Tour operator and tour agent - what is the difference between them and what will suit you?

After relative stabilization of social and economic situation in Ukraine, the demand for travelling increased among foreign tourists who want to visit our country, and among Ukrainians who want to go abroad.

This situation preconditioned the increase of the number of entities who provide the tourism services – tour operators and travel agencies. Activity of tour operators and travel agencies is regulated by the Law of Ukraine “About tourism” dated 15.09.1995 which specifies general requirements for entities on providing tourism services, provisions of agreement about providing tourism services, and also the responsibility for breaching the law in the sphere of tourism.

However, before performing the tourism activity, a tour operator should get a corresponding license (Article 17 of the Law of Ukraine “About tourism”. The licensing of tour operator’s activity is performed in accordance with the Resolution of the Cabinet of Ministers of Ukraine dated November 11, 2015, No. 991.

As for travel agencies, at present their activity is not required to be licensed.

This is only one of essential differences that exist between a tour operator and a travel agency.

For entrepreneurs’ full understanding of which form of running the tourism business will be suitable namely for them, further in this article we will consider other differences between a tour operator and a travel agency.

What is a tour operator?

Tour operator is a legal entity which got a license for tour operator’s activity and which is engaged exceptionally in the following:

• organizing and creating a tourism product;
• realization and providing of tourism services;
• mediatory activity on providing typical and related services.

Only a legal entity having a tour operator’s license has the right to include the word “tour operator” in its name. It should be noted that a tour operator may perform travel agency’s activity, too.

What is a travel agent?

Travel agent is a legal entity or an individual entrepreneur who performs mediatory activity in realization of tour operators’ ready tourism product and tourism services of other business entities engaged in tourism activity (realization of typical and related services).

An essential difference between a tour operator and a travel agent is the amount of bank guarantee required for covering losses which may be caused to a tourist in case of travel agent’s financial insolvency or opening a procedure about acknowledging him as a bankrupt.

• Minimal amount of tour operator’s financial providing should be the sum equivalent to not less than 20 000 Euros. Amount of financial providing of tour operator who provides services exceptionally on domestic and inbound tourism should be the sum equivalent to not less than 10 000 Euros

What is the inbound and domestic tourism?

Inbound tourism is travelling of persons within the territory of Ukraine who do not reside constantly in its territory, and outbound tourism is travelling of citizens of Ukraine and persons who reside constantly in the territory of Ukraine, to other country.

• Domestic tourism is travelling within the territory of Ukraine of citizens of Ukraine and persons who reside in its territory.
• Minimal amount of travel agent’s financial providing should be the sum equivalent to not less than 2000 Euros.

Process of providing

the tourism services

Tourism services are provided based on an agreement for tourism servicing, where the parties can be:

• a tour operator and a tourist, when realization of service is performed without travel agent’s participation;
• a tour operator, a travel agent and a tourist, if realization of service is performed through a travel agency (through a travel agent).

Before signing an agreement, a tour operator or a travel agent should provide a tourist with information about conditions of providing the tourism services. For untimely providing information, a tour operator bears legal responsibility before a consumer of tourism services.

Conclusion

A tour operator can be only a legal entity which organizes and provides a high-quality tourism product. That entity can be engaged only in tourism and related activity and should necessarily have a tour operator’s license. For that reason, a number of requirements is raised additionally which are to be fulfilled for getting a license.

Unlike tour operator, a travel agent can be both a legal entity and an individual entrepreneur. Besides tourism activity, a travel agent may perform other types of activity, too, and it is not required for a travel agent to get a license.

However, if speaking about level of confidence on the part of tourists, the more the sum of tourism product is, the more often the tourists prefer such a service.
If you want to engage in tour operating activities and do not know where to start, you can contact our experts who will help you start a tour operating activity "turnkey". By contacting us you will receive:

• Legal advice on the peculiarities of opening a tour operator company;
• Development of constituent documents and registration of legal entity;
• Assistance in obtaining a bank guarantee and insurance;
• Drawing up a package of documents for a license and directly to obtain the license itself.

If you want to get a tour operator’s license and you have not decided yet which form of running the tourism business to choose (a tour operator or a travel agent), you can apply to the lawyers of our company.