1 / 32

Chapter 12 Travel I ntermediaries - Middlemen

Chapter 12 Travel I ntermediaries - Middlemen. This Lecture will give you. Familiarity with the nature and structures of intermediation and the arguments for and against dis-intermediation of distribution channels in tourism;

carol-swanson
Download Presentation

Chapter 12 Travel I ntermediaries - Middlemen

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 12Travel Intermediaries - Middlemen

  2. This Lecture will give you • Familiarity with the nature and structures of intermediation and the arguments for and against dis-intermediation of distribution channels in tourism; • An awareness of ‘online’ developments and the increasing consolidation and concentration of tourism intermediaries; • Familiarity with the operating characteristics, roles and functions of retail travel agents and tour operators; • An understanding of the process of distribution; and • An awareness of the financial constraints on the operation of intermediaries.

  3. Intermediaries Middlemen are intermediaries between consumers and suppliers. Customer (tourist) – middlemen – supplier Using middlemen has many advantages for both customers & suppliers Tourism industry has been traditionally characterised by its use of intermediaries.

  4. Figure 12.1Structure of distribution channels

  5. Intermediaries Various middlemen that are included in the travel and tourism industry are; • Travel agencies, Tour Operators • Travel clubs, • Hotel marketing and booking schemes, incentive travel organizations, • Sales representatives, • Computerised reservation system (CRS), global distribution system (GDS) etc.

  6. Functions of Intermediaries • Provide info about tourism products • Contact current & potential customers • Make reservations & other arrangements • Assemble services to meet customer needs • Prepare tix & make confirmations

  7. Functions of Intermediaries • Provide databases on customer behavior • Reduce cost of acquiring new customers • Market excess or distressed inventories • Take risks by buying (or reserving) products  & then reselling them to individuals or groups

  8. The Nature of Intermediation • Benefits • Producers are able to sell in bulk and so transfer risk to intermediaries • Producers can reduce promotioncosts by focusing on the travel trade, rather than consumer promotion, which is more expensive • Consumers can avoid search and transactions costs • Consumers can benefit from the specialist knowledge of intermediaries, their market power and the resulting lower cost of products • Destinations can benefit from the marketing, and international marketing, network of many intermediaries

  9. The Nature of Intermediation • Disadvantages • Use of intermediaries by producers will result in the loss of margins and their degree of marketing control and influence over the process of distribution

  10. Travel Agencies • Travelagent = person • Travelagency = company • Provide important info & sales links • Links between: tourists & tourism suppliers • Using TA, one of most common (popular) ways to buy tourism products\services • Many tourists now use Internet travel agencies: Travelocity, Expedia, & Orbitz

  11. Travel Agencies • Via websites & e-mails TA compete with each other regardless of their physical location • Do not own products they sell, so they have little or no inventory or cost of goods sold • As commissions dwindle, markups increase • Large volume agencies often earn override commissions (above the normal percentage) • Destinations experts; make recommendations

  12. The Role of the Retail Agent • Travel counsellor • Principal role is to supply the public with travel products and services (such as insurance and foreign exchange) • Income is predominantly earned via commissions • Retail location and choice of reservation systems are key decisions • Impartiality (neutrality)?

  13. Receptive Service Operators • RSO are part of tourism distribution channel • AKA receptive tour operator, ground handler & inbound operator • RSO: a local company that  specializes in handling needs of groups traveling to it destination

  14. Consolidators & Travel Clubs • Are combinations of wholesalers & retailers • They perform a unique function within tourism distribution channels • Consolidators buy excess inventory of air tix, then resell them at reduced prices via TA or directly to travelers

  15. Tourist Information Sources • Travelers need info before, during, & after a trip about tourism product benefits, prices, & availability • Marketing communications provides this via: • Advertising, public relations, & personal selling • Information is available from national tourist offices (NTOs), convention & visitor bureaus (CVBs), and chambers of commerce • These sources have tool-free phone numbers,  websites, & welcome centers/TICs

  16. Table 12.1Some developments and trends in the marketplace affecting travel agencies

  17. Table 12.2Arguments for and against the dis-intermediation of travel agencies

  18. Table 12.2Arguments for and against the dis-intermediation of travel agencies (cont’d)

  19. Table 12.3 Arguments for and against the dis-intermediation of tour operators

  20. Table 12.3Arguments for and against the dis-intermediation of tour operators (cont’d)

  21. Table 12.5 Major global travel conglomerates

  22. Online Travel • Drivers of growth • Growth of Internet usage and electronic commerce • Success of global distribution systems (GDSs) • Sabre • Worldspan • Galileo • Amadeus • Phenomenon of ‘no frills’ airlines • Role of commissions in ‘traditional’ channels of distribution

  23. Global Distribution Systems •  Majority of TA business is done via GDS • GDS provide extensive data on suppliers: • Schedules • Rates & fares • Space availability • GDS can also: • Make reservations • Print itineraries, tix, & invoices

  24. Computer Reservation Systems • Travel Agencies are linked on-line via one or more computer reservation systems (CRS) built & operated by airlines • CRS make airline reservations,& serve as databases for tourism suppliers

  25. Internet vs. Travel Agents • Consumers have choice in buying travel products • Increases scope & reach of options • Open 24/7 • But requires more work & knowledge by consumers • TravelAgencies have expertise & human touch • Can save clients time, money, & energy • Can manage entire trip & its details

  26. Figure 12.4Conceptual model of the process and factors influencing agents’ destinations recommendations

  27. Tour Operators • TO: business organizations engaged in planning, arranging, marketing, & operating vacation packages • TO work with all sectors of tourismindustry • They perform many functions: • Planning , Sales and reservations , Representatives /guides • They organise and put together package trips and holidays.

  28. Tour Operators Reasons to Buy Tour Package 1. Convenience 2. One-stop shopping 3. Cost savings 4. Special treatment 5. Worry-free

  29. Tour Operators Tour Operators Risks • TO are unregulated • Very susceptible to perishability • Must commit to place, products, & prices in advance  • Currency fluctuations: • Natural disasters: • Changing consumer tastes: • Security & Safety Concerns

  30. The Role of theTour Operator / Wholesaler • Principal stages of the tour operating process • Research • Capacity planning • Financial evaluation • Marketing • Administration • Tour management

  31. Price structure of a14-night inclusive tour Table 12.8 Price structure of a 14-night inclusive tour Source: Trade information

  32. Conclusion • Increasing consolidation, integration and concentration • Pressure from ‘virtual’ players • Changing patterns of booking behaviour • Pressure on cost structures and commission rates • New market entrants • Branding

More Related