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Transcript of Slide 12.1 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, ©...
Slide 12.1
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Chapter 12
Travel ITravel Intermediariesntermediaries - - MiddlemenMiddlemen
Slide 12.2
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
This Lecture will give you1. Familiarity with the nature and structures of
intermediation and the arguments for and against dis-intermediation of distribution channels in tourism;
2. An awareness of ‘online’ developments and the increasing consolidation and concentration of tourism intermediaries;
3. Familiarity with the operating characteristics, roles and functions of retail travel agents and tour operators;
4. An understanding of the process of distribution; and
5. An awareness of the financial constraints on the operation of intermediaries.
Slide 12.3
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Middlemen Middlemen are intermediaries between consumers and suppliers.
Customer (tourist) – middlemen – supplier
Using middlemen has many advantages for both customers & suppliers
Tourism industry has been traditionally characterised by its use of intermediaries.
Intermediaries
Slide 12.4
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Figure 12.1 Structure of distribution channels
Slide 12.5
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Various middlemen that are included in the travel and tourism industry are;
• TTravel agencies,ravel agencies, Tour Operators Tour Operators• TTravel clubs, ravel clubs, • HHotel marketing and booking schemes, otel marketing and booking schemes,
incentive travel organizations, incentive travel organizations, • SSales representatives, ales representatives, • CComputerised reservation system (CRS), omputerised reservation system (CRS),
global distribution system (GDS) etc.global distribution system (GDS) etc.
Intermediaries
Slide 12.6
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Functions of Intermediaries
• Provide info about tourism products • Contact current & potential customerscurrent & potential customers • Make reservations & other arrangements • Assemble services to meet customer
needs • Prepare tours & make confirmations
Slide 12.7
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Functions of Intermediaries
• Provide databases on customer behavior • Reduce cost Reduce cost of acquiring new customers • Market excess or distressed inventories • Take risks by buying (or reserving)
products & then reselling them to individuals or groups
Slide 12.8
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Nature of IntermediationThe Nature of Intermediation
• BenefitsBenefits– Producers are able to sell in bulk and so
transfer risk to intermediaries– Producers can reduce promotioncan reduce promotion costs by
focusing on the travel trade, rather than consumer promotion, which is more expensive
Slide 12.9
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Nature of IntermediationThe Nature of Intermediation - - BenefitsBenefits
– Consumers can avoid search and search and transactions coststransactions costs
– Consumers can benefit from the sspecialist pecialist knowledge of intermediaries,knowledge of intermediaries, their market power and the resulting lower cost of products
– Destinations can benefit from the marketing, and international marketing, marketing, and international marketing, network of many intermediariesnetwork of many intermediaries
Slide 12.10
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Nature of IntermediationThe Nature of Intermediation
• DisadvantagesDisadvantages
–Use of intermediaries by producers will result in the loss of margins and their degree of marketingmarketing control and influence over the process of distribution
Slide 12.11
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Travel AgenciesTravel Agencies
• Travel agent = person person • Travel agency = companycompany • They provide important info & sales links • Links between: tourists & tourismtourism supplierssuppliers • Using Travel Agents, one of most common (popular)
ways to buy tourism products\services • Many tourists now use Internet travel agencies:
Travelocity, Travelocity, Tripadviser, Tripadviser, Expedia, & Orbitz Expedia, & Orbitz
Slide 12.12
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Travel AgenciesTravel Agencies
• Via websites & e-mails Travel Agencies compete with each other regardless of their physical location
• They do not own products they sell, so they have little or no inventory no inventory or cost of goods sold
Slide 12.13
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Travel AgenciesTravel Agencies
• As commissions dwindle(fall), markups (profits) increase
• Large volume agencies often earn override commissions (above the normal percentage)
• They are destinations experts and make beneficial recommendations
Slide 12.14
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Figure 12.4 Conceptual model of the process and factors influencing agents’ destinations recommendations
Slide 12.15
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Role of the Retail AgentThe Role of the Retail Agent
• Travel counsellorTravel counsellor
• Principal role is to supply the public with travel products and services (such as insurance and foreign exchange)
• Income is predominantly earned via Income is predominantly earned via commissionscommissions
• Retail location and choice of reservation Retail location and choice of reservation systems are key decisionssystems are key decisions
Slide 12.16
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Receptive Service OperatorsReceptive Service Operators
• RSO are part of tourism distribution channel • A receptive tour operator is a ground handler
& inbound operator at the same time • RSO is a local company that specializes in
handling needs of groups traveling to it destination
Slide 12.17
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Consolidators & Travel ClubsConsolidators & Travel Clubs
• They are the combinations of wholesalers & retailers
• They perform a unique function a unique function within tourism distribution channels
• ConsolidatorsConsolidators buy excess inventory of air tickets, then resell them at reduced prices via TA or directly to travelers or directly to travelers
Slide 12.18
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tourist Information SourcesTourist Information Sources
• Travelers need info before, during, & after a trip about tourism product benefits, prices, & availability
• Marketing communications provides this via: – Advertising, public relations, & personal selling Advertising, public relations, & personal selling
Slide 12.19
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tourist Information SourcesTourist Information Sources
• Information is available from national tourist offices (NTOs), convention & visitor bureaus (CVBs), and chambers of commerce
• These sources have tool-free phone numbers, websites, & welcome centers.
Slide 12.20
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.112.1 Some developments and trends in the marketplace affecting travel agencies
Slide 12.21
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Slide 12.22
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Slide 12.23
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Slide 12.24
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Slide 12.25
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authorsTable 12.5 Major global travel conglomerates
Slide 12.26
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Online TravelOnline Travel• Drivers of growthDrivers of growth
– Growth of Internet usage and electronic commerce– Success of global distribution systems (GDSs)(GDSs)
• SabreSabre• WorldspanWorldspan• GalileoGalileo• AmadeusAmadeus
– Phenomenon of ‘no frillsno frills’ (low cost) airlines– Role of commissions in ‘traditionaltraditional’ channels of
distribution
Slide 12.27
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Global Distribution SystemsGlobal Distribution Systems• Majority of Travel Agency business is done via
GDS
• GDS provide extensive data on suppliers:
• Schedules
• Rates & fares
• Space availability
• GDS can also: – Make reservations – Print itineraries, tickets, & invoices
Slide 12.28
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Computer Reservation Systems
• Travel Agencies are linked on-line via one or more computer reservation systems (CRS) built & operated by airlines (Apollo and Amadeus in TR)
• CRS make airline reservations,& serve as databases for tourism suppliers
Slide 12.29
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Internet vs. Travel AgentsInternet vs. Travel Agents
• Consumers have choice in buying travel products
• Increases scope & reach of options • Open 24/7 • But requires more work & knowledge by
consumers • TravelAgencies have expertise & human touch • Can save clients time, money, & energy • Can manage entire trip & its details
Slide 12.30
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tour OperatorsTour Operators
• TO are the business organizations engaged in planning, arranging, marketing, & operating planning, arranging, marketing, & operating vacation packages
• TO work with all sectors all sectors of tourism industry • They perform many functions:
– Planning , Sales and reservations , Representatives Planning , Sales and reservations , Representatives /guides /guides
• They organize and put together package trips and holidays.
Slide 12.31
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tour OperatorsTour Operators
Reasons to Buy Tour PackageReasons to Buy Tour Package
1. Convenience2. One-stop shopping3. Cost savings4. Special treatment5. Worry-free
Slide 12.32
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tour OperatorsTour Operators
Tour Operators RisksTour Operators Risks
• TO are unregulated • Very susceptible to perishability • Must commit to place, products, & prices in
advance • Currency fluctuations • Possible natural disasters• Changing consumer tastes• Security & Safety Concerns
Slide 12.33
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Role of theThe Role of theTour Operator / WholesalerTour Operator / Wholesaler
• Principal stages of the tour operating process
– ResearchResearch– Capacity planningCapacity planning– Financial evaluationFinancial evaluation– MarketingMarketing– AdministrationAdministration– Tour managementTour management
Slide 12.34
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.8 Price structure of a 14-night inclusive tourSource: Trade information
Slide 12.35
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
ConclusionConclusion
• Increasing consolidation, integration consolidation, integration and concentration
• Pressure from ‘virtualvirtual’ players
• Changing patterns of booking behaviourof booking behaviour
• Pressure on cost structures and commission cost structures and commission ratesrates
• New market entrantsNew market entrants
• Branding
Slide 12.36
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Related Web Sites
• http://www.abta.com
• http://www.travelmole.com
• http://www.tuigroup.com
• http://www.tursab.org.tr
Slide 12.37
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
End of Chapter SlidEnd of Chapter Slideses