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Tourism Distribution Channels

Tourism Distribution Channels. HPR 3100 Introduction to Hospitality, Tourism and Recreation. Tourism Distribution Channels. Suppliers Transportation Providers, Accommodations, Food Service, Resorts, Recreation, Entertainment etc. Direct Channel via Internet, Telephone, Supplier’s Office.

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Tourism Distribution Channels

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  1. Tourism Distribution Channels HPR 3100 Introduction to Hospitality, Tourism and Recreation

  2. Tourism Distribution Channels Suppliers Transportation Providers, Accommodations, Food Service, Resorts, Recreation, Entertainment etc. Direct Channel via Internet, Telephone, Supplier’s Office Retail Travel Agent Tour Wholesaler Specialty Channeler Customers Individuals, Pleasure Groups, Business Groups etc.

  3. Travel Agent • Acts as the ‘middle person’. • Receives commission from suppliers and/or fee from clients. • Functions as a ‘broker’ in the industry. • Expert – knowledgeable about various aspects of travel. • Specialist and counselor who saves the client both time and money.

  4. Tour Wholesaler • Also known as ‘tour operator’. • Puts together a tour and sells it through various outlets. • Plans, prepares and markets vacation packages at cheaper prices. • Provides customers with a wide selection of tours to large number of destinations • at varying costs, • for varying durations • in various seasons • Provides suppliers with the assurance of future passenger volumes in advance.

  5. Tour Wholesale Business Characterized by: • Relative ease of entry. • High velocity of cash flow. • Potential for high return on equity.

  6. Four Entities in Tour Wholesaling • The independent tour wholesaler. • The airline working in close cooperation with the tour wholesale business. • The retail travel agent who packages tours for its clients. • The operator of motor-coach tours.

  7. Impact of E-Commerce on Tour Wholesaling • 81% of NTA (National Tour Association) tour operators have a website. • 31% provide on-line bookings. • 9% have some partnership with an internet travel company .

  8. Phang Nga Kayaking Camp - Package 2D/1N • Based on the stunning island of Koh Yao Noi and situated only an hour by water from Phuket, the kayak camp offers an excellent ‘back to nature’ experience. • Koh Yao Noi is just like what Thailand would have been 20 years ago - a cultural delight. More information

  9. Underwater Explorer - Package 5D/4N • Love diving, but schedules just don't fit in with yours? No time to sort out hotels? Our diving package allows you to enjoy diving at some of the great sites southern Thailand has to offer. • Dive in the warmest waters in the world and afterwards relax in comfortable accommodation. Our package provides the best, above and below the waterline, with excellent value for money. More information

  10. Specialty Channelers • Incentive travel firms. • Business meeting and convention planners. • Corporate travel departments. • Association executives. • Hotel representative firms. • Travel consultants. • Supplier sales offices.

  11. Travel Agent & Air Travel Sales • 2000 – US $83.5 billion • 2001 – US $69.9 billion (- 16%) • 2002 – US $64.1 billion (- 8%) • 2003 – US $61.8 billion (- 4%)

  12. Airline Commissions • 1995 – Domestic commission cap of $50 roundtrip. • 1997 – Domestic commissions cut from 10% to 8%. • 1998 – International commission cap of $100 roundtrip. • 1999 – Domestic base commissions cut to 5%. • 2001 – Domestic commissions reduced from $50 to $20 roundtrip. • 2002 – Domestic commissions cut to zero.

  13. Travel Agents & Service Fees • Number of travel agencies charging fees: 1998 2008 64% 93% • On average, travel agents charge customers US $36.80 for issuing airline tickets - An increase of US $9.48 from 2007.

  14. Travel Agents vs. Internet • Airlines can reduce distribution costs via direct contact with customers. • Low cost airlines (e.g. Air Asia) leading the use of internet. • Internet has ‘easier & less expensive’ reputation. • Market share will continue to shift away from traditional travel agents.

  15. Sales by Travel Agents & Airlines 2001 2004 Travel Agents Traditional 49.6% 32.1% Online 12.8 21.5 Airlines Website 18.0 34.7 Call Centre 19.6 11.7

  16. Agency Sales by Travel Sector 1996 2000 2004 % % % Airline 58 56.1 27.2 Cruise 10 16.8 25.9 Hotel 5 14.7 8.4 Car Rental 5 8.1 4.6 Tour Packages 15 - 29.9 Other 6 4.3 4

  17. Will the Internet replace the need for travel agents? The Internet cannot replace the expertise, guidance and personal service of a travel agent. Travel agents provide both high tech and high touch.

  18. Travel Agents Sell • 85% of cruises • 70% of all tours and packages • 50% of all airline tickets • 30% of all hotels • 25% of all car rentalsSource: 2008 PhoCusWright Travel Agency Distribution Landscape Report

  19. Conclusions • Travel agents are still the leading distributors of travel products and services. • Travel agencies will increasingly focus on leisure/ holiday/ vacation travel rather than business travel. • The internet will grow in importance and impact the travel distribution system.

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