© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Chapter Nineteen Channels of Distribution: Bringing the Customer to the Product

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution  Consortium –A group formed to accomplish objectives beyond the scope of any one of the individual members –Increase distribution channels by decreasing expenses  Incentive houses –Handle incentive reward travel  Is a specialized field for corporate travel  Larger need for the trip to be perfect  Examples: Carlson, Maritz

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution (cont.)  Travel agents –Intermediaries in travel, usually working on commission –Can also form consortia –The (changing) role of the travel agent  Routine/agent sells their time  Complex/agent sells their knowledge –How agencies book travel  Sophisticated travel agents

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution (cont.)  Travel agents –Working with travel agents  Need clear, current, concise information on products  Timely payment of commissions  Upgrading important clients  Complimentary stays/promotions to gain loyalty  Agents get information via familiarization trips, advertising

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution (cont.)  Central Reservations Systems (CRS) –Integrated with the Global Distribution System (GDS) and Property Management System (PMS)  Worldwide chains can provide consolidated access to consumers  CRS can outsource the calls; “private label” service  Seamless connectivity provides immediate information/two-way inventory management

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution (cont.)  Global Distribution Systems (GDS) –Connects the travel agent with the hotel –Started with airline flights, now hotels, rental cars, train tickets –CRS must link electronically with GDS to book directly

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution (cont.)  Tour operators and wholesalers –Tour operators take “nominal possession” of inventory in order to sell it –Wholesalers negotiate the best deals and re-sell it for a profit –Usually function through a travel agency –Advertise in print media

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Hospitality Channels of Distribution (cont.)  Internet channels –Book directly with the firm’s website or via online travel agency –Merchant model –Agency model –“Opaque” approach –Challenges:  Complete transparency in pricing  Control of Internet channels by business  Lack of two-way interfacing

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Customer books via: Toll- Free Call to Hotel Toll- Free Call to CRS Bricks and Mortar Travel Agent Online Travel Agent Branded Chain Website Hotel Property Website GDS Booking Fee Switch Fee Total Cost to Hotel Toll-free call to CRS -$3-$ Through traditional travel agent --$18-$22---$4-$5$0.30$22- $27 Toll-free call directly to hotel $3-$ Branded website----$5--- Online travel agency— merchant model ---$18- $22 ---$2$18- $24 Online travel agency— agency model ---$66-- Direct through hotel website -----$5 to $15--$5 to $15 Estimated Costs to Hotel to Book a Room

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Strategies for Distribution Channels  Push-and-pull strategies –“Pull” the product down the channel or the customer up –“Push” the agent to sell to the consumer  Promotional tie-ins –A “catch-all” for attempts by the industry to expand via intermediaries  Selecting the channel of distribution

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition International Markets  Heavy reliance on external distribution channels outside of native country rather than within  Some have toll-free numbers, others rely on other channels  International franchising increases the distribution network

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Channel Management  Control depends on the strength of the product  Relationships among channels –All agreements in writing and current –“Give and take” philosophy for long- term success

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Channel Management (cont.)  Evaluation of the channel –Critical for success –Management should review the statistics –Understand the “break-even” point –Good relationships ensure customer satisfaction –Needs  Motivation and recruitment

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition