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The Distribution Process:
Bringing Travelers and
Tourism Service
Providers Together
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Introduction
Travel necessitates a variety of services.
Goal of service suppliers is reaching, serving, and satisfying
travelers.
Serving Traveler Needs
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Operating Sectors of the Tourism Industry
Travel Trade
Sector Accommodation
SectorEvents
Sector
Tran
spor
tatio
nSe
ctorA
dventure & O
utdoor
Recreation Sector Food ServicesSector
Attr
actio
ns S
ecto
r
Entertainment
Sector
Tourism
Services
Graphics/Components(B&W2003)
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Distribution Channel
An operating structure, system, or linkage of various combinations of organisations through which a producer of travel products describes, sells, or confirms travel arrangements to the buyer
Products get to consumer through a distribution channel: Belikin Beer?
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Tourism Services
Services are actions; goods are material objects
Services are often accompanied by facilitating goods which support the service
In tourism there is no physical good that can be held in inventory and can be transferred from one middleman to the next
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Serving Traveler’s Needs
Thomas Cook is credited with being the first tourism intermediary, packaging tourism services and then selling the packages to tourists
To attract business, tourism suppliers must provide prospective customers with information on which they will base tourism choice decisions
There are many alternative ways to provide information and services to prospective guests
Three types of distribution channels can be used
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Why Use Intermediaries?
Intermediaries make information and services widely available cost-effectively
They perform a variety of value-added functions
e.g, types of services, potential customers, packages
Intermediaries are frequently paid on commission
May also charge the customer a modest fee
Exist where they perform a necessary role more cost-effectively than the supplier could perform the same role
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Distribution Channels
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One-Level (Direct) Distribution
ChannelsSimplest form of distribution, no intermediary between supplier and customer
Most tourism suppliers utilize one-level distribution channels
Purchase directly from the supplier
World Wide Web is increasing the direct availability of information and purchase
Airlines encouraging the use of the Web and ticketless travel
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Advantages
Simplicity
Additional Sales Opportunity
Flexibility
Greater Profitability to Suppliers
Personal Control over the Sale
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Two-Level Distribution Channels
Intermediary between tourism supplier and touristMost common form of tourism supplierTravel agencies are the department stores of the travel industryImproving service delivery through cooperative systems
Global distribution system (GDS)Computer reservation system (CRS)
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Improving service delivery through cooperative systems
Agencies big and small use global distribution systems (GDSs)
Via GDSs agents have on-line information about schedules, availability, and
fares, and allow booking of some reservations and printing tickets
Two airline GDSs; Sabre and TravelPort
These GDSs are also used as databases/reservation systems for many other
tourism services such as hotels and rental cars
Two important cooperative systems for airline ticketing
Airlines Reporting Corporation (ARC)
International Airline Travel Agency Network (IATAN)
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Advantages
Professional Assistance
Multiple Options
Free or Low-Cost Assistance
Cumulative Group Power
Single-Charge Billing
Cost Less???
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Three-Level Distribution
ChannelsAdd another level of intermediary such as tour operators to low-level channel
Some travel agencies have entered tour packaging business
Tours
A package of two or more tourism services priced together
Four primary forms of tours
Independent
Foreign/domestic independent
Hosted
Escorted
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Three-Level Distribution
Channels, continued
Tour Operators
Purchase tourism services in bulk and then mark up the price and resell in packaged form
Plan, prepare, market and often operate vacation tours
Also termed tour packager or tour wholesaler
Many financial risks in the tour packaging business
Receptive service operator is local company that handles group’s needs while in its location
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Three-Level Distribution
Channels, continuedConsolidators and Travel Clubs
Consolidators buy excess airline capacity and resell at discounted prices
Travel clubs perform similar function for their members plus offer discounts on other tourism services
Meeting PlannersProfessionals employed by corporations, associations, etc. to organize all the details entailed in meetings
Meeting planner must balance meeting costs with meeting attendee desires
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Tourism Distribution Channels
Suppliers
Transportation Providers Accommodations Food Service Resorts
Recreation, Entertainment, Etc.
Customers
Individuals Pleasure Groups Business Groups, Etc.
Tour
Wholesaler
Specialty
Channeler
Retail Travel
Agent
Specialty
ChannelerSpecialty
Channeler
Specialty
Channeler
Tour
Wholesaler
Tour
Wholesaler
Tour
Wholesaler
Retail Travel
Agent
Retail Travel
Agent
Retail Travel
Agent
Direct
Channel
via
Internet
Telephone
Suppliers
Office
Host Retail
Travel Agent
Home-based
Travel Agent
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Flow of Payments, Information, and Service
Delivery
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Tapping the Power of Dual
DistributionInternet increasing the use of the direct channel
Direct channel using mall locations
Indirect channel using traditional travel agents
Indirect channel using Internet-based cruise-only agents
Indirect channel using last-minute fire sale agencies
to fill cabins close to sailing dates
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Tourism Information Sources and
ServicesTourism offices provide general information
Often operate tourist information centers
Large cities have conventions and visitors bureaus; small cities use chamber of commerce- both funded by local tourism service suppliers
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Selling Adds a Personal Touch
Most tourism suppliers have their own sales force
Often conduct missionary sales activities to supply information and brochures to aid in sales efforts
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Seven Steps to “Making the Sale” at
BETEXAcquiring product knowledge
Approach
Qualifying the customer
Making sales presentation
Closing the sale
Follow-up
Build relationships