Organizations in the

Distribution Process

Khong Yen Giang, MBA

 Learning Objectives

• Become familiar with tourism distribution systems

organizations and their functions.

• Understand the role of travel agents and their dominance in

the distribution system.

• Consider the impact of the Internet on the distribution

system.

• Examine the role of the tour wholesaler.

• Recognize that a combination of all channels of distribution

can be used by travel suppliers.
Operating Sectors of the
Tourism Industry

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 Distribution Channels

Methods or systems used to sell the

supplier ‘s travel products through
organizations i.e. Retail Travel
agencies, Tour wholesaler etc. other
than their own.
 Tourism Distribution
Channels

Suppliers
Transportation Providers Accommodations Food Service Resorts
Recreation, Entertainment, Etc.

Specialty
Channeler
Host Retail Specialty Specialty
Direct Travel Agent Tour Channeler Channeler
Channel Wholesaler
via
Tour
Internet
Wholesaler
Telephone
Suppliers Tour Retail Travel
Retail Travel
Office Retail Travel Specialty Wholesaler Agent
Agent
Agent Tour Channeler
Wholesaler Retail Travel
Home-based Agent
Travel Agent

Customers
Individuals Pleasure Groups Business Groups, Etc.
 Distribution channels
 Similar
to those basic industries as their
products flow to the ultimate consumers
through:
 Wholesalers
 Distributors
 Middlemen

 Tourism distribution system is unique as:

 Mainly intangible products and services
 No physical product that can be held in inventory
or flows
 Product is very temporal
Direct vs. indirect channels
Direct channels Indirect channels
Simple form of distribution, no Most common form of tourism
intermediary between supplier and supplier, using intermediary
customer between supplier and customer

Customers purchase products and

Customers purchase products and
services via organizations of
services directly from the suppliers
distribution

Advantages: professional
Advantage: Simple and greater assistance at free or low cost,
profits for suppliers multiple options, single- charge
billing

Eg? Eg?
 Travel Agents
• An agent is a middleman acting on behalf of the
client, making arrangement with suppliers of travel –
airlines, hotels, tour operators, cruise lines - and
receiving a commission or a fee for each products
sold

• An expert counselor, advising clients on travel

concerns and making itineraries

• 94% of travel agencies charge fees

• Shift to an emphasis on leisure travel

 Travel agents

 Mostly located in origin regions

 Sell both:
 Prepared package tours
 Prepares individual itineraries (save time and money)

 Changing structure from commission to charging

fee
 Heavy users of automation (for reservation
systems)
 Harnessing Internet power (91%)
 Travel agents

 Dominant distributors:
 51% of air travel

 47% of hotel reservations

 87% cruises reservations

 45% rental car

 35% of rail

 81% of tour packages

 Travel agents
 Diverse range of tasks:
 making reservations
 planning itineraries (including complex round-the-world
travel)
 calculating fares and charges
 producing tickets
 advising clients on destinations, resorts, airline
companies and a wide range of travel products
 communicating with clients verbally and in writing
 maintaining accurate records on reservations
 ensuring racks are stocked well or supplies are kept in-
house
 acting as intermediaries when customer complaints
occur.
Online travel agencies (OTAs)
 A web-based marketplace that allows consumers to
research and book travel products and services, including
hotels, flights, cars, tours, cruises, activities and more,
directly with travel suppliers.
 Selling holidays/travel products over the Internet
 > 400 OTAs
Online travel agencies (OTAs)
 Roles: as an intermediaries
 Bridge between service providers and travelers: connect
travelers with numerous service providers, acting as a digital
marketplace for travel services

 Negotiating better rates: often negotiate competitive prices,

passing on savings to travelers

 Streamlined booking process: simplify the booking procedure

by consolidating information and providing a single platform for
multiple services

 Creating personalized customer experiences

Online travel agencies (OTAs)
 Benefits:
 Accessibility and convenience: available 24/7

 Vast selection: present a one-stop-shop for travel needs

 Price comparisons: easy to compare price, ensure traveler’s

best deal

 Reviews and recommendations: Holidaymakers can benefit

from reviews and ratings provided by fellow travelers, aiding
informed decision-making

 Flexible packages: allow travelers to customize their packages,

combining flights, hotels and other services
 Internet
 Makes direct selling from the supplier to the
consumer more possible
 Gives consumers the information and power
to plan and book their own travel
A new marketing medium
A powerful social medium
 E-commerce: selling goods and services via
the internet
 Internet

 High tech but not high touch

 Need user’s attention long enough to deliver

message

 Out of date information

 Right to privacy

 Security of the site

Travel agents vs. Internet
 Consumers now can make their own
bookings on Internet or use services of
travel agents
 Internet is a powerful tool as:
 Increase scope and reach of a consumer’s effort
 Allow people to check hundreds of options
 Consumers has to understand how to search
and the sources to search
Travel agents vs. Internet
 Travel agent is a world of difference
 Expertisein travel services due to large sources
of information
 Save time and cost for consumers
 Manage consumers when problems occur in
supplier side or any other troubles
 Offer
numerous alternatives to lower prices for
consumers
 Personal touch and human being
 Consolidators
 Brokers/Travel agencies that sell air tickets at
sizeable discounts

 Have contracts with airlines  specialization

 Airlines work with consolidators to help fill

what would otherwise be empty seats

 Function as both a wholesaler and retailer

 Example: [Link]; [Link]

 Tour Wholesaler

• Also called Tour Operator.

• A firm that puts together all tour components

usually transportation, accommodation,
meals, and some special activities or special
interest into a package.

• Offer vacation packages at prices lower than

an individual traveler can arrange
 Tour Wholesaler
 Tour operator can keep their prices low by:
 negotiating low prices from suppliers
 reducing profit margins
 cutting their cost structures

4 types of wholesaler:
 The independent tour wholesaler
 The airline working in close cooperation with a tour
wholesaler (consolidators)
 The retail travel agents who packages tours for its
clients
 The operator of motor coach bus
Tour wholesalers
Gov.
 The position of Tour IATA, ATA
Other
Operator: SUPPLIERS

 consolidating the
Airlines &
services into one other carriers Any tour
Wholesalers
package, which can
be sold through Hotels

travel agents to
Retail travel
the consuming Other des. agent or other
Services retail outlet
public

Public
Travel Agents Organizations

• UFTAA :
United Federation of Travel Agents’ Associations
• WATA
World Association of Travel Agents
• PATA
Pacific Asia Travel Association
• ASTA
American Society of Travel Agents
• JATA
Japan Association of Travel Agents.
 Specialty Channelers

• Incentive Travel Firms

• Corporate Travel Offices

• Hotel Rep. Firms

• Meeting Planners

• Association Executives

• Travel Consultants

• Travel Supplier Sales People.

 Special channelers
 Small force in tourism distribution

 Influence where, when and how people

travel

 Represent either buyers or sellers, receiving

either a commissions or a salary from
employer

 Experts in their particular aspect of travel

GDS systems
 3 main systems: Sabre, Amadeus, Travelport
(Galileo, Apollo and World span)
 Create new trends in travel distribution, providing
worldwide distribution network
 Important innovations:
 E-ticketing
 Travel e-commerce
 Graphic seat selection
 Lowest fare search capability
 Ability for agents and travelers to view, on one screen,
public, private/negotiated, consolidator, and web fares
 Trends
• Reduction in commission
• Direct sale through Internet – online booking
• Distribution system i.e. SABRE, ABACUS...
• Automated distributions
• Affiliated members of Travel Agency
Associations
• Using a various combination of channels
depending on the particular products.
End of Presentation

Thank you for joining us!

Topic for Presentation
 What is GDS? How GDS contribute to the
success of travel agents and tour operators?
Illustrate your answer with specific
examples?