What's in it for the Travel Agent?

As I explained in a previous post, the typical holiday is sold by a Tour Operator - a marketing company based in the traveler's home location. Holidays are actually operated by smaller companies known as Destination Management Companies (DMC's), or Ground Handlers, or Local Agents.

These are the guys who provide all the services you paid for, including booking your hotels & tickets, providing local transport, guides and sightseeing tours - it is their staff that meets you at the airport, helps with check-in at hotels and airports, calls to confirm the time for tomorrow's sightseeing tour and that you are happy with your room.

This is standard division of labour based on core competence (a fancy term that you should look up sometime). The Tour Operator has the marketing skills to attract holiday goers, but the staff you deal with in most such companies may not know the destinations very well - they sell everything from India to Iceland!

Local travel agents are the ones that transform a set of hotel bookings and tickets into an memorable holiday experience. They have the operational skills, local knowledge, network of contacts, trained staff and infrastructure (like vehicles, camping equipment, mountain bikes ...) to ensure that your holiday happens perfectly, but lack the marketing skills or advertising budgets to attract customers.*

*Note: Distinctions are often blurred, but this division is roughly true in most cases.

Local agents usually work with tour operators on a contract basis. Contracts are usually for a full year or more, and based on a combination of quality, reputation and price. As is usual in any such set-up, decisions are based largely on the measurables - price in this case. An annual contract may be worth several hundred thousand dollars, and for a local travel agent, getting a contract from a large tour operator means the difference between a good year and a middling one. They are forced to keep margins low, and need to maintain these low prices throughout the year, even in the face of inflationary pressures.
Dealing directly with customers means they have more flexibility in pricing.

Credit for a well organised holiday, or more courteous & efficient staff, or nicer cars goes to the Tour Operator in the form of better reputation, or the ability to command higher prices. Almost no benefit trickles down to the local operators. There is no incentive to do a better job, and in fact, as margins are low, many are tempted to skimp on the non-essentials (cold towels, free bottled water etc.)
Dealing directly with customers makes it worthwhile to invest in quality.

Often holidays are marred by poor planning and incorrect advice/information imparted by Tour Operators, whose staff do not have on-the-ground knowledge of the destination as ground operators do. (Try asking a tour operator which hotel will be able to provide gluten-free meals for you) When a holiday unravels on the ground, like when the promised hotel right by the sea turns out to be three streets away from the beach, guess who's left holding the baby?
Dealing directly with customers reduces bungling & misinformation.

It gives the better control over their business, more operational independence and rewards good performers with increased business and margins. They deal directly with their customers, so understand their needs better and give them better itineraries. They get the opportunity to promote interesting and unique ideas (a new home-stay, an out of the way picnic spot .. ) to their customers, and are not limited by the brochure some tour operator printed 2 years ago.
Dealing directly with customers means more 'customer delight'

Even without charging more than they used to previously, a local travel agent's financial position improves tremendously when he gets direct business. He is paid immediately for the holiday he sells, rather than as many as 1-2 months later, as in the case of business through Tour Operators. This frees up huge amounts of cash and savings in interest or overdraft charges.
Dealing directly with customers means improved cash cycle.

Travelers often have a budget in mind for their holiday. More often that not, this budget is spent in full. If a holiday is cheaper than anticipated (for example, if the Tour Operator is cut out), travelers tend purchase add-on tours, hotel upgrades or hire a luxury car instead of a standard one. The traveler gets more for her money, while the travel agent gets higher revenues.
Dealing directly with customers means higher revenue per holiday.

Besides, who ever said 'No' to additional business?

It's every travel agent's dream to be able to get business directly.
We believe the TailorMyHoliday way gives better value not only to the customer, but also to the service providers. Our set of Travel Agents seem to agree!