?

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beverage items that you have in stock. It is advisable to break these down into categories such as meats, produce, dairy products, beverages, dried goods, etc., and subtotal each category for ease of calculating your total inventory. 2. The Unit column should depict the way in which each item will be counted and priced, i.e., lbs., cans, packets, cases, bottles, etc.

3. The Opening column is, in fact, your dosing-inventory figure from the last inventory you completed. For the very frrst inventory report taken for your operation, there should be no opening figures. 4. The Purchases column would include all the purchases for the period since you last inventory report.

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5. The Total column figure is arrived at by adding the Opening and Purchase columns together.

6. The Closing columns would b e the amount of inventory physically on hand, taken at the end of the period.

7. The Used column is the sum of the Total column, less the Closing column, and tell you what h as actually been used in your operating during the period. 8. Unit Price is the most recent rice of each item, reduced to the unit by which it is counted, as depicted in Unit column. 9. Cost is arrived at by multiplying the Unint Price by the number of units used (from the Used column). The sum of this column, Total Cost, will give you the total amount of food and beverages used in a give period. 10. The Re-Order column is a handy device for instantly recognizing what is, or should be, needed for the next period of operation. You n ow know what has been used and what you have left, so it is quite easy to calculate w hat you should reorder. Note

The completion of physical inventory report is quite consuming: but it is the only way to measure how well you and your staff are controlling the operations' cost o f sales. For the new owner, a weekly report should be completed until such a time as you think everything is running as it should be. Then you can drop down to monthly report. However, if at any time the food costs start to get out of line, then the reintroduction of the weekly report should tell you where things are going wrong.

Management Style The establishment of standards and systems must be lY.tcked up bu your one management style. This not only includes your manners with your stall, but also your reponse to situations , that require action. Always remember that, as the owner, it is up to you to


Systems and Controls 125

instruct your staff in the way their jobs are to be done. You're controlling your staff; your own behaviour set an example. Presumably, your long-range goal of success means that your behaviour will reflect the standards and systems you have reated. That, in turn, will influence your staff's beheviour when following your standards and systems. For example, if, when you're helping to plate dinners, you use excessive portions, your staff will tooo when you're nor around. Remember to be consistent. Too often, owners vary their actions, and that does not offer a clear picture to employees. Such inconsisteny confuses the staff and tends to wa ter down whatever control you've created. Staff Training Setting an example for staff to follow in standards and systems is not enough. You must first train staff in these areas before you can expect your example to be followed. Initially, you must create a complete training programme for each job category in your operation: manager, chef, cooks, dishwashers, janitors, servers, bartenders, hostesses, busboys, etc. You must writ out out their job descriptions for them, telling them what they will be expected to do. They must be instructed in product knowledge (what you sell and how). They'll have to be taught your standards for products as well as your systems for handling and producing these products, and your systems for sales cashcontrol and remittances for the staff that serves \~ustomers. Although a lengthy process, it must be done if you are to expert a professional staff. And every time a new person is hired, you'll have to do it all over again. Staff Monitoring One of your most important tasks is to control your operations by continually observihg the actiions of all of your staff as they go about their daily tasks. You must judge their actions in light of your standards and systems, and correct them when neccessary.


126 Tourism and Travellndustty

The object of this monitoring is to change or modify the staff's job perfomance, or to control each person's job activity, so that it is consistent with your standards and systems. For example, if you observe a bartender mixing drinks without measuring the ingredients and fail to direct him to measure, then your bartender could assume that his work is acceptable. You have just missed an opportunity to apply a control to a job task that was not consistent with your standards and systems. The effectiveness of your standards and systems depends on the continuous monitoring and correction of your staff. Staff that follow the standards and systems should recevie a positive response and prasise, but conversely, those staff members that do not follow the guidelines must be corrected, and may require retraining in the particular task.

Other Conslderatlons Some other reports and forms that you may want to consider are as follows: 1. Beverage inventory control form

2. Beverage requisition form 3. Spillage, spoilage, breakage report 4. Bin control form 5. Purchase order form

6. Labour cost report 7. Waiting list form 8. Staff schedule form 9. Shift change form 10. Sign in/our form 11. Vacatio n report 12. Server/cashier remittance report 13. Costed inventory report 14. Payroll deduction authorization form


Systems and Controls 127

15. Purchase summary report 16. Equipment history report 17. Staff time cards 18. Kitchen/bar transfer report In general, you must remember that at the heart of the control process are three basic steps. · Begin by establishing both your standards and systems for operations. Be as thorough as possible. These are the building blocks of control, and there must be a flflll foundation to build on. Measure perfonnance in all areas from your own management style to your staff's training and monitoring. Adhere closely to those standards and systems. Don't deviate as your success will depend upon them. And finally, through your reporting, learn how to analyze infonnation early. The variances between your potential and actual stantards and systems will eat up your r.>rofits, os take action quickly to correct these areas.


i


Personnel One of the most important assets in your new restaurant will . be your staff. That single point must be remembered at all time. Consider that the staff you hire represents your restaurant to the public. They're the ftrst and last people that your customers will meet. They sell your products, or waste tham, or steal them from you. Their service may make or break you. Or even worse, they may try to rip off your customers, and everyone will hear about that! Whatever they do, you are paying them for their actions. You expect them to follow the standards and systems you've created for them, and you'll use both training and monitoring "to ensure that they do. But never forget that you must set an example they can follow. So h ow do you begin? You might find it easier to look at your personnel needs as a series of seven stages, or steps, that should be followed in order from planning, right through to training. Policy The first step is one that will be very impotant to you as the owner of· a new restaurant. The policies you set down


Personnel 129

before you open are the rules and regulations, the law, if you will, that your staff will have to live by. Any they are also loaded with information that your staff will want to know. Consider some of the following areas: SAMPLE# 18 The Seven Steps to Organizing Personel Needs T ram ..m~

Files Interviewing & Hiring

Descriptions Rates Category Specifications Policy

Probation Period

How long will your employees be on probation? Will you sit down with them at the end of this time and evaluate their performance? Discipliue a11d Dimissa/

What constitutes a disciplinay situation? How will discipline employees? How many such situations are grounds for dismissal?



What constitutes ground for immediate dismissal? TI1efi? Lat~ness? A no-show for a shift? An unclean uniform? Are you aware of standards laid down in the federal and state labour laws? StaffMeals

Does your staff eat free when on duty? Or at half-price? Or what ? Can they have anything they want? Or selected item only? Can they drink alcohol on duty? Do they any discount when they come in as customers? Are there some who'll have to pay and others who won't? Where can they eat? In the dinning room? Or do you have a separate place for !them? StaffBreaks

Who gets a break? For how long? Do you pay them for that break? What are the labour Jaws concerning breaks? Where do they take their breaks? Who do they ask for a break, or do they just walk off the floor? Saff Somkt,g

Are staff allowed to smoke at their work stations? In the dining room? On their breaks? Or not at all? Schedules

When will the week's schedule be posted? Can they ask for specific time oft? Do they just switch shifts with each other or must you okay it? What about vacations? How far in advance must they request vacation? What if they all want the same day or week oft? How will you decide? Staff as Customers

Can your staff stay after work as customers? Can they come in on days oft? Must they keep to the front-o!f-the-house areas? Are they allowed to charge meals? Or drinks? Vnifomts Will you have any? Do you supply them? To all or just

some of the staff? Or does your staff buy them? What about cleaning? Repairs? Deposits? What about shoes? What colours and styles are acceptable? And nylons? Aprons? If employees wear their own clothes, what styles and colours are acceptable?


Personnel 131 Cash Responsibility

Are the staff members who handle cash reposible? Do they make up shortage? How will you collect those monies? What about improperly verified credit-card vocuchers? StaffAn?as

Can staff be in the back of the house when they're off duty? Where will their friends/pouses wait for them to finish after hours? Payroll

When is pay day? Do you pay extra for public holidays? What deductions might affect all or some staff? Will you cash their checks? How often do you review rates? TipSplUs

Will you collect all or some portion of the tips? How will you distribute it among other staff members? StaffHygiene

Have you considered acceptable hair styles? Make-up? Jewellery? Their hand for cleanliness? Nail polish colours? Category Secllications

Throughout your new restaumat, each position falls within one of the tradtional job categories-from chef to sous-chef to line cooks, prep cooks, dishwahers, janitors, managers, assistant managers, floor supervisors, servers, bartenders,, busboys, hostesses and bar porters And each of those categories will need just so many people to fill your needs. You'll plan to 'ful each category to the maximum level needed to run your restaurant. But be forewarned about the experience factor. For example, at opening you may have to put eight servers on the floor to cover the dining room. But a month later, after they are experienced, only six or seven are really needed to handle the floor. So what do you do with those extra se rve rs? You can partially get around this problem by using part-time staff might from the start. That way, you'll noe be cutting down o n your full-time staff. Natural attrition may also solve this problem.


'\.

13? Tourism and Travel Industry

RatesofPay

Begin this third step by checking around in your community as to what rates are being paid for each job category. Your local restaurant and foodservice association office will supply you with a breakdown of these rates. Study them, carefully, since it's your money your're looking at Check around with other owners ·as to their rates. Remembers that many of these rates will be based on experienced staff. But you'll be most interested in starting rates, taking into account minumum wage amounts. As well as establishing your starting rates for each category, you should decide when the staff will be eligible for raises . This informatin should also be passed on the staff, reminding them that raises will be based on performance and merit, not just on length of employment. Job Descriptions

The fourth step is to take each job category and write a complete job description for it. This job description will also be handed out to all employees so they know just what is expected of them. It will dear up any misconceptions or , excuses like "you didn't tell me I had to do that." For example, here is a job description for a server in a full-table-service, licensed resturant: 1. To serve every guest with courtesy and a smile. 2. To check in 15 minutes before each shift to receive cash register Key, guest chec!<s, section, assignment, and daily special information. 3. To arrive each day in a clean, neat uniform and with personal appearance in accordance with policy. 4. To be fully knowldegeab in all menu item and prices. 5. To know proper garnishing of menu items and bar tiems.

6. To check each server station to see if it's fully stocked. 7. To check you section and see that every table is properly

set.


Personnel 133

8. To check the chairs, booths, and rug for dirt or crumbs. 9. To make sure coffee's hot and ready on each server station.

10. To inform you supervisor in case of customer complaints, equipment malfunctions, or poor housekeeing by cleaning staff. 11 . To perform any other duties as may be requested (covers

anything else you may forget). Interviewing and Hiring

The fifth step uses all of the previous steps and is often the hardest. It involves the actual interviewing of everyon.e who applies for a job with you. But before you can interview, you have to know what you're looking for in the each job category. For each category, remember to list the four analysis points to use when interviewing. They are as follow: 1. Knowledge: What knowledge is needed to do this job?

2. Skills: What are needed to do this job?

3. Physical: What are the physical demands of the job? 4. personal: What personal qualities are necessary for the job? As an exapmle, here's a job analysis for the cashier category/ 1. Knowledge: (a) How to make change accurately (b) How to make up a cash repot for each shift

(c) How to record adjustments (d) How to handle credit-card vouchers, travelers' checks and goverments checks. (e) How to handle coustomer complaints (f) How to service the cash register for tape or ribbons 2. Skills:

(a) Basic Math, English, reding. and writing


134 Tourism and Tral(ellndustry

(b) Skill and speed on a cash register

(c) a counteous and frienly tn.IUlOer of speaking 3. Phsical: (a) Ability to stand up for a long time (b) Ability to punch in number keys on cash register

4. Personal: (a) Responsible, fast and eftlcent (b) Sociable and tactfully cooperative

(c) Cheerful, but tough when necessary (d) Honest Regardless of whether your applicants are walk-ins, come from employment agencies or schools, are referrals, or ·are responding to a newpaper ad, your next step is to have everyone fill out an application form. The application form is used: (a) togather all personal data you may need , (b) to show work experience and educational levels, (c) to help you direct questions arising from the information given and general data required. The application can, therefore, reduce the time you spend on each interview, while still giving you vital information in areas you would question. It can also aid in quickly eliminating candidates without the sills or ~xperience you need. Once the application completed, it's your tum. lnterview applicants in private-you're trying to get each candidate to open up to you, and that's impossible when surrounded by other candidates. Ask questions that call for more than a "yes" or "no" answer. Don't ask a sever cand.i~te if they like being a server; intead ask them what they li.lce/dislike about their job, and why? Check their listed skills by asking them about their training for those skills. Or ask a technical question about those skills to test the ir knowledge and see if they really do have a


Personnel 135

particular skill. Always refer to the past employment record and get them to explain why they left. This will give you some infromation as to how they perceived their old job and past employers. Then tell about what happens next: how long you'll be considering applications, when ~e candidates will be notified if they're hired, when ·the starting dates are, etc. These things are important to your applicants, so be honest with them. Remember too, that you want the applicant to talk as much as possible. Listen well, and take notes on what is said and let them sell you on themselves. After the interview is over, you should then check the references of every applicant who is a serious candidate. Simply call the listed employers and ask their opinion of the applicants' work habits, skills, perfonnance, etc. This will give you a good idea of any problems in the candidates· past employment histories. You know have all hte information that can be gathered on each candidate. It is time to make your decision. Use your written notes to create a. strength/weakness outline for each applicant. Both will be present, of course, for each position you have. Remember that each staff member is very important to. your operation, so rate them on a scale from one to ten, according to how well you think the candidate can nu the requirements .of the position. You now have a list of their knowledge, skills, physical abilities, personal characteristics, references, strengths· and weaknesses, and a risk-rating to help you decide.

fUes It is very important to set up personnel files for you restaurant. Purchase one of the pre-printed cardboard mefolders available. The covers have space to allow you to insert all personal infonnation on each employee such as: name, address, Social Security number, the person to notify in case of emergency, and medical plan, and income tax rating, etc. Space is also provided for your comments coneming promotions,



tradiness, discipline, etc.

You will soon learn that restaurant business, like all other businesses, generates a lot of paper. But these personn.el flies should not be forgotten; you'll refer to them regularly, and an updated, complete set of files is a necessary part of the smooth relations between you and your staff. Training

The seventh and fmal step is the training of your newly hired staff. This traning programme is often assembled into a training manual for instruction to the staff, and a staff handout for them to study and refer to. They general purpose of any training program is to turn these newly hired staff members into "professionals,• regardless of their previous experience, and to improve the perfonnance of each staff member. The benefits of any training programme are vaaried. They help your staff to earn a pay check and trips, satisfy your cusxtomers, and build your sales, which will lead to your new restaurant's success. In any training pogram, regardless of your individual restaurant type, there are some basic areas to conv:e r in depth. Generally they are as follows:

Product knowledge-standards Your staff must be knowledgeable about your complete menu, both food and beverage item. You must tell show them your standards for all Items, from the receiving d oor to the customer's plate or glass. They must know what constitutes a perfect meal, in quality and portion quantity. They must know what plate or glass is to be used so they will be able to properly server and sell the items on your customers. job Procedures-systems This area, again to be fully developed and presentented to the staff, will explain how to do each task in every job category. Although lengthy, these procedures will show the staff the correct way to follow the systems. In order for your restaurant


Personnel 137

to run smoothly, everything must be listed, and taught to your staff, from how to cook a prime rib of beef, to how to greet and seat guest; from how to carry a trayful of drinks, to how to mix a drink. Selling Aids Because your servers will be the direct link to your customers, you must infonn them about how you are going to enable them to sell. Use your menu to show what is for sale, and what accompanies each meal. Teach them about your bar listings too-they're a great check7builder. What other things are available that may not be on the menus? Do you have blackboards with daily speciais? Or placemats? Is there a childeren's menu? Or an after-theratre menu? Show each one of the servers, and test them on their product knowledge. Remember, to help your servers sell for you, must fully develop these aids and systemize all of the procedures they will be using to sell. Recipe File

This file is created for instruction of tall production staff. Generally, the recipe me is composed of every menued or featured food and beverage item. In lists ingredients and qualities end quantities to be used, and the procedure to be followed erery time that item is prduced. This ensures that the consisteny of the menu item is constant in taste and quality. Often these recipes are printed or typed on cards for easy reference by your kitchen or bartending staff. Many restaurants include a photo of the finished item so the staff will be consistent about plate arrangments as well. As the onwner, you'll not only want these recipes followed religiously for consistency of taste, but to ensure that the production staff are following the standards and systems s~t up to control your food and beverage costs. Conclusion Any new restaurant has problems in almost every area,



and yours will be no different One thing t? remember is that your new restaurant will probably have few problems in attracting customers right off the bat The difficult thing is to please them that first time. If you lose the, because they are not happy, it's ve ry difficult to get those dissatisfied coustomer to come back again. One of the best tactics to use in smoothing out those opening problems, is to organize dry runs. TI1is tactic involves providing a full-service meal to selected guest for free (or perhaps all monies might be donated to a charity). Basically it's to give your staff the time to fme-tune your standards and systems. Begin by splitting your categories in half, wherever possible. This ftrSt dry run would be planned using one half of the staff to come in to work and completely set up the restaurant for service. The sceond group then comes in as customers. They are seated, served, etc. Afte r they have gone, the working half then closes up. Then :reverse the two groups, and do the same again. Next, you might invite all of the tradesm(~n in, or your supppliers, or your family and friends, or local merchants, or business people, or all of them for staggered meal priods. They'll act as "guinea pigs" for your systems. Problems will surface quickly and you'll be able to adapt befor your have paying guest. And the experience your staff gains will out weigh the costs of such dry runs. Once you are open, you're not finished by any means. just because you've trained all your staff, don't thing it's over. Training exployees never stops. The staff are costantly leaving one position for another, and you'll have to train your new employees as well as your opening staff were trained. You 'll also have to motivate them to help you new restaurant to succeed. SUPPUER

As a new restaurateur preparing to open your business, yo u must realize that way in wh ich suppliers view you. Certainly,


Personnel 139 the sales staff look on you as potential new business, the lifeblood of successful sales people, but every supply company has a killjoy, and his title is usually credit manager. To the credit manager, you are another potential risk in an industry with a high mortality rate. So as far as he is concerned you will have to prove you are worthy before he allows the privilege of credit. The procedure theat many suppliers are now adopting is that your first order, which is always the largest, will be delivered C.O.D. Then, depending on the supplier, he may give you terms ranging from 10 to 30 days. Sometimes a supplier may not otTer you credit for the first month or two, until he sees how your business is progressing. You progress can e-.Jsily be determined by the volume of product that you are ordering, or by the local salesperson dropping into your location, at what should be peak time for business, to see how busy you really are. Service v ersus Price Service

As an operator in the service industry, you have deadlines to meet daily. When a customer comes through the door of yor restaurant, the meal that he is expecting has to be available. This can only be achieved . if you have ordered the product and your supplier has delivered iL Consequently, service by the suppliers you use must be high on your list of requirements, and equally important is the availability of the products you need. T.O.S.'s (temp orarly out of stocks) can't be served to the customer. So service and avilability are the hallmarks of a good suppl ier. These requil:ements can be established prior to opening, by taking to other restaurants serviced by the supplier, and will very quickly be confirmed once you are open. Plice

The price you pay for the goods you receive is a lso very important, but low price and poor service will most definitely cost you more money in the long run. If various items are



constantly T.O.S., then you'll be running to the comer store or local supermarket and paying far more than you should. You must also be wary of the supplier who comes in with the lowest· prices intitially and then gradually raises them over the next few weeks or months. Many new operators are so concerned with the day-to-day running of their they fail to notice prices creeping up, especially if they are not taking time to phone other suppliers ot compare prices. Remember, if you can save $100 per week because of good buying practices, that money is direct profit because your menu prices are often fixed for a 3-to-6 month period, and product price increases cannot always be pased on to the customer immediately. The Sales Representative

As we mentioned earlier in this chapter, the life-blood of selling is new business, and to the supplier's 53,les staff, you are new business. Although most reputable companies give tl1e sales staff strict guidelines to follow when selling, not all sales person follow these instructions to the letter. Some of the questions you should ask are: 1. What is the minimum dollar or case delivery? 2. What credit terms can be arranged or can y,o u expect, once you are established? 3.. Does the company deliver every day in your area and , if not, what are the delivery days? 4. What time of the day can you expect delivery? 5. What is the cutoff time ofr ordering to receive delivery the following day? 6. When an item is T.O.S., does the supplier call you to let you know, allowing you to subsititute, or does the company just dieliver without the item, or substitute at the same price? · 7. Are the delivery personnal unionized, and has the supplier experienced may tabor disputes? Once you have discussed all these points with your sales representative, don't be afraid to confirm the details with the


Personnel 141

company's manager and credit manager. Other Services Supplier can provide many other seJVices, such as: 1. Product information 2. Product-manufactureres' recommendation on cooking, storing, and seJVing ideas 3. New products on the market 4. Equipment related to the seJVice of their products. The last item can be a great intitial cost saving to the new restauranteur. For Example, some coffee companies will provide coffee manchines at no up-front cost to you, as long as you only use their product in the machine. However, there may be an up-charge in the cost of the product you puchase, i.t., lOc per lb. extra for the coffee. Many other types of companies also offer this kind of service, such as ice-cream suppliers, carbonated-soft-drink suppliers, milk suppliers, etc. But it should be remembered that the supplier will only offer this seJVice if he feels that you volume of purchases from his company is high enough to justify the capital exense his company will incur. In other words, nobody is going to give you something for nothing. Receiving Checking off the suppliers' delivery slips against what you have received is a task that any member of the staff should be able to complete. But knowing if the product is acceptable is something that only an experienced person can decide, especially when dealing with produce, meats and fish products. lt is therefore essential that you try to schedule all deliveries at a time when they can be received and checked properly, and that any unaccaptable items can be noted on the delivery slip and returned immediately. Products delivered during a busy lunch period, not only fail to get checked properly, but often do not get put mto storage until after the luch rush is over. For perisable goods, this can not only be costly, but very dangerous. Good ordering and receiving pratices are as important for you restaurant's success as any other control.



Travel Writing Making a living as a freelance travel writer in the 1990s is becoming increasingly dilfircult. ewspspers, whose Sunday travel sections had been the largest market for travel articles, are becoming fewer. As n ewspapers decline in number, however, all kinds of specialized magazines spring up. They do not use as many travel articles as the newspapers had, and their standards are often higher, but magazines of many kinds use travel articles in hopes of attracting travel advertising. This has incresased the umber of jobs ofr staff writers and editors. A growing threat to freelance travel writ~rs the decision by a few of the most prestigious magazines to rt:fuse articles generated by sponsored trips, as a few top newspapers did two earlier.

History of Travel Writing In English slang a few generations ago, a "traveler's tale" meant a tall story-a h ighly coloured and exaggerated account of adventures in exotic and faraway lands. Most of the world's literatures have included s uch reports. Homer's Odyssey, dating from about 850 B.C. not only relates the adventures of Odysseus (Ulysses) over the 20 years it took him to come home from the Trojan War, but also decribes accurately many parts of the Mediterranean world that he visited.


Travel Writing 143

One of the world's most fascinating travel classics is 11Je Book of Mar-eo Polo. Fortunately for the world, this Venetian man of action, after his epochal journeys across Asia and his 24 years in the service of Kublai Khan, was taken prisoner in a war between Venice and Genoa. Using his carefully written travel notebooks, in 1298 he dictated to a fellow captive, the scribe Rustigielo of Pisa, the book that disclosed Cathay to Europe. Christopher Columbus had a copy of this book and made notations on more than 70 pages. His object, when he sailed in 1492, was to reach Marco Polo's Cathy. Another monumental travel writer was Richard Hakluyt of England, who became archdeacon of Westminster and is buried in Westmister Abbey. Between 1582 and 1600, he wrote several books, chief of which is his Principal Navigatiou.s, Voiages, and Discoveries of tbe E11glisb Nation, describing all the great sealbome expeditions o f English captains to America, the Arctic, the Pacific, and around the world. If only some chronicler had joined the fishing e xpeditions of early Pottugues, French, English, and Scandinavian Fishennen, we might know much more about ancient landings in North America. lt is suspected that there was fishing from European ships on the Grands Banks off Newfoundland and Nova Scotia as long as a thousand years ago. The fJtSt important analysis of the United States and its life is De la democratie cm Amerique (Democracy i1t America), published in 1835, by Comte Alexis de Tocqueville. Sent to examine the United States pentientiary system for the French government, de Tocquevill wrote his report on prisons, and then, in Democracy iu America, he described American life with such penetration as had neoer been applied before, and seldom since. He perceived that the great difference between Europe and America was the American insistence on equality, and he showed how this affected every facet of life, from emergent literature to science, religion, philosph}~ . the arts, language, b usiness, the family, the military and manners. He didn't care much for our ancestors' manners, but he fore saw that the inOuence of democracy would bring about the



emancipation of women. De Tocquevill's work would not be considered travel writing by some persons-those who believe that travel writing conoerns it self solely with the traveler's transportation, accommodations, shopping and recreation. But, in reality, this is the very best kind of travel writing because de Tocqueville delivers that most precious gift-insight. The insight of the travel writer can bring the reader to feel kinship with people of another land and another race, by showing the universal emotions and motivatins behind customs that seem strange, even bizarre. An alert travel writer is always auuned to the subtle emanations of a new place and its people. Every bit of feeling that a place arouses in · the travel writer must be savored, perhaps analyzed, but certainly fully realized, so that the writer can express it in a way that makes the reader feel it as well. Two men who strongly influenced the development of travel guidebooks as we know them today were John Murray of London and Karl Beadeker of Koblenz, Germany. John Murray (1808-1892) was the third of a distinguished line of publishers, all bearing the same name. He wrote a series of handbooks on the Netherlands, Belgium, France, the Rhine, South Germany and Switzerland. Karl Baedeker (1801-1859) started a printing in Koblenz in 1827. Under an arrangement with John Murray, he published a pocket-sized guidebook on the Rhine, Belgium, and the Netherlands in 1839. He subsequently brought out guides covering most of Europe and part of Nortl1 America and the Orient. These books were so reliable and thorough that the name baedeker became a synonym for the word guidebook. The era of exaggerated "tra veler's tales• had ended. Baedeker started the pratice of marking with one or more stars in his books places of special interest or attraction, so travelers with little time could determine quickly what to see. ··starred in Beadeker" soon came to mean "well worth seeing." These . Beadekers were published from the beginning in Gennan, French, and English, and this helped them to gain extremely wide readership.


Travel Writing 145

Modern Travel Guidebooks ln our own time, the mantle of Beadeker graces the shoulders of Eugene Fodor, a native, Hungarian w ho is now a United States Citizen. He was editing travel books by 1936 and began p ublishing Fodor's Guides in Paris after World War TI. He moved his headquarters to the United States in the 1960s and retired in the late 1970s. For each jodor Guide, authorship is generally shared by a number of witers and researcherwhenever possible, experts residing in the country descibed by the book. Quite different are the highly personal guidebooks exemplified by Myra Waldo's Travel arui Motoring Guide to Europe and Fielding's Travel Guide to Eurpoe(j)y Temple Fielding ). These popular guidebooks, revised annually, d!epend for their attraction on the readers' confidence that they can rely upon the taste and perferences of Myra Woldo and the late Temple Fielding. Arthur Frommcr, after traveling through Europe with his wife, as inexpensively as possible, worte Europe on $5 a Day, an inexpensive paperback book. Tile title's assertion mat travel could be very inexpensive doubtless inspired many Americans to visit Europe. For millions of Young people, it was a bible of essential information, carried around Europe until it was dogeared and tattered. It was such a success that Frommer strated a publishing house and. now keeps a number busy writing and updating over 40 titles. Each book is wiritten by a single writer or a team of two writers. Having achieved fame as a travel write r, then as a travel-book publisher, Frommer went on to become a package-tour operator and hotel impresario. Many readers seek excitement, exotice scenes an d escapist literature which takes them out of meir daily routines. Tr-.avel books do this, with descriptions of true adventure in jungle exploration or mountain climbing, treasure hunting or visiting natives of lost civilizations, archeological exploration or sailing trips across an ocean on a raft. This kind of escapist nonfktion pem1its armchair travel and is at the opposite end of the spectrum of travel writing from the step-by-step Beadeker.



In between these opposites are many kinds of books on outdoor life, hunting and fiShing, camping, ecology, folklore, local crafts, transportation, skiing, boating, history, cruising, flying , gliding and so forth. Some of these are written to amaze or amuse the reader, other to give the reader practical advice and istruction. As travel has become more widespread, the amount of

travel coverage in magazines and newpapers has increased. Travel is a major interest, and people do mroe trave ling every year. Another reason for the increase .in the number of travel articles is that travel advertising has been increasing from year to year. A magazine or newspaper carrying a great deal of travel advertising must carry a commensurate amount of trAvel writing: otherwise, readers do not look at "the advertising. If a Sunday newspaper's travel section had only advertisement, most people would discard it unread.

Job Opportunities While travel writing is important to readers, and therefore essential to magazines and newspapers, it is not a lucrative field for the writers. The reason is an anient econimc one, the law of supply and demand: so many people are willing to write to write articles on travel for little or nothing (and public relations people supply so many free articles and pictures) that a newspaper editor on a slim budget may decide to buy no articles at all, relying solely in free material. During the economic slowdown of the mid-1970s, when newspapers suffereed a shortage of newsprint (paper) and greatly increased cost (ink and labour), many newspapers that had been regular buyers of travel articles from freelancers completely stopped buying. They had their travel editors write articles, they used free articles from public relations sources, and they used articles provided by the wire seJVices at very low cost. This is happening again in the 1990s. Freelance Travel Writing

Travel writing on a full-time freelance basis is a highly insecure profession. As a result, there are very few full -time


Travel W riting 147

freelance travel writers. Many people who would like to be full-time freelance travel writers find it necessary to do some writing in public relation or in other fields in order to sruvive. Staff position as travel editor or assistant travel editor on a magazine or newspaper are more secure. Almost never, however, is a person give such a position because he or she has trained for it or is a specialist in travel. On newspaper, unfortunately, the travel editorships· are sometimes given to aging reporters coasting toward retirement, as a reward for past service, They get an opportunity to do some traveling and to write about it, but they do not regard suh writing very seriously, and, consequently, readers are shortchanged. To help combat such attitudes, the Society of American Travel Writers was founded in 1956. Its two primary goals are (1) to convince publishers that reponsible travel reporting is an essential editorial service, an inescapable obligatio to reader in this age of rising leisure and discretionary income and (2) to build joint strength of travel writers in support of their elemental function in the travel industry-as true spokespeople and travel critics for the average traveler. The frrst president of ths Society of American Travel Writer was Peter Celliers, who for several years was travel editor of both playboy and modem Bride at the same time. Now senior partner of a public relation agency, Celliers notes with distress that more than half of the United States newspapers and magazines that purport to cover travel do so without any professional consisteny. In 1980 a second national travel writers' organization was fom1ed-the Travel Houmalists Guild (TJG). Composed solely of freelance travel writers and travel photographers, its establishment was necessitated by the fact that freelance objective could not be pursued in the SATW because they conflicted with the policies that travel editiors in SATW had to enforce for their publishers. The founding presiden ofTJG, Bern Keatin, performed a signal service for all American freelance writers by obtaining the introduction in the Sentate of a bill amend the copyright law so that publisher wo uld n ot be permitted to



buy other than first serial rights of articles, unless other rights were paid for, the bill had a hearing about did not reach the Senate floors. Many other write', photograhpers' and aritists' groups joined ranks in supports of the amendement, and the fight goes on. TJG has about 75 members in 1990. Membership is being kept small and highly professional. Travel writing, for most freelance writers, does not eam enough to cover the costs of the necessary travel. !Recognizing this (and hoping to obtain coverage of their attractions or facilities) airlines, resorts, hotels, railroads, cruise lines, and local and national governments often invite travel writers on press trips and cover part or all of their expenses. In the early 1970s, several prestigious newspapers, declared they would no longer buy travel articles based articles based on "sponsored" trips. One editor went so far as to say this was a dishonest way of obtaining information for an article, despite the fact that his publication pays low rates, demands, "magazine quality" articles, and pays no expenses. Under these conditions, of course, a travel writer sepdalizing in faraway places must have other irncome in order to write for these papers. This cuts out the professional freelancer, in fact, and leaves this article market to those who do not depend on travel writing for their income-business travelers, pleasure travelors with a flair for writing, and others for whom travel · writing is a sideline. The same newspapers that reject press trips as unethical accept free tickets to plays, ballets, concerts, and :sport events for their theatre critics, dance critics, music critics, and sports wirters. They also pay the expenses of any reporter who must travel to cover a story. Writing about press trips, Richard Dunlop, author of unmerous travel books and former president of the Society of American Travel Writers, says; I cannot imagine that any responsible public relations person who works for an honourable client, whether it be a hote l company, airline, state, or foreign government, thinks he can .buy a repected travel writer by inviting his on a press trip.


Travel Writing 149

Nor would a travel writer of stature go on such a trip if he thought he was being bought. I have always felt free to write exactly what I thought of the areas I vistied on press trips, and I belive that all travel writers who are members of the STAW should take the same attitude. Another difficulty for trying to become full-time professional free-lance travel wiriters is that the "star" system in effect at most of the best magazines. An editor wants to p ublish as many articles by celebrities as possbile, so their names can be printed on the cover to help sell the magazine. This makes it difficult for a newcomer to break into the field and to sell enough articles to keep going. This look at the problems show that freelance travel writing is, in general, an insecure field. For those with talent and persistence, however, it is a fascinating way to earn a living. Travel Editiors A position as /raiX!I editor of a magazine or newspaper is much more secure thatn that of a freelance. There is :a regular salary, there are regular hours in the publication's offices, and, in the case of most metropolitan newspapers, a union contract to regulate working conditions. The Newspapers Guild, the union for reporters and editors, has been quite militant about obtaining good salaries and other benefits for its members. Travel writing and travel editing are generally not recognized as specialities open to begining reporters and editors in the newspaper world, so the neophyte must begin as a general reporter or copy editor. As more educational institution develop curricula in TIT (transportation, travel and tourism), newspapers may begin to place TIT graduates in assignments that cover these subjects. Since the colleges with TIT generally do not require courses in writing, ncv.'Spapers may obtain TIT specialists from among journalism graduates who have minored in TIT. There are so few magazine travel editors that it is difficul~ to generalize about them, but it can be said that collage education is required fo~ such work. Some travel editors are journalism



graduates, but many are in fme arts. For both newspapers and magazines, the master's degree is becoming increasingly necessray. The work of a travel editors varies greatly from one publication to another. On some newpapers and magazines, the travel editors is actually the sole travel writer. Richard joseph, for example, was travel editors of Esquire from 1946 until he died while on a trip in the late 1970s. He generally wrote two articles for each issue, and Esquin? seldom bought any other travel articles. , On a metropolitan newspaper that buys 10 to 30 travel articles each week, the travel editor's job is completely different. He or she generally works regular hours and is inundated with unsolicited articles, queries about prospective articles, and press releases from carriers, hotel and arrraction. Selecting articles, correspondinng with travel writers, editing articls, and coping with problem of layout, photography, and deadlines require long hours, leaving the travel editor little time for personal travel. On the prosperous newpapers, there are one to four assistant travel editors, so the travel editors, so the travel section can be prepared even if two of them are traveling on assignment. On the papers with lower budgets, the travel editor may have no funds for personal travel or four buying articles. Then he or she must rely on publec relations press releases and write an occasional vacation article. To become any kind of a tra~el writer, editor, or broadcaster today, an undergraduate college education is essential, and graduate degrees help. A travel photographer does not need collage training, but must have a great deal of technical expertise, as well as flair for the work. The competition in this work is very stiff-a magazine editors selecting photographs to illustrate an aritcle often will have 100 to 200 or more offered, of which one to five may be used. Further information about opportunities on newspapers and salaries for graduates of journalism schools, as well as a list of scholarships, fellowships, assistantships, and lo:1ns for


Travel Writing 151 journalism students, may be obtained from the following organization: The Newspaper Fund, Inc. Box 300 Princeton, NJ 08540 Current union wage scale infonnalion can be requested from the following addresses: The Newspapers Guild Research Department 1125, 15th Street, N.W. Washington, DC 20005 Canadian Daily Newspaper publishers Association 321 Bloor Street, East Toronto, Ontarion M4W 1E7. Opportunities for Women Opportunities ofr women in tragvel writing are good. The roster of the Society of American Travel Writers(SATW) includes about 40 per cent women as active members. Active members include freelance writers, photographers, broadcasters, staff travel writers, photographers on newspapers and magazines, and travel editors in magazines, newspapers and bookpublishing house. Women have peresided over all of SATW's regional chapter, all of its major committees, and the national organization itself. Opportunities for women in newspapers, magazines, and broad-casting are described in information from this address: Women in Communications, Inc., 2101 Wilson Boulevard, Suite 417 Arlington, VA 22201



Start, buy, or Franchise? There are three ways of becommg the owner of a travel business: • Starting a new agency • Buying an exising agency • Investing in a frachise How do you decide which is the way for you? You should investigate the advantage and disadvantages of each alternative by compiling answers to a lot of question. This chapter poses these questions and then focuses on the buy option before a brief consideration of franchsing. The Chapter closes with suggestions about how to get fmancing. Other chapters in this part relate more specifically to the myriad details involved in starting a new agency. Many points are equally relevant to taking over an exising agency. Starting a new agency means building a business from nothing-unless you yourself have access to substantial business, or the staff you hire have a good following. Most new agencieslike most new businesses of any kind-do not make money the first year. The books of many do not have much bleak ink


Start, Buy, or Franchise? 153

until the second or third year of operation. Buying an established agency has a somewhat different set of advantages and disadvantages. For a franchise agency you must take into account most of the elements of starting, if its is a new franchise; or buying, if it is an existing franchise-but important additional factors have to be considered in both cases. Franchising requires even more careful consideration before you sign a contract. Here are some questions to be answered if you are thinking about starting a new agency: • Can the community support an(other) agency? • Are trained staff available? • · Are suitable premises availble?

• Is sufficient capital available to cover operating expenses until the agency reches a self-supporting stage? Here is a summary checklist of points to consider when you are trying to decide whether to start a new agency or buy an existing one: Reasons to Buy: • Already at an approved location with conference appointments, which can be transferred if the new owner meets conference requirements. • Has experienced staff who have helped build clientele. • The buyer would have immediate income. • The agency has already achieved a sales volume an.d profit base. • The seller can give the buyer the benefit of his or her experience and provide instructions to individual clients, business accounts, and key people in the community. • It may be possible to buy the agency at a b argain price. For personal reasons, the owner may be anxious to sell and would give you a favourable buy. Reasons not to Buy: • You may pay too much for the agency because of your



inaccurate assessment of its value. • Things may not actually be what they seem-the owner may misrepresent important facts . • The agency may be in d efault, under investigation for deceptive practices, or have lawsuits pending. • The location may be poor..If a previous owner has been unable to build up the agency, the chances are a new owner cannot do so either. • The owner may have a bad reputation, and the buyer would have to overcome prejudices of former clients. • Purchase requires more up-front mo ney then does a start-up. • Cash would be required for working capital apart from the cash needed for the purchase price. The larger the agency, the more working captial will be necessary. • Key staff may leave, and individual and business clients may be lost as well. Rezoning or other events that affect the location may be in the offing, which the seller failed to mention. Considerations About an Establlshed Agency Considerations the following specific questions if you are thinking about buying an established agency. There will no doubt be many other questions and details which must be investigated, but you should answer these first: • Is adequate capital available-to provide the purchase price and sufficient working capital to support the sales volume for at least one year? • Is there an agency for sale within your price range in the area or areas where you want to operate a business? • Is the agency available at a realistic establish a price is discussed below).

price? (How to

• Can the agency be acquired with a moderate down payment and attractive payout terms? • Does the agency have a consistent pattern o f growth?


Start,

Buy, or Franchise? 155

• Will the agency generate sufficient income to repay any loans and p rovide a return on the initial investment? • Will the selling owner remain for a reasonable u-.msition period? Aside from the fact the sellers are notorious for asking more than a business is worth, prospective buyers often underestimate the amount of capital required to buy and operate an agency. It is important to evaluate you fmancial position realistically in order to judge whether it is strong enough to acquire a going concern-or whether you should instead be thinking about a start-up situation. All things considered, buying an existing agency is generally the better choice since it will provide immediate income. But it requires substantially more capital than starting an agency from scratch. Always buy the largest agency you can affordpreferable one that generates at least $750,000 to Sll million in annual sales. Many smaller agencies either are operating at a loss or are marginally profitable and generate only enough income to pay a small salary to the owner and support one or two employees. If the staff of an agency you are thinking of p urchasing are likely to leave when a new owner takes over, there will be very little goodwill value left. Since the goodwill represents the major share of the purchase price, such an agency will then have only nominal value-so you would be better off starting your own. What Is an Agen cy Wo rth?

Perhaps the greatest problem of buying or selling a travel agency is establishing a realistic selling price. There are different and often conflicting opinions as the best metl1od to use to price an agency. But there are also rules to thumb which, if used intelligently, will help the buyer and the seller arrive at an equitable price. Many agency owners set an asking price that is subantially more than an agency is worth and then wonder why it does not sell. An inordinately high ask ing price will discourage: a

Elements sous drotts d auteur


potential buyer from negotiating. A realistic asking price will usually result in negotiations that reach a mutually accepetable figure. Evaluations Factors

No two travel agencies are alike. Each must be judged on its own merits and inancial data. For example, two agencies with $1 million in annual sales might have very different market values. One might be worth $98,000 and the other only $35,000. As with any reliable method of evaluation, the factors must all be considered in relation to each other. For example, an agency might have an unusually high tumover of staff (a negative factor); but this is counterected by an above-average business/eamings ratio (also called mix) and by being a longestablished b usiness (two positive factors). An ethnic agency (one whose owner and clientele have a

strong ethnic background-such as Polish, Greek, Hispanic, or whatever), might be an ideal acquisition for someong else of the same background. But such an agency would be worth a great deal less to someone else. A checklist of important factors by which to evaluate any travel agency is as follow:

.

Pasitivc (plus) factors. '

Long established

• Stable management and staff • Well-trained management and staff • A large percentage of vacation-oriented business ( unless

it is specifically a commerial agency) • History show a consistent growth pattem

• A mix of 10 per cent or better • A good location • A favourable lease with an option to renew • Attractive decor and good quality fumiture and equipment • Automated with a major computerized reservation system



(and perhaps accounting system also) • Holds all necessary conference appointments. • Has trade association memberships (ASTA,ARTA) • Is a member of a consortium • Has a good cash flow • Has a good product mix (a wide variety of travel products) • Owner(s) will remain for a reasonable transition period after the sale • Loaction in a growing an developing community Negative (minus) Factors

• Newly established • High turnover of staff • High percentage of cornrnerdal business (unless primarily a commercial agency) • A mix of less than 10 per cent • Poor or deteriorating location • Shabby premises • Nonproductive employees • Too many nonproductive commissioned salespeople • An ethnic agency (unless the potential buyer has the same background as the clients served) • Any disproportion of charter, student, ethinic, or group business (such business is often built around one or two persons, who might leave the agency after a new owner takes over) • Poor cash flow • Slow-paying commercial accounts which the agency must carry for an extended period • High or unreasonable rent • No option to renew lease • Owner(s) will leave as soon as the transaction closes



• Owner is unwilling to sign a covenant not to compete Since each transaction is different, there may be other positive or negative factor which must be thoroughly investigated ·and negoticated. Assets

Every business has both tangible and intangible assets. The tangible assets are those items carried on the books-office equipment, furniture, automobiles, and so forth . The value of tangible assets is easy to establish because they were acquired for cash, are depreciated annually, and their value is readily measued in dollars and cents. But tangible assets usually represent only a minor portion of the asking price for a business. The intangible assets are much more difflCUclt to "inventory" or place a value on. In a service business goodwill represents the lion's share of the selling price. Goodwill consists of a collection of intangible factors. It Includes a good reputation in business (honesty, professionalism and so forth), a steady and loyal dientel, a good lease, qualified and experienced staff, automated reservation, a good mix, or a combination of these and similar factors. Goodwill is earned over time. It does not appear overnight, nor does it appear automatically. It may take an agency five years or longer to build wothwhile goodwill. The Numbers

You will often read In financial and business publications that a business was acquired for X times pretax earnings. This is called the pricing-by-multiples method and is a traditional formula for buying and selling a business. An example is shown below, but this method is_not usuallyy suitable for application to smaller businesses, especially a service buisnesssuch as a travel agency. The method frequently, used in establishing the price of a travel agency is the gross sales method. A third method uses the gross pofits (commissions) as means of establishing the price. .

Pricfng-by-multiples method. In the pricing-by-multiples

method the price is established by applying the fonnula to the


Start,

Buy, or Franchise? 159

last complete calendar or fJScal years figures. The following example will serve to illustrate how this method is used: Gross sales

$1,235,000

Gross profit (commissions)

128,751

Operating expenses

101,834

Net profit (pretax)

26-,917

A multiple is then applied to' the new profit (before taxes) to cstabish the price. The multiple used in the sale of many business is 5, but this is often too high when applied to many agencies. A multiple of 4 would be more appropriate. In the above example, the new profit of $26,917 multipled by four is $107,668. The net worth is then added. The net worth of business is the sum of its assets less the sum of its liabilities. The net worth can include atsh, receivables and payable, tangible assets, capital stock paid-in capital, and retained ea.mings. After the multiple and net worth are established, the fi.rm price can be set only after all of the other points d iscussed in this chapter are taken into consideration. But remember the statement above that this method is not likely to suitable for a small service business such as a travel agency. Gross sales method: In the gross sales method, look first at gross sale, then at commissions (gross profit), then at the operating expenses, then at the new profit (pretax). Do not be too concerned at fmding a paper loss on the profit and loss statement for the year. Red ink does not necessarily mean that an agency is a loser. Look at what the owner is taking out of the business in salary, profit sharing and ·pension plans, travel and other benefits. Many other miscellaneous expenses are often charged to the business. These may include auomobiles and automobile operating expenses, insurance, travel, and so forth. It has even been known for agents to also charge items to the business that were .strictly personal in order to lower tax obligations. Any otlbeat expenses must always be identified


160 Tourism and T ravel Industry

and extracted from the operating figures if you are to arrive at a true fmancial picture of the agency. Unlike net earnings, the gross sales and commission figures cannot be distorted, and they will often provide a much more accurate and clear picture of the agency than will net earnings. A potential buyer should p repare an operating budget that would reflect his or her estimate of how an agency would operate under different mangement. price is often fiXed at 10 per cent of the agency's gross sales for the previous calendar or fJScal year. But it is unrealistic to evaluate any business on a single year's performance. Unusual circurrJStances might easily influence sales and income in one year that might not be present in another. For example, an ag-ency might have sold a one-time group movement, and that would have substantial effect on a particular year's performance. A

It would be more revealing to look at the complete history of an agency. Its market value can then be determined by averaging its figures over at least a five-year period, or as long as the agency has been in business if less than five years. The following figures will serve as an example: Gross sales

lst year

$523,000

2nd year

706,000

3rd year

901,000

4th year

1,010,000

· 5th year

1,187,000

Total

$4,327,000

Average annual sales $ 865,400

The above agency in this example would be worth somewhere between a low of 4 per cent ($34 ,616) and a high of 10 per cent ($86,540) of the average annual sale figure of $865,400. If the checklists of positive and negative factors showed this agency to have primarily positive factors, including operating

Elements sous drools d auteur


profitably, then it should sell near the high end of the rang$86,540. But if negative factors dominate, then the value would drop closer to the low end of the range, $34,616. An agency in good standing should be worth about 8 per cent of the fiveyear average-in this example, $69, 320. The kind of formula just given will help buyers and sellers establish a fair price for most independent travel agencies. It assumes that that the agency is a going concern, full accredited, and not on the verger of bankruptcy, and it allows a great deal of leeway. However, this formula is invalid in a buyer's market such as occurred in 1984/85 when may agencies came on the market and agency prices dropped substanitially. The formula also allows for average tangible assets (desks, tables, chairs, and office machines), but excludes automobiles, owned automated reservation equipment, notes payable and receivable, accounts payable and receivable and cash. These should b e treated as sepocate items and allowances made for them after the selling price of the agency is established. It is essential in any business transaction that the seller

make available to a buyer all profit and loss statements, balance sheets, tax returns, inventories, and other documents. These should be reviewed by an accountant and/or attorney. Only after a prospective buyer has made throught analysis of the records should a sale be consummated. If an accounted examines the fmancial records, the services of a lawyer are still necessary. And to avoid any conflict of interest and to provide maximum protection to both buyer and seller, each should be represented by his or her own attorney.

Gross profit method: In the gross profit method the commissions are used as a basis for establishing the price. The most frequent formu la is to use the total commissions of the previous calendar or fiscal year. But as already pointed out above, it is unrealistic to evaluate any business on a single year's perfom1ance, and if this method is used then the average of the total commission of the previous five years would be more appropriate.



Franchising

There have been a number of attempts at travel agency franchising. Until recently most failed becasue the frachiser d id not have enough knowledge about the travel industJy, or promises were made which the franchiser was unable or unwilling to keep. As airline d eregulation gradually took effect, several new franchise operations came into existence. Others will probably enter the scene. Past history has clearly indicated that travel agencies have not been a sutible kind of business for franchising. Whether this continues remains to be see,. The travel agency business has always been a relatively low-revenue-priducing, low-income business, not able to support franchise fee, yearly service fees, and other such assessment, But franchisers say that with an umbrella name and identification, a central marketing campa.ign, training facilites, and so forth, travel agencies are now ideal as franchises. Fees very from one franchiser to another. One company charges an up-front fee o f$30,000 for a new turnkey operation. To this is added a 10 per cent service charge on income plus a $30Q-a-month assessment to cover cooperative advertising. In return for these fees and assessments, the franchiser contracts to provide investors with training, a corporate identity, business advice, sales techniques, and other assistance. Oth.er franchisers may charge less. Fees are generally lower for existing agencies that opt to become a franchise operation. Anyone considering investment in a franchise travel agency should thoroughly investigate the services and promises of the franchiser. Here are some questions to ask: • Does the franchiser offer a protected territory? If so, it limited to a specific community, or d oes it just extent a specific number of miles? (There is little point in investing in a frachise if another outlet can be opened in the same community.) • What support services (accounting, managerial, training) are p rovided?



• If the agency fails, how can the investor get ·out of the contract? • Is the franchiser more interested in selling a franchise than in selling travel product? Do not invest on a franchise unless you are completely statisfied that the franchiser will provide what is contracted for. It would be wise to talk with other investors who have bought that franchise. This will be the best sources for an objective evaltuion. And, as always, do not invest in anything until your attorney has reviewed the contract and perhaps conducted an investigation into the company selling the franchise. The following companies are at present engaged in travel agency frachises: Cardillo Travel Systems, Inc., 5710 Hannum Avenue, Culver City, CA 90230 (At the present time will convert only existing agencies to their operation. Empress Travel, 5 Penn Plaza, New York, NY 10001. (Franchises only exising agencies.) International Tours, Inc., 530 Sooner Federal Centre, 5001 East 68th Street, Oklahoma City, OK 74136 Jewelcor Travel, 15 South Franklin Street, Wilkes-Barre, PA 18701 Tenholder Travel, 2801 ltaska, St. Louis, MO 63111. Uniglobe Travel (International) inc., 90 - 10051 Shellbridge Way, Richmondm B.C., Canada V6X 2W9 (Although this company frachises in the United States all requests for information should be sent to .the home office in Canada. How to Get Financing

Borrowing money to finance a service business is often impossible. At best it is exceedingly difficult to locate a source of fmancing. Still, there are several ways of obtaining fmancing if you do not have sufficient funds to start or busy a travel agency. If you borrow from a bank or through the Small Business Administration programme you must still be prepared to pledge your home and other personal assets as collateral. If you go to



equity fmancing your will have to relinquiesh a percentage of the bnsiness to the investors. Such drawbacks might be in signifincant if you have the ability and confidence in yourself to establish a successful enterprise. It is often easier to locate finacing to buy an existing travel agency than to start one from scratch. Even though it will take more cash to buy and finance a going concern, some ivestors and lenders are more inclined to consider something which has a record of consistent sales and earnings than something which involves taking on an unknown. These are the usual sources of capital: Bank Loans Bankers as conservative and are not prone to loaning money unless they are certain of repayment, or have recourse against other assets in the event of failure. If you do take out a bank loan you will have to be prepared to put up your home and perhaps other personal assets as securitey. E.ven if the bank will loan money to your corporation (which is a separate leagel entity from its owners) you will still have to personally guarantee the loan. The bank will want that personal guarantee in the event the corporation becomes insolvent and cannot repay the loan. The bank will also maintain that if you do not have sufficient faith in yourself and in your business venture to be willing to back it with everything you have, then they should not be asked take the risk. There are several types of loans. Term loans may be for as short as one or two days or for years. Long-term loans can be secured by such assets as real estate, life insurance, stocks and bonds and gold. a Character loan is usually short term and generally unsecured. Only someone with a high credit rating would be eligible. A good credit rating is a prerequisite for any loan-not only for you, for the bank may even require a cosigner who will be equally obligated for repayment. Small Business Administration Loans

The Small Business Administration is an independent ageny of the federal government with offices in many cities. The SBA


.,.


~

offers vairous type of assitance ot small business owners, including loans for start-up and acquisition situations. While the SBA does have limited funds to loan direct, most SBA loans are made through comercial banks, with the SBA guaranteeing 90 per cent of the loan. The borrower must meet speific credit requirements, must put up collateral, and must also have extensive business experience in the particular field or business for which the loan is required. The borrower must also prove to the SBA that he or she cannot obtain a loan from any other source. If a bank has refused you a business loan, do not let it deter you from applying to the SBA. Get in touch with your nearest SBA office for complete information on this loan programme. Small Business Investment Companies

0

Small business invesunent companies (SBISs) are licensed by the Small Business Administration to supply equity capital to those who are unable to obtain fmancing from other sources. Your local SBA office can give a list of approved SBICs. Remember that SBICs are private invesunent companies. They expect a profitable return on their investments. Your venture will have to stand up to severe and critical evaluation. Some SBICs specialize only in stright loans while other will want equity in you company through ownership of a percentage of stock. They will also what a say in the running of the business and will require representation through one or more directorships. Equity Financing

In equity fmancing outsiders put money into the businessnot as lenders who expect repayment, but as investor who anticipate a profitable return on their investments. Equity capital can be subscribed by relatives, friends, professional peopleperhaps even an invesunent club. Equity investors usually know and trust the person in whose business they invest, and they are willing to invest not only money but also a very great deal of faith. Equity investors, participate by buying stock in the corporation or by becoming limited partners in the venture. their return comes in the form of dividends in the case of a



corporation; as a sha.re of the profits in the case of a partnership. There are several drawbacks to equity fmancing.lt certainly is not for everyone. First, of all, you must know those who invest in your business very well, because you have to work closely with them. They, like SBICs, will also want to protect thier investment by expecting a say in the running of the business and will want a seat on your board. They are likely to interfere in the operation if they do not like the way things are going or disagree with management policies. Inviting friends and relatives to invest in your business is a great way to end up without friends and on nonspeaking terms with your relatives. Be very, very careful before you embark on an equity-financed venture. Be sure to hire a lawyer to help you draw up contracts, terms. and conditions. Even indealing with friends and relatives it is essential to proceed in a proper and busineslike manner so that everyone is protected later. Never relinquish more than 49 per cent of you company, which will leave you in control as majority stockholder with 51 per cent of the stock. Two of the more important points you will want covered in an equity fmancing agreement are: 1. The terms under which an investor can sell his or her stock. For example, if the investor decides to withdraw, the aggreement should be worded in such a way that the stock must be offered to you first (right of refusal), then to the other stockholders in the event you are unable or unwilling to acquire it. If an investor wants to offer his or her stock to an outsider, that outsider should first be unanimously approved by all stockholders. 2. Teh degree of involement or contribution (other than money) o f each investor. Are the investors going to be silent partners, or will they want to help with the bookkeeping, ticketing, or make sales calls? While it is natural for investors to want some say, it is best if they are prohibited, thorugh a signed agreement, from interfering with, or becoming involved in, the actual day-to-day operation of the agency.


Start, Buy, or Franchise? 167 Ven~

Capital Venture capital comes from companies which are prepared to back pronrising venture in return for equity in the company. Such sorces are known to lawyers, accountants, business brokers, and often, to bankers who cannot help you themselves but will be prepared to arrange an introduction ot venture capital sources. Venture capital sources. Ventrue capital companies are prepared to accept a certain degree of risk, but you will still have to do a good job of convincing them that your idea is sound and has good profit potential. How to Prepare a Proposal

Wherever you apply for a business loan or seek capital you will have to submit a comprehensive and detailed blueprint of the proposed enterprise. Bankers and fmanciers are not at all interested in vague proposals. They want specific facts and figures so that they can thoroughly evaluate the venture. Take the time to prepare you data in geat detail, and present it in a businesslike but clear and easy-to-understand formaL Remember that those who will read and evaluate your proposal may know little, if anything, about the business aspect of the travel industry. Do not confuse them. A good proposal usually incorporates the following: l. An introduction (goals, why you think you will succed, and so forth). 2. Where you intend to establish your agency. 3. .Estimated start-up expenses. 4. Estimated operation expenses by category for the first three years. 5. Estimated sales for the first three years. 6. Estimated conunissions (income) for the first three years. (If you base you projected income on a 10 per cent mix you may not be exact, but you will not be far off, e ither. 7. The total investment required, and:



a. The amount of cash you can raise yourself. b . The amount of cash you need from a loan, equity capital etc. 8. A biography or resume. This should include you buisness experience, education and references. 9. A personal financial statement. This will be required in the case of a bank loan. The bank will also want a list (including valuation) or the assets you intend to use as loan collateral. If you are purchasing an existing agency, you will also need to provide the bank or investor with operating statements and balance sheets for the previous five years at least. Projection figures and data for untried and unproven ventures is always a challenge, but if you do your homework and know you field you should come suprisingly close. Your proposal should be carefully though through and neatly and accurately typed. A well-presented proposal will get more attention than one which is incomplete or sloppy. Whether you get what you want-a loan or other form of fmancingwill often on just how well you prepare your presentation.


Starting Up If you decide that you want to start a new travel agency, there is a great deal of thinking and other work to do before you can open the door to your first client. Starting up an agency is a complicated prodedure. You have to decide on an operating budget for the first year-and you also have to decide on furniture and equipment. You have to arrange for occupancy of the premises you have chosen-and you also have to decide on what of working tools (manuals and tariffs) you need. Below is a checklist that will help you keep track of everything. It is not necesarily in the order of importance, or in the order in which you should do things. It may help you establish priorities based on your own circumstances, however. And it will remind you of things you may otherwise forget. It is meant to be bracing rather than discouraging. Checklist for Opening a Travel Agency 1. Contact all conferences for information. and application fom1S.

2. Order Catalogs from travel agency printers and office supply stores.



3. Consult with you attorney and tax advisor to discuss from of legal structure. 4. Establish start-up expenses and the first year's operating budget. 5. Establish the name of the agency. 6. Locate suitable office space. 7. Form your corporation. 8. Negotiate lease .

9. Order telephone installation and obtain assigned numbers from telephone comany. 10. Open a bank account. 11. Arrange of design of logo, stationery, etc. 12. Set up accounting system. 13. Order all office furniture and equipment. 14. Order any automated equipment (reservation system, ticket imprinter, etc.) 15. Order all stationery and supplies. 16. Subscribe to all necessary manuals and tariffs. 17. Establish contact with tour operators, cruise lines, and other suppliers, and order a supply of literature. 18. Hire the agency manager. 19. Plan opening promotion, advertising, and dire ct mail campaign.

20. Obtain ARG bond, and take out insuranc-e policies as needed. 21 . Carefully read and complete conference application forms. 22. File for conference appointments. 23. Arrange insurance. · ~thnating Initial Expenses .

The most seriouS problems that face many new entrepreneurs ~re (1) insufficient capital and (2) underestimation of the

•


Starting Up 171

intitial cash outlay required to get a business opening opnig and running. Unfortunately, the new entrepreneur is often too engrossed in sales promotion and marketing matters to devote time and attention to making sure that the necessary cash is available. First things ftrst means that before you sing a lease, commit yourself for furinture and equipment, or do anything else, you sit down and estimate both your start-up costs and your first year's operating expenses. 7ben you can get down to the more enjoyable tasks, such as designing your agency's interior and planning your opening campaign. Tile start-up costs are what you must spend to furnish, equip, and staff your agency so it can open for business. OperalirJg expenses are what you must spend to urn you agency once you are itr business. Spend a couple of hours with a sharp pencil, an office supply catalog, and some other realistic figures. This will help you estimate what it will cost to get going. If you later spend a couple of days (or more) seeking our good used office furniture and equipment at stores or auctions and get them at less then you budgeted, so much the better. It is important to estimate accurately, and it is also important to try to stay within your budgeted figures, not ending up spending far more than planned. Start-up Costs

Start-up costs include, in addition to the cost of everything needed to furnish and equip your agency, all the ftrSt month's recurring expenses, like salaries and rent, and also all grand . opening promotional expenses. Some items relating to start-up minght easily be overlooked be an inexperienced planner. Watch out for them. Furniture attd Equipments

Here, your costs will depend on whether you buy new or used furniture and equipment, and whether you pay cash or finance it over a period of years. Travel counselors need a lot of work area, so look for desks which have an overhanging top rather than settle for a



standard desk. Even better, since most counselors also do their own tryping, consider modular units. This consists of a normal size desk with a typing module attached to the side. Such a unit is self-contained, so each cunselor will have a total work area geared for optimum efficiency. Do buy the best chairs you can afford. A cheap or uncomfortable cha.ir is an abomination. And it will not last long either. People must be comfortable if they are to do good work. I have found the padded swivel chair with a reclining spring-back not only the ~st comfortable, but the easiest to get in and out of when one has to jump up to get something or greet an client. You will also need one or more side chairs for clients as well as seating in the reception area. It is important to have sufficient space for ftling and storing

literature, client files, and so forth . The four-drawer letter-size filling cabinet is the most appropriate. You will need a minimum of four such flles to start with, and unless you have a rear storage area, you will probably have to add more very quickly. Do not fail to consider buying used furniture. If often costs a fraction of what new pieces cost, and it can be refmished. If that is done properly, you will have some attractive pieces still at modest cost. If you decide on new furniture and are in or near a larger city, the Yellow Pages may have listing for disount office furniture outlets. At such a place you may be able to buy at well below list or what you would have to pay in the average office supply or. retail store. If you place a large order, you may save even more. Your will need an electric typewiriter for each position in the agency. (Nonelectric machines will not do the job when you need tickets typed or four or five copies of an itinerary.) Not every agency can afford IBM Correcting Selectrics, but do not buy the cheapest machines you can find either-they will not hold up and will have to be replaced sooner than you would like. A good typewirter will last for years and in the long run will probably cost you less than an inexpensive machine which has to be replaced. Rebuilt typewriters may be


Starting Up 173 a little fidderent in styling from new model but will work just as well and usually carry a good guarantee. And they cost a great deal less. Each counselor will also need an electronic calculator. A hand-held model that does the four basic mathematical functions as well as percentages can be bought for as little as $12. However, a printing model is better, for you can then attach a tape of figures to the clients' me, and also recheck additions or invoices. The price of a printing calculator ranges from about $30 to $200. Access to a copy machine is essential. You will fmd you cannot do without one. Before you buy or lease a machine, see if one may be available to you in another way.. Often the "quick print" outlets which can now be found in small as well as large cities have copy machines for their coustomer's use. Cost varies form 10' to 25' a copy; and is often lower in quantity. Many post offices as well as libraries have copy machines available also. If you want to buy your own copying machine, the range in price of some kinds suitable for low-level use may sometimes now be as liule as $100. Other kinds, whose print quality compares favourable with "quick-print" offeset printing, are already being marketed for appreciably less than$1,000. There are essentially three types: those that use a powdery toner, those that use a liquied, and those that use heat. Most rquire a specila paper just for that machine, but there are also "plainpaper" copiers with which any bond paper will. do the job and well. The technology and competition in this field are working the magic of a free market economy and causing dramatic drops in prices. So the best advice here is to shop around. Of course, the cost-per-copy should be considered also. It should include cost of toner or liquid or e~ectricity as well as paper-and maintenance and repair costs. That cost could range from less than 5c to 20c per copy. If you are near a bank, you could store all working-supply air tickets, and otl1er valuables in a safe deposit box rather than invest in an on-premises vault or safe. This is just another



example of how taking time to think about you equipment needs may save you money. That thinking time may reveal other ways you can hold your start-up costs to a bare minmum. Used file cabinets, typewriters, and copy agency. The estimates in Figure 8.1 suggest what it will cost to frunish and equip a small travel agency. Actual costs may vary considerable and will depend on whether you buy new or used, buget or top-of-the-line. These figures are based on buying rather than leasing office equipment, such as a copy machine. Some Typical Furnlture and Equipment Costs Total

CostCJICh

H ow.,tmyl

Low

111gb

Low

H lgb

Desks

2

$200

500

$400

1,000

Chairs (swivel)

2

100

300

200

600

Chairs (side)

4

40

100

160

400

4 2

no

200

440

800

300

800

600

1,600

Typerwrlter stands (If desks with typing modules not used) 2

50

100

100

200

Calculator (Prindng

2

40

150

80

300

Uterature racks

1

100

300

100

Shelving/bookcases

1

200

Safe/vault

1

50 150

800

50 150

300 200 800

Copy machine

1

200

3,000

200

. 3,000

Coat rack

1

30

100

3(J

100

u mps

2

20

50

40

100

200

500

200

500

$1,590

7,100

$2,750

9,900

Etpdpntertl

File drawers (four-dnwer, letter size) Typerwrlters

MlsceDaneous Totals

Figure 21.1 These figures show low and high costs fnr many standard pieces of furinture and ~quiprnent.

These start-up costs for furnishing and equipping a small agency could go as high as $10,000 or be less than $3,000.


Starting Up 175 If yo buy new equir~ent, it can be bought for cash, fmanced by a bank, o r leased with an option to buy. There are advantages to each arrangement. If you can depreciate the equipment on you tax returns over a period of years. Your start-up cost could be lower if you finance you furniture and lease the office equipment with an option to buy when the lease expires. If you lease with an errangement to buy for a one-time payment of 10 per sent of the list price at the conclusion of the lease, a lease plan on a $1,750,00 piece of equipment would look as follows : Ptutytfll!lll perWd

Molllbly

Total rewtai

1'otai cost to ooo"

$159.00

$1,908

$2,083

24

87.00

2,088

2,263

36

64.50

2,322

2,497

48

52.75

2,532

2,707

60

45.75

2,475

2,920

12 months

Under this plan you would end up paying anything from $2,083 to $2,920 for a $1,750 iece of equipment. Yo u may be better off to get a bank loan and buy it ourtight and then write off the interest and depreciation on your tax return. On the other hand, although it may cost you more this way, it is easier to pay out thirty six payments than one lump sum. You will also be paying for furniture and equipment as the agency grow and busines flows. Once you have estimated the cost of your furniture and equipment, add a 5 per cent contingency .to cover things you had not thought of and to allow for price increases and sales taxes. Use Worksheet (1.) to help budget these costs and then carry the total to Worksheet (2.) where you can list the other start-up costs. Add another 5 per cent contingency to this total. Otber Start-Up Costs

Here are some of the expenses to be prepared for in getting your premises read for occupancy.



Tenants in a brand-new shopping mall or office building most often bear the costs the cost of "fmishing," such as carpeting, painting and wallapering. Such tenants may also have to pay for any doors or partitions needed to create separate rooms or to enclosed a storage area. If you are going to be required to pay for such "finishing" costs, get the specific obligations in writing. Also get an estinmte in writing of what these costs will be, and the terms of payment. The landord may want payment in full upon occupancy, but often the cost can be spread out over the same period as your lease, in which case you may be required to pay interest. If you are moving into previously occupied space, your landlord may agree to pay for minor redecoration, such as a paint job. Anything beyond this would normally be your responsibilitly. If the landlord wants a tenant badly enough, he may be willing to do more, and perhaps split the costs. Just make sure that you understand what will be done, and who will pay for it. Decorating and altering your office space may be one area where a little extra time (if yo u have it) may save you some money. If you decide to handle the contracting youself, or even do the work youself, you may reduce your costs. But you may have to get the landlord's approval ftrSt. Get several estimates, including the landord's, before you decide. Figure 12.2 suggests ran~es for a variety of other initial expenses necesssary to bring a new travel to the operational stage. It includes both one-time expenses .such as decorating and decorating and regular periodic expenses such as annual subscriptions and monthly salaries. Budget salary for either a manager or counselor to start at least two weeks-preferable one month-before you plan to open. Estimate what all these costs will be in your case and set them down on Worksheet 2: Estimate of Start-up Costs. Where this money is to come from is discussed in another chapter.


Stal'ting Up 177

Some Typical Initial Expenses High $800

Low

$150 50

Rent (first month) Utility deposits Decorating Signs Business Ucenses Conference fee Legal and accounting services Opening promotion Manager's salary (one month) One counselor's salary (one month) Insurance/bond Telephone lnstaUatlon Subscriptions, tariffs, etc SuppUers and forms

200 4,000(or more) 2,000

0 300 0

100 600

500 500

2 ,000 2,000

1,000

1,200 900 225 300 600

600 600

150 50 400 800 300 $15,725 $4,900 Totals Figure 12.2. These figures show low and high costs of many basic star·up expenses.

WORKSHEETl

Schedule of Furniture and Equipment 11 you pll!ll 10

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pay casn 1n fulL

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eas a hanging lamp in a style that blends with the office decor. Sound. The management of sound is important to the impression your clients get ou.t of your agency, as well as to the ease or difficulty with which your employees work. A busy travel agency is a noisy place, so use carpeting, soft furniture, and draperies to help absorb distracting sound. Colour. Especially in a small space, the rule of colour is less is more. Keep colours light and airy. A dark colour will make the agency look smaller than it really is; light shades can give the illusion of spaciousness. Stick with a. neutral colouroff-white, ivory, or beige-which will blend with practically anything. Use bright or inte nse colours for accents onlyperhaps chair coverings or lamps. Walls. Before you decide on what to hang on your walls, decide how to.cover them. Wallpaper is best. Attractive fabrictextured vinyl papers can be pleasing-grasscloth, perhaps, or burlap. Choose a texture that inatches your theme. If your budget is too tight for wallpaper, textured paints can add interest to the walls. There are many other possible wall treatments. For -instance, if you choose a garden them, 4' x 8' panels of lattice, stocked by lumberyards, can be painted white and placed against a green wall for an instant arbor effect. Or walls could be covered with adhesive cork panels; large v.:all maps; draperies; colorful rugs; tapestries or other such wall hangings; large photographs or wall murals of exotic places or well-known !andmarks. Even that old handyman's standby, pegboard, may find a place in certain setting. It offers the advantage of providing storage possibilities, by use of the range of accessories available with it. 0

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The Physical Structure 215

There are too many agencies where the only decorative trealment for the walls is to plaster them with travel posterssometimes framed often just stuck on the wall with transparent tape. If you must use travel posters, try to find old ones, or perhaps modem reproductions of old ones. Travel posters of another era or of ships long gone to the breaker's yard are conversation pieces. So are posters of the early days of aviation. And if they are worth hanging they are wor:th framing properly. Antique maps-perhaps a grouping of them-can make a handsome wall decoration. In a very different vein, a large dock-perhaps the kind that tells time in various time zonesmight be a good choice. You could also use original artworkoils or line drawings, for example. If there is an art school or community art league in the vicinity, or if the local college has an art department, the problem of locating original art can be solved quickly and inexpensively. You might even be able to make a deal-provide "gallery" space in return for allowing the artists to post their names and the prices of their works. Thereby you would assure yourself of a varied supply of artwork. But do not confine yourself to paintings and drawings. You may be able to locate community craftspeople who can provide handsome examples of work in textiles, such as weaving, or in other crafts, such as stained glass . Floors. The floor covering is more important than many people think. Wall-to-wall carpeting-the thicker the betterover heavy padding not only adds an elegant touch, more important, it helps to absorb much of the sound generated by the average b usy trael agency. A' bare floor such as wood or tile will reflect sound rather than absorb it. However, in a street-level agency, the entry area should not be carpeted because so much dirt will be tracked in. A hard-surfaced floor is best-perhaps quarry tile if you can afford, it or vinyl tiles or no-wax flooring can be used. Textures and designs are available in a!J of these materials to suit any decor. A flagstone design might suit a rustic look; a fancy tile pattem could set off a Spanish theme; a parquet design would go with colonial and traditional. Tn any event, whatever you. choose, keep it clean .


216 Tourism and Travel Industry Furniture and equipment. You will find desks in a wide

range of styles and materials. Metal desks are not the drab items they once wee. Metal des.ks are now available in several standard fmishes other than black or beige. Metal furniture can also be custom finished to blend with the overall decor of the office. Wood, or even wood veneer, desks add a cetain elegance, but both can be expensive. You may be able to save money and get the look you want by having either wood or metal desks and other furniture refmished. One of the most attractive agencies I ever visited was furnished almost exclusively with refmished furniture. File cabinets are available in neutral colours, or you can have them custom fmished to match your decor. Even typewriters come in a choice of colours. Accessories. Once you have decided on a decorative theme, choose the accessories for the agency with care. TI1ey can provide a lot of impact for relatively little money, if chosen correctly. You may want a handsome lamp in the entry area-and perhaps some goodlooking ashtrays. Here, again, a local potter may be able to supply something more attractive than the usual motley collection. Plants are very popular today, and used properly then can be versatile accessories. But this will be true only if you choose the right plants for the right places, and take care of them. Large plants can effectively divide areas; smaller ones can add interest to bleak corners. But do remember that they are decorative accessories-tender heartedly nursing a spindley coleus on your counter may show your soft heart, but it will not improve the appearance of your office. If you decide to use plants in any quantity, do some research-read up on tl1e requirements of the plants you like. Or ask the local florist for some recommendations. And do stay away from plastic flowers and plants. Decorating Themes There is no one best style of decoration for a travel agency. It is even possible to have an agency without a single travel


The Physical Structure 217

poster on the walls ! The style you choose should reflect your pesonal taste, not someone else's. Some of us like modem design; some may feel more comfortable in traditional or "colonial" surroundings some like a more exotic international theme-Oriental, Spanish, or Polynesian, perhaps. Any one of these, along with many other motifs, can be equally suitable for travel agency decor. Do pick something with which you are comfortable, and which is within your budget. A wellchosen theme, nicely carried, out will make a better impression on your clients, and on you, than a half-hearted attempt to be "in fashion." I once designed an agency with a garden theme. The

waiting area was a patio. We used imitation brick tiles for the floor and white wrought iron patio funiture for the waiting area. Large plants and window boxes fJ.lled with geraniums completed the image. Oriental motif dm make an elegant office. You might choose a grasscloth-textured wallpaper for this. A low bamboo table-available at import shops-could hold a well-chosen plant and a handsome ashtray in the entry area. Reproductions of Oriental prints are available in a variety of subjects and colours. Something like a three-foot-high print of an ancient mandarin would make an effective focal point for your walls. or a lamp styled like a Japanese lantern could be dramatic in the reception area. Another posibility for wall decoration in the Oriental mood might be a colourful large Japanese kite. An

For a Spanish or Mediterranean look, black wrought iron panels might define the entry. Dark furniture and some accents in a sharp, wann colour could do much to set Spanish mood. Or you could go Mexican with a tile floor, one or two goodsized cactus plants in handsome ceramic planters, and a pinata or two. Whatever theme you decide on, choose your elements with care, and make sure that everything is kept in pristing condition. This may well mean replacing certain items when they look tired. You will then have an office that appeals to your customers.



Staffing the Travel Agency The growth, and therefore the success, of a travel agency will depend almost entirely upon the competence and ability of its manager and on the knowledge and experience of its staff. I have watched many well-financed and beautifully appointed travel agencies sink into oblivion. The secret of their failure was mediocre management and staff. I have also seen agencies be enormously profitable (for the travel business) with little mo re than a couple of desks and chairs in hole-in-the-wall locatio ns. The secret of their success was above-average management and top-notch employees. How Many Employ ees?

In most travel agencies there are probably several more categories of jobs to be done than there are employees to do those jobs. Ther new or small agency can usally afford no more than a manager and one other full-time person. Often th e "other" person in ·an inexperienced owner or the spouse of an absentee owner. In the small agency everyone has to be willing to do everything, and "everything" means for more than interviewing


Staffing the Travel Agency 219

clients, booking space and writing tickets. Someone has to do the bookkeeping. Someone has to be reponsible for the ordering, maintenance, and control of airline ticket stock. Someone has to handle the countinuous flow of literature from tour operators, resorts, hotels airlines, and other suppliers that comes to even the smallest of agencies. Because rates and fares change frequently it is essential that old literature be removed and destroyed and n ew brochures filed away so they can be found and referred to quickly. Someone has to keep tariffs up to date : write letters; keep billing current; see that option dates are adhered to; plan and carry out promotional compaigns; ....the list is practically endless. In a large agency most of the houskeeping jobs can be handled by a trainee or a part-timer--or, at worst, be spread over the entire office. In the smaller agency all these chores must be handled by only two-at the most three-people. This detracts from valuable selling time. As the agency grows, new people can be hired to do bookkeeping, filling, and other such tasks. The skilled staff can then concentrate on sales. Many absentee owners are intrigued by the travel business and are often inclined to spend several hours a day or a week in the agency to "help out." Some owners also want their spouse involved is the agency to "keep an eye on things." A busy travel agency is no place for the inexperienced to practice their lack of skills. Inexperienced owners (for that matter inexperienced anyone) should never attempt to handle travel transactions by themselves until they have had the opportunity to get some fonnal training plus on-the-job exposure under the eyes and tutelage of a watchful manager or skilled counselor. An inexperienced person who gets involved in the sale of travel products will do more than good. The clients will quickly sense an amateur and rapidly move on to a more qualified agency. Job Categories 7be Manager The manager is the most important determinant of an



agency's success. Therefore, you must be much more demanding and analytical when considering management job applicants than when you hire non-management candidates. There is a tendency for agency owners to hire as their manager someone who barely meets the basic requirements of experience as specified by the conferences. An applicant who only meets this criterion is nothing more than a qualifier (someone who meets the conditions necessary for the agency's accreditation). Because the choice of manager is so crucial to the agency's efficiency and growth, it is essential to hire someone who not only meets ARC and IATAN requirements, but someone who possesses all the other skills generally associated with the term manager, and other skills as well. This means that the ideal manger should be able to handle virtually any type of business the agency is likely to generate. Apart from the ordinary tragel transactions common to all fullservice agencies, the manager should be able to plan and implement a solicitation programme and an advertising and promotional compaign; to do public speaking; to make sales presentations to potential groups; to sell, process, and operate group tours; and to genrate business for the agency.. Not every manager has been exposed to all types of business, especially group tours. Neverthless, the manager must be able to grasp quickly the essentials of this type of transaction. All too many agencies lose group business because no one in the agency knows how to handle it prqperly. Experience is Important, but do not look at experience only, because it ·by itself does not necessarily guarantee competence. Nor does experience guarantee that someone possesses management capabilities , salesmanship, or professionalism. Look beyond the word on the job application or resume. Evaluate an applicant's background thoroughly and from every perspective, and check all references carefully before you hire. Superivisory repo11Sibilitfes. Even in the small agency the

manger will have to supervise at least one other person. The manager must thus be able to perform as a manager in deed



and not just in word. That means to be able to hire, ftre, build and maintain morale, and do all the other things expected of a manager. It is not usually in the agency's best interest to have a manager bogged down with things like bookkkeeping functions. That takes away from valuable selling time. However, it is ideal, and even necessary, for the manager to have a working knowledge of the accounting system of the agency. If you are an absentee owner, or one who works in the agency but does not meet the criteria of the conferences to be carried as manager, then you would be wise to dearly defme exactly who is to be responsible for hiring, ftring, and the general supervision of the agency, as well as who will set policy. Misunderstandings often occur between owner and manager because the division of management responsibilities was not plainly and unmistakenly defined when the manager was hired. If the owner considers the manager to be nothing more than a qualifier, not someone who will handle staff and other administrative functions of the agency, then a letter of agreement should be discussed, agreed to, and signed by both parties before the managers is hired. This letter of agreement should clearly spell out what functions and duties are delegated to the agency manager and what responsibilities are reserved to the owner. Everything should be in writing. When disagreements arise, it is often difficult or impossible to recall exactly what was orally agreed to sometime back. MeetingARCand!ATANrr?quirement. Both ARC and IATAN are specific in their defmitions of what they mean by the term manager-or person who will appear on the record as being the qualified agency manager. It is important to understand exactly what ARC and IATAN demand. There has been a great deal of confusion over the phraseology in appointment applications, sometimes resulting in agencies being refused accreditation. Contrary to popular belief, two years' experience in a accredited agency is not always sufficient for someone to qualify a new agency.

At one time the conferences were not strict in enforcing

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their own rules about agency management experience. If ARC and lATAN were provided with reasonable evidence that a person had spent two years in a retail agency, the appointments were almost always approved-provided, of course, that all other criteria were satisfied. Such appointments are no longer automatic. The conferences, while not demanding anything more than they every did now are enforcing both they letter and the spirit of their regulations. The relevant phrase in the ARC application is: "The owner, a partner, an officer, or the manager of the applicant has had two years' full-time experience in creating, generating, and promoting passenger sales and serivces." Many agencies have been refused accreditation even though their prospective managers had more than two years' practical experience in ticketing and sales. What was lacking was two full yeras' promotional experience. ARC and IATAN want to be certain that a manager not only has ticketing and reservation experience, but also knows how to generate and promote new business. Make certain you read and understand the ARC and lATA."! application forms. If you are interviewing candidated for the position of agency manager, satisfy yourself about whether someone you are considering does meet all regulations. If in any doubt, get in touch with ARC and/or lATAN and seek advice-before you hire someone, not afterward. It is extremely costly to have to start the conference ftling process all over again in the event your application in turned down just because you were careless in hiring your manager. Another problem can arise if the prospective manager was involved with an agency that went bankrupt or into default during the manager's tenure. If your prospective managers was involved with either situation, it is possible that the agency application will not be approved. Other Salaried Employees To be succe.ssful, an agency will need the services of effectively trained counselors and sales representatives. Commerciol cou,rselor. Commerical counselors handle the travel arrangements of corporate customers almost exclusively.



The job requires knowledge of the route structures and fares of virtually all the domestic airlines, plus a working knowledge of the simpler ir.temational fares and routes. A commercial conuselor must be completely familiar with railroads, hotels, motels, resorts, car rentals, and airport facilities. Good typing skill is important, plus the ability to work quickly accurately without close supervision. A commercial counselor's position is frequently considered to be a training position in some agencies, leading to the job of domestic counselor, and ultimately to the international desk. However, a commercial agency offers little opprortunity for advancement, and the counselor has to move to a more diversified agency to gain promotion and more experience. Domestic counselor. Those who handle domestic trnnsactions should have all the skills of the commercial counselor and in addition, be thoroughly familiar with all aspects of travel within the continental United States, Hawaii, Alaska, Canada, the Caribbean, Mexio. and Central America-all of which constitute "domestic" travel in the agency lexicon. This position requires a thorough knowledge of all tour programmes and packages, hotels and resorts, airlines, railroads, cruise lines, and car rental facilities throughout the area. Domestic counselors must also be knowledgeable about climatic conditions, currency, health regulations and precautions, and coustoms and entry regulation throughout the area. lntenzational cowzselor. Pive years' intensive on-the-job training is probably about the minmum time required to produce a good international specialist. There are those who will say that five years' experience is insufficient, even though .it is in adition to time spent on the domestic desk or as commercial counslor-positions tltrough which most intemational .counselors have progressed. The world is a very large place indeed, and the international counselor is responsible for the processing of all travel arrangements o utside the realm of domestic travel. In just one day an international counselor might be called upon to plan an independent tour through Scandinavia, set up a camera safari to Kenya, sell a cruise to the Mediterranean, work out a



rail tour through E1,1rope, an process a package tour around the world. A great deal of time, work, and experience go into the proper planning and handling of international travel. That includes keeping courrent on passport, visa, and health regulations; customers and currency matters; and much, much more. An accomplished international counselor might not always have the answer to a client's question, but he or she must know exactly where and when to fmd the right answer quickly. Other positions. As the agency grows and it is necessary to add new employees, it is a good idea to assign new people to training positions before moving them into jobs of greater responsibility. A ticketing clerk is a definite asset in a busy agency by freeing counselors from much paperwork and processing, leaving them more time to concentrate on selling. A well-trained ticketing clerk could make air reservations after being trained to use the agency computer, could issue tickets, and could perform other behind-the-scene tasks, such as ticket and forms-of-value control, literature filling and updating, and so forth. After gaining a good grounding ticketing this person would be promotable to ~ more responsible position, such as a commerical o r domestic counselor. Other support positions include typists, bookkeepers, and perhaps part-timers who can do ftling and other miscellaneous jobs. There is no one satisfactory arrangement for efficient staff deployment. Each agency is different. Obviously the larger agency is better able to hire support and backup people than is the new or small agency. But the more time the professional counselors have for meeting with clients and selling, the quicker the agency will grow. Productivity There are mixed opinions on just how much volume one full-time person can comfortably and efficiently handle. A great deal depends o n whether the agency is automated, the type of business handled, and what, if any, back-up staff and/or other facilities are provided to sales staff. And of course, some people



have superior sales ability, or they work faster, and have the capability of handing a large volume of business. In a nonautomated agency a counselo r processing all categories or business (domestic and international tours and packages, cruises, and point-to-point air tickets) should be able to handle $275,000 to $350,000 in annual sales. The same person in a fully automated agency should be able lto process a substantially larger volume-especially if back-up staff are assigned to assist with paperwork and ticket processing. But a survery conducted for this book did prove the case for automation. Agency managers indicated that after automating their sales capabilities increased from fifty to one hundred per cent. One manager said that if she eliminated automation her sales productivity would be cut in half. Automation does increase the potential for a substantially larger sales volume. The figures in the following table should not be considered as industry averages, but as basic guidelines to sales staff productivity. Commercial counselor All-round counselor DomeStic counselor International counselor

Nonauromeated agency

AuJomated age11cy

$350,000 to $400,000 275,000 lO 350,000 275,000 lO 350,000

$650,000 to $ 750,0000 550,000 to 650,000 450,000 tp 550,000

300,000 lO 375,000

450,000

to

550,000

What to Pay Too many agency owners hire as manager the person who is willing to accept the lowest salary, and they pay the other employees as little as possbile. Trying to keep operating expenses down this way can be very costly. Such agencies usually have a high personnel turnover, which in tum contributes to a turnover of clientele. Scuh staff change are very expensive for a small business. Unless everyone is well paid and enjoys a high level of job satisfaction, there are likely to be continual staff changes-to the detriment of the agency. A travel agency with good employees whose morable is high is a self-generating agency which will attract and hold business simply because of the competence and sale ability of its staff.



I

The best advice is to hire the best people you can fmd and pay them as much as you can afford. They will reward you with good sales and loyalty. It is practically impossible to give any realistic salary figures. There are no nonns in the industry, and salary ranges vary widely from on.e area of the United States to another, and from city to suburbs. As might be expected, salaries in New York or Chicago are bound ·to be higher than salaries in rural areas of the Midwest or the South. Experience is an important criterion which influences a person's salary level. An international counselor with ftve years' sound experience and a good following of clients would obviously command a higher salary than someone who had been on the job for only a years or two. In the tr'avel business it is normal to compensate managers and fulltime employees by straight salary rather than by salary plus commission. A manager can always be given the opportunity to increase earning through incentive and profit-sharing plans based upon the growth and profitability of the agency. Other employees can also be included in incentive, profit sharing, and bonus programmes. These programmes are covered in more depth in may book 1be Travel Agency Personnel Ma11ual. The important thing to remember is that if the agency is to operate profitably, then payroll (always the biggest single expense in any agency) must be controlled.' It should never exceed 50 percent of total revenue. General Guidellnes MmUJger. A good manager-one who is highly motivated, sales oriented, and with good knowledge and supervisory skills-should be well compensated (according to industry standards). One leading travel industry consultant has suggested that agency managers should earn at least .015 per cent of gross sales. Although this is a good rule of thumb for smaller and medium size agencies (up to $2 million), it may get too costly for the larger agency. According to this formula, the manager of a $1 million agency should have a salary of $30.000. The same formula says that the manager of a $4 million agency



should be paid $60,000. I know of no agency manager earning anything like $60,000-but it is possible, of course, that there are owners paying themselves this kind of salary. Managers should be paid a base salary and then given a good profit sharing programme which rewards managers in relation to the agency's bottom line rather than gross sales. TI1is will help to motivate the manager not only to increase the gross sales but to improve the agency's mix and to lbe diligent in cotrolling expenses in order to arrive at higher net earnings. The manager of new agency is going to expect a minium of at least $14,400 a year-probably more, depend!ing on his or her experience and the geographical location of t!he agency. Established agencies might be expected to pay their managers anything from$ 15,000 to $25,000, and up. Courzselors. An experienced counselor should be paid anything from S750 to abut $1 ,400 a month-depending on job function , degree of experience, sales ability, location, and following of clients. A commercial counselor would usually have a lower salary than someone who handles a complete range of travel products. Again, many smaller agency managers and owners underpay their staff and then wonder why people leave for greener pastures. To justify their existence, counselors most be required to produce revenue (commissions) at least three times their own salary. This means that a counselor earning $10,000 a year should earn of the agency a minimum of $30,000 in revenue. Entry-level positions. Trainees should be brought into an agency at a salary in the $650 to $80 range and then be given increases commensurate with their learning ability and job performance. If you fmd a highly motivated beginner and then invest time and money in training that person, it would be wise to protect you investment by providing regular salary increases-say every three months or so, based on progressuntil the employee reaches the going rate for the job in your area. If you do not bring a new employee along, he or she will quickly become discouraged, and you will fmd that you have been training your employee for a competitor..



Support Staff My own theory of support staff is that people hired as ftling clerks, typists, bookkeepers, and so forth, should have the potential for training and growth into a more responsible position or into travel sales. But this might not always be possible. Entry-level support staff should be paid something between the· minimum wage and $6 per hour, based on skills and experience and the job itself. Skilled typists and secretaries will want from $6-$9 per hour. For an accounting staff, an accounting clerk will expect $6 an hour and up; an experienced bookkeeper, up to $ or $9 per hour. How and Where to Find Employees

'

Good travel people are much harder to fmd now than they used to be. TIJ'ere are several reasons for this situation. First, as the industry expands and travel agencies proliferate, the demand for top-notch employees also grows. Secondly, although the industry is growing, a gr~t many superior employees are leaving because they can earn. substantially more and can move ahead faster in other fields. Thirdly, with the advent of automation, the airlines now recognize that well trained travel agents are worth pursuing, and pursue them the airlines do. There is no way an independent travel agency can compete with the airlines in terms of salaries and benefits. If your agency is located in a small or rural community, it is often next to impossible to find experienced help at any level. About the only options open to you are either to bring in new people and train them from scratch, or hire them away from another agency-if, indeed, there is another agency in the vicinity. Finding good employees in a larger city is somewhat easier. There are several ways to locate travel staff. But do not assume that you will be lucky enough to find exactly who you want when you want them. You may come close, however, and be able to compromise and hire someone who with a little training will make an ideal employee. Some of the resources available in many cities are described below.



Travel Schools Never assume that a tavel school graduate can walk into your office and right away start handling all sorts of arrangements. If you assume this, you are laying the groundwork for costly errors and innumerable other problems. The travel school does not tum out a full-fledged travel agent. What a good school will do is prepare the student to handle tl1e many basics or elementary functions of an agency, such as domestic and foreign air tickets, car rentals, railroad tickets and hotel, motel, and tour reservations, and perhaps automated reservation system training. Exposure to the more complicated travel produas must come later. Travel school trairlirlg is at a relatively unhurried pace and ir1 a protected environment. The student is not exposed to a strirlg of telephone calls, impatient clients, the frustration of being unable to get telephone calls through to the airline reservation desks, faulty computers, and all the other pressures and harassments of the busy travel agency. For these reasons you should consider a travel school graduate to be an advanced trainee-nothing more. Supplement the trainee's knowledge with on-the-job training, tariff and ticketing seminars, and familiarization trips. Virtually all schools have a placement director who will jump at the opportunity to introduce likely candidates. It there is no travel school in your area, then by all means write to schools which have resident programmes and to correspondence schools and inquire about whether they have any recent or prospective graduates in your vicinity. CoHeges and Universities Graduates of four year college travel and tourism programmes generally ask for (and are entitled to) salaries well above those that most travel agents are able to afford. These graduates usually look for positions with airlines, the larger travel corporations, or hotel and motel organizations. However, graduates from travel and tourism programmes of two-year colleges are ideal candidates for the retail travel agency. Most of them are well trained and eager to find an opening that will give them



the practical experience they need. Once again, just remember that these young people are still only trainees and should not be let loose on unsuspecting clients without additional training. You may also want to consider hiring on a part-time basis a travel and tourism student who is still in college. The student then has the opportunity to gain on-the-job experience, which may even be allowed some credit in the school programme. Call your local community college to fmd out if travel and tourism courses are taught there. also consult such references as Lovejoy's College Guide and Barron 's Guide to the Two- Year Colleges, Volume 2 for information about courses offered by specific schools. Lovejoy's Barron's and similar reference works can be found in most public libraries. A number of community colleges also offer non-credit courses in travel agency techniques. Such courses are usually offered under an adult education and/or an adult vocational training program and are often taught by a local travel agent. TI1e training usually does not go beyond the basics., but often it is sufficient to qualify the student for a trainee position. The depth of training may be on a par with that of a proprietary travel school, but do not assume this to be the case. You should investigate the curriculum carefully before you commit yourself to hiring someone. Help Wanted ADS

The travel industry trade press is an excellent source for locating job applicants. All of the trade journals have classified sections that will accept your help wanted ads. The classified section of such publications as Travel Age East, Travel Age \Vest, Travel Age Mid America, and others, are often very productive in generating applicants because they are regional publia!tions read by almost everyone in the business. At the national level, Travel \Veekry has the best classified advertising section. Keep your ads brief and to the point, and avoid the use of box numbers. Most travel agents, especially at the managerial level will not respond to a box number. Give a telephone number where you can be reached during business hours and also in the evenings. Reme mber, many prospective applicants are already employed and cannot call during working hours.

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The lead time necessary for travel industry trade journals requires that you allow at least two to three weeks after you submit your ad for it to appear. Ads in local or suburban newspapers will not usually generate many qualified applicants. More often then not your telephone will be tied up with people who want to get into the business but who have absolutely no practical experience. But if you are located in one of the larger cities, an ad placed in the help wanted section of a local large newspaper will often produce results. An ad run on Sunday gets better results than one in a midweek edition. To avoid being inundated with callers who are totally inexperienced, you should include a phrase such as •experienced only" in your ad. Airline People Airline sales representatives, district managers, and passenger sales managers are sometimes excellent sources for le.ads to experienced staff. For some inexplicable reason, an airline sales rep is often a father confessor to a dissatisfied counselor or manager looking to move on to bigger and better things. Make your sales reps aware of your job openings and ask them to be on the lookout for likely candidates. The airlines might themselves have potential candidate. Airline jobs are not always as secure and as exciting as one might imaging them to be. Under the seniority system of most airlines, the last to arrive are the first to go in the event of a layoff or furlough-and airlines are notorious for layoffs. Often a reservationist must work strange hours, or some awful shift which ends late at night when ttie fun of the evening is over. Some airline employees are less than happy with their lot in life. They will often be responsive Lo an inquiry as to their interest in a possible change of allegiance. Feel perfectly free to put out feelers to a competent airline employee when you have a job opening to fill. The Cocktail Circuit In all but perhaps the largest cities the travel community is close knit. One sees the same faces at travel industry cocktail parties, where peope are likey to relax after what may have

Elements sous arolts a auteur


been a particularly bad day at the office. Inhibitions lessen, and certainy many transfers of allegiance have been initiated, ,- if not actually cemented, around the hors d'oevre table. Take a batch of your business cards when you attend social functions and be prepared to pass them out with a discreet "call me if you're interested in making a change.• Do not, however, blanket every cocktail party you attend with business cards, unless you want to antagonize other travel agents. But do be prepared to discuss job openings seriously with someone who interests you. Employment Agencies Private employment agencies in the United States are as old as the country itself, and "broker• advertisements appeared in Boston and New York newspapers more than 150 years ago. All employment agencies must be licensed by the state in which they operate and must conform to rigid rules and regulations. A reliable employment agency will carefully interview, evaluate, and screen applicants. A professional recruiter spends about eighty per cent of his or her time interviewing and evaluating applicants. The recruiter's livelihood depends on the ability to evaluate applicants and place them in the right job. An experienced recruiter makes very few mistakes, and his or her judgement is usually to be trusted. Unfortunately, very few employment agencies specialize in travel industry placements. The few such agencies that do are located in places like New York and San Francisco. Run-ofthe-mill employment agencies should be avoided because their staff will know virtually nothing about the travel agency business. A good employment agency will expect its fee to come from the employer and not the applicant. If you do use an employment agency, be sure to ask for a copy of the agency's rate schedule and terms and conditions. Know exactly what your responsibilities are before you hire someone. You should also get some type of guarantee, which will provide either for a refund of the fee or a credit if the applicant leaves your employment within a specified time period.


Representatives Sales representatives who work outside the agency on a commission basis are another kind of employee. An outside representative can solicit and introduce business which the agency would probably not otherwise receive. The sales rep is paid according to an agreed-upon division of earnings on the business generated. Qualifications for the Job Hiring a commissioned sales representative is just as important as hiring a full-time experienced counselor. You should do a thorough interview and reference check. The appropriate person can be a big asset to your agency. The wrong person could damage the reputation of your agency through carelessness, negligence, .or unpleasant p ersonality traits. Of cou~e, the same point applies to counselors who work inside the agency, but you would discover the problem much more quickly. Careful screening will help you fmd the applicant who has the best characteristics and skills for the job.

Like other positions in the travel field, a good sales rep should be friendly and outgoing-someone others will like and trust. Look for a self-starter who is sales oriented and



interested in building a clientele and good income. In other words, check the motives of applicants. Weed out those who seem to want to get into the business in order to gain cheap travel. Such people will not produce much business for the agency. The job does require determination and an investment of time if worthwhile reults are to be achieved. Preferably, the applicant will have done some treaveling and be able to demonstrate that he or she has the time to give to selling travel. It is absolutely essential that the person you hire feel comfortable about making sales calls on local clubs, businesses, churches, and so forth to solicit convention and meeting and other kinds of group travel as well as individual travel amngements. If the applicant comes with conneaions to groups that might provide travel busjness, all the better. If the candidate does not already possess the necessary technical knowledge about tr'avel, he or she should be capable of teaming quickly. Training

Some agencies simply will not hire salespeople who do not have previous travel experience. Whether or not yours is one, when you do hire a sales representative, you should not expect that person to immediately go out and corner the travel market for you. Your new rep must be trained at least in your office procedures. The more thorough the training, the less the rep will require of inside people, and the more professionally the rep will handle busir,ess for the agency. Usually 'the agency manager educates the new outside salesperson, just as the manager would a new inside counselor. Alternatively, the new ·person can be apprenticed to a more experienced travel counselor before being allowed to sell. The schooling must include all office procedures, traiffs and manuals, travel brochures, the agent/client relationship, and various travel products, such as airline tickets, package tours, cruises, etc. Be sure to give the new rep a calendar of industry seminars and encourage attendance . Remember, your agency will reap only benefits from a


Representatives 235

more effective and efficient outside sales representative produced by your putting time and effort into a good training programme. Establish a probationary period for a new sales rep of from three to six months. At the end of that time you and the rep should evaluate job perfonnance and goals. Do remember that in travel sales there must always be "lead time" from. establishing client contact, to booking transactions and generating a flow of business into the agency. Allow the rep adequate time to be able to do this.

Job Description To prevent later misunderstanding, be sure to discuss and agree upon all terms of employment at the time of hiring. Draw up a written contract or letter of agreement which defines the working conditions and reponsibilities, including the approximate number of hours to be worked each week, the type of business to be solicited (individual, commercial, or group), probationary period, and method of compe nsation. The whole idea of having commisioned salespeople is that they work outside the agency to solicit and introduce business the agency would not otherwise receive. You should establish dear guidelines regarding what constitutes new business at the very begining. Distinguishing a "house account" from a "seller's account" can be trickly. If a sales rep brings in travel business from a past customer who has not recently booked with the agency, whose account is itJ In ma!ly agencies, the rule .is, "Once a house account, always a house account." Some agencies stipulate that if a coustomer has not boolked for five years, an outside sales rep may recapture the business as a seller's account. Other agencies use three yeares as the yardstick. At least one agency goes so far as to say that if an outside rep can turn ~~ sporadic cus10mer into a regular one, the rep is welcome to receive a commission. My own feeling is that if a rep brings in someone who

used to be a client of the agency but then we nt to another /AgeMutAmerica(2416 Prudential Plaza, Chicago, IL 60601). Twice-monthly. Travel Age Sorttbeast (888 Seventh Ave., New York, NY 10016). Monthly. Trawl Age West (582 market St., San Francisco, Ca 94101). Weekly. 3. Management Books and Training Guides.

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Corporate Rivalry and Market Power: Competition Issues in the Tourism Industry (Tourism, Retailing and Consumption)

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