1. Distribution channels :
Travel agents & Tour operator

2. Distribution Systems
The process which moves the product from production to
consumption stage is called distribution.
Two factors make the distribution of the tourist product unique:
 The consumer must go to the destination
 The tourist product is highly perishable
It is important to understand the sales distribution systems and
their role in influencing sales.

3. clarice / 20113
Distribution Channel Functions
 Members of the marketing channel perform many keys
function:
1. Information- Gathering and distributing marketing research
intelligence information about the marketing
2. Promotion – Developing and spreading persuasive
communications about an offer
3. Contact – Finding and communicating with prospective
buyers
4. Matching – Shaping and fitting the offer to the buyer’s
need, including such activities as manufacturing, grading,
assembling and packaging

4. clarice / 20114
Distribution Channel Functions
5. Negotiation – Agreeing on price and other term of the offer
so that ownership or possession can be transferred
6. Physical distribution – transporting and storing goods
7. Financing – Acquiring and using funds to cover the costs
of channel work
8. Risk taking – Assuming financial risks such as the inability
to sell inventory at full margin

5. clarice / 20115
The Chain of Distribution
PRODUCER
↓
INTERMEDDIARIES
↓
RETAILERS
↓
CONSUMERS

6. clarice / 20116
The Chain of Distribution
Two level Distribution Channels
PRINCIPLES
↓
TRAVEL AGENTS
↓
TOURISTS

7. clarice / 20117
The Chain of Distribution
Three level distribution channels
PRINCIPLES
↓
TOUR OPERATORS
↓
TRAVEL AGENTS
↓
TOURISTS

8. clarice / 20118
The Chain of Distribution
 There are some general consideration when
choosing the channels distribution including:
a) Cost
b) Control and level of services
c) Efficiency

9. Distribution Systems
Direct Distribution System
Sales are realized through direct contact
Advantages
Time saving – by direct communication
Increased profits – no commission to any middleman
Flexibility – make possible changes
Greater Control – feeling of comfort and security in transaction
Disadvantages
High cost of sales force
Possible reaction of dissatisfied intermediary

10. Distribution Systems
Indirect Distribution System
Use one or more travel intermediaries
Benefits of customers
Professional consultation
Greater variety
Lower price
Single payment

11. Travel Intermediaries
Tour Operator
• Designs
• Prepares
• Promotes
• Executes
Supplier
Tour operator Travel
agent
Air travel + lodging + meals + entertainment + ground transportation +
sightseeing tours + special entrance fees
Sales of tour packages
Tour Operator: A company that operates as an intermediary between the
travel product supplier and the retail travel agent in the marketplace, generally
provides such as information and reservations to travel agents. (Tour operators
often operate as wholesalers, but usually when they are involve in some form of
product packaging)

12. Travel Intermediaries
The Role of Tour Operators
 Purchasing in bulk
 Buying power and ability to negotiation
 Financial security to suppliers and large sales
Types of Operators
 Inbound operators
 Outbound operators
 Domestic operators
 Independent operators
 Airline operators
 Wholesale travel agent
 Specialty operators
 Travel clubs

13. Travel Intermediaries
The Travel Agent
 Definition:
• A licensed travel product retailer that provides travel information, reservations
and other forms of assistance to consumers, companies and groups in
making travel arrangements.
• Final link in the consumption process
• Connecting the receiver and the source (supplier or wholesaler)
 Representative selling products
• Legally a travel agent is a commissioned agent or an authorized
representative.
• Maintains a delicate balance between serving the client and promoting the
interests of the principles the agent represents.

14. Travel Intermediaries
Regulation and Intermediaries
 Travel Agents
o Some states require a license
o Where a license is not is not legally obliged, certification or accreditation
consists of approval from industry conferences
o Minimum bond and minimum cash reserve
o Minimum experience
o Travel agents have a legal obligation to perform in a professional manner
 Tour Operator
o A local business license and compliance with governmental and airline
regulations are required
o Some monetary constraints

15. The Impact of Technology on Travel
Distribution Systems
The Link between Technology and Tourism
Changes in market and mentality
o Travel marketers realize that they are not only in pleasure or business
travelers but also in the business of communication and information.
Group vs. individual travel
o Developing of mass tourism
Need for technology
o The use of technology to gather, manage, distribute, and communicate
information.

16. The Impact of Technology on Travel
Distribution Systems
Computer Reservation Systems (CRS)
Beginning in the Airline Industry
Introduced in 1960’s for keeping track of the seats sold
Become a reservation system in 1970s.
Linking Systems
Interconnection between CRS in 1976
Alliances within Industry
Different travel suppliers linked their reservation systems
Global Distribution System

17. Global
Distribution
System
GDS
Starwood
CRS
Marriott
CRS
Choice Hotels
CRS

18. Traditional GDS Role
CRSs TAs
Airline
Consumer

19. The Impact of Technology on Travel
Distribution Systems
Ticketing Automation
 Satellite ticket printers (STP)
 Electronic ticket delivery network (ETDN)
 Electronic Kiosks
 Ticketless Travel
The Internet
 Both complement and substitute
 Advantages and disadvantages
The Future
 Elimination of intermediaries
 On-line operations

22. The End