MARKETING THE INDUSTRY SEGMENTS

1. MARKETING THE INDUSTRY SEGMENTS 4.07 Explain travel agencies.

2. Travel agent: A wholesaler who is authorized to represent buyers and sellers of the travel industry for a commission Travel agency: A business that employs travel agents who make travel arrangements for clients for a commission or service charge

3. Travel Agencies • American Express • AAA of the Carolinas • Mann Travel & Cruise • Thomas Cook

4. American Express • Independently owned and operated travel agencies licensed to provide travel and travel-related products and services • American Express TravelFunds Card • New, safe way to carry money • Not linked to your bank account • Prepaid, reloadable card • Balance refunded on lost or stolen cards

5. American Express (cont.) • American Express Travelers Cheques • Available from banks • Can be ordered online up to $1,000 in combined Travelers Cheques and foreign currency • Customer service support available 24/7 • Value refunded on lost or stolen cheques • Accepted practically everywhere

6. AAA of the Carolinas (American Automobile Association) • 25 offices in the Carolinas • Member benefits • Travel assistance with destinations and reservations • Road service • Insurance • Assistance with automotive purchase, maintenance, and repair

7. Mann Travel & Cruise • Founded in 1975 • Largest locally-owned travel agency in the Carolinas Thomas Cook • 3,600 travel agencies • Services supported by 28,000 employees across 5 continents • Third largest travel group in the world

8. Historical events in the travel industry • Thomas Cook started the concept of the travel agent in England in 1841. • Ward Foster introduced travel agencies to the US in 1888. • Airline Deregulation Act was passed in 1978 and had impact on travel agencies. • Commission cap was established reducing the travel agent’s profit. • Travel agents had to diversify and began offering tourism services that were not dependent on airline reservations. • Agents began to charge for their services.

9. Types of travel agencies • Independent agencies: Small, unaffiliated agencies that serve clients from a walk-in office location or over the telephone • Agency chains: Semi-independent agencies affiliated with one another through franchise agreements • Consortium-affiliated agencies: Independent agencies linked to gain the resources and financial benefits of a chain but with lower fees and commissions. Examples: World Travel Affiliates and Hickory Travel Systems • Commercial or corporate travel agencies: Agencies that provide services to business clients for a commission on reservations made or for a management fee

10. Types of travel agencies (cont.) • Home-based agencies: Agents who conduct business from their homes using electronic technology rather than from the traditional office • Internet agencies: Agencies that may or may not be home-based and that serve clients primarily through the use of the Internet

11. Internet travel intermediaries: Internet agencies that act as a mediator between the travel industry businesses and customers at a lower price per transaction than either the business or a traditional travel agency may be able to provide • Priceline.com • Travelocity.com • Expedia.com • Orbitz.com

12. Pioneer Internet intermediary of the hospitality industry, organized as Priceline Hotel Service in 1998 and allows customers to negotiate prices • Customers enter data stating destination, minimum quality star rating, and price they would like to pay. • Priceline only considers hotels at or above the quality tier the customer has specified. • Priceline negotiates to match the offer that best accommodates the client. • Priceline receives a service charge.

13. A giant search engine that allows consumers to enter a request and receive comprehensive data about options available • Offers multiple ways to search for economy class travel • Does not act as a negotiator

14. World’s leading online travel service • 4th largest travel agency in the US • Carries the Good Housekeeping Website Certification Seal • Does not act as a negotiator

15. A travel website formed by five airlines sharing a mission to provide better online customer service • The award-winning flight search engine makes finding the lowest fare easy • Searches hundreds of airlines to find the best flights for the customer • Offers the largest collection of discount web-only airfares from dozens of airlines • Provides a comprehensive selection of hotel rates, including discounted Orbit Saver rates • First travel site to monitor travel conditions for travelers • Does not act as a negotiator

16. Advantages of using a travel agent • The agent has knowledge of a geographically diverse marketplace. • The agent saves the customer time by researching the product mix that best meets the customer’s request. • The agent can recommend price considerations. • The agent may use Global Distribution Systems (GDS) to make reservations. GDS is a worldwide inter-organization information system that maps destinations for travel associates’ use in selling tourism services.

17. Disadvantages of using a travel agent • The customer may be asked to pay a service charge. • The agent may not have current information and prices. • The agent may not work in a timely manner.

18. Challenges facing travel agencies • Agents are no longer just order-takers making reservations at the customer’s request. • Agents have to market themselves and the agency. • Agents now have Internet competition. • Agents earn commissions on reservations they make. • Travel agents spend much of their time researching travel products. • Agents must be culturally diverse and able to relate to customers’ personalities.

19. Package tour: A prepaid travel arrangement that includes transportation, accommodations, and at least one other component such as meals, transfers, sightseeing, or car rental, and that is sold for a single all-inclusive price. Most tours are arranged using the services of a travel agent. • Itinerary: The predetermined schedule and arrangements for a trip. • Independent tour: The least structured tour package allowing purchasers to set their itineraries themselves. It is usually more costly for the customer and results in higher profits for the agent. • Escorted tour: The most structured tour package with a predetermined itinerary and a guide or host.

20. Tour rates • An all-expense tour offers transportation, lodging, meals, and sightseeing for a pre-established price. • Group rates or bulk fares are available only to tour organizers or agents who request a specified block of rooms or seats.

21. Resources available to travel agents • Trade publications: Print media associated with the travel industry. Examples: Today’s Traveler, Travel Weekly • Trade associations: Professional organizations associated with the travel industry. Example: American Society of Travel Agents (ASTA) • Tour associations: Professional organizations associated with travel agencies that specialize in tours. Example: National Tour Association

22. Marketing strategies for travel agents… • Marketing is vital to the successful travel agent/agency. • Between 5 and 10 percent of an agency’s total budget should be spent on promotion. • Advertising is paid for by the agency. • Agents must make a commitment to market themselves and the services they provide.

23. Advertising for Travel Agencies • The objective of the agency must be determined before deciding how and where to advertise. • The agency must consider the target market. • The agency should consider the current client database. • Broadcast media • Print media • Internet

24. Sales Promotion for Travel Agencies • Contests • Sweepstakes • Incentive programs

25. Publicity/Public Relations for Travel Agencies • Can be positive if initiated by the travel agent/agency or a satisfied customer • May be negative if communicated by a dissatisfied customer • Example: Travel column written by a travel agent