Welcome to the Zulu Kingdom, KwaZulu-Natal

How To Establish A Travel Agency

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Note that legislation now requires all businesses providing services to tourists be registered with the provincial tourism authority, Tourism KwaZulu-Natal. Kindly contact TKZN if you are not sure whether registration is mandatory or optional for your business, as well as information on how to register.

Definitions

A travel agent sells either individual parts of or complete holiday packages to the customer. The main function of the travel agency is to sell the temporary use of transport (air, rail, coach, car), accommodation (hotel, motel, lodge), tours (packages) and other associated services (insurance, foreign exchange). This means that they are involved in the planning, booking, organisation and documentation of travel arrangements for their clients. Often, this also involves advising, reassuring, explaining and encouraging the customer. However, they generally do not operate vehicles or accompany tourists themselves.

Travel consultants (the people in a travel agency who deal with the public) are expected to gather information on travel destinations and be capable of giving advice on travel products. Travel consultants require good inter- personal and organisational skills and the ability to deal with unexpected situations.

TRAINING REQUIREMENTS

Experience in the travel industry and a love of travel are some of the best training grounds for individuals wishing to enter the travel agency business. There is a clear distinction between those travel agents who sell air tickets and those who do not, and this choice is influenced by the qualifications of the travel agency consultants and the availability of start-up funds.

If you do not wish to be involved in the sale of air tickets, but wish to make arrangements for clients in terms of accommodation, transport and excursions, the International Air Travel Association (IATA) Diploma is not compulsory. However, it has become a benchmark for quality training in the travel industry, and would provide the travel agency with a mark of integrity and credibility which is critical in the early years. You should also read the “How to” brochure entitled “How to establish a Tour Operating Business”, available from TKZN.

If you wish to be involved in the sale of air tickets, you must be registered with IATA which requires the completion of an IATA/UFTAA (universal air travel) Standard Diploma. You will need to register with a recognised educational institution (e.g. Damelin) in order to complete this diploma. The course is offered on a part-time basis to individuals with a Grade 12 (Standard 10) education, preferably with travel industry experience. The IATA/UFTAA Diploma will provide a broad understanding of travel agency and airline operations, and enable the student to advise clients, make appropriate travel arrangements and reservations, calculate airfares, and complete international travel documents in accordance with IATA rules and procedures.

In addition, every IATA Travel Agency is required to have a qualified BSPZA (Billings and Settlement Plan Southern Africa) consultant in the office at all times. BSP is the standardised accounting function for IATA accredited travel agents, controlled by IATA. All travel agents should understand the BSP function in terms of ticketing and airline accounting, including information on cancellations, refunds, etc.

There are a number of other useful travel related courses (e.g. Galileo certificate, SAA Fares and Ticketing, British Airways Level 1, etc) available at various educational institutions (e.g. Damelin, Varsity College, DIT), which should be explored according to your needs. These are available on a part-time basis, or as part of a one year, full-time Diploma in Travel and Tourism.

CODE OF CONDUCT

The Business Practices Committee, which is part of the Consumer Council, has published a Consumer Code for Travel Agencies which governs the conduct of travel agencies and protects the consumers. When complaints are directed to it, the Business Practices Committee assess whether harmful business practices were conducted, irrespective of whether the travel agent is a member of Association of South African Travel Agents (ASATA). In this respect, the Code is more than a voluntary code of conduct, although membership of ASATA is voluntary (see section on Voluntary Requirements).

The Code has three main benefits:  Firstly, it informs customers about what standard of service to expect, what recourse there is in the event of dissatisfaction and what their legal standing is when dealing with travel agencies, whether the latter are members of ASATA or not.  Secondly, it assists travel agents, whether they are members of ASATA or not, to meet desirable levels of business practice by providing the criteria that are broadly acceptable within the industry.  Thirdly, it sets a standard of service, professionalism and business practice for all travel agencies in South Africa. Copies of the Consumer Code for Travel Agencies can be obtained from ASATA or the Business Practices Committee

LAND AND PLANNING ISSUES

Space and Infrastructure

Sufficient space is needed where the public can sit and discuss their needs with the travel consultant. Access to basic office infrastructure is needed, including access to electricity, telephones, fax and email. Access to quite expensive computer equipment and software is required if the travel consultant is to be involved in the booking of air tickets. Registration with IATA will allow the keeping of airline ticket stock and the use of a ticket printer (see also Licensing and Registration). The operational costs of an IATA registered travel agency are therefore likely to be higher than a business which is not registered.

Parking The Local Municipality's town planners can advise you on the parking required.

Amenity Value

An attractive or appealing tourism office environment may be created with posters and maps and will be supported by being located in attractive, clean and well-kept surroundings.

Accessibility / Roads

Is the site easy to find for those people using their own or public transport?

The Local Municipality has controls for the erection of any signs. If new access onto streets is needed, the Local Municipality will usually construct them, at the cost of the developer. Permission must be obtained from the Provincial Department of Transport to construct new access points onto main roads outside of Local Municipality areas.

LEGAL REQUIREMENTS

Land Use Zoning


Approach the Local Municipality to establish whether the Town Planning Scheme permits the activity on the site you have chosen.

Licencing and Registration

Approach the Local Municipality in order to register your business. You will also need to register with the District Municipality.

If you wish to be involved in the sale of air tickets, you will need to be registered with IATA. Compliance with the Consumer Code for Travel Agencies is necessary (Business Practices Committee) and membership of ASATA is desirable.

Regulations and By-Laws

Your application for a trading licence will be circulated by the Local Municipality to the Health, Fire and Building inspectors, the Town Planning Department, and in some cases uMsekeli (previously the Development Services Board (DSB)). These bodies will ensure that your plans comply with their regulations before the application can be approved.

Other Legal Requirements

If you wish to erect a road sign in the road reserve area (as distinct from on your own property) for the purpose of advertising your business then you need approval from: - Department of Transport in the case of national roads; - the Facility Signs Committee in the Provincial Department of Transport in the case of secondary roads; - the Local Municipal Engineer in the case of local roads within a Local Municipality area.

Policy

TKZN and the Department of Arts, Culture and Tourism should be consulted for updates on policy affecting the tourism sector. If you have queries arising from the changes in District and Local Municipality boundaries, you should approach your Local or District Municipality for assistance.

BUSINESS ISSUES

Structure of Your Business


You may be registered as a Sole Proprietor, or your business may be registered as a Private Company (Propriety Limited or (Pty) Ltd Company), or Close Corporation (cc). Chambers of Commerce are a good contact through which to obtain details of organisations that can give advice on the structuring of your business. Advice may also be obtained from Business Advice Centres.

Managing Your Business

Management of your business will involve:

- a decision on the types and packaging of services; - bookkeeping and accounting; - arrangement of VAT and taxes; - record-keeping for your own records, for advertising reasons and for tax purposes; - taking and managing bookings from clients; - employment and labour conditions which includes employment equity, labour unions, and conditions of employment; - training of staff: it is vitally important that staff are trained in customer care and to be professionals in their field; and - insurance cover which includes both security and public liability.

Chambers of Commerce are a good contact through which to obtain details of organisations that can give advice on the management of your business.

Marketing and Advertising

Marketing and advertising may be done through a variety of media such as through printed brochures, internet, television and word of mouth. TKZN should be approached to enter your business into their tourism assets database for the Province which provides freely available information to the public on tourism facilities. The District Municipality has a copy of the same database. Publicity Associations should be approached to help disseminate your information.

Any brochures produced to advertise your establishment should include an easily readable map showing your location.

Voluntary Requirements

Membership of ASATA* is advisable to ensure that minimum service standards are adhered to. Membership of ASATA can be used as a marketing tool and provides tourists with an assurance that certain standards are being maintained. The ASATA logo engenders public confidence and underwrites the integrity and reliability of the travel agent.

ASATA provides a sounding board in the form of monthly meetings where ideas are shared and members are kept abreast with the latest developments in the travel industry.

The requirements for membership of ASATA are as follows: Requests for application forms should be addressed to:

The Executive Director of ASATA PO Box 31742 Braamfontein 2017 Phone (011) 403 2923 Fax (011) 403 3997  Any person, firm or corporation may be considered for full membership provided he is engaged in Southern Africa in the sale of travel and the facilities of travel and who meets the criteria as determined by the Association and approved respective councils.  Applications for membership must meet standards and criteria in the following areas: premises from which they operate; qualifications of their management and staff; business capital; financial stability; security and no criminal record. The application may be referred to the Membership Council for consideration of the proposed premises and calibre of the proposed staff.  Full membership is only granted subject to agreeing to abide by the ASATA Constitution and Rules, Code of Conduct, Terms of Reference and all other agreements entered into by the Association and its respective sections.  New membership will not be granted until satisfactory reports are received by the Section Committee and the applicant agrees by signing the application that it will not advertise or in any way represent itself as being a member of ASATA until written confirmation for the application is received.  In order to ensure financial integrity and professionalism of members to their clients, the audit report is of paramount importance. In terms of the Terms of Reference of the respective sections, it must be returned to the Executive Director on completion of the application form. Thereafter, depending on the type of business (sole proprietor, cc or other), the audit report will be required annually, within 6 months of the financial year end. This information will be inspected by the Executive Director and the Treasurer of ASATA and the confidentiality thereof will be secured. Any circumstances of financial irregularity that may appear will be dealt with in terms of the section 'Terms of Reference' and the ASATA Constitution.  The application for membership should be submitted with the prescribed application fee. This will be credited to the applicant's account should the application be approved.  The membership fee is payable immediately the application is approved and such approval will be confirmed in writing on receipt of the subscription.  If, at the expiry of a period of 3 months from the receipt of an application by ASATA, any information required by ASATA is still outstanding or any action on the part of the application has not been carried out, the application shall be deemed to be abandoned and the application fee shall be forfeited to ASATA.  The ASATA logo is a registered trade mark. All members are required to sign the Trade Mark Agreement and to remove this mark from stationary and premises immediately membership lapses.  ASATA shall be advised of any change of trading name, address or shareholding immediately the same comes into effect.

There are also benefits to joining trade associations such as improved marketing opportunities, access to information on the market, and liaison with authorities. Trade associations have set codes of conduct to govern the relationships of their members with their clients. Such associations include Southern African Tourism Services Association (SATSA), AFRITOUR, Black Association of Travel Agents of SA (BASATA), and Council of Adventure Travel Associations of SA (CATASA).

Sources of Information

A useful source of information for travel agents is TKZN website (www.zulu.org.za). TKZN also has a resource centre which may be used to obtain information.

FINANCIAL ISSUES

Sources of Finance

Finance for your proposed business may be obtained from various sources. It can either be in the form of individual savings, loan finance, or in some instances, State subsidy.

Sources of loan finance include: - Business Partners Limited - Ithala Development Finance Corporation - Industrial Development Corporation (IDC) - Development Bank of Southern Africa (DBSA) - Joint Venture Financing - Commercial Banks.

The Department of Trade and Industry provide limited subsidy for certain small and medium sized enterprises in the tourism field. They should be consulted.

TKZN may be approached for advice on potential funders.

Business Plan

Loan organisations normally require a comprehensive Business Plan to be prepared in applying for a loan. Such a Business Plan should include: - business analysis; - financial forecasts; based on rational assumptions and experience; - budgeting guidelines; - schedules determining the amount and kind of finance most appropriate for the business; - details on proposed financing sources; and - useful information about the planned business which will aid decision making by the loan organisation.

More details on the required content of Business Plans may be obtained from commercial Banks, Business Partners Limited, and Ithala Development Finance Corporation.

Advice on business planning may be obtained from: - the Tourism Market Research Division of TKZN, - Business Advice Centres, - the Department of Economic Development.

You may employ Consultants to advise you or to draw up your Business Plan with you. This would be at your own expense. TKZN could give you a list of such persons that could assist you.

Financial Record Keeping

Good record keeping systems provide information for managing finances. The key items in record keeping include: - Original records e.g. sales slips, receipts, invoices etc.; - Journals which record the details of every transaction in chronological order e.g. the cash book; - Ledger where information obtained from journals is made more useable; - Trial balance is a list of all ledger accounts balances taken out to prepare financial statements; - Financial statements: - Income statement - Balance sheet.

The minimum requirements for a small business operation are: - Cash Book - Cash Control Systems - Assets Register - Debtors Record - Creditors Record.

Budgeting

Budgets are based on past experience, current state of affairs and future expectations. Budgets will help provide an estimate of financial requirements in the execution of plans in the business operation. Kinds of budgets include: - Sales budget: a forecast of expected monthly income; - Materials budget: expected purchases; - Labour budget: expected remunerations and numbers of staff members; - Capital budget: expected fixed assets expenditure e.g. land, buildings etc; - Cash budget: expected working capital requirements over a specific period.

Tariff Structures

Tariffs should be based on those of your competitors and a detailed analysis of income and expenditure for the proposed operation. Research will therefore be needed in order to set realistic tariffs.

Advice on setting of tariffs may be obtained from: - TKZN tourism assets database, - Publicity Associations, and - SA Tourism.

LIST OF USEFUL CONTACTS

ASATA (Association of South African Travel Agents) 011 - 484 0580

Business Advice Centres Durban: 031 - 309 5432 Pietermaritzburg: 033 - 345 4604

Business Partners Limited Durban: 031 - 266 7130 Richards Bay: 035 - 789 7301

Business Practices Committee 012 - 310 9791

Department of Agriculture and Environmental Affairs 033 - 355 9100

Department of Arts, Culture and Tourism 031 - 309 7559

Department of Trade and Industry 012 - 322 7677

Department of Transport 031 - 305 2348

International Air Travel Association (IATA) 011 - 486 5200

Ithala Development Finance Corporation 031 - 907 8911

Tourism KwaZulu-Natal (TKZN) 031 - 366 7500

SA Tourism 011 - 895 3000

Southern Africa Tourist Services Association (SATSA) 031 - 261 2525

Provincial Planning and Development Commission 033 - 395 3066

Trade Associations AFRITOUR 012 - 782 6979

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