A “Travel Agent Agreement” is a contract between a Travel Agent and a Tour Operator Company which gives the agency the authority to operate the business on its behalf. Such agreement sets out the terms and conditions for the business transactions carried on by the travel agent on behalf of the tour operator. By executing the agreement, the tour operator company may authorize the travel agent use of its advertisement and promotional material and also use of its brand for generating the business. The travel agent has to provide the timely reports of sales and bookings generated by him
Agency agreement may be in any of these 2 forms:
Net rate agreement: This type of agreement involves the tour operator selling their tours or activities to the agent at a discounted net rate (or wholesale rate) based on the rack rate or retail rate. The agent sells the tours to their customers at the retail rate and keeps the difference as their margin. The agent pays the tour operator for all tours sold during a specific period
Commission agreement: This type of agreement involves the agent selling the tours or activities offered by the tour operator at the rack rate or retail rate directly to customers. The operator calculates a commission for sales made by the agent during a specific period and pays them an agreed upon commission
Checklist For Travel Agency Agreement
- Names & addresses of tour agent and tour operator
- Authorization letter in favour of signing person if any of the 2 parties is a company/LLP/partnership firm
- Purpose & Subject matter of the agreement
- Terms of bookings by agent
- Terms of remission of booking amount and balance amount by agent to operator
- Terms as to right to cancel or alter bookings by operator
- Liabilities of both the parties in relation to bookings made by agent on behalf of tour operator
- Particulars of cancellation charges
- Duration of agreement
- Other conditions namely breach of contract/ arbitration/ jurisdiction etc.
