1. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

2. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

3. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

4. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

5. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

6. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

7. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

8. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

9. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

10. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

11. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

12. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

13. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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-$5------ Through traditional travel agent --$18-$22---$4-$5$0.30$22- $27 Toll-free call directly to hotel $3-$5------- 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

14. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

15. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

16. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

17. © 2007 Pearson Education, Upper Saddle River, NJ 07458. 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

18. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition