Tour operating firms are key players in the tourism sector. In view of this, the roles they play in Ethiopian tourism was the subject of this study. Such things as their branch distribution, promotional methods they employ, the skills and training of their personnel, and the level of involvement of local communities in their operations were studied. It was observed that tour operating firms are highly vertically integrated, have low branch distributions in tourist attraction sites, employ limited promotional media, and involve local communities in some forms of tourism activities at tourist destination sites. The sector is also characterized by lack of skilled man power and appropriate infrastructures.