MARKETING THE INDUSTRY SEGMENTS 4.07 Explain travel agencies.

Travel agent: A wholesaler who is authorized to represent buyers and sellers of the travel industry for a commission Travel agency: A business that employs travel agents who make travel arrangements for clients for a commission or service charge

Travel Agencies American Express AAA of the Carolinas Mann Travel & Cruise Thomas Cook

American Express Independently owned and operated travel agencies licensed to provide travel and travel-related products and services American Express TravelFunds Card  New, safe way to carry money  Not linked to your bank account  Prepaid, reloadable card  Balance refunded on lost or stolen cards

American Express (cont.) American Express Travelers Cheques  Available from banks  Can be ordered online up to $1,000 in combined Travelers Cheques and foreign currency  Customer service support available 24/7  Value refunded on lost or stolen cheques  Accepted practically everywhere

AAA of the Carolinas (American Automobile Association) 25 offices in the Carolinas Member benefits  Travel assistance with destinations and reservations  Road service  Insurance  Assistance with automotive purchase, maintenance, and repair

Mann Travel & Cruise Founded in 1975 Largest locally-owned travel agency in the Carolinas Thomas Cook 3,600 travel agencies Services supported by 28,000 employees across 5 continents Third largest travel group in the world

Historical events in the travel industry Thomas Cook started the concept of the travel agent in England in Ward Foster introduced travel agencies to the US in Airline Deregulation Act was passed in 1978 and had impact on travel agencies.  Commission cap was established reducing the travel agent’s profit.  Travel agents had to diversify and began offering tourism services that were not dependent on airline reservations.  Agents began to charge for their services.

Types of travel agencies Independent agencies: Small, unaffiliated agencies that serve clients from a walk-in office location or over the telephone Agency chains: Semi-independent agencies affiliated with one another through franchise agreements Consortium-affiliated agencies: Independent agencies linked to gain the resources and financial benefits of a chain but with lower fees and commissions. Examples: World Travel Affiliates and Hickory Travel Systems Commercial or corporate travel agencies: Agencies that provide services to business clients for a commission on reservations made or for a management fee

Types of travel agencies (cont.) Home-based agencies: Agents who conduct business from their homes using electronic technology rather than from the traditional office Internet agencies: Agencies that may or may not be home-based and that serve clients primarily through the use of the Internet

Internet travel intermediaries: Internet agencies that act as a mediator between the travel industry businesses and customers at a lower price per transaction than either the business or a traditional travel agency may be able to provide Priceline.com Travelocity.com Expedia.com Orbitz.com

Pioneer Internet intermediary of the hospitality industry, organized as Priceline Hotel Service in 1998 and allows customers to negotiate prices Customers enter data stating destination, minimum quality star rating, and price they would like to pay. Priceline only considers hotels at or above the quality tier the customer has specified. Priceline negotiates to match the offer that best accommodates the client. Priceline receives a service charge.

A giant search engine that allows consumers to enter a request and receive comprehensive data about options available Offers multiple ways to search for economy class travel Does not act as a negotiator

World’s leading online travel service 4 th largest travel agency in the US Carries the Good Housekeeping Website Certification Seal Does not act as a negotiator

A travel website formed by five airlines sharing a mission to provide better online customer service The award-winning flight search engine makes finding the lowest fare easy Searches hundreds of airlines to find the best flights for the customer Offers the largest collection of discount web-only airfares from dozens of airlines Provides a comprehensive selection of hotel rates, including discounted Orbit Saver rates First travel site to monitor travel conditions for travelers Does not act as a negotiator

Advantages of using a travel agent The agent has knowledge of a geographically diverse marketplace. The agent saves the customer time by researching the product mix that best meets the customer’s request. The agent can recommend price considerations. The agent may use Global Distribution Systems (GDS) to make reservations. GDS is a worldwide inter-organization information system that maps destinations for travel associates’ use in selling tourism services.

Disadvantages of using a travel agent The customer may be asked to pay a service charge. The agent may not have current information and prices. The agent may not work in a timely manner.

Challenges facing travel agencies Agents are no longer just order-takers making reservations at the customer’s request. Agents have to market themselves and the agency. Agents now have Internet competition. Agents earn commissions on reservations they make. Travel agents spend much of their time researching travel products. Agents must be culturally diverse and able to relate to customers’ personalities.

Package tour: A prepaid travel arrangement that includes transportation, accommodations, and at least one other component such as meals, transfers, sightseeing, or car rental, and that is sold for a single all-inclusive price. Most tours are arranged using the services of a travel agent. Itinerary: The predetermined schedule and arrangements for a trip. Independent tour: The least structured tour package allowing purchasers to set their itineraries themselves. It is usually more costly for the customer and results in higher profits for the agent. Escorted tour: The most structured tour package with a predetermined itinerary and a guide or host.

Tour rates An all-expense tour offers transportation, lodging, meals, and sightseeing for a pre- established price. Group rates or bulk fares are available only to tour organizers or agents who request a specified block of rooms or seats.

Resources available to travel agents Trade publications: Print media associated with the travel industry. Examples: Today’s Traveler, Travel Weekly Trade associations: Professional organizations associated with the travel industry. Example: American Society of Travel Agents (ASTA) Tour associations: Professional organizations associated with travel agencies that specialize in tours. Example: National Tour Association

Marketing strategies for travel agents… Marketing is vital to the successful travel agent/agency. Between 5 and 10 percent of an agency’s total budget should be spent on promotion. Advertising is paid for by the agency. Agents must make a commitment to market themselves and the services they provide.

Advertising for Travel Agencies The objective of the agency must be determined before deciding how and where to advertise. The agency must consider the target market. The agency should consider the current client database. Broadcast media Print media Internet

Sales Promotion for Travel Agencies Contests Sweepstakes Incentive programs

Publicity/Public Relations for Travel Agencies Can be positive if initiated by the travel agent/agency or a satisfied customer May be negative if communicated by a dissatisfied customer Example: Travel column written by a travel agent