Tourism Organisations, Products and Services » Ancillary Services of Travel Agents

What you'll learn this session

Study time: 30 minutes

What ancillary services are and why they're important for travel agents
The range of ancillary services offered by travel agents
How travel insurance works as an ancillary service
Transportation services including car hire and airport transfers
Currency exchange and other financial services
Additional services like visa processing and travel accessories
How ancillary services generate revenue for travel agents

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Introduction to Ancillary Services of Travel Agents

Travel agents do much more than just book flights and hotels. They offer a range of additional services that make your journey smoother and more enjoyable. These extra services are called 'ancillary services' and they're a crucial part of the travel industry today.

Key Definitions:

Ancillary Services: Additional services offered by travel agents beyond the core products of flights, accommodation and package holidays.
Commission: A percentage of the sale price paid to travel agents for selling a product or service.
Cross-selling: The practice of selling additional products or services to existing customers.

Industry Insight — The Value of Ancillary Services

Ancillary services now account for up to 40% of revenue for many travel agents. As competition increases and commission rates on core products decrease, these additional services have become essential to travel agency business models.

Types of Ancillary Services

Travel agents offer a wide range of ancillary services to enhance the travel experience and provide convenience to customers. Let's explore the main categories:

💰 Financial Services

Travel agents offer various financial services to make your trip hassle-free:

Travel insurance
Foreign currency exchange
Travellers cheques
Pre-paid travel cards

🚌 Transportation Services

Getting around at your destination is made easier with:

Car hire arrangements
Airport transfers
Train tickets
Ferry bookings

🎫 Entertainment & Activities

Enhance your travel experience with:

Theatre tickets
Attraction passes
Guided tours
Event tickets

📄 Documentation Services

Travel agents can help with important paperwork:

Visa applications
Passport renewal assistance
Travel permits
Health documentation

Travel Insurance: A Key Ancillary Service

Travel insurance is one of the most important ancillary services offered by travel agents. It provides protection against various risks that might occur during travel.

🏥 Medical Coverage

Covers emergency medical expenses, hospital stays and repatriation costs if you fall ill or have an accident abroad.

✈ Cancellation Protection

Reimburses you if you need to cancel your trip due to unexpected circumstances like illness or family emergencies.

💼 Baggage Protection

Provides compensation if your luggage is lost, stolen, or damaged during your journey.

Travel agents earn commission on insurance sales, typically between 15-30% of the premium. This makes insurance one of the most profitable ancillary services for travel agents.

Case Study Focus: Thomas Cook Insurance

Before its collapse in 2019, Thomas Cook earned over £40 million annually from travel insurance sales. They offered tiered insurance packages (Basic, Standard and Premium) to match different customer needs and budgets. Their success came from training staff to explain insurance benefits clearly and integrating insurance offers into the booking process.

Transportation Services

Transportation services are essential ancillary products that help travellers get around at their destination. These services provide convenience and can be a significant revenue source for travel agents.

Car Hire

Travel agents partner with car rental companies to offer vehicles to tourists at their destinations. This service provides:

Convenience of booking everything in one place
Often better rates than booking directly
A range of vehicle options to suit different needs
The security of dealing with a trusted agent

Travel agents typically earn 10-15% commission on car hire bookings. Many major agencies have preferred partnerships with companies like Hertz, Avis and Enterprise.

Airport Transfers

Getting from the airport to accommodation is a common concern for travellers. Travel agents offer:

Private taxi transfers
Shared shuttle services
Executive car services
Coach transfers for groups

These services provide peace of mind, especially for travellers arriving in unfamiliar destinations or late at night.

Currency Exchange and Financial Services

Travel agents often provide currency exchange services, allowing customers to obtain foreign currency before their trip. This is convenient for travellers and provides additional revenue for the agent.

💱 Foreign Currency

Travel agents can order and supply foreign currencies, often with competitive exchange rates. This saves customers time and the hassle of finding exchange services elsewhere.

💳 Travel Money Cards

Pre-paid cards that can be loaded with multiple currencies are increasingly popular. They offer security, convenience and protection against exchange rate fluctuations.

Additional Ancillary Services

Visa and Passport Services

Navigating visa requirements can be complex and time-consuming. Travel agents offer:

Advice on visa requirements for different destinations
Assistance with completing visa applications
Checking documentation for accuracy
Expedited processing services

Travel Accessories

Many travel agents sell practical items that travellers might need:

Adaptor plugs
Travel pillows
Luggage tags
Travel guides and maps
Luggage scales

Airport Lounge Access

Access to airport lounges is a growing ancillary service that provides travellers with a comfortable space to relax before flights, with amenities like:

Complimentary food and drinks
Comfortable seating
Wi-Fi access
Shower facilities (in some lounges)

The Business Value of Ancillary Services

Ancillary services are not just add-ons; they're vital to the profitability of travel agents in today's competitive market.

📈 Revenue Generation

Ancillary services often have higher profit margins than core products, helping travel agents remain profitable despite reduced commissions on flights and packages.

👋 Customer Retention

Offering a wide range of services keeps customers coming back to the same travel agent for all their travel needs, building loyalty.

📝 Differentiation

In a market where core products are similar, ancillary services help travel agents stand out from competitors and online booking platforms.

Case Study: Trailfinders' Ancillary Success

Trailfinders, a UK-based travel company, has built a reputation for excellent service partly through its comprehensive ancillary offerings. They provide detailed visa advice, comprehensive travel insurance tailored to specific activities (like scuba diving or skiing) and even services like airport parking and lounge access. By positioning themselves as a one-stop shop for all travel needs, they've maintained strong customer loyalty despite competition from online travel agencies.

The Future of Ancillary Services

The travel industry is constantly evolving and so are ancillary services. Current trends include:

Personalisation: Using customer data to offer relevant ancillary services based on past behaviour and preferences
Mobile delivery: Providing ancillary services through mobile apps for convenience
Sustainability: Growing demand for eco-friendly options like carbon offsetting
Experience-based services: Unique local experiences and activities that enhance the travel experience

As travel agents face increasing competition from online booking platforms, ancillary services represent an important way to add value, differentiate their offerings and maintain profitability.

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