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    Intermediaries Intermediaries Presentation Transcript

    • TOURISM DISTRIBUTION CHANNEL The tourism channel of distribution is 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.
    • INTERMEDIARIES    Principal role is to bring buyers and sellers together The task of intermediaries is to transform goods and services to a form which the consumers would want to purchase Provides the consumers the opportunity of avoiding the effort and cost of undertaking the product
    • BENEFITS OF INTERMEDIATION CONSUMERS PRODUCERS  Able to sell products in bulk  Avoid search and transaction costs  Reduce promotional costs   Gain from knowledge of the specialists Gain from lower prices DESTINATIO N  Internationa l marketing networking
    • TOUR OPERATOR  Organize package tour together and offer them for sale to the public either through the medium of a brochure, leaflet or advertisement, or using ICT to display its offering.  Does bulk-buying  They offer package kown as “inclusive tour”.
    • INCLUSIVE TOUR Normally includes: Accommodation  Transportation  Tour guide services  Transfers  Insurance  Food and Beverage  Destination / Attraction 
    • The type of packages are often segmented according to:    Mode of Travel Mode of Accomodation International or Domestic Package  Length of Holiday   Distance Destination Type
    • The Business of Tour Operation     Tour operators allow different tourism sectors to sell their capacity in advance. Tour operators negotiate contracts. Tour operators traditionaly provides guaranteed level of sales which allowed principals to fix their costs in advance and give discounted rates. Tour operators add a mark-up in the product they are selling by calculating all the input costs, their overheads, profit margin and then producing a price.
    • TOUR OPERATOR Principal Stages of Tour Operating:  Planning, preparation and coordination  Research  Capacity Planning  Financial Evaluation  Marketing  Tour Management
    • STAGES OF TOUR OPERATING      RESEARCH – enable the operator to derive a market strategy CONTRACTS - allocation and guarantees HEDGING – covering risks by anticipating future changes (exchange rates) ACCOMPANIMENT – tour managers oversee arrangements CORRESPONDENCE – receive and answer consumer's inquiries, needs, wants and even complaints
    • FACTORS AFFECTING THE TOUR OPERATING SECTOR TOURIST AS CONSUMER  Increased use of technology and acceptance of e-products   GOVERNMENT AND REGULATION  More trend in niche-products More flexibility in time poor / income rich consumers  New types of consumers (ageing population)  Consumer nd public sector concerns for tourism and sustainability Constraints on infrastructure development and planning  Concerns over global terrorism
    • FACTORS AFFECTING THE TOUR OPERATING SECTOR BUSINESS ENVIRONMENT TECHNOLOGY and ICTs   Rise of e-travel, e-mediaties, low-cost solutions Competitive industry sector   Declining profits per unit sold  Pace of change and rapidity of innovation  Wider use of internet    Globalization Disintermediation Mergers, Acquisitions and integration New market opportunities
    • TRAVEL AGENTS AND RETAILING The travel agent's role in tourism is to recognize and highlight that tourism is:      INTANGIBLE - product is conveyed thru brochures or thru the internet PERISHABLE – sold for the period it is available DYNAMIC – forever in a state of flux ; prices can rise or fall HETEROGENOUS – not a standardized product INSEPARABLE – consumed as an over-all experience
    • THREE IMPORTANT IMPLICATIONS FOR THE BUSINESS OF TRAVEL DISTRIBUTION    The cost of setting up in business is relatively small compared to that of other retail business Agents are only able to sell products made available by the tour operators or principals, so, in times of peak demand, they may be competing with other agencies to find the products that the customers wish to purchase Agents are not seeking to dispose of products that they have already purchased
    • TRAVEL AGENTS: ROLE AND ACTIVITIES   Travel Agents receive commission for each sale, and as agents, do not become part of the contract of sale. Travel Agents have no stock, acting on behalf of the tour operators, and so they have little financial risk and do not purchase products themselves
    • TRAVEL AGENTS : TASKS        Making reservations Planning itineraries Calculating fares and charges Producing tickets Advising Clients Maintaining accurate records on reservations Act as intermediaries where customer complaints occur
    • BUSINESS TRAVEL AGENTS   Individual business travel (corporate travel), involving business trips related to employer needs Occasional work activities such as conferences, convention, events and incentive programs
    • THE ROLE OF THE “NEW” CONSUMER   NEW TOURISM is characterized by more experienced travelers who have growing environmental concern about the impact of their holiday on the place they visit. Consumers prefer products that are full of surprise, discovery and memorable experiences rather than simply a repetition of last year's beach holiday
    • TRENDS IN TOUR OPERATION       Future growth in internet-only low-cost air travel sales Online Travel Continued direct selling by tour operators Shifting consumer preferences New markets Integration, Consolidation and Concentration
    • INTEGRATION, CONSOLIDATION INTEGRATION  An economic concept describing formal linking arrangements between one organization and another 1. Vertical integration – tour operator and airline company 2. Horizontal integration – two tour operators or travel agencies  Consumers and shareholders: major beneficiaries of consolidation