HyflexModule6-Week12-13 ITM102 Tour and Travel Agency Marketing

Document Code: CIHTM–F–CMT
MANUEL S. ENVERGA UNIVERSITY FOUNDATION Document Title: Course Module Template

An Autonomous University Page No: 1 of 9
LUCENA CITY Revision No.: 0
Effectivity Date: 15 August 2022
COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Department Chairperson
Approved by: Dean
QUALITY FORM
NAME OF THE Bachelor of Science in Tourism Management

PROGRAM
COURSE TITLE Tour and Travel COURSE CODE ITM102
Management
PREREQUISITE/ None COURSE UNIT 3 units
CO-REQUISITE
COURSE CO3: Process reservation for domestic travel and
OUTCOME accomplish booking card for tours.
MODULE 7 Tour and Travel Agency Marketing
LESSON After successful completion of this module, you should be
LEARNING able to:
OUTCOME/S a. Identify the role of tour operators and travel agents in the
distribution channel;
b. analyze the importance of the marketing mix, and
c. explain the impact of electronic marketing in the travel
and tour operations.
TOPICS a. Roles of tour operations and travel agents in the
distribution channel
b. Why is marketing important in the tour and travel
business?
c. The electronic marketing of travel and tours
WEEK / 12-13/
INCLUSIVE DATE April 1-12, 2024
MODALITY Synchronous
LESSON PROPER
The tour and travel industry are dynamic due to ongoing changes, which creates
current business hurdles to remain relevant and survive. Businesses must position their
goods and services in the minds and hearts of continuously high-standard, picky
consumers.
Tour operators depend on their sales and marketing programs, strategies, and
activities to increase their market share given the growth of travel and tourism due to
global integration and mobilization.
The phrases marketing and tourism together make up the phrase tourist
marketing. Tourism, according to Chang and Katrichis (2016), is a social activity that
involves people traveling to locations other than their typical residences for short-term
employment.
Identifying, satisfying, and catered to customers' requirements can be done
profitably through marketing (Sharpley & Pearce, 2014). But, on the other hand,
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locations endure environmental degradation, pollution, species extinction, and climate
change. Marketing allows merchants to promote their tourist items and increase
demand (Sharpley & Pearce, 2014: Nickerson et al., 2016). Given this context,
marketing to tourists is an essential component of tourism that is necessary to make
money (Donohoe, 2012). Yet, marketers can also exert pressure on a tourist
destination's viability if it does not take safety precautions while promoting such places
(Albrecht, 2016).
The Role of Tour Operators and Travel Agents in the Distribution Network
The general public's needs are catered to by travel agencies, who provide their
finest services in terms of finding places, reserving transportation, and making other
ground arrangements in order to meet each individual traveler's needs and demands.
When it comes to the distribution of highly experienced, on-site tourist products,
tour operators serve as a critical middleman between producers and consumers
(Morrison, 1989). Three approaches are used for distribution.
-By creating a tour package and then offering it to retail travel agencies
-By recommending their travel goods and services directly to clients via their
distribution networks
-By using local ground transportation provided by local service providers
Some wholesaler travel companies run foreign branch offices to provide tour
operator features. As a result, wholesaler travel agencies serve as both a supplier and a
distributor.
Woodward (2000) emphasizes the practice of creating a mix of distribution
channels by travel agencies serves as a suitable portfolio for identifying market trends,
marketing initiatives, and market segments. This helps to promote product tangibility
and win customers' trust, which in turn helps to build brand awareness and brand
image. As Internet-based distribution methods have emerged, these channels have
grown increasingly complex. A practical distribution plan must consider that wholesalers
must use a variety of marketing distribution channels for each market group, making a
suitable marketing mix a key element.
The Importance of Marketing in Tourism

In today's consumer-oriented society, businesses actually take into account what
consumers want through developing partnerships with additional value (Boone & Kurtz,
1999). According to McCarty et al. (1993), a typical marketing strategy consists of
product, place, price, and promotion in response to the market's desire for a product
based on its pricing and efficient distribution channels in combination with qualified
sales and marketing operations. Even though tourism is a worldwide sector, the majority
of businesses and national government entities exclusively concentrate on promoting
tourism (Ryan, 1991). Companies must use additional marketing techniques to create
delighted customers.
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Marketing Mix
A marketing bundle comprising targeted duties and activities is used by
organizations to develop connections (Al-Debi & Ashraf, 2014). Their organization's
sales and profit goals are met by implementing service marketing techniques involving
the 7 Ps of pricing, product, promotion, place, process, people, and tangible evidence
(Othman et al., 2018). They assess the existing market's demand, patronage, and
loyalty vs rival businesses (Khan & Shambour, 2017). Customer happiness is
substantially impacted by place and promotion, but not by product or price (Wahab et
al., 2016). While promotion, people, procedure, physical proof, and development have a
big and positive impact on the customer's delight, price has a negligible or adverse
effect on the customer's happiness.
Traditional Travel Distribution Channel

About 50 years have passed since traditional media first entered the marketing
lexicon. From a long time ago, businesses have utilized them to market their goods and
services. Print and broadcast media are two examples of them. Newspapers,
periodicals, brochures, signs, posters, and other print advertisements are all examples
of print media. Television and radio are examples of broadcast media. Compared to
print media, which typically fosters strong, rational relationships, broadcast media tends
to be low on the emotional scale (Chauduri & Buck, 1995). Television is a better
medium for displaying goods that need to be physically tested, while radio, which
focuses on sound, gives a different way to reach potential buyers (Kim et al., 2005).
Since print media offers customers pace and relationships while focusing on interest,
very few travel firms in the Philippines use expensive distribution like televisions and
cable TV (Assael, 1992). Magazines have a longer lifespan than most media since they
feature high-quality reproductions and colors (Nylen,1986). Newspapers are favored
because they are more useful, trustworthy, and genuine (Kim et al., 2005).
An essential function in the tourism distribution chain is played by retail travel
agencies (Bitner & Booms 1982). Travel agencies are still more dependable when
providing advise and making reservations despite the development of technology and
online booking (Walle, 1996). Nonetheless, by expanding on their typical reputation as a
booking agency, the Internet can strengthen the position of travel businesses (Law et
al., 2004). Comparatively speaking to clients that rely more heavily on the internet, they
can provide secured service through a variety of distribution channels. Some people
prefer to use conventional distribution channels and value the traditional approach.
Contemporary Tourism Distribution Channel

Within the purchasing process, the tourism distribution channels act as
middlemen (Kracht & Wang, 2010). The tourism and hospitality industries are
significantly impacted by technological advancements (Kapiki, 2012; Scaglione er al.,
2013). Traditional computer reservation systems were replaced by GDS throughout the
industry. In the end, OTAs like Booking.com were made possible by the Internet Age
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(Inversini & Masiero, 2014). Online social networks, review websites, and mobile
location-based services were also introduced, creating additional distribution channels
that changed the customer's booking capacity (Scaglione et al., 2013). Distribution
networks become extremely complex as a result of the transition away from traditional
booking channels and toward online and social intermediaries. A theoretical
investigation on creating tourist distribution channels was carried out by Kracht and
Wang (2010).
For instance, Inversini and Masiero (2014) stressed the need for tourism
businesses to use social media to connect with their clients and enhance marketing and
sales efforts. Web 2.0 demands modifications to operational business processes and
reengineering of marketing frameworks, according to Scaglione et al. (2013, p. 288).
The Model of Distribution Channels

Customers, OTAs, web-enabled corporate travel agents, web-enabled tour
operators, GDS incoming travel agents, switches, destination marketing organizations
(DMOs), web browsers, additional search engines, supplier websites, and metasearch
engines are the components of the distribution channel described by Kracht and Wang
(2010).
According to Buhalis and Licata (2002), the airlines first employed GDS as an
airline computer reservation system (CRS), a technological electronic middleman. As a
result, traditional travel agencies began to do business with GDS like Sabre Galileo,
Amadeus, and Worldspan. Now, "Global New Entrants" are used by GDS's airlines
(GNEs). They emerged along with the growth of the Internet and open-source software
that makes use of Farelogix, G2 SwitchWorks, and ITA Software, which were created
using Orbit's search technology and offer GDS services at a reduced cost.
The continued expansion of the web as a significant distribution channel and the
emergence of new travel eMediaries, such Orbitz, Expedia, and Last Minute, to mention
a few (Kalodikis & Yannakopoulos, 2003), have a direct bearing on travel and tour
operations. As a result of guiding travel eMediaries, the merchant business models
blend dynamic packaging, which effectively transformed OTAs into online tour
operators, with the earlier founded tour operators like TUI, MyTravel, or Thomas Cook.
With the help of IT Software, Orbitz, an online travel agency, can access metasearch
engines like Bing Travel, Fare Comparison, Kayak, Side Step, GNE, or Farelogix.
Interestingly, this threat boosts GDS's resistance and significance inside the supply
chain. Unexpectedly, this threat increases GDS's resilience and importance inside the
supply chain. Following Sabre's example of investing in an online travel agency, several
GDS owners established commercial connections with OTAs through re-intermediation
(Armstrong, 2009) like a traditional collaboration with traditional agencies in the past. As
an illustration, Expedia and Opodo both have connections to Amadeus. Suppliers set up
websites connecting directly with customers using the concept of conventional retail
travel agencies. Conventional travel agents, on the other hand, are advantageous to
hotels.
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As a search engine, Google took the lead in the intermediary role in 1998 (Flint et
al., 2011), which led to the emergence of intermediaries through Internet technology
and established a structural shift of power to a new position. Subsequently, this
intermediary produced revenue for other web browser manufacturers from queries
performed through their browsers. Practically speaking, these web browser software
makers have evolved into middlemen inside the tourism distribution chain, whereas
other middlemen require payment in order to create income (Claro & Claro, 2010).
The need for tourism is fueled by the rapidly increasing numbers of travelers, the
line application of potent casts of locations, vacation parks, and travel, as well as the
use of potent CRSs to manage traffic and offer visitors with lodging and leisure services.
They simultaneously receive rapid confirmation and prompt documentation of
reservations with greater flexibility, allowing potential tourists to make "last-minute"
arrangements (Liao & Tseng, 2008). Expedia, Orbitz, Travelocity, and other metasearch
engines were created by founders, as well as companies like Kayak (Kayak.com, 2009).
Thomson and Thomas Cook's business models are put to a lot of test by
lastminute.com, which forces them to rethink their strategies and methods.
Many hotels and rental car agencies still use GDSs to distribute their goods to
clients, which suggests that businesses of the future will need to create improvements
in distribution technologies to improve the quality of their customer service.
Global Distribution Systems

The GDS network is used by a business to offer automated travel services from
suppliers like airlines, hotels, car rental agencies, and travel agents. GDS provides
relevant linkages to travel services, prices, and reservations by combining travel goods
and services from various industries. In most cases, consumers may book hotel rooms,
rental cars, airline tickets, tours, and other travel-related services including train and bus
bookings in select markets. Contrarily, they aren't usually integrated into the main
system; for specialist customers like LCCs (low-cost carriers) and small- and medium-
sized domestic and regional airlines, some smaller organizations provide specific GDS
solutions.
GDSs differ from CRSs. Although service providers (also known as vendors) and
travel agencies (both online and in-person) are their main clients, GDS enables these
middlemen to manage bookings in real-time. To make reservations for flights, hotels,
activities, and other related activities, GDSs route airline and travel agency reservation
requests to the many suppliers in the GDS network.
(IATA) member airlines to reserve all of the flights on different IATA-approved
carriers. These airlines use IATA's Billing and Settlement Plan (BSP) to coordinate and
streamline the selling, reporting, and remitting processes of lATA's accredited
passenger sales agents, enhancing financial management and cash flow for BSP
airlines. With an on-time settlement rate of 99.99% across 181 countries and territories,
the system extensively runs and supports almost 400 member airlines, and IATA's BSP
achieved $230.3 billion in 2015. (IATA, 2017).
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The Direct Distribution System
Direct or indirect distribution channels are also possible. In an upfront distribution
approach, the provider (destination, airline, hotel, etc.) interacts directly with the client,
directing individuals or groups of clients to certain hotels or flights for specific
reservations. The provider calls back or emails the customer to confirm the reservation.
Several vendors are experimenting with less common ways to connect with
tourists. Large businesses that utilize toll-free 800 numbers make it possible for
customers to call for free. Automatic ticketing devices that exist at airports are directly
linked with the CRS, providing travelers with a credit card the ease of instantly
accessing flight data, submitting a reservation, and getting both ticket and boarding
permits. Nevertheless, there are just a few of these machines at the airport, and retail
travel agencies are not included.
Home computers now benefit from the advancement of technology. In Europe,
potential tourists can purchase travel directly by visiting tour businesses located in
supermarkets. The customer and seller deal directly with one another through the direct
distribution channel, which is straightforward, economical, and gives providers more
control over the transaction. When a consumer makes a purchase, the supplier receives
the whole sale, with a supplier employee in charge of overseeing the transaction.
The Indirect Distribution System

According to Herrera, M.D., Ocampo, FD. C. and Tugade, L.O. (2021) in the Tour and
Travel Management book, one or more intermediaries exist between the supplier and the
customer in an indirect distribution method.
1. Retail travel agents. They are travel professionals who sell tours, hotel rooms, car rentals,
and transportation tickets for wholesalers and operators who serve as representatives for the
supplier and get compensated with a commission for sales. Retail travel agents can also create
tours and offer them to the traveling public and other sellers/retailers.
2. Tour operators or tour wholesalers. They make packages by combining a selection of
tourist products and services (transportation, lodging, meals, transfers, sightseeing, etc.) that
they buy in bulk from the supplier at a bargained price and make revenue by adding up the
package cost. They distribute the package directly to the tourist (tour operator) or by using
retailers (tour wholesalers), and the retail travel agents earn through a commission.
3. Specialty channelers. They operate as intermediaries between the retailer and the
customers and may act on behalf of their customers or the supplier and involve incentive travel
firms, meeting and convention planners, association executives, and corporate travel
companies.
Incentive travel firms assemble and sell travels as an incentive to make sales by
applying their competencies and resources in designing and managing incentive travel
programs. The organizations' actual employees who purchase travel services at economical
costs for their organizations also serve as specialty channelers.
4.Supplier choice. A supplier decides to deal with intermediaries and pay commissions with the
primary rationale of cost. There are expensive costs of maintaining another office in national
and regional territories, including salaries and rents, regardless of sales quantity. In contrast, the
cost of selling using intermediaries is highly flexible, with commissions paid upon realized sales
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only. The intermediaries provide service support to suppliers by verifying customer credit,
accepting various individual payments, and paying the supplier in one amount.
5. Customer choice. Customers may choose to deal with an intermediary, considering that the
middleman can provide unbiased professional assistance in offering various travel products. An
example is a customer calling United Airlines by phone, prompting the reservation staff to sell
United products automatically. On the contrary, a travel agent offers a wide variety of flight
options with his/her access to numerous airline flights, resulting in customers with better
purchasing inexpensive and more convenient flights. Travelers get to have the professional
knowledge and advice of an intermediary for free. On the other hand, travel agents create a
tailor-made itinerary with a minimal fee for advising clients through negotiated options that the
traveler cannot accomplish independently. Intermediaries make suppliers acquire difficult-to-get
theater tickets or amazing discounts.
The Influence of ICTs on Distribution Channels

The Internet offers a range of options for the tourist sector that bridge the barriers
between customers and providers thanks to its worldwide reach (Berne et al., 2016).
(2012) and Xiang and Gretzel (2010). A number of components, including CRS, global
distribution channels, and destination management systems, have emerged as a result
of the technology revolution to control the distribution of tourist products (Law, 2009).
Global tourism suppliers and customers can connect via the Internet and other
developing technologies, which provide outstanding communication and engagement
tools.
Yet, it also enables consumers to evaluate the sector's level of customer service
in a public forum on a website like TripAdvisor (Law, 2009). The distribution landscape
of the tourist sector has been dramatically influenced by the Internet (O'Connor, 2010).
Law (2009) established that the Internet is a virtual market that needs certain
communication and distribution methods, just like any other market. As the tourist sector
has been at the forefront of new technology adoption, many aggressive early adopters
have increased their market share while leaving behind the established businesses
(Berne et al., 2012). In order to stay competitive, intermediaries are investing in e-
commerce technology since power has shifted more and more in favor of the customer
(Ford et al., 2012). In order to compete with online intermediaries like Booking.com in
attracting new clients and keeping hold of current ones, travel agencies must become
more visible within the current tourist scene. To the contrary, their profit margins are
significantly impacted by the hefty commissions. Inversini and Masiero (2014) pointed
out that hotels might make use of their own social media platforms and sell to the
general public, resulting in disintermediation and boosting the power of the consumer. In
addition, using mobile technology enables the tourist distribution channel market to get
a larger market share than conventional online and off-line channels (Douglas & Lubbe,
2001).
Extranets are Internet-based applications that allow external organizations to
access a company; internal data thereby promotes tourism organizations' productivity
as it provides an immediate utilization of information. Extranet XML is the next step to
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empower tourism providers and consumers within this explosive growth of all these
technologies (Caber et al., 2013).
The Rising Relevance of UGC and Social Media

Social media and cellphones' incredibly quick adoption rates are how modern
travelers nowadays gather information. When someone checks in on Foursquare while
connected to Twitter or takes an Instagram photo that is instantly shared through a
person's Facebook page, they may discuss a future, current, or previous trip on several
networks.
Well-known DMOs employ well-known platforms like Pinterest, Instagram,
Tumblr, Google+, Linkedin, Foursquare, TripAdvisor, Facebook, Twitter, and other
places where a brand may be highlighted, such as WiiVoyage, Google Reviews, etc.
Examining these discussions and engaging with potential passengers at the site
who have inquiries or comments are challenging undertakings.

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Document Code: CIHTM–F–CMT

MANUEL S. ENVERGA UNIVERSITY FOUNDATION Document Title: Course Module Template

NAME OF THE Bachelor of Science in Tourism Management

The Importance of Marketing in Tourism

Traditional Travel Distribution Channel

Contemporary Tourism Distribution Channel

The Model of Distribution Channels

Global Distribution Systems

The Indirect Distribution System

The Influence of ICTs on Distribution Channels

The Rising Relevance of UGC and Social Media

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