Http:// Copyright 2006 – Biz/ed The Retail Travel Environment BTEC National Travel and Tourism.

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Copyright 2006 – Biz/ed

The Retail Travel Environment

BTEC National Travel and Tourism



IntroductionThis session covers the startof a new Unit of Study:

Unit 7: Retail Travel Operations

There are links and overlaps with earlier Units of Study, especially Units 1, 2, 3 and 5.




• A good starting point is ABTA (Association of British Travel Agents).

• ABTA members account for more than 80% of all holidays and travel tickets sold in the UK.

• ABTA’s data shows their members employ in excess of 120,000 people in the UK.




• The three largest firms employ more than 27,000 individuals.

• In the past 20 years, ABTA membership has fallen.

• There are now fewer small independent travel agents.

• The big firms have grown larger, ‘swallowing up’ many of the smaller agencies.



Recent Industry Data

• As of February 2005, there were 1,787 ABTA members in total.

• Many members have more than one outlet (or office).

• In total, ABTA members have over 6,700 offices.



Recent Industry Data

• More than 5,700 of these are travel agencies, over 450 are tour operators and almost 550 are dual members (acting as travel agents and tour operators).

• Source: ABTA Statistical Trends accessed from http://www.abtamembers.org/research/abtastatstrends2005.pdf.



Types of Travel Retailer

There are three types of travel agent:

• multiples • miniples • and independents



Multiples

• Multiple travel agencies have offices throughout the UK.

• These national, sometimes international travel agency groups include firms such as* TUI * First Choice * MyTravel * Thomas Cook



Multiples

• Multiples dominate the industry, in terms of proportion of total turnover.

• They are usually dual ABTA members.

• They sell a wide range of holidays and other services such as flight tickets, car hire and hotel rooms.



Multiples

• Sometimes the multiples actually own the firms which offer these different services.

• When this happens, it is called ‘integration’.

• We will cover this concept in depth later.



Miniples

• Miniple travel agencies are usually based in regions of the UK.

• Their strengths are local knowledge of their markets and trusted local branding.

• Miniples often offer a simpler range of travel and tourism services than multiples.



Independents

• Independent travel agencies are usually single travel agencies.

• They often offer a small range of services, which may be highly specialised.

• There is a trend for independents to become part of a consortium.



Consortia

• ‘Consortia’ is the name for more than one consortium.

• A consortium can negotiate better prices from tour operators.

• It may also be able to share marketing costs.

• This helps independents compete with the multiples.



Consortia

• Worldchoice is an example of a travel agency consortium.

• In this case, each consortium member is independently owned.

• In 2006, it was estimated that there were 700 independent agents in the Worldchoice consortium.



Consortia

• In 2006, Worldchoice and two other groups, Global Travel and Advantage formed another consortium, called Triton Travel.

• This is the largest travel agency in the UK, with an estimated 15% share of the UK travel agency market.



Integration in the Retail Travel Industry

• One of the main trends in the industry is the move towards greater integration.

• This is where firms join together, through takeovers and mergers, to form bigger operations.

• Larger firms can achieve economies of scale.



Economies of Scale

• These happen where a firm cuts its unit costs by doing things on a larger scale.

• Larger firms sell more; their costs per unit are lower.

• It’s often in a firm’s interests to increase the scale of its operations



Vertical Integration

• Integration can be either vertical or horizontal.

• Vertical integration is where firms integrate at different levels of the distribution chain.

• If a tour operator buys a travel agency, this is known as forward vertical integration



Vertical Integration

• In the above case, the tour operator spreads its business towards the customer, down the distribution chain.

• Where a tour operator buys an airline, this is known as backward vertical integration – The tour operator buys its own

supplier, up the distribution chain.



Horizontal Integration

• Where two travel firms which offer competing services join together, this is known as horizontal integration.

• The aim is still to make economies of scale.

• Advantage Travel is a form of horizontal integration.



Future Trends

Current conditions in the retail travel industry may persist or change. Some of these trends can be summarised as follows:

• Travel agency business becoming dominated by the multiples.

• Greater concentration of retail outlets in the hands of consortia.



Future Trends

• New services offered to counter the threat posed by the Internet

• Increased focus on business travel services



What Next?

Now go to the Activity to take your understanding of the retail travel environment further.

Http:// Copyright 2006 – Biz/ed The Retail Travel Environment BTEC National Travel and Tourism.

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Transcript of Http:// Copyright 2006 – Biz/ed The Retail Travel Environment BTEC National Travel and Tourism.