HTT167

FUNDAMENTALS OF TOURISM
CHAPTER 4: TOURISM DISTRIBUTION CHANNEL
 Learning Outcomes

At the end of this topic, students should be able to:

a. Explain the importance of tourism intermediaries

b. Explain the tourism distribution channels
c. Explain the tourism technology’s competitive
advantage
 4.1 Why use intermediaries?

Perform a vital function for

tourism service suppliers by
INTERMEDIARIES making the suppliers’ services
available to large numbers of
potential customers in a cost-
effective way.

The intermediaries will receive in the

form of commissions once the services
have been sold or used.
 4.1 Why use intermediaries? (cont.)

Intermediaries in tourism distribution channel perform a variety

of value-adding functions:

a. Providing information about the types and availability of

service offerings
b. Making reservations and other travel arrangements
c. Preparing tickets and/or providing confirmations
d. Encouraging repeat use of supplier channels
e. Contacting current and potential customers
f. Reducing costs of acquiring new customers
g. Assembling services to meet customer needs
h. Risk taking by buying or booking large quantities of services in
advance and then reselling them to individuals and groups
i. Marketing excess inventories
j. Providing extensive marketing data to tourism suppliers through
databases containing targeted behavior information
4.2 Tourism distribution channels
One-level Two-level Three-level

Service Service Service

Provider Provider Provider

Tour operator
(e.g.,
Travel agent wholesaler)
(e.g., retailer)

Travel agent
(e.g., retailer)

Customer Customer Customer

Figure 4.1: Distribution Channels

 4.2 Tourism distribution channels (cont.)

One-Level (Direct) Distribution Channels

The simplest form of distribution,

providing travellers with direct access
to tourism suppliers.

Rely on online promotions and

advertising to encourage people to
purchase directly.

Traditional direct channels:

call centers
 4.2 Tourism distribution channels (cont.)
Two-Level Distribution Channels

Save the human

More complex
and financial
than one-level
resources

Travel agents Simplify the travel

serve as process for
consumers & more
intermediaries
efficient and
bringing suppliers effective for both
and customers consumers and
together suppliers
4.2 Tourism distribution channels (cont.)

Travel Agencies

Provide a common group of services called a “product mix”

The services: itinerary, transport reservations, tour packages, travel

insurance, event ticketing, and general travel information

Online travel agencies (OTA) has made the possible the servicing of
clients who are thousands of miles away
 4.2 Tourism distribution channels (cont.)

Travel Agency Types

Independent agencies
a) small agencies, privately owned, unaffiliated with any larger
organization
b) less than 40% of all travel agencies, traditionally serving clients from a
walk-in office location or over the phone

Agency chains
a) wholly owned-mega agencies
b) have dozens to hundreds of branch offices throughout region, country,
worldwide
Agency chain-franchises
a) Semi-independent agencies affiliated with each other through franchise
agreements
 4.2 Tourism distribution channels (cont.)

Consortium-affiliated agencies
a) independent agencies that link together through a consortium to gain
financial benefits of a chain
b) have lower fees and commisions

Specialty agencies
a) agencies that offer limited services
b) E.g.: cruise-only agencies

Corporate travel agencies

a) provide services to business clients, not regularly to general public
b) private enterprise, specializes in busines clientele, may have branch
offices on-site at major clients’ locations
c) frequently compensated by management fees, rather than commissions

Corporate travel department

a) Similar to corporate travel agency, but agents are employees of the
organization in a department that handles most travel needs of the
organization’s employees
 4.2 Tourism distribution channels (cont.)

Home-based agencies
a) agents who conduct their services from their homes, using electronic
technology
b) may be independent or affiliated with some organization

Internet (online) agencies

a) either opaque (hiding service supplier) or transparent (showing service
supplier)
b) Others may be home based, serve clients through internet
 4.2 Tourism distribution channels (cont.)

4 Questions to Ask a Travel Agent:

1. What are your qualifications? – Expect an agent to have credentials;
what certificates does the agent have?; What industry affiliations does
he/she holds?; etc.

2. What are your relationships with specific industry members? –

Special relationships with a certain airline, cruise line, a hotel chain.

3. What will you charge and what will I receive for your fee? – Ask
what fees will be charged and determine whether the expertise of the
agent is worth the money.

4. What are your contact details – phone numbers, email address,

messaging app ID, etc. Agents should return calls promptly and should
be available in emergencies to solve problems.
 4.2 Tourism distribution channels (cont.)

Travel Agents
Pre-Internet Role Post-Internet Role
Transactional focus Travel experience focus
Process transactions and Manage overall travel experience
concentrate on travel logistics
Book air, lodging, and car Book air, car, and hotel
Majority of compensation from Majority of compensation from markups and
suppliers through commissions service fees
Little or no follow-up with clients Concierge orientation:
• Door-to-door delivery of sports equipment
and luggage
• Theatre tickets
• Restaurant reservations
• Golf tee times
• Spa treatments, etc.
 4.2 Tourism distribution channels (cont.)
Three-Level Distribution Channels

Tour Operators
Defined as business organizations engaged in
planning, preparing, markeitng, and, at times,
operating vacation tours.

They buy large blocks of Do not typically work Usually buy tourism
space (e.g.: airline seats, on a commission products more than a
hotel rooms, admission basis like travel year in advance,
tickets, etc.) and services to agents, but on a which relieves
be resold in the form of markup basis suppliers the worry
tours in packages about demand and
focus on providing
quality products
 4.2 Tourism distribution channels (cont.)

Tours
The word tour: “a trip taken by a group of people who travel together and
follow a pre-planned itinerary” – the United States Tour Operator Association

Type of tour packages:

Foreign independent Escorted tour

tours
Independent tour The most
(FITs)/domestic
The least structured tour
independent tours Hosted tour
structures tour type with the most
(DITs)
Provide a number complete
package. E.g.: Customized tours of tourism elements for the
Hotel “escape” including many supplier elements package price. A
featuring elements needed. and the services tour escort
accommodations, FITs and DITs may be of a local host to accompanies tour
some meals and designed by a travel give advice groups throughout
possibly a rental agent or by a
car the tour.
wholesaler
 4.2 Tourism distribution channels (cont.)
Why would a traveler prefer to purchase a TOUR PACKAGE?
1. Convenience – Allows the decision-making process to be shortened so that the
traveler does not need to spend a lot of time deciding what to do and which supplier
to use. (often ground transfers, tipping, baggage handling are including)

2. One-stop shopping – The buying process is made easier; one payment covers the
cost and paperwork of two or more services.

3. Cost savings – In most cases, tour packages are less expensive than the cost if the
tourist were to purchase all of its elements separately. Tour wholesalers are able to
take advantage of volume discounts and usually pass on some of the cost savings to
tour purchases.

4. Special treatment – Because of the volume of the business tour wholesalers made to
suppliers, tour members tend to receive preferential treatment. (e.g.: special queue
lines or special parks from entrances.

5. Worry free – Travelling on a hosted or escorted tour, tourists are able to concentrate
on the experiences and new world around them, leaving problems and details in
hands of tour personnel.
 4.2 Tourism distribution channels (cont.)
Consolidators and Travel Clubs
Consolidators buy excess Travel clubs also provide an
inventory of unsold airline tickets inexpensive and convenient outlet
and then resell these tickets at for members to purchase unused
discounted prices. seats at the last minute.

Tourism Boards & Other Intermediaries

National tourism offices Tourist information Trade associations
centre

Tourists are always seeking general information about travel and locations from tourism
boards. National, state, provincial and local tourist offices can be accessed to obtain
information and updates on currency, transportation, restaurants, and more.

Familiarization trips (fam trips) – designed to promote tourism in general and

acquaint participants with the specific capabilities of tourism service suppliers. Fam
trips are offered to tourism intermediaries (government agencies, tour guides, tourism
boards, tour operators, etc.)
 4.2 Tourism distribution channels (cont.)
SELLING TOURISM SERVICES Cultivate long-term customer relationships
“Personal Touch of Travel as part of a process called: Customer
Agents” Relationship Management – creating a win-
win situations for both customers and
suppliers

Acquiring Ability to excite, give details and help others envision places near
Product and far, known or unknown is one of the first skills needed in selling
Knowledge tourism services.

Armed with the confidence of product knowledge, salesperson are

Approaching
prepared. Begins with contact with clients (over the phone, email or
the Client
in person) – create positive and professional impression through
common business courtesy.

Identify and serve each client’s need. Qualifying the customer to

Qualifying
discover the specific needs, budgetary considerations, and the
the Client
necessary personal information that can be used to make sales
presentation to match the tourism products.
 4.2 Tourism distribution channels (cont.)

Making the Opportunities for the salesperson to present the features and
Sales benefits of a service or package of services that will meet the
Presentation client’s needs. E.g.: As simple as making a recommendation as to the
best airline schedule or a complex as presenting a complete sale
proposal for a major convention. Sales tools: brochures, PowerPoint
presentations, videos, testimonial letters, social media clips, etc.

Negotiations involve responding to objections or resistance even

Closing the
when clients may be ready to purchase. Objections can be cleared
Sale
up through active listening and clarifications. Be prepared to counter
or overcome these resistance points effectively to CLOSE the sale.

The sale is formally closed: when payment is made; the reservation

is confirmed; a deposit is made; and/or the contract is signed.
 4.2 Tourism distribution channels (cont.)

Following Up The final step in the selling process. Providing service after sale
creates customer loyalty and satisfaction – by letting their clients
know they truly care about them as individuals.

A good salesperson provides consistent high-quality service to

Building
clients. Returning phone calls promptly, solving problems,
Relationships
providing thank-you cards, or notifying clients of special sales or
offers serve as simple tokens of appreciation.
 4.3 Technology’s competitive advantage

Profitability

Customer
Communications Technology service

Productivity
Figure 4.2: Technology’s impact
on tourism service suppliers
 4.3 Technology’s competitive advantage (cont.)
Improving Operating Efficiency and Effectiveness

Management Information System (MIS)

a. Collect and store data and provide information for planning, decision
making, and problem solving
b. E.g.: Accounts receivables, revenue management, web ordering, etc.

Point-of-Sale Systems (POS)

a. Being integrated into MIS to improve foodservice efficiency and
profitability
b. Designed to:
- process reservations, manage waiting lists, record and track customer
orders, etc.

Property Management Systems (PMS)

a. Combine computer hardware and software into an integrated information
system.
b. E.g.: reservations, guest profile, guest check-in check-out, night audit, etc.
 4.3 Technology’s competitive advantage (cont.)
Providing Customer Convenience and Enhancing Service

Touch screen
Online booking Self-service kiosk
kiosks

Audio or video
Mobile apps
tour guides
 4.3 Technology’s competitive advantage (cont.)
Changing Communication and Distribution Channels

Internet-Based Distribution
Internet and Travel Product
Hotels
Distribution
- Online lodging distribution
- Online reservations
- platform for customer
- The use of GDS
reviews and comments

The Power of User-

Internet as a Travel Tool Generated Content
- Major source of information - Social networking (social
medias), blogs, etc.
 Summary and references

Chapter 4 provide an insight view on:

a. Tourism distribution channels
b. The tourism technology’s competitive advantage

References:

1. Cook, R. A., Hsu, C .H. C., & Taylor, L. L. (2018). Tourism: The
Business of Hospitality and Travel (6th ed.). Pearson