Intermediaries

INTERMEDIARIES

PREPARED BY: Ma'am L.

TOURISM DISTRIBUTION CHANNEL

The tourism channel of distribution is an operating structure, system, or linkage of various

combinations of organizations through which a producer of travel products describes, sells, or

confirms travel arrangements to the buyer.

INTERMEDIARIES

Principal role is to bring buyers and sellers together

The task of intermediaries is to transform goods and services to a form which the consumers would want to purchase

Provides the consumers the opportunity of avoiding the effort and cost of undertaking the product

BENEFITS OF INTERMEDIATION

PRODUCERS

Able to sell productsin bulk

Reduce promotion

alcosts

CONSUMERS

Avoid search and

transaction costs

Gain from knowledge

of the specialists

Gain from lower prices

DESTINATION

International

marketingnetworking

TOUR OPERATOR

Organize package tour together and offer them for sale to the public either through the medium of a brochure, leaflet or advertisement, or using ICT to display its offering.

Does bulk-buying

They offer package kown as “inclusive tour”.

INCLUSIVE TOUR

Normally includes: Accommodation

Transportation Tour guide services

Transfers Insurance

Food and Beverage Destination / Attraction

The type of packages are often segmented according to:

Mode of Travel

Mode of Accomodation

International or Domestic Package

Length of Holiday

Distance

Destination Type

The Business of Tour Operation

Tour operators allow different tourism sectors to sell their capacity in advance.

Tour operators negotiate contracts.

Tour operators traditionaly provides guaranteed level of sales which allowed principals to fix their costs in advance and give discounted rates.

Tour operators add a mark-up in the product they are selling by calculating all the input costs, their overheads, profit margin and then producing a price.

TOUR OPERATOR

Principal Stages of Tour Operating: Planning, preparation and coordination Research Capacity Planning Financial Evaluation Marketing Tour Management

STAGES OF TOUR OPERATING

RESEARCH – enable the operator to derive a market strategy

CONTRACTS - allocation and guarantees HEDGING – covering risks by anticipating future

changes (exchange rates) ACCOMPANIMENT – tour managers oversee

arrangements CORRESPONDENCE – receive and answer

consumer's inquiries, needs, wants and even complaints

FACTORS AFFECTING THE TOUR OPERATING SECTOR

TOURIST AS CONSUMER

Increased use of technology and

acceptance of e-products

More trend in niche-products

More flexibility in time poor / income rich consumers

New types of consumers(ageing population)

GOVERNMENT AND REGULATION

Consumer nd public sectorconcerns for tourism and

sustainability

Constraints on infrastructuredevelopment and planning

Concerns over globalterrorism

FACTORS AFFECTING THE TOUR OPERATING SECTOR

TECHNOLOGY and ICTs

Rise of e-travel, e-mediaties,low-cost solutions

Pace of change and rapidity of

innovation

Wider use of internet

BUSINESS ENVIRONMENT

Competitive industry sector

Declining profits per unit sold

Globalization

Disintermediation

Mergers, Acquisitions andintegration

New market opportunities

TRAVEL AGENTS AND RETAILING

The travel agent's role in tourism is to recognize and highlight that tourism is:

INTANGIBLE - product is conveyed thru brochures or thru the internet

PERISHABLE – sold for the period it is available DYNAMIC – forever in a state of flux ; prices can

rise or fall HETEROGENOUS – not a standardized product INSEPARABLE – consumed as an over-all

experience

THREE IMPORTANT IMPLICATIONS FOR THE BUSINESS OF TRAVEL DISTRIBUTION

The cost of setting up in business is relatively small compared to that of other retail business

Agents are only able to sell products made available by the tour operators or principals, so, in times of peak demand, they may be competing with other agencies to find the products that the customers wish to purchase

Agents are not seeking to dispose of products that they have already purchased

TRAVEL AGENTS: ROLE AND ACTIVITIES

Travel Agents receive commission for each sale, and as agents, do not become part of the contract of sale.

Travel Agents have no stock, acting on behalf of the tour operators, and so they have little financial risk and do not purchase products themselves

TRAVEL AGENTS : TASKS

Making reservations Planning itineraries Calculating fares and charges Producing tickets Advising Clients Maintaining accurate records on reservations Act as intermediaries where customer complaints

occur

TRAVEL AGENT-CLIENT PURCHASE PROCESSESTABLISH RAPPORT

WITH A CLIENT

UNDERSTANDING CLIENT'S TRAVEL NEEDS

PRESENTATION AND CLIENT'SSELECTION OF PRODUCT

COMMITMENT

LOSE CLIENT,NO RAPPORT IS

MAINTAINED

BUSINESS TRAVEL AGENTS

Individual business travel (corporate travel), involving business trips related to employer needs

Occasional work activities such as conferences, convention, events and incentive programs

THE ROLE OF THE “NEW” CONSUMER

NEW TOURISM is characterized by more experienced travelers who have growing environmental concern about the impact of their holiday on the place they visit.

Consumers prefer products that are full of surprise, discovery and memorable experiences rather than simply a repetition of last year's beach holiday

TRENDS IN TOUR OPERATION

Future growth in internet-only low-cost air travel sales

Online Travel Continued direct selling by tour operators Shifting consumer preferences New markets Integration, Consolidation and Concentration

INTEGRATION, CONSOLIDATION

INTEGRATION An economic concept describing formal linking

arrangements between one organization and another

1. Vertical integration – tour operator and airline company

2. Horizontal integration – two tour operators or travel agencies

Consumers and shareholders: major beneficiaries of consolidation