2. 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

3. 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

4. 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

5. 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

6. Figure 13–1 • The Travel Distribution System

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

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

14. 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

15. 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

16. 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

17. 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.

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. Figure 13–2 • Area Bank Settlement Plan

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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