1. Tourism Marketing for small businesses
Chapter 13 Tourism Distribution

2. Chapter learning aims To enhance your understanding of:
tourism distribution opportunities and challenges
commission as a cost of getting a sale through an intermediary
the range of travel trade intermediaries

3. Key terms Tourism distribution (place)
The point of sale (place is the 4th P in the traditional marketing mix) for intangible tourism services, as well as a cost of getting a sale through travel intermediaries.
Travel trade intermediaries
Agents in the distribution chain, in between a business and their target consumers, such as concierge services, visitor information centres, retail and online travel agents, airlines, inbound tour operators, and overseas wholesalers.
Commission
The cost of getting a sale through an intermediary, on behalf of the business, typically as a percentage of the advertised retail selling price. Commission levels vary between different types of intermediaries, and can include an override payment to secure preferred supplier status for the tourism business.

4. Tourism distribution
For intangible services, distribution represents the point of sale, as well as a cost of getting a sale through travel trade intermediaries.
Business pays a commission to an intermediary who supplies a customer
Commissions impact on pricing, competitiveness and profits.
Intermediaries provide access to consumers, often in markets the business would not be able to reach.
As many intermediaries have a powerful influence in travellers’ itineraries, distribution is an important aspect of tourism marketing planning.

5. Commission A cost of getting a sale
Akin to tax…high commission costs are because of high sales levels
Only paid when a sale is made
Commission levels vary between different types of intermediaries
Typically 10% +
Be aware of kickbacks
Unethical cash-under-the-table deals where ultimately the traveller is disadvantaged

6. Preferred supplier agreements
A tiered system of preferred service suppliers
A preferred supplier is recommended by an agent to their customers first
Eg a travel agent displays brochures of preferred suppliers only
In return, the service supplier pays a higher level of commission
Referred to as an override commission

7. The power of travel trade intermediaries
In some markets a small number of intermediaries have enormous influence over travellers’ decision making
Eg international outbound packages
Gaining access to these intermediaries is a key aim of many tourism service suppliers
Securing a contract with leading intermediaries can be a source of competitive advantage
At a cost, of course

8. Range of travel trade intermediaries
Visitor information centres (VIC)
Concierge services
DMOs as information brokers and Convention & Visitors Bureaus (CVB)
Retail travel agents
Corporate travel offices
Online travel agents (OTA)
Online daily deal sites
General sales agents (GSA)
Inbound tour operators (ITO or IBO)
Tour wholesalers
Professional conference organisers (PCO)
Incentive travel planners
Airlines

9. Visitor information network (VIN) offices
Local information offices
Funded by local government and/or industry
Rarely profitable due to level of information provision
Over reliant on commissions
Legislation in different countries prohibits selling other forms of travel other than local sights and domestic travel.
Many run by volunteers

10. Concierge services
Many hotels provide a concierge service to assist guests
Brochure rack opportunities
Spotter’s fee opportunities
Cruise ships travel desks
Only information carried is shore excursions with preferred suppliers

11. DMOs as information brokers
Most DMOs don’t sell wholesale packages or retail products
With the exception of Convention & Visitors Bureaus (CVB)
The DMO provides information to intermediaries on local tourism services, and updates the local industry on intermediaries needs
As well as opportunities to feature tourism services on the DMO website, many coordinate a digital database of local tourism information, enabling businesses to list their services.

12. Retail travel agents
Traditionally the most visible element in tourism distribution
In the digital age there is much discussion about the potential demise of travel agents through disintermediation
However, while online sources are accounting for increasing volumes of some tourism sales, the traditional retail agent does still has a role to play in major travel purchase decisions
where trust is a major factor in overcoming the risks inherent with intangible services
While official statistics in different countries show a decline in the number of registered travel agencies, the figures often don’t take into account the increasing number of independent home-based travel agents.

13. General Sales agents (GSA)
Either based domestically or overseas
Represents a group of independent service suppliers
Sometimes provide a booking service for travel agents
Sales calls to domestic/international agents and wholesalers
Representation at travel trade events
Organisation of familiarisation visits
Providing market updates to clients

14. Tour wholesalers Outbound tour wholesalers based overseas
Promoting their range of products to a network of travel agents
Traditional link between domestic Inbound Tour Operators and overseas travel agents
Some own their own retail travel agency chain
Some deal with trade and public Eg
Most deal only with trade Eg

15. Inbound tour operators (ITO)
Specialists in international inbound tourism
Promote and sell travel packages to offshore buyers such as wholesalers, travel agents, meeting planners and event managers
Key element in international distribution network
Key to tourism success for many businesses
Eg Case 13.1 – It’s just a sheep show isn’t’ it?

16. Advantages in working with ITOs
For local suppliers
For overseas wholesalers
Market knowledge
Market access
Forward bookings an regular contract business
Payment in local currency
Local knowledge
Access to a wide range of quality products
Better $$$ rates
Reduces time/effort in dealing with multiple suppliers
Local contact for tour problems

17. Professional Conference organisers (PCO)
All conferences need to be organised!
Eg Industry associations
Eg Franchise networks
Eg Academic conferences
PCOs contracted by organisations and associations to take care of arrangements Eg
Registration process
Venue hire
Special equipment
Functions
Key note speakers
Pre and post conference tours
Lucrative commissions

18. Incentive travel planners
Society of Incentive Travel Executives (SITE)
Work performance-based travel rewards Eg
Travel is a popular reward
Short, mono destination, itineraries
The best of service
Exclusive tailor-made experiences
Sometimes including a corporate meeting
Sometimes including team building retreats

19. Promoting to the travel trade
Sales calls
Brochure distribution eg visitor information office, hotel concierge
Familiarisations/educationals
Travel trade events
Travel expos
Travel exchanges
Horizontal integration
Collectives of independent service suppliers

20. Discussion questions
Why is paying commission to an intermediary a positive outcome?
Describe what is meant by the role of the local DMO being an information broker.
How could a small group of local tourism businesses work together to improve their access to travel trade intermediaries?