There are currently approximately 5,000 active travel agencies in Israel. At the end of 2003, there were 644 active travel agencies (for incoming and outgoing tourism). Of them, 40 are main agencies, and 204 branches. In addition, at the end of 2003, there were 89 active travel agencies for internal tourism. Of them, 57 main agencies, and 32 branches. Note that in 2003 there was an additional reduction in travel agencies as 37 agencies closed throughout the year. Of them, 28 were incoming and outgoing tourism, and 9 were internal travel agencies.
Seasonality: The industry reaches its peak in the third quarterly, as there is more activity in the summer months, summer vacation, and holiday season, in comparison to other seasons in which there is less activity. Seasonality causes changeability in the number of Israelis traveling abroad, and price level, and as a result, agency revenue is not constant throughout the year.
Exchange rate fluctuation: Travel agencies are exposed to foreign currency fluctuation which stems from possible differences in exchange rates.
This is usually dealt with by regularly exchanging NIS to foreign currency in accordance with payment to tourism vendors, usually on the 15th of each month. In addition, rates are calculated according to highest exchange rate on payment day.
1.2. Competition: The industry is highly competitive due to the continuing increase in the number of outgoing travelers. Competition is also reflected in airline flights, which causes a decrease in flight prices both for airlines and for charters.
1.4. Profitability: Travel agencies have relatively low profits in comparison to other industries. This requires travel agencies to have a large number of customers, and to charge handling charges for services rendered.
The potential target market is comprised of a number of parameters:
Ø Outgoing traffic.
Ø Internal tourism.
Ø Incoming tourism.
Large companies- operate a large number of branches nationally. Their sales run over 15 million dollars. These agencies are usually members of IATA, an international aviation organization. According to IATA regulations, an airline is permitted to sell flight tickets only to certified IATA agents. Some of these companies are under wholesaler ownership. As agency or branch size increases and a greater number of agents are employed, specialization level in various types of market segmentation and travel areas grow.
Medium Sized Agencies- operate one to three branches, and their sales run approximately 4 million dollars. These agencies are usually IATA members as well.
Small Agencies-most small agencies only focus on outgoing tourism. They offer package vacation deals, guided tours, and charter flights.
Websites- the travel industry is very appropriate for the internet.
Website with search engines can become virtual agents. Low costs enable commission prices to be lower, and thus the cost of vacation is lowered accordingly. Many agencies as well as private bodies and airlines have established such sites. Most of these sites allow on-line reservations.
In Israel: Outgoing tourism wholesalers and airlines headed by El-Al (Airtour) are primary industry vendors. El-Al’s share of the market is approximately 40-50% of ticket sales in Israel.
In addition, there are charter wholesalers, who operate charter flights, offer tourism packages, and ground services.
Other vendors in Israel are hotels, tour organizers, and car rental companies.
Abroad: Foreign airlines, hotels, and car rental companies.
Average vendor credit terms are 45 days for reputable agencies. New agencies are usually required to provide securities and/or cash payment according to vendor demands.
Small and large agencies advertise on national and local media.
Agencies specializing in specific types of travel and/or specific customer sectors usually also use direct marketing resources.
The computerized system operated by the Travel Agents’ Union, ITN-2000 is a technologic database for all travel agents in Israel, based on the Internet. This system is intended both for travel agents and the regular public, in order to allow internet access.
There are hundreds of independent and agency sites, on which one may purchase and inquire regarding to any tourism product available.
Last Minute Deals
There has recently been an increase in the number of travelers purchasing tickets and tourism packages using the "last minute" method.
Agencies purchase packages and tickets from vendors at the “last minute”, a few days prior to travel time, and thus are able to significantly reduce prices.
Average profit percentages in the industry:
Profit before tax
The industry is defined as medium risk.
The bigger the agency, the smaller the risk
Licensing and certification:
In 2002, the requirement for a government permit in order to operate a travel agency was cancelled, along with the requirement to deposit a bank guarantee to insure customer's money. Customer’s money should be insured by a policy, or by the trust for customer insurance founded by the Travel Agency Organization. The trust must accept anyone offering travel services even if they are not organization members. Organization members receive a “quality certification” which can be presented to customers.
It is recommended to examine the full version of regulations and laws at: http://www.tourism-law.co.il/LICENSE.htm
Ministry of Tourism., Standardization, and Licensing Department. King George 24, Jerusalem
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