2. Distribution Channels
• 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
3. The Travel Trade Industry
The Travel Trade
• Made up of travel agents, tour
operators, also referred to as
intermediaries or middlemen and the
tour guides.
• The sector that provides the travelling
public with advice on destinations to go
to and facilitates the reservation or
purchase of different travel services.
4. One-Level (Direct) Distribution Channels
• Simplest 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
5. Two-Level Distribution Channels
• Intermediary between tourism supplier and tourist
• Most common form of tourism supplier
• Travel agencies are the department stores of the travel
industry
• Improving service delivery through cooperative systems
– Global distribution system (GDS)
– Computer reservation system (CRS)
– Airlines Reporting Corporation (ARC)
6. Three-Level Distribution Channels
• Add 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
7. Three-Level Distribution Channels
• 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
8. Three-Level Distribution Channels
• Consolidators 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 Planners
– Professionals employed by corporations, associations, etc.
to organize all the details entailed in meetings
– Meeting planner must balance meeting costs with meeting
attendee desires
9. The Travel Trade Industry
Travel Agencies
• Can be compared to a department store selling travel
needs.
• A place or establishment where people can secure
information, expert counselling and make arrangements
for travel by air, sea or land to any point in the world.
10. What is a Travel Agency?
“A travel and tour agency is an entity engaged in
the business of extending to individuals or
groups, travel services and assistance to include
documentation, ticketing, booking for
transportation and/or accommodation;
arrangements, handling and/or conduct or tours
within or outside the Philippines whether or not
for a fee, commission or any form of monetary
consideration.”
- Article 243 of the Tourism Code of 1980
11. What is a Travel Agency?
Traditional view:
- A commercial enterprise where a
traveller can secure information and
expertise, get impartial counselling, and
make arrangements to travel by air, sea or
land to any point in the world
12. What is a Travel Agency
• Acts as an agent for
different suppliers or
providers of products
and services.
13. What is a Travel Agency
• A middleman between the vendor and the
vendee.
Vendor Middleman Vendee
(supplier) (Travel Agent) (travelling Public)
14. What is a Travel Agency
• In a traditional perspective, travel agencies earn by
commissions and through price- mark ups called “Net-
plus”
15. What is a Travel Agency
• With the advent of new technology, travel agencies
harnesses the links, expertise and professional service
orientation of the travel organization and turns it into a
vendor and principal selling travel services and solutions
• Also known as: the Travel Management Company
16. What is a Travel Agency
• The Travel Management Company (TMC)
acts as a partner to both the vendor and
the vendee.
• TMC’s are Proactive.
17. What is a Travel Agency
• A commercial enterprise where a traveller
may secure information, receive travel
advice and make arrangements to travel
by land, air or sea to any point in the world
for a professional fee.
• Travel Agencies now earn through a
professional fee called the “Cost plus”.
18. What is a Travel Agency
Vendee
(travelling
public)
Travel
Vendor
Management
(Supplier)
Company
19. Travel Agents v. The Internet
• With the advent of the internet, the consumer now has
more choices in terms of products.
• However given the expansion of products they can
get, the question here is how can they make the internet
work effectively for them?
20. Functions of a Travel Management
Company
• Provide Information and Expertise
• Recommend Destinations, products and services best suited to the
needs of the client
• Provide assistance in securing travel documents.
• Process Travel arrangements
• Assist in case of refunds and cancellations.
21. The Travel Management Company
Travel Management Companies earn through the following:
• Through a negotiated professional and handling fee
• Commissions or Mark-ups
• Service fees for ancillary services
• Production Incentives and rebates from suppliers.
22. Characteristics of a TMC
• Retailer
• Counsellor
• Derives income from a pre-determined
fixed commission dictated by suppliers or
a professional fee negotiated with client
• Charges fees for ancillary services.
23. Consolidators
• Travel Agencies that sell airline tickets at sizeable
discounts.
• Have contacts with one or more airlines to distribute
discount tickets. Airlines work with them to fill up what
would be empty seats.
• Can act strictly as wholesalers or can sell directly to the
public
24. Tour Operators
• Companies that contract and purchase separate travel
components and assembles them into one package.
• Provides the packages sold by travel agents.
• Their businesses is characterized by a relative ease of
entry, high velocity cash flow, low return on sales and
the potential for high return on equity.
25. Tour Operators
Types of Wholesale business:
– Independent tour wholesaler
– Airline working in close cooperation with a
tour wholesailing business
– Retail travel agent who packages tours for its
clients
– Operators of bus tours
26. The Tourism Industry
TRAVEL AGENTS TOUR OPERATOR
Retailers Wholesalers. Deals with travel
agents (retailers)
Acts as consultants or advisers to Acts as middlemen between the
the traveller. suppliers and the vendors.
Revenues are fixed and pre Have variable but limited revenues
determined by suppliers income and profit margins
Charges fees for documentation Sells optional products and
and ancillary services services and makes use of
deposits
Agents of the Suppliers Capitalize on Cost-savers
27. Specialty Channelers
• Includes organizations like:
– Incentive travel firms,
– Business meeting and convention planners,
– Corporate travel offices,
– Association executives,
– Hotel representatives,
– Travel consultants and;
– Supplier sales office.
28. Specialty Channelers
• Any intermediary between a provider of a travel product
and the ultimate consumer of that product used to refer
to companies that specialize in a particular type of
travel, for example meetings and incentive travel.
• Experts in their particular aspect of travel (niche)
