Chapter 9 The Distibution Mix in Tourism

The Tourism System 6th edition Kendall Hunt Publishing Company

Chapter 9 The Distribution Mix in Tourism

Robert C Mill and Alastair M Morrison © 2013 1

Chapter 9 The Distribution Mix in

Tourism

© 2013 Tourism Australia Copyright

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Contents Identifies the travel trade intermediaries.

Describes the roles of each of the intermediaries.

Tourism Australia Copyright




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Purpose Having learned about the tourism distribution system, students will be able to explain direct and indirect distribution, and describe the functions of the main travel trade intermediaries.


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Learning Objective 1: The Tourism Distribution System Describe the tourism distribution system using a diagram to illustrate the relationship of the various tourism organizations involved.





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Tourism Distribution is Unique There is no physical distribution system in tourism. Tourism services are perishable. Travel trade intermediaries play specialized roles. Packaging of complementary tourism services is

very important.


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Distribution’s Role in the Marketing Mix The distribution mix = “place” in the traditional 4

Ps of marketing. Distribution mix affects other marketing mix (8 P)

elements. DMOs and tourism companies also market to travel

trade intermediaries as well as to consumers.





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Learning Objective 2: Direct and Indirect Distribution Define direct and indirect distribution, and explain the difference between these two concepts.


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The Tourism Distribution System Individual and group customers Direct and indirect distribution Travel trade intermediaries Carriers, suppliers, and destination marketing

organizations (DMOs)





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Direct and Indirect Distribution Direct distribution occurs when a carrier, supplier,

or DMO sells directly to the traveler. Indirect distribution is when the sale is made

through one or more travel trade intermediaries. The difference between the two is the use or non-

use of travel trade intermediaries.


© 2013 Tourism Australia Copyright

Individual and Group Customers

Lodging Restaurant/Foodservice Airline/Rail/Bus Cruise Lines Attractions Gaming Facilities Destination Marketing Organizations

Dir

ect

Dis

trib

uti

on

Indirect Distribution

Incentive Travel Planners

Tour Wholesalers and Operators

Tra

vel T

rad

e In

term

edia

ries

Retail Travel Agencies

Convention-Meeting Planners

Corporate Travel Departments

Carriers, Suppliers, and DMOs




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Learning Objective 3: Major Travel Trade Intermediaries Identify and describe the major types of travel intermediaries.


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Travel Trade Intermediaries Tour Wholesalers and Operators Companies whose main business is the planning,

packaging, selling, marketing and promotion of multiple vacation elements. The wholesaling function means assembling or planning and packaging the tour. The operating part of the tour means managing the tour by providing tour escorts, sightseeing services, or transportation. Many tour operators perform both the wholesaling and operating functions.





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Travel Trade Intermediaries Retail Travel Agencies Travel agencies handle the sale and reservations of

tours, vacation packages, airline tickets, hotel rooms, car rentals, cruises, travel insurance, and other related services. They are professionals who counsel clients on destinations, transportation and all other aspects of travel.


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Travel Trade Intermediaries Corporate Travel Departments “Travel management is a specialized business function that balances employee needs with corporate goals, financial and otherwise. Travel management ensures cost tracking and control, facilitates adherence to corporate travel policies, realizes savings through negotiated discounts, and serves as a valuable information center for employees and managers in times when travel is not as smooth and carefree as it used to be.” (GBTA, 2013).





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Travel Trade Intermediaries Incentive Travel Planners Specialized tour wholesalers who primarily serve corporate clients. The trips they arrange are given to certain of their client’s employees or dealers as a reward for outstanding sales or work performance.


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Travel Trade Intermediaries Convention-Meeting Planners These are employees of corporations, associations, government agencies, and other nonprofit groups who plan and coordinate meetings, conventions, conferences, exhibitions or trade shows.





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Travel Trade Intermediaries Electronic Distribution Channels

Internet and Web Online travel agencies/companies (OTAs/OTCs): http://www.expedia.com/ http://www.travelocity.com/

Global distribution systems (GDSs): http://www.amadeus.com/ http://www.travelport.com/ http://www.sabre.com/


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Learning Objective 4: Functions and Economics of Tour Wholesaling Explain the functions of tour wholesalers and operators, and the economics of the tour business.


http://www.expedia.com/

http://www.travelocity.com/

http://www.amadeus.com/

http://www.travelport.com/

http://www.sabre.com/




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Functions of Tour Wholesalers and Operators 1. Tour planning and preparation: Researching the

market and product, and preparing the tour program.

2. Tour marketing: Internet marketing brochure distribution, advertising, personal selling, and other sales promotions.


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Functions of Tour Wholesalers and Operators

3. Tour administration: Conducting all the necessary

administrative tasks associated with the tour program.

4. Tour evaluation: Assessing the success of the tour.





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Economics of The Tour Business Ease of entry: Low capital investment needed,

except where licensing is required. Cash flow: Cash flow management is critical, as cash

flows are quite volatile. Return on sales: The return on sales tends to be low. Return on equity: The return on equity can be high.


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Learning Objective 5: Functions of Retail Travel Agencies Explain the functions of retail travel agencies.





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Functions of Retail Travel Agencies Distribution and sales network Reservations and ticketing Information provision and travel counseling Design of individualized tour itineraries


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Learning Objective 6: Reasons for and Functions of Corporate Travel Departments Describe the reasons for creating corporate travel departments and the functions of these departments.





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Reasons for Creating Corporate Travel Departments To establish company-wide travel policies To negotiate the best prices on travel To save the corporation money in its travel costs


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Functions of Corporate Travel Departments

Negotiations with carriers and suppliers Development of corporate travel policy Monitoring of travel expenses and travel policy

compliance Reservations and ticketing Meeting and incentive planning Monitoring travel agency performance





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Learning Objective 7: Functions of Incentive Travel and Convention-Meeting Planners Explain the functions of incentive travel and convention-meeting planners.


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Functions of Incentive Travel Planners

Design and implementation of motivational programs

Design of tour program Tour operation Reservations and ticketing Program evaluation





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Functions of Convention-Meeting Planners

Convention and meeting planning On-site coordination Convention-meeting evaluation


THE TOURISM SYSTEM

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Chapter Summary Highlights


Chapter Summary Highlights

Chapter 9

Tourism distribution is unique. The distributions mix is a combination of direct and indirect

distribution. Indirect is distribution through travel trade intermediaries.

There are unique intermediaries in tourism: 1) tour wholesalers and operators; 2) retail travel agencies; 3) corporate travel departments; 4) incentive travel planners; 5) convention-meeting planners; and 6) electronic distribution channels.

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