Objectives After reading and studying this chapter, you should be able to: Understand the role of tourism distribution organizations Describe the role of the Internet as a part of the distribution system Describe the purpose of the American Society of Travel Agents (ASTA) and list its member services as well as requirements

Objectives (cont’d.) Explain the functions of the Airlines Reporting Corporation (ARC) Discuss airfares and give examples of their complexities Name the most common computerized reservation systems Describe the main types of tours, major tour operators, and wholesalers Identify important current trends

Introduction Channels of distribution Companies cannot always reach consumers as cost effectively as an intermediary Distribution is a critical source of competitive advantage in the marketing mix Consolidation and vertical integration have become more pronounced

Introduction (cont’d.) Purpose of the channels of distribution: Bring clients and providers together so that they can communicate Direct channels: a product or service is sold directly to the client Indirect channels: the client goes through an intermediary to purchase the product or service

Figure 13–1 • The Travel Distribution System

Retail Travel Agents Important part of travel distribution system Those who are up to date are aware of current trends and offer the best service Act as a consultant and sales intermediary Responsible to the client Have a special relationship with carriers and suppliers

Retail Travel Agents (cont’d.) Commissions From airlines has been greatly reduced or canceled completely Hotels are also cutting commissions Rail, bus, car rentals, cruises, and package tours remain about the same (10-15%) Most rely on commissions plus service fees ($10–$20 per ticket) charged to the client

Retail Travel Agents (cont’d.) Salary Depends on experience, sales ability, and agency size and location Median annual earnings is $29,210 Top 10% earn more than $46,270 Expected to experience little to no future growth Those with a specialization will have the best chances for success

Retail Travel Agents (cont’d.) Travel agent’s job: Prepare itineraries Arrange accommodations Handling details (e.g., insurance, currency exchange, etc.) Provide information (e.g., schedules of connections, hotel quality, etc.) Arrange reservations for special interest activities

ASTA American Society of Travel Agents Founded in 1931 World’s largest association of travel agents More than 24,000 members Travel agents future does not look good Online booking Cut commissions

Consolidators Work to make airfares more attractive Sell to travel agencies and/or directly to the public Blocks of discounted seats are sold to consolidators, which are then sold to the public

Tours Types of tours: Special interest Escorted Foreign independent Domestic independent Group inclusive tours

Tour Wholesalers Package tours for a country or an area Sell them to retail travel agents May have offices in other countries or sell directly to the public May represent an area if market does not justify a complete office Best-known are Thomas Cook and American Express

Tour Wholesalers (cont’d.) Negotiate with airlines, shipping lines, hotels, restaurants, and other services Use them to assemble packages Tours are then sold to travel agents, who, in turn, sell them to tourists Benefit to tourists: Much lower prices Transportation is planned out

Tour Operators Can be local, national, or international Bring together all the elements of a trip Sold in one package Types of tours: Escorted Hosted Independent Package

Tour Operators (cont’d.) National Tour Association Trade organization composed of: Tour operators Tour suppliers Destination marketing organizations U.S. Tour Operators Association Companies whose tours and packages encompass the entire globe Conduct business in the U.S.

Tour Operators (cont’d.) Services vary widely Ground services at various destinations Meeting clients upon their arrival Luggage arrangements Responsibility for the tour from beginning to end Tour covers all expenses

Corporate Travel Management Work out details for travel guidelines Keeps travel costs under control Invites agencies to submit proposals based on company travel needs Create and operate travel offices within the company Any discounts or commissions earned go directly back to the company

Incentive Travel If employees meet or exceed goals, they get a all-expenses-paid trip Motivates employees to produce, sell, or otherwise meet and exceed goals Society of Incentive and Travel Executives Only international, not-for-profit, association

Meeting Planners Arrange meetings, conventions and expositions Clients in the business sector, government, and public sector Select suitable locations based on need Book accommodations Facilitate all aspects of the meeting, conference, or exhibition

Meeting Planners (cont’d.) Meeting Planners International (MPI) Professional association Professional Convention Management Association Leading organization for meeting and event professionals Provides education, training, and promotion

Meeting Planners (cont’d.) Convention and visitors bureaus (CVBs) Help facilitate tourist visitation Promote features and benefits of the area to target markets Familiarization trips Arranged for agents at little or no cost Allows agents to get to know and areas geography and culture

Regulatory Agencies Airlines Reporting Corporation (ARC) Domestic airlines, travel agencies, corporate travel departments, railroads, and other travel suppliers Processes all transactions in the travel system More than $80 billion annually Financial backbone of travel distribution

Regulatory Agencies (cont’d.) International flights: International Air Transport Association International Airlines Travel Agency Network Cruise conference: Cruise Lines International Association Rail ticketing: National Railroad Passenger Corporation

Area Bank Settlement Plan Allows ASTA members to sell and distribute tickets on the airlines’ behalf Administered by Airlines Reporting Corporation Allows agents to pass through cash and credit card payments directly to the airlines

Figure 13–2 • Area Bank Settlement Plan

Air Fares Almost all domestic airline seats are discounted for the discretionary traveler Depends on demand If more seats are sold than usual, discount seats are cut back If fewer seats are sold, more discounts are added Known as yield management

Air Fares (cont’d.) Yield management Set of strategies to enable capacity-constrained service industries to realize optimum revenue Provide the right service to the right customer at the right time for the right price Competition has a major influence

Air Fares (cont’d.) Classes of fares Prices depend mainly on: Economy, business, and first class Prices depend mainly on: Sections of the plane Passenger seating space Level of attendant service Cost of meals served

Air Fares (cont’d.) Complexities that affect airline fares: Economy Excursion rates Advance purchase excursion fares Inclusive tours Youth fares Short-stay tour packages Late-night fares

Air Fares (cont’d.) Online reservations Revolutionized airline reservations Travelers can quickly obtain quotes Many airlines actually reward customers for booking through their company website Travelocity is one of the world’s leading online travel agencies

Air Fares (cont’d.) Global distribution systems Connects travel agents to airlines, hotels, car rental companies, railroads, tour operators, etc. Sabre is number one Others include Amadeus, Worldspan, and Galileo

Hotel Reservations Most major hotel chains are included in some computer reservation systems Hotels assign a number of rooms for sale to a GDS, and as a room is sold, it is subtracted from the inventory MICROS Systems Provides enterprise applications for the hospitality and retail industries worldwide