SELF-PACED LEARNING MODULE

COLLEGE

MODULE 12
Subject:

MICRO PERSPECTIVE OF TOURISM AND

HOSPITALITY

AISAT COLLEGE – DASMARIÑAS, INC.

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 Unit TOURISM DISTRIBUTION CHANNEL
Module TOURISM DISTRIBUTION CHANNEL
THC4- Micro Perspective of Tourism and Page |2
Units: 80hrs
MPTH1 Hospitality

Information sheet FN-12-1-1

“Tourism Distribution Channel”

Lesson Objectives
At the end of the lesson, the students should be able to;
1. define tourism distribution channel;
2. describe the types of travel intermediaries;
3. discuss the functions of specialty intermediaries;
4. compare travel agents with tour operators;
5. explain the relation of distribution to marketing; and
6. discuss the distribution strategies.

Meaning of Tourism Distribution Channel

• The tourism distribution channel produces the link between the
suppliers of travel services and the consumer. It is a system of
distribution that makes the product available. Robert Mcintosh defined it
as "an operating structure, system, or linkage of various combinations of
travel organizations through which a producer of travel products
describes and confirms travel arrangements to the buyer." This has a
twofold purpose to make sure that potential travelers can obtain the
information they need in choosing a vacation or trip and to make the
necessary reservations. Distribution may be direct or indirect. Direct
distribution occurs when the producer sells directly to the consumer;
indirect distribution takes place when the sale to the consumer Is made
through an intermediary (See Figure 11).

• Unlike manufacturing products, tourist products cannot be packaged

and shipped to the consumer nor can it be held in inventory. The hotel
room or airline seat must be sold every day in each flight or trip. Sale lost
today is lost forever. In tourism, more than in other industries, sales
intermediaries or individuals who operate between the producer and
consumer are necessary. The major function of intermediaries is the
packaging of a number of complementary travel products in order to
achieve a vacation experience for the consumer. A retail travel agent may
book an airline seat, a hotel room, sightseeing tours, and a rented car,
and offer this vacation to the tourist. A tour operator may assemble the
above components into a tour to be promoted in a brochure and sold
through retail travel agents. Thus, the distribution system aims to get

PREPARED BY: APPROVED FOR IMPLEMENTATION:

MODULE 12th
FINALS MS. NICOLE S. MARCELINO MR. WILBERT A. MAÑUSCA
12 Meeting
Subject Teacher School Director
 Unit TOURISM DISTRIBUTION CHANNEL
Module TOURISM DISTRIBUTION CHANNEL
THC4- Micro Perspective of Tourism and Page |3
Units: 80hrs
MPTH1 Hospitality

the necessary information to the consumer to make a sale and allow the
sale to be made or confined.
The success of tourist service providers depends on their ability to promote and advertise as well as
their ability to gain access to the intermediaries. The WTO has identified the following functions which
intermediaries perform on behalf of producers:
1. Intermediaries can achieve better results in the field of distribution and
selling than the producer himself through specialization. They have
direct contact with the markets and potential customers which would be
difficult and more costly for the producer;
2. Intermediaries assemble the heterogeneous service of different producers
and a "package" of services that is meaningful and attractive to the
customer

Travel Intermediaries
There are three types of travel intermediaries: travel agents (wholesale and retail), tour
operators, and specialty channels.

Travel Agents
A travel agent arranges travel services from suppliers such as airlines, bus companies,
railroads, cruise ship companies, car rental agencies, hotels, and sightseeing operators. In general,
there are two types of travel agents-wholesale and retail.
1. Wholesale travel agents or wholesalers organize tour packages which
are sold to the public through a network or retail agents. They do not
deal directly with the consumer and they may or may not operate the
tours markets. Many times, wholesalers enter into a contract with a tour
operators for all or certain land arrangements. Wholesale travel agents
may organized tour packages sold under the agency's name or they
combine the land packages assembled by a ground operator with air
transportation to for new packages.

2. Retail travel agents sell travel services directly to the consumer.

They handle the actual sale of tours, air tickets, and other travel
services. 1ney are Compensated by the supplier or wholesaler for the
sales he or she made. ne consumer does not pay any fee for the services
of the retail agents. The retail travel agents are important to the traveler
because they act as impartial and independent businessmen who
recommend the best offer they represent an outlet for the products and
services of suppliers and wholesalers since it would be expensive, if not
impossible, to establish a company system of distribution nationwide.
PREPARED BY: APPROVED FOR IMPLEMENTATION:
MODULE 12th
FINALS MS. NICOLE S. MARCELINO MR. WILBERT A. MAÑUSCA
12 Meeting
Subject Teacher School Director
 Unit TOURISM DISTRIBUTION CHANNEL
Module TOURISM DISTRIBUTION CHANNEL
THC4- Micro Perspective of Tourism and Page |4
Units: 80hrs
MPTH1 Hospitality

Tour Operators
Tour operators deliver the services specified in an advertised tour package. The services offered
by a tour operator may vary from basic airfare, transfers, hotels, meals, and sightseeing, to
entertainment. Some tour operators own buses, hotels, or other facilities or they may obtain ground
services from a contractor such as specific hotels, bus companies, restaurants, car rental companies, or
attractions.
Specialty Intermediaries
Specialty intermediaries include incentive travel firms, meeting and convention planners, hotel
representatives, interline representative, association executives corporate travel firms, travel
consultants, motor coach brokers, and the like T intermediaries may represent either buyers or suppliers
and have the power to influence how, where, and when the travel product will be distributed.
The following are examples of specialty intermediaries;
1. Incentive Travel Company - The incentive travel company may either
sell s professional services of planning, promoting, and executing an
incentive travel program for a buyer or act as an intermediary Tor both
buyer and Suppliers. Incentive travel is given to members of a sales force
who have reached their quotas and received bonuses in the form of
travel.

2. Meeting and Convention Planners and Destination Planners- Meeting

and convention planners specialize in planning and organizing meetings
mainly for corporate clients and professional associations. Many of the
meeting planners have credentials as Professional Congress Organizers
(PCO) or Certified Meeting Professionals (CMP) and are members of
Meeting and Planners International, a professional and educational
organization for those who manage meetings. Destination planners are
independent professionals who help meeting and convention planners.

3. Corporate Travel Firms Corporate travel firms- specialize in handling

corporate travel accounts. There are two ways of handling corporate
travel accounts. The first is for a corporation to work with a travel agent.
The second is tor a corporation to establish its own travel agency. The
advantage of the first option is that it offers not only an established
market but also increases worker productivity because once a business
relationship is established, there will be less shopping to be done. Thus,
one agent can handle more business.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

MODULE 12th
FINALS MS. NICOLE S. MARCELINO MR. WILBERT A. MAÑUSCA
12 Meeting
Subject Teacher School Director
 Unit TOURISM DISTRIBUTION CHANNEL
Module TOURISM DISTRIBUTION CHANNEL
THC4- Micro Perspective of Tourism and Page |5
Units: 80hrs
MPTH1 Hospitality

4. Motor Coach Brokers- These intermediaries organize motor coach tours

to full-time professionals.

Distribution Channels
There are three distribution channels. These are:
1. Product supplier-consumer channel - This is direct distribution without
going through intermediaries. It is the direct selling of airline tickets and
hotel rooms to the consumer.

2. Product supplier-travel agent- consumer channel this is the most popular

form of buying services and products in the tourism industry. It is through
an intermediary in the form of a travel agent who provides products and
services to the consumer;
3. Product supplier-tour operator-consumer channel-The tour operator
strives to create demand. He or she makes arrangements with the suppliers
Such as block booking on airlines, hotels, restaurants, and attractions to
produce a travel package which is sold to the travel agent or directly to the
consume.

Types of Distribution Channel

Distribution channels have three classifications: consensus channels; vertically- integrated
channels controlled by intermediaries/retail travel agents; and the vertically-coordinated channels led
by producers/tours operators.
1. Consensus Channels
In a consensus channel, no part of the channel exercises control over the system. The
several participants in the system work together for their mutual interest. Distribution channels of
this type are found in North America and the United Kingdom.
2. Vertically-integrated Channels
In a vertically-integrated channel, the functions of production and retail distribution are
owned and/or controlled by a single company. Since tour operators have emerged from the retail
travel agency business, vertically- integrated channels controlled by retail travel agents are usually
found in the United Kingdom, West Germany, and North America.
3. Vertically-Coordinated Channels
The channel comes from contractual or financial commitments with retail agents.
Franchising is an example of such a system. In West Germany, franchising is a large part of travel
distribution. The franchisor of a particular Company agrees to retail only through certain retail

PREPARED BY: APPROVED FOR IMPLEMENTATION:

MODULE 12th
FINALS MS. NICOLE S. MARCELINO MR. WILBERT A. MAÑUSCA
12 Meeting
Subject Teacher School Director
 Unit TOURISM DISTRIBUTION CHANNEL
Module TOURISM DISTRIBUTION CHANNEL
THC4- Micro Perspective of Tourism and Page |6
Units: 80hrs
MPTH1 Hospitality

outlets and to promote no other methods of distribution. The retail franchise benefits from the
marketing activities of the franchisor

Reference:
• Cruz, Z.L (2019) Micro Perspective of Tourism and
Hospitality. Rex Book Store.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

MODULE 12th
FINALS MS. NICOLE S. MARCELINO MR. WILBERT A. MAÑUSCA
12 Meeting
Subject Teacher School Director