slide 12.1 cooper et al: tourism: principles and practice, 3e pearson education limited 2005, ©...
TRANSCRIPT
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Slide 12.1
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Chapter 12
Travel ITravel Intermediariesntermediaries - - MiddlemenMiddlemen
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Slide 12.2
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
This Lecture will give you1. Familiarity with the nature and structures of
intermediation and the arguments for and against dis-intermediation of distribution channels in tourism;
2. An awareness of ‘online’ developments and the increasing consolidation and concentration of tourism intermediaries;
3. Familiarity with the operating characteristics, roles and functions of retail travel agents and tour operators;
4. An understanding of the process of distribution; and
5. An awareness of the financial constraints on the operation of intermediaries.
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Slide 12.3
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Middlemen Middlemen are intermediaries between consumers and suppliers.
Customer (tourist) – middlemen – supplier
Using middlemen has many advantages for both customers & suppliers
Tourism industry has been traditionally characterised by its use of intermediaries.
Intermediaries
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Slide 12.4
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Figure 12.1 Structure of distribution channels
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Slide 12.5
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Various middlemen that are included in the travel and tourism industry are;
• TTravel agencies,ravel agencies, Tour Operators Tour Operators• TTravel clubs, ravel clubs, • HHotel marketing and booking schemes, otel marketing and booking schemes,
incentive travel organizations, incentive travel organizations, • SSales representatives, ales representatives, • CComputerised reservation system (CRS), omputerised reservation system (CRS),
global distribution system (GDS) etc.global distribution system (GDS) etc.
Intermediaries
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Slide 12.6
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Functions of Intermediaries
• Provide info about tourism products • Contact current & potential customers • Make reservations & other
arrangements • Assemble services to meet customer
needs • Prepare tix & make confirmations
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Slide 12.7
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Functions of Intermediaries
• Provide databases on customer behavior • Reduce cost of acquiring new customers • Market excess or distressed inventories • Take risks by buying (or reserving)
products & then reselling them to individuals or groups
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Slide 12.8
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Nature of IntermediationThe Nature of Intermediation• BenefitsBenefits
– Producers are able to sell in bulk and so transfer risk to intermediaries
– Producers can reduce promotioncan reduce promotion costs by focusing on the travel trade, rather than consumer promotion, which is more expensive
– Consumers can avoid search and transactions costssearch and transactions costs– Consumers can benefit from the specialist knowledge of
intermediaries, their market power and the resulting lower cost of products
– Destinations can benefit from the marketing, and international marketing, network of many intermediaries
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Slide 12.9
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Nature of IntermediationThe Nature of Intermediation
• DisadvantagesDisadvantages
–Use of intermediaries by producers will result in the loss of margins and their degree of marketing control and influence over the process of distribution
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Slide 12.10
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Travel Agencies
• Travel agent = person • Travel agency = company • Provide important info & sales links • Links between: tourists & tourism suppliers • Using TA, one of most common (popular) ways to
buy tourism products\services • Many tourists now use Internet travel agencies:
Travelocity, Expedia, & Orbitz
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Slide 12.11
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Travel Agencies
• Via websites & e-mails TA compete with each other regardless of their physical location
• Do not own products they sell, so they have little or no inventory or cost of goods sold
• As commissions dwindle, markups increase • Large volume agencies often earn override
commissions (above the normal percentage) • Destinations experts; make recommendations
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Slide 12.12
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Role of the Retail Agent
• Travel counsellor
• Principal role is to supply the public with travel products and services (such as insurance and foreign exchange)
• Income is predominantly earned via commissions
• Retail location and choice of reservation systems are key decisions
• Impartiality (neutrality)?
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Slide 12.13
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Receptive Service Operators
• RSO are part of tourism distribution channel
• AKA receptive tour operator, ground handler & inbound operator
• RSO: a local company that specializes in handling needs of groups traveling to it destination
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Slide 12.14
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Consolidators & Travel Clubs
• Are combinations of wholesalers & retailers
• They perform a unique function within tourism distribution channels
• Consolidators buy excess inventory of air tix, then resell them at reduced prices via TA or directly to travelers
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Slide 12.15
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tourist Information Sources• Travelers need info before, during, & after a trip
about tourism product benefits, prices, & availability
• Marketing communications provides this via: • Advertising, public relations, & personal selling • Information is available from national tourist
offices (NTOs), convention & visitor bureaus (CVBs), and chambers of commerce
• These sources have tool-free phone numbers, websites, & welcome centers/TICs
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Slide 12.16
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.1 Some developments and trends in the marketplace affecting travel agencies
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Slide 12.17
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.2Table 12.2 Arguments for and against the dis-intermediation of travel agencies
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Slide 12.18
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.2 Arguments for and against the dis-intermediation of travel agencies (cont’d)
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Slide 12.19
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.3 Arguments for and against the dis-intermediation of tour operators
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Slide 12.20
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.3 Arguments for and against the dis-intermediation of tour operators (cont’d)
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Slide 12.21
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 12.5 Major global travel conglomerates
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Slide 12.22
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Online Travel• Drivers of growth
– Growth of Internet usage and electronic commerce– Success of global distribution systems (GDSs)
• SabreSabre• WorldspanWorldspan• GalileoGalileo• AmadeusAmadeus
– Phenomenon of ‘no frills’ airlines– Role of commissions in ‘traditional’ channels of
distribution
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Slide 12.23
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Global Distribution Systems
• Majority of TA business is done via GDS
• GDS provide extensive data on suppliers:
• Schedules
• Rates & fares
• Space availability
• GDS can also:
• Make reservations
• Print itineraries, tix, & invoices
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Slide 12.24
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Computer Reservation Systems
• Travel Agencies are linked on-line via one or more computer reservation systems (CRS) built & operated by airlines
• CRS make airline reservations,& serve as databases for tourism suppliers
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Slide 12.25
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Internet vs. Travel Agents
• Consumers have choice in buying travel products
• Increases scope & reach of options • Open 24/7 • But requires more work & knowledge by
consumers • TravelAgencies have expertise & human touch • Can save clients time, money, & energy • Can manage entire trip & its details
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Slide 12.26
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Figure 12.4 Conceptual model of the process and factors influencing agents’ destinations recommendations
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Slide 12.27
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tour Operators
• TO: business organizations engaged in planning, arranging, marketing, & operating vacation packages
• TO work with all sectors of tourism industry • They perform many functions: • Planning , Sales and reservations , Representatives
/guides • They organise and put together package trips and
holidays.
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Slide 12.28
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tour Operators
Reasons to Buy Tour Package
1. Convenience2. One-stop shopping3. Cost savings4. Special treatment5. Worry-free
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Slide 12.29
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Tour Operators
Tour Operators Risks
• TO are unregulated • Very susceptible to perishability • Must commit to place, products, & prices in
advance • Currency fluctuations: • Natural disasters: • Changing consumer tastes: • Security & Safety Concerns
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Slide 12.30
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The Role of theTour Operator / Wholesaler
• Principal stages of the tour operating process
– ResearchResearch– Capacity planningCapacity planning– Financial evaluationFinancial evaluation– MarketingMarketing– AdministrationAdministration– Tour managementTour management
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Slide 12.31
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Price structure of a14-night inclusive tour
Table 12.8 Price structure of a 14-night inclusive tourSource: Trade information
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Slide 12.32
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
ConclusionConclusion
• Increasing consolidation, integration and concentration
• Pressure from ‘virtualvirtual’ players
• Changing patterns of booking behaviour
• Pressure on cost structures and commission rates
• New market entrants
• Branding