Slide 12.1 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Travel Intermediaries - Middlemen Chapter 12 Travel Intermediaries - Middlemen

Slide 12.2 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors This Lecture will give you 1.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; Travel agencies, Tour OperatorsTravel agencies, Tour Operators Travel clubs,Travel clubs, Hotel marketing and booking schemes, incentive travel organizations,Hotel marketing and booking schemes, incentive travel organizations, Sales representatives,Sales representatives, Computerised reservation system (CRS), global distribution system (GDS) etc.Computerised reservation system (CRS), 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 current & potential customersContact current & 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 costReduce 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 Intermediation BenefitsBenefits –Producers are able to sell in bulk and so transfer risk to intermediaries can reduce promotion –Producers can 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 Intermediation - Benefits search and transactions costs –Consumers can avoid search and transactions costs specialist knowledge of intermediaries, –Consumers can benefit from the specialist knowledge of intermediaries, their market power and the resulting lower cost of products marketing, and international marketing, network of many intermediaries –Destinations can benefit from the marketing, and international marketing, network of many intermediaries

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors The Nature of Intermediation DisadvantagesDisadvantages marketing –Use of intermediaries by producers will result in the loss of margins and their degree of marketing control and influence over the process of distribution

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Travel Agencies personTravel agent = person companyTravel agency = company They provide important info & sales links tourismsuppliersLinks between: tourists & tourism suppliers Using Travel Agents, one of most common (popular) ways to buy tourism products\services Travelocity, Tripadviser, Expedia, & OrbitzMany tourists now use Internet travel agencies: Travelocity, Tripadviser, Expedia, & Orbitz

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Travel Agencies Via websites & s Travel Agencies compete with each other regardless of their physical location no inventoryThey do not own products they sell, so they have little or no inventory or cost of goods sold

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Travel 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 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 inuencing agents destinations recommendations

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors The 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 commissionsIncome is predominantly earned via commissions Retail location and choice of reservation systems are key decisionsRetail location and choice of reservation systems are key decisions

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Receptive 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 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Consolidators & Travel Clubs They are the combinations of wholesalers & retailers a unique functionThey perform a unique function within tourism distribution channels Consolidators or directly to travelersConsolidators buy excess inventory of air tickets, then resell them at reduced prices via TA or directly to travelers

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Tourist 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

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Tourist 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 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors 12.1 Table 12.1 Some developments and trends in the marketplace affecting travel agencies

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Table 12.5 Major global travel conglomerates

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Online Travel Drivers of growthDrivers of growth –Growth of Internet usage and electronic commerce (GDSs) –Success of global distribution systems (GDSs) SabreSabre WorldspanWorldspan GalileoGalileo AmadeusAmadeus no frills –Phenomenon of no frills (low cost) airlines traditional –Role of commissions in traditional channels of distribution

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Global 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 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 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Internet vs. Travel Agents Internet 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 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Tour Operators planning, arranging, marketing, & operatingTO are the business organizations engaged in planning, arranging, marketing, & operating vacation packages all sectorsTO work with all sectors of tourism industry They perform many functions: –Planning, Sales and reservations, Representatives /guides They organize and put together package trips and holidays.

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Tour Operators Reasons to Buy Tour Package Reasons to Buy Tour Package 1. Convenience 2. One-stop shopping 3. Cost savings 4. Special treatment 5. Worry-free

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Tour Operators Tour Operators Risks Tour 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 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors The Role of the Tour Operator / Wholesaler Principal stages of the tour operating process Research – Research – Capacity planning – Financial evaluation – Marketing – Administration – Tour management

Slide 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 tour Source: Trade information

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Conclusion consolidation, integrationIncreasing consolidation, integration and concentration virtualPressure from virtual players of booking behaviourChanging patterns of booking behaviour cost structures and commission ratesPressure on cost structures and commission rates New market entrantsNew market entrants Branding

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Related Web Sites

Slide Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors End of Chapter Slid es