Objectives

Copyright ©2011 by Pearson Education, Inc.publishing as Pearson [imprint]

It’s Tourism: Concepts and PracticesJohn Walker

Tourism Distribution Organizations

Chapter 13



Objectives• After reading and studying this chapter,

you should be able to:– Understand the role of tourism distribution

organizations– Describe the role of the Internet as a part of the

distribution system– Describe the purpose of the American Society

of Travel Agents (ASTA) and list its member services as well as requirements



Objectives (cont’d.)– Explain the functions of the Airlines Reporting

Corporation (ARC)– Discuss airfares and give examples of their

complexities– Name the most common computerized

reservation systems– Describe the main types of tours, major tour

operators, and wholesalers– Identify important current trends



• Channels of distribution– Companies cannot always reach

consumers as cost effectively as an intermediary

– Distribution is a critical source of competitive advantage in the marketing mix

– Consolidation and vertical integration have become more pronounced

Introduction



• Purpose of the channels of distribution:– Bring clients and providers together so

that they can communicate• Direct channels: a product or service is sold

directly to the client• Indirect channels: the client goes through an

intermediary to purchase the product or service

Introduction (cont’d.)



Figure 13–1 • The Travel Distribution System



• Important part of travel distribution system– Those who are up to date are aware of

current trends and offer the best service– Act as a consultant and sales

intermediary– Responsible to the client– Have a special relationship with carriers

and suppliers

Retail Travel Agents



• Commissions– From airlines has been greatly reduced

or canceled completely– Hotels are also cutting commissions– Rail, bus, car rentals, cruises, and

package tours remain about the same (10-15%)

– Most rely on commissions plus service fees ($10–$20 per ticket) charged to the client

Retail Travel Agents (cont’d.)



• Salary– Depends on experience, sales ability,

and agency size and location– Median annual earnings is $29,210– Top 10% earn more than $46,270– Expected to experience little to no future

growth– Those with a specialization will have the

best chances for success




• Travel agent’s job:– Prepare itineraries– Arrange accommodations– Handling details (e.g., insurance,

currency exchange, etc.)– Provide information (e.g., schedules of

connections, hotel quality, etc.)– Arrange reservations for special interest

activities




• American Society of Travel Agents– Founded in 1931– World’s largest association of travel

agents– More than 24,000 members

• Travel agents future does not look good– Online booking– Cut commissions

ASTA



• Work to make airfares more attractive

• Sell to travel agencies and/or directly to the public– Blocks of discounted seats are sold to

consolidators, which are then sold to the public

Consolidators



• Types of tours:– Special interest – Escorted– Foreign independent – Domestic independent – Group inclusive tours

Tours



• Package tours for a country or an area – Sell them to retail travel agents

• May have offices in other countries or sell directly to the public

• May represent an area if market does not justify a complete office

• Best-known are Thomas Cook and American Express

Tour Wholesalers



• Negotiate with airlines, shipping lines, hotels, restaurants, and other services – Use them to assemble packages– Tours are then sold to travel agents,

who, in turn, sell them to tourists

• Benefit to tourists:– Much lower prices– Transportation is planned out

Tour Wholesalers (cont’d.)



• Can be local, national, or international • Bring together all the elements of a

trip– Sold in one package

• Types of tours:– Escorted– Hosted– Independent– Package

Tour Operators



• National Tour Association– Trade organization composed of:

• Tour operators• Tour suppliers• Destination marketing organizations

• U.S. Tour Operators Association– Companies whose tours and packages

encompass the entire globe • Conduct business in the U.S.

Tour Operators (cont’d.)



• Services vary widely– Ground services at various destinations– Meeting clients upon their arrival– Luggage arrangements – Responsibility for the tour from

beginning to end– Tour covers all expenses

Tour Operators (cont’d.)



• Work out details for travel guidelines– Keeps travel costs under control– Invites agencies to submit proposals

based on company travel needs– Create and operate travel offices within

the company– Any discounts or commissions earned

go directly back to the company

Corporate Travel Management



• If employees meet or exceed goals, they get a all-expenses-paid trip– Motivates employees to produce, sell, or

otherwise meet and exceed goals

• Society of Incentive and Travel Executives– Only international, not-for-profit,

association

Incentive Travel



• Arrange meetings, conventions and expositions– Clients in the business sector,

government, and public sector– Select suitable locations based on need– Book accommodations– Facilitate all aspects of the meeting,

conference, or exhibition

Meeting Planners



• Meeting Planners International (MPI)– Professional association

• Professional Convention Management Association– Leading organization for meeting and

event professionals– Provides education, training, and

promotion

Meeting Planners (cont’d.)



• Convention and visitors bureaus (CVBs)– Help facilitate tourist visitation– Promote features and benefits of the

area to target markets

• Familiarization trips– Arranged for agents at little or no cost– Allows agents to get to know and areas

geography and culture

Meeting Planners (cont’d.)



• Airlines Reporting Corporation (ARC)– Domestic airlines, travel agencies,

corporate travel departments, railroads, and other travel suppliers

– Processes all transactions in the travel system

• More than $80 billion annually• Financial backbone of travel distribution

Regulatory Agencies



• International flights:– International Air Transport Association– International Airlines Travel Agency

Network

• Cruise conference:– Cruise Lines International Association

• Rail ticketing:– National Railroad Passenger

Corporation

Regulatory Agencies (cont’d.)



• Allows ASTA members to sell and distribute tickets on the airlines’ behalf– Administered by Airlines Reporting

Corporation– Allows agents to pass through cash and

credit card payments directly to the airlines

Area Bank Settlement Plan



Figure 13–2 • Area Bank Settlement Plan



Air Fares• Almost all domestic airline seats are

discounted for the discretionary traveler– Depends on demand

• If more seats are sold than usual, discount seats are cut back

• If fewer seats are sold, more discounts are added

• Known as yield management



Air Fares (cont’d.)• Yield management

– Set of strategies to enable capacity-constrained service industries to realize optimum revenue

– Provide the right service to the right customer at the right time for the right price

– Competition has a major influence



Air Fares (cont’d.)• Classes of fares

– Economy, business, and first class

• Prices depend mainly on:– Sections of the plane– Passenger seating space– Level of attendant service– Cost of meals served



Air Fares (cont’d.)• Complexities that affect airline fares:

– Economy– Excursion rates– Advance purchase excursion fares– Inclusive tours– Youth fares– Short-stay tour packages– Late-night fares



Air Fares (cont’d.)• Online reservations

– Revolutionized airline reservations– Travelers can quickly obtain quotes– Many airlines actually reward customers

for booking through their company website

– Travelocity is one of the world’s leading online travel agencies



Air Fares (cont’d.)• Global distribution systems

– Connects travel agents to airlines, hotels, car rental companies, railroads, tour operators, etc.

• Sabre is number one• Others include Amadeus, Worldspan, and

Galileo



Hotel Reservations• Most major hotel chains are included in

some computer reservation systems– Hotels assign a number of rooms for sale to a

GDS, and as a room is sold, it is subtracted from the inventory

• MICROS Systems – Provides enterprise applications for the

hospitality and retail industries worldwide

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