CHAPTER 4: TOURISM DISTRIBUTION

Chapter objectives:

1. Explain the importance of intermediaries in the distribution of tourism services.

2. Identify the types of tourism distribution channels.
3. Relate tourism distribution to marketing.

Lesson 1: Travel Intermediaries

- Travel (or Tourism) intermediaries are distribution agents that participate in the tourism-product sales
process from its creation until the time it is consumed by final clients. Most intermediaries are
wholesalers, tour operators, bed banks, booking centers, and OTAs (online travel agencies). Their activities
include organizing and marketing packaged trips, one-day tours, selling tickets, booking seats for
transportation, and booking or contracting tourist accommodation.

a. Tour Operators
- A tour operator combines tour and travel components to provide a holiday. The most common example
of a tour operator’s package would include a hotel, transportation arrangements (e.g. flight
reservations, limousine pickups, etc.), a specific activity (e.g. tickets for events).
- Niche tour operators may specialize in specific destinations (e.g. Italy, India, UK) activities and
experiences (e.g. skiing, music festivals, sports events) special interest tours 9e.g. religious pilgrimages),
or a combination of those mentioned.
- Tour operators usually negotiate net rates with suppliers (e.g. hotels and airlines) and then add their
profit own margins onto the package.

b. Travel Agents
- A private retailer that provides travel related services to the public on behalf of suppliers such as hotels,
flights, car hire or package holidays from tour operators.
- A travel agency’s main function is to act as an agent selling travel products and services on behalf of a
supplier. A packaged holiday or a ticket is not purchased from a supplier unless a customer requests that
purchase (meaning, the product cannot be stored).
- The holiday or ticket is supplied to them at a discount and profit is therefore the difference between the
advertised price which the customer pays and the discounted price at which it is supplied to the agent,
known as the commission.

c. Benefits of Using Intermediaries

1. Producers
- Able to sell products in bulk
- Reduce promotional costs
2. Consumers
- Avoid search and transaction costs
- Gain from knowledge of the specialists
- Gain from lower prices
3. Destination
- International marketing networking
 Lesson 2: Tourism Distribution Channel

- The tourism channel of distribution is an operating structure, system, or linkage of various organizations
through which a producer of travel products describes, sells and confirms travel arrangements for the
buyer.

a. Methods of Distribution
1. Direct distribution- this is accomplished through advertising, brochure distribution, websites, social
media and client referrals. These methods of distribution directly reach the target consumers.
2. Indirect distribution- the tourism product reaches the consumers through a third party (indirectly) by
using tourism distribution channels such as retail travel agents, wholesalers and inbound tour operators.

Traditional Tourism Distribution Channel. © www.tourismexportcouncil.org.nz

Lesson 3: Tour Operators

- A tour operator creates and offers a package known as an “inclusive tour” which normally has at least two
elements which are offered for sale at an inclusive and discounted price. An inclusive tour package
includes a combination of any of the following elements:
o Transportation
o Accommodation
o Meals
o Entertainment
o Attractions
o Sightseeing Activities

a. How Tour Operators Conduct their Business

1. Tour operators allow the different tourism sectors to sell their capacity in advance. This occurs often a
long time in advance because the contracts between the tourism supplier and the tour operators are
made a year prior to tourists using accommodation or services. For example, resort would allow a tour
operator to sell and reserve their rooms for the next year.
2. The tour operator connects together all the tourism services offered. This allows for negotiation that
lets a holiday to be sold and be delivered on the ground.
3. Tour operators traditionally have provided a guaranteed level of sales which allowed suppliers to
establish fixed costs in advance. This set up provided the operators economies of scale by giving them
access heavily discounted rates on their purchase.
4. The tour operator will often add a mark-up on the product they are selling by calculating all the input
costs, their overheads, profit margin and then producing a price.
b. Functions of Tour Operators
1. Tour Planning- This is the most important function of the tour operators. Tour operators plan a tour
and make tour itineraries which identifies the origin, destination and all the stopping point in a
traveler’s tours. They also give advice to tourists about various types of tour programs and their
inclusive activities, which they may choose from.
2. Making Tour Package- Tour operator buys individual travel components (e.g. hotel rooms, airline
tickets, restaurant reservations, theme park tickets, etc.) separately from their suppliers and combines
them into a packaged tour. Tour packages are made by assembling various travel components into a
final product which is sold to tourists for a single price.
3. Arranging a Tour- Tour operator also arranges a tour according to tourist demands to provide them
with the best travel experience. This is usually done when a customer is not interested in a tour
package offered by the operator and wants a customized tour package to cater to their own interests.
4. Travel Information- tour operators must provide the necessary travel information to the tourists. The
information must be up-to-date, accurate and timely with regards to the destinations, modes of
travel, accommodation, sightseeing, immigration, health and security rules about various permits
required to travel in a particular area etc.
5. Reservation- Tour operator makes all the reservation by making linkages with the accommodation
sector, transport sector and other entertainment organizations to reserve rooms, travel tickets, and
seats in cultural and entertainment events.
6. Travel Management- Tour operators manage tour from beginning to the end. A tour operator has the
responsibility to look after the finer details of a vacation or tour such as hotel, accommodation, meals,
conveyance etc. Tour operators provide travel guides, escorting services and arrange all travel related
needs and wants.
7. Sales and Marketing- Tour operators can act as advertisers for tourist products since they can
recommend the products and services of a destination to the potential tourists.
8. Contingency management- Tours operators are also known as “handling agencies” because it is part
of their responsibility to take care of all the glitches and problems that arises during a tour. Tour
operators fix the issues and provide the best available alternative to tourists during their journey.

c. Types of Tour Operators

1. Inbound Tour Operators (a.k.a. incoming tour operators)- These are the operators who receive
guests, clients/tourists, and handle arrangements in the host country. For example, a group of
American Tourists is coming to Philippines, the company that makes arrangements and handles the
group in the Philippines is called an inbound tour operator.
2. Outbound Tour Operators- Tour operators who promote tours for foreign destinations. For example,
the tour operator that handles a group of Filipino tourists going to India is called Outbound Tour
operators in the context of America.
3. Domestic Tour Operators- Domestic tour operators are those who assemble, combine tourist
components into inclusive tours and sell it to the domestic travelers. In general, these tour operators
provide travel services within the tourist’s native country. The domestic tour operators operate within
the boundary of their home country.
4. Ground Operators (a.k.a. ‘reception operator’, ‘destination management companies’ and ‘handling
agencies’)- Ground operators are normally expected to provide ‘land arrangements’ at a particular
destination for larger tour companies that do not have a local branch/office in that destination. Their
services are important for an efficient and successful operation of inclusive group as well as foreign
independent tours.

d. Difference between Travel Agents and Tour Operators

 1. A travel agent is a person who has full knowledge of the tourist product such us the destinations,
modes of travel, climate, accommodation, and other areas of the service sector. He acts on the behalf
of the product providers and in return get a commission.
2. A tour operator is an organization or company that buys individual travel components, separately
from their suppliers and combines them into a package tour, which is sold with their own price tag to
the public directly or through middlemen.
3. Tour operators are like wholesalers and travel agents are the retailers.
4. A tour operator makes the package holidays up and the travel agents sell them on.
5. The tour operator takes up the bulk of the responsibilities and their fee is obviously much greater than
a travel agent.
6. A tour operator has the responsibility to look after the finer details of a vacation or tour such as hotel,
accommodation, meals, conveyance, etc.

Activity 4.1.

1. Define Tour Itinerary

2. Enumerate and explain the elements of a tour itinerary.
3. Enumerate 10 guidelines to follow in making a tour itinerary.
4. Create a simple tour itinerary. The itinerary should be good for 6 hours and must include at least
four tourist destination in your locality. Focus on the time frame, ETA and ETD.
References:
Cruz, Z.L. (2013). Principles of Tourism Part II. Rex Book Store, Inc. Philippines.
Darboe, F. (2019, June 6). Which Type of Tour Operator are You? Retrieved from https://pro.regiondo.com/types-of-tour-
operators/#:~:text=Wrapping%20Up-,Types%20of%20Tour%20Operators,operators%2C%20and%20ground%20tour%20operators.
Online Travel Technology (2019, February 4). Tourism intermediary. Retrieved from https://onlinetraveltechnology.com/en/tourism-
intermediary/#:~:text=Tourism%20intermediaries%20are%20distribution%20agents,OTAs%20(online%20travel%20agencies).
Tourism Notes (n.d.). Tour Operators. Retrieved from https://tourismnotes.com/tour-operators/.
Verma, D. (n.d.). 4 Most Important Types of Tour Operators in Tourism Industry. Retrieved from https://www.shareyouressays.com/knowledge/4-
most-important-types-of-tour-operators-in-tourism-industry/93530.