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A travel Agent offers holidays/vacations to potential customers. These vacations can be quite expensive and the travel agent knows that his/her customers expect value for money.

The Tour Operator takes responsibility for a part of the customer's holiday. For example: S/he may provide road transport and act as a guide to the travel agents customers.

Naturally the tour operator expects to get paid for the service provided. The travel agent is concerned that his customers enjoy their vacation and hopes to increase his/her business through referral.

How does that work?

Answer: Well, if a customer has a great experience whilst on vacation and especially if he is suitably impressed by the tour operator, then it is a good possibility that the customer will tell family and friends about his experience and they may be encouraged to do business with the travel agent. It's called - 'growing the business'.

Hope that helps.

Source(s):I just know this is what happens.
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