Travel Trade 101 & Working with Receptive Tour Operators

Travel Trade 101 &

Working with Receptive Tour Operators

Don PrincePrescott Office of Tourism

Don Prince

28 years in Travel & Tourism Arizona Office of Tourism

Deputy Director, Director of Travel Industry Marketing & International Marketing Mgr.

Sales & Marketing Consultant to hotel groups, resorts and destinations.

Tour Operators and Cruise Lines

Travel Trade 101

Travel Trade The hierarchy of businesses that operate between

the long-haul/international traveler and the destination.

aka: Travel ‘Middle – Men’

Travel Trade 101

Access to long-haul / international markets U.S. long-haul markets (Midwest, East Coast) Canada Mexico/Latin America Europe Asia Pacific

Travel Trade 101

Access to long-haul / international markets USA Canada Mexico/Latin America Europe Asia Pacific

Navigate the International Protection Laws

Travel Trade 101

Access to long-haul / international markets USA Canada Mexico/Latin America Europe Asia Pacific

Navigate the International Protection Laws GUARANTEED RETURN

ON INVESTMENT!

Travel Trade 101

LEISURE TRAVELER FIT – Fully Independent Traveler, or

Foreign Independent Traveler

- a person traveling independently who is not part of an organized group tour

Travel Trade 101

LEISURE TRAVELER Group - an organized group tour that

has a tour leader/guide, and where transportation, accommodation, admissions and meals are generally included

Travel Trade 101

BUSINESS TRAVELER MICE – Meetings, Incentive travel, Conference

and Exhibition attendees Incentive Trips – ‘gifts’ that businesses provide

to clients or employees and are 100% paid for by the company

Travel Trade 101

Tour Operators - the term represents 3 different business models:

1. Tour Operators – either contract products, ground and air

services from a Receptive Tour Operator or a Tour Wholesaler or they may contract directly with the Supplier. They then package these products and resell to the Consumer. They market these products through brochures, websites, advertising and promotions. They often work through Travel Agents to sell their products, but there are also many Tour Operators that sell directly to the public, bypassing the Travel Agent.

Travel Trade 101

Tour Operators - the term represents 3 different business models:

1. Tour Operators 2. Tour Wholesalers – may contract products and

services from either Receptive Tour Operators or Suppliers and then resell them to other Tour Operators or Travel Agents. They do not traditionally sell directly to the public.

Travel Trade 101

Tour Operators - the term represents 3 different business models:

1. Tour Operators

2. Tour Wholesalers

3. Receptive Tour Operators

Travel Trade 101

Receptive Tour Operators (RTO) are ‘business to business’ U.S.-based Tour Operators who

contract products and services with U.S./Arizona Suppliers. They resell these services to an International Tour Operator, who then resells these services to the Consumer, sometimes via a Travel Agent. Traditionally, they package individual services into multi-day packages for individuals and groups but they also sell stand-alone products and services.

A RTO is one of the strongest marketing partners a Supplier can have!

Travel Trade 101

Travel Agents – sell or arrange trips or tours for consumers. They book services directly with suppliers and with tour operators and receive a commission for the booking.

Travel Trade 101

Travel Agents Airlines - access by air is a key component in the

success of the Travel Trade for a particular market

Travel Trade 101

Travel Agents Airlines Media - articles in newspapers, magazines and online

are a reliable means of generating interest in a market

Travel Trade 101

Specialized Travel Companies On-Line Travel Companies (OTAs) sell

individual travel services or complete packages on their website. They generally contract products and services directly from the Supplier or Tour Operator. Will generally receive payment in the form of a commission from the supplier.

Travel Trade 101

Specialized Travel Companies On-Line Travel Companies Destination Management Companies

(DMCs) – are companies that arrange ground services and events for business groups and conferences. They generally only service the region in which they are located.

Travel Trade 101

Specialized Travel Companies On-Line Travel Companies Destination Management Companies General Sales Agent (GSA) – is an appointed

sales representative of a company or tourism organization, usually located in an international market.

Travel Trade 101

Specialized Travel Companies On-Line Travel Companies Destination Management Companies General Sales Agent (GSA) Consolidators – are companies that buy large

volumes of travel services (usually airline tickets) in order to secure a preferred rate and override commissions.

Consumer

Tour Operator Tour Wholesaler

or Travel Agent

Receptive Tour Operator

Supplier(Hotels, Attractions, Transportation, Activities)

10%Commission

10%Commission

20%Net

20% Net

30% Net

Travel Trade 101

Commissions – a percentage of the booking paid by the supplier (usually to Travel Agents)

Net Rates – an established rate for individual or packaged products and services made available to Tour Operators, typically 15% to 35% less than retail or rack

Travel Trade 101

Net Rates – develop at a variety of price points to meet the needs of TO’s versus RTO’s

Travel Trade 101

Net Rates Develop a Marketing Plan – identify and

communicate with appropriate members of the travel trade (those that compliment your product). Trade shows such as NTA, Go West Summit, International Pow Wow are excellent for establishing a presence in the international marketplace.

Travel Trade 101

Work with AOT and your local DMO. AOT and most DMOs attend a variety of domestic

and international trade shows. AOT and DMOs communicate with the travel trade

throughout the year – your new product/service is NEWS! Tell us about it.

Receptive Tour Operators

How receptive operators can make your life easier…

Receptive Tour Operators

Sales Chain: Supplier Receptive Operator / Wholesaler Overseas Wholesaler Overseas Retail Outlet / Travel Agent Consumer

Receptive Tour Operators

What is an RTO ? There are a wide range of sizes and types of

Receptive Tour Operators but the common feature to all is that they buy U.S. Tourism products. Products are presented in confidential tariff’s or through customized quotes.

Receptive Tour Operators

The Overseas Wholesaler These are tour operators outside of the U.S. which

may buy a U.S. land package from an RTO and add on the air transportation. They produce glossy brochures which are distributed to the travel agents and into the hands of the consumer.

Receptive Tour Operators

The Travel Agent (overseas) This is where the tour product reaches the consumer.

The travel agent will discuss which of the multitude of different products will best suit their desires.

Types of Receptive Operators

Geographic Market. The demands of the overseas markets vary considerably which requires specialized knowledge from the RTO.

Destination Area. Some RTO’s specialize in one state or region, ie; the Southwest USA and at the opposite end of the spectrum they represent the entire country.

Product Type. One of the main differences here is whether the RTO is selling to Groups or FIT (Individual Travelers)

Size. Smaller companies are usually more specialized by market, destination or product types. Usually the larger the operation the greater number of markets they reach and the wider the product range.

Receptive Operator Organization

Product / Contracting Sales and Marketing Operations

Advantage of RTOs to Intl. Operators

One Stop Shopping Cost Savings Reliable U.S. Partner Protection of Interests – Tourism Laws Marketing of New Products Destination Education Adaptable Tour Products

Advantage of RTOs to Suppliers

Exposure to International Marketplace Less Volume Fluctuations Efficiency Customer Service Packaging of Your Product Accounts Receivable

Why Work Direct?

Control Over Client Relationship

Promotion of Your Product

Higher Price

Some Things To Remember

You Can Work with Both!

Loyalty, Trust, Respect

Pricing Structure is Important

Commission Structure

U.S. Receptive Operator = 20% to 30%

Overseas Tour Wholesaler = 15% to 20%

Travel Agents = 10%

Consumer Price Should Match Retail

Why 25% to 30% off Retail?

Marketing Costs Communication Costs Questions / Complaints Payment Issues Expertise and Experience Packaging with Other Products

Sales Cycle

RTO Produces a Tariff Meet with the Overseas Tour Operators Finalize Product for Their Brochure Overseas TO Produces a Brochure Distribute Brochure to TA’s Traveler Buys a Vacation Package

Lead Times

International Markets Require Advance Pricing

RTO’s Tariff Production

Products and Prices Require 12-18 Months in Advance

Making Your Product Export Ready

Description Pricing – 12 Months in Advance Terms and Conditions Consistent Rates Consistent Product Key Contact Images (High Resolution for Brochures)

Other Issues

Consumer Protection Laws Inventory (Hotel Block Allocations)

Liability Assumption of Risk Safety Languages

Marketing Your Product

Research the RTO’s Book a Sales Call Follow Up Make Presentations to RTO Staff Offer Familiarization Tours to RTO Staff & the

Overseas TA’s via RTO Requests

Which Type of RTO is Best Suited for Your Business?Supplier Type: Hotels Lodge / B&B Restaurants Boat Charters Coach Attractions Adventure product Limo’s Regional TO

RTO’s Focus: All FIT & Small Groups Groups & Incentive Groups & Incentive Groups & Incentive All All FIT Only All

Other Resources

Your Local DMO (CVB or Tourism Office)

Arizona Office of Tourism

Mary Rittman, Dir. Trade & Media Relations

Jennifer Sutcliffe, Travel Industry Marketing

Kristin Swanson, TIM Specialist

USTA

DMAI

My Contact Information

Don Prince, Director

Prescott Office of Tourism

[email protected]

928-777-1221

visit-prescott.com

prescott-az.gov