Organizations

in the
Distribution
Process
Chapt. 7
 Introduction
The tourism channel of
distribution is an operating
structure, system, or linkage of
various combinations of
organizations through which a
producer of travel products
describes, sells, or confirms travel
arrangements to the buyer.

E.g. It would be impractical for a

cruise line to have a sales office
in every market city of five
thousand or more people.
Operating Sectors of the Tourism
Industry
 Tourism Distribution Channels
What is
unique
about the
products
sold in the
tourism
industry ?
Tourism Distribution Channels
Ask and answer these questions :

● Is it possible to cross sell your products/ services ? How ?

● Can i sell via visitors centers ? to distribute brand
information
● Can i promote via my DMO website ?
● Selling within Hotel properties to their guest via Concierge
● How can i develop an impactful brand via Social Media ?
● Sale through Inbound or Outbound travel agents
What makes up
Travel Trade?
What is a Travel Agent?
● A travel agency is a middleman —a business or person selling the
travel industry ’ s individual parts or a combination of the parts to the
consumer.

● In marketing terms, a travel agent is an agent middleman, acting on

behalf of the client, making arrangements with suppliers of travel
(airlines, hotels, tour operators) and receiving a commission from the
suppliers and/or a fee from the client.

● Travel agent is thus an expert, knowledgeable in schedules, routing,

lodging, currency, prices, regulations, destinations, and all other
aspects of travel and travel opportunities.
Travel Agents
● Travel, whether for business or pleasure, requires arrangements.
● The traveler usually faces a variety of choices regarding:
○ transportation and accommodations;
○ and if the trip is for pleasure,
○ there are a variety of choices regarding destinations,
attractions, and activities.
● The traveler may gather information on:
○ prices, value, schedules, characteristics of the destination, and
available activities directly, investing a considerable amount of
time on the Internet, or possibly money on long - distance
telephone calls, to complete the trip arrangements.
● Alternatively, the traveler may use the services of a travel agency, obtaining all these
arrangements for a fee.
Airline Reporting Corporation (ARC)
● Travel Agents are accredited by Airlines Reporting Corporation (ARC)

● ARC is the premier provider of financial settlement solutions for data

and analytical services for the travel industry.
● Endorsed by the International Airlines Travel Agency Network (IATAN),
● Or appointed by Cruise Lines International Association (CLIA) to do
business.
 ARC
For more than half a century,
Airlines Reporting Corporation
(ARC) has been a trusted provider
of settlement services. ARC
operates at high volume, settling
more than $86 billion in
transactions between carriers
and travel agencies each year.
SPOTLIGHT : ARC INDUSTRY

What does Success to ARC look like ?

The Changing World of the Travel
Agent
● Travel industry has struggled through tough times in recent
years because of September 11, severe acute respiratory
syndrome (SARS), terrorism, COVID19 and war, the long- term
expectation for all sectors except travel agents is recovery
and growth.

● Very tangible factors contributed to this decline.

○ The first was shrinking airline commissions, beginning in
1995 and continuing until 2002, when they were
eliminated.
 Changing the TA industry #1
● After decades of offering travel agents a
standard commission of 10 percent or
more, with no cap, many of the larger
carriers in the United States stopped
paying base commissions to travel agents.
○ These changes in the commission
system driven by the airlines altered
the distribution system fundamentally.
○ Agents were no longer paid to process
transactions, and the airlines lost a
huge sales force that was not paid
until a sale was made
2nd Industry Challenge
● second major factor is the Internet, which has impacted travel purchase
behavior.
● The Internet has changed the way commerce is conducted.
○ Many businesses use the Internet as a way to bypass product and
service intermediaries and deal directly with consumers.
○ The airlines have been a leader in aggressively using e - commerce.
TA’s versus Internet
● Another important factor is that airlines now attempt to bypass travel agents.
● As more people have Internet access and are willing to purchase over the Web, airlines have adopted the strategy of selling direct,
diverting business away from travel agents and dealing directly with the passenger.
● This has two advantages:
○ (1) reduced distribution costs and
○ (2) increased control over passenger information.
● Sale of travel over their own airline sites has not only reduced CRS booking fees and commission costs, it has also attracted passengers
who have previously used travel agents.
Technology Vs. Future of TA’s
OTA’ s Vs. TA’s
Independent & Home based Travel
Sellers
In the travel industry, technology has turned just about any
location such as a home into a sophisticated office from which
business can be conducted.
The Future of TA’s
● One of the problems of being an intermediary (wholesaler or
retailer) is that someone is always trying to eliminate you.
● So- called experts have been predicting for years that
intermediaries would disappear— that with the current level of
education, technology, and communication, consumers could
conduct business directly with suppliers, and middlemen would
gradually disappear because they were no longer needed.
● The experts have been wrong; intermediaries are doing more
business than ever before while at the same time there has been an
increase in direct selling.
 The Future of TA’s
● The TA species are alive and will continue adapting to market changes
● Travel agents offer a service that is valued by the majority of clients.
○ The travel industry cannot get along without travel agents,
○ they will continue to save clients time and money far into the future,
○ even with the fees they will be required to charge.
● While the Internet provides price comparison and transparency, it has
some shortcomings.
○ One of the biggest is consumer concern over credit card security.
○ The growing fear of online identity theft presents a serious obstacles
○ Frustration with Web site performance and lack of ability to make
specific requests
● Agents will morph into sellers of various leisure travel requests :
○ Honeymoons , cruise, tours, all-inclusives etc.
Travel Agency Organizations
The American Society of Travel Agents is the largest association of travel and tourism
professionals in the world.

ASTA ’ s purposes are:

● To promote and encourage travel among people of all nations

● To promote the image and encourage the use of professional travel agents
worldwide
● To promote and represent the views and interests of travel agents to all levels
of government and industry
● To promote professional and ethical conduct in the travel agency industry
worldwide
● To serve as an information resource for the industry worldwide
● To promote consumer protection and safety for the traveling public
● To conduct educational programs for members on subjects related to the
travel industry
● To encourage environmentally sound tourism worldwide
What is a
GDS?
Global Distribution System ( GDS)
● GDS is used to describe the large and sophisticated electronic travel
reservation systems in use throughout the world.
● There are currently four major GDS systems in operation:
○ Amadeus,
○ Sabre,
○ Galileo by Travelport,
○ and Worldspan by Travelport
● these (4) are the most used systems accounting for the majority of
global bookings
 ● GDSs are responsible for some of the most important innovations in
the travel industry, including:
GDS ○ electronic ticketing; travel e - commerce; graphic seat selection;
lowest- fare search capability; and the ability for agents and
travelers to view, on one screen, public, private/negotiated,
consolidator, and Web fares.
● Online travel is an e- commerce success story.
● Online travel companies offer consumers access to:
○ travel and tourism options
○ and furnish suppliers with opportunities to distribute their
products widely and at low cost
● Online travel agencies such as Expedia, Travelocity, Orbitz, Hotwire,
Priceline, ebookers, Site 59, Cheap Tickets, and Opodo use the GDS
systems; some are owned by the GDS systems.
The Internet
● The term “ e - commerce ” refers to the selling of goods and services via the
Internet.
● Many studies indicate that travel is being swept into the Web economy.
● Tourism-related services are now the king of Internet sales.

Limitations

● It “high-tech” not “high -touch”

● Overwhelms customers with information (challenge holding customer
attention to deliver message)
● Speed & ease of use
● Pop-ads are annoying
Consolidators
● Consolidators are travel agencies that sell airline tickets at sizable discounts.
They specialize in this area and have contracts with one or more airlines to
distribute discount tickets.
○ Airlines work with consolidators to help fill what would otherwise be
empty seats.
○ Some consolidators act strictly as wholesalers, selling their tickets only
through other travel agencies.
● Others also sell directly to the public, usually at higher- than- wholesale
prices.
○ Thus, they function as both a wholesaler and a retailer.
○ Discount agencies sell consolidator tickets or other discounted travel
services to the public.
○ Some act as their own consolidators, while others buy from wholesale
consolidators
Tour Wholesaler
● The tour wholesaler (also called tour operator) puts together a tour and all
of its components and sells the tour through his or her own company,
through retail outlets, and/or through approved retail travel agencies.
● Wholesalers can offer vacation packages to the traveling public at prices
lower than an individual traveler can arrange
○ because wholesalers can buy services such as transportation, hotel
rooms, sightseeing services, airport transfers, and meals in large
quantities at discounted prices.
● Tour wholesaling businesses are usually one of four kinds:
○ (1) the independent tour wholesaler,
○ (2) the airline working in close cooperation with a tour wholesaling
business,
○ (3) the retail travel agent who packages tours for its clients, and
○ (4) the operator of motorcoach tours
 Tour Wholesaler in the Travel
●
Industry
The public or the consumer is
the driving force
● and can purchase travel
services from a retail travel
agent
● or directly from the suppliers of
travel services: the airlines,
hotels, and other providers of
destination services.
Specialty Channelers
● Specialty intermediaries are a small force in distribution compared
to travel agencies,
○ they have considerable power to influence when, where, and how
people travel.
● Such groups can represent either buyers or sellers, receiving either
a commission or a salary from their employer.
● Specialty intermediaries are experts in their particular aspect of
travel.
○ As tourism becomes more specialized, these types of channelers
will become increasingly important
 Tourism Distribution Channels
● The travel industry landscape is constantly changing, and nowhere
is this more true than in travel distribution.
● Powered by advances in technology and the growth of e-commerce,
travel distribution has changed dramatically.

SPOTLIGHT
● What impact does the internet have on travel agents and
consumers ?
Thanks for Joining the
Journey
Any Questions?
!