distribution channels in tourism

How do travel and tourism distribution channels work?

By Kevin Tjoe — 29 Nov 2021

tourism distribution channels

Updated January 2023 – A tourism distribution channel refers to the stakeholders and methods involved in taking a tourism product from the supplier to the consumer. Typically, the chain of distribution in tourism refers to the businesses and platforms involved in selling, distributing, and bundling tourism products. However, more components are involved across the entire distribution chain, including suppliers, wholesalers, resellers, and consumers.

By aligning your business with existing distribution channels, you connect with important stakeholders in the industry. This creates more efficiency in your marketing efforts and ultimately grows your tourism and activity business.

What is a distribution channel?

Tourism distribution channels are the avenues tourism products and services are made accessible to consumers. Typically, tourism products are sold directly by the primary provider or through a series of intermediaries. If brokers or travel wholesalers are involved, this is called indirect distribution. Consumers can access these products via various mediums, including traditional channels such as travel agents, government bodies such as information centers, and even other tour and activity operators .

How it works

While direct bookings may still account for a large part of business, branching out through additional distribution channels can help you to maximize your brand exposure, reduce risk and ultimately boost your bookings. Many distribution channels will have access to much larger marketing spend or broader customer bases. This can provide you with access to more exposure and quality bookings.

Typically speaking you’ll provide your availabilities to them, and they’ll, in turn, bring in bookings at a pre-agreed commission rate.

The chain of distribution

The chain of distribution in tourism refers to the businesses and platforms involved in selling, distributing, and bundling tourism products. This process begins with the primary tour and activity provider all the way to the end consumers experiencing it.

Generally, there are four steps to the distribution chain:

1. Suppliers/principals

2. Wholesales

3. Resellers

4. End consumers

The distribution chain for a particular product can go through all of the steps depending on its distribution channel. For example, direct distribution won’t require wholesalers or resellers, as suppliers sell their products directly to consumers, whereas indirect distribution requires intermediaries.

Suppliers or principals include the primary providers across accommodation, transportation and car hire companies, attractions, and experiences. Examples include hotels, Airbnb hosts, airlines, and the attractions such as the Empire State Building.  

Wholesalers

Wholesalers develop packages of travel products for retailers to sell on, though in some cases they may actually sell directly to the consumer. These packages or itineraries might include tours, activities, accommodation, transport, and/or travel insurance.

Wholesalers can include: 

• Destination Management Organisations (DMOs) or inbound tour operators, such as government tourism boards or tourism authorities
• Global Distribution Systems (GDSs), are used by retailers such as OTAs to easily see an inventory of availability from tourism operators.

Resellers purchase and bundle experiences to be sold directly to the consumer. A common example includes traditional travel agents, which create personalized travel packages. However, online travel agents (OTAs) such as Expedia and Tripadvisor are more commonly used these days. They provide accessibility to a range of tourism products such as airline tickets, hotel bookings, tours and activities, and more.

Consumers are the most critical component of the distribution chain. That is because they are the end user of the product. The choices and decisions consumers make have a huge impact on the rest of the distribution chain. Trends in consumer behavior, or individual decisions all influence how tourism products are marketed and sold.

Advantages of tourism distribution channels

Broadening your distribution channels involve heaps of advantages. Here are the top five:

Connectivity

By aligning your tour and activity business with the broader industry, you can connect with important stakeholders across every step of the tourism distribution chain. Forming strategic partnerships with resellers and tourism platforms enables you to access a broader customer base. This provides you with a greater opportunity to increase your sales. 

Generating 100% of your revenue via direct marketing requires a great deal of investment in time and money. Existing distribution channels generally have larger marketing budgets that they can spend to attract more customers.

Typically, as the supplier, you’d only pay a fee when a booking has been made via their channel – making your marketing and sales costs predictable. This means you gain additional resources to expend on other areas of your business, such as improving your customer experience.

Flexibility

Given the wide array of potential partners, you have the freedom and flexibility to test and experiment with different methods of promoting your business. Plus, it’s more convenient for your customers to book your services through an array of trusted partners. This helps to increase customer loyalty and satisfaction.

Transparency

Utilizing existing distribution channels can make the entire booking process more transparent for both you and the end consumer. On the tour operator side, it provides you with a clearer understanding of your customer behavior and adjusts your marketing strategies for better outcomes. And on the customer side, information such as reviews displayed on your profile allows them to create informed decisions before choosing to book your services.

Accessibility

Promoting your tourism products via numerous distribution channels means that your customers can book your services where they like; when they like. Furthermore, your products and services will be found across multiple avenues – enabling a wider array of customers to book with you. In fact, operators are using an average of 14 distribution channels according to Arival’s Operator Insights 2021-2022 report.

What are the main types of tourism distribution channels?

There are many ways to get in front of customers, even more so since the rise of digital channels. From travel agents to mobile apps, tourism suppliers have never had more choices regarding promoting their products and services. There are four main distribution channel types. These include:

Traditional channels

Traditional distribution channels often refer to real-world marketing channels separate from online and mobile experiences. Indirect traditional distribution channels can include travel distribution services such as travel agents, tourism information centers, flyers and print/ digital brochures , promotional marketing services, and tour operators . Depending on your products and services, wholesalers can also make up part of your business’ traditional distribution channel. 

Online channels

In recent years, online travel agencies (OTAs) have dominated the tourism industry. These online experiences allow users to plan, book, and pay for personalized travel plans through an easy-to-use centralized platform. Often flights, hotel bookings, car hire , and local experiences can be bundled and purchased through a single site, making the process convenient and intuitive. These platforms can also be cheaper due to the relatively low cost of maintaining a website over a brick-and-mortar travel agency. 

Mobile channels

Like online channels, mobile distribution channels rely on digital platforms, such as apps, to promote and sell tourism products. Many popular mobile apps which centralize the tourism buying experience have cropped up in recent years. In addition, airlines, hotels, and other major suppliers have begun developing apps to improve customer loyalty and engagement. Other forms of mobile marketing can include SMS marketing, mobile advertising, and cold calling.

Direct channels

Direct marketing and sales channels include anything your business has direct control over and does not involve an intermediary. This type of marketing can occur through traditional, online, and mobile mediums. For example, direct online channels can include your website, direct bookings via a booking system, online chat assistance, and your social media accounts.

While direct marketing efforts via mobile can consist of sending promotional text messages to previous customers, cold calling potential customers, and sending personalized email marketing messages . More traditional measures may include brochures and flyers, a storefront, and salespeople.

Choosing the right tourism distribution channels

As a tour company, it’s essential to understand which distribution channels will achieve the most significant results for your business. While trial and error can bring results over the long run, understanding what makes a channel right for your business can accelerate your path to success. 

Identify target market

To understand whether online or offline marketing, direct or indirect distribution, or mobile versus online platforms are best for your business, you need to understand your customers.

Demographics such as age, country of origin, the number of travelers in a party, and the number of children arriving can greatly impact how you communicate and effectively sell your services. For example, an older demographic may be more likely to use traditional channels such as a travel agent, while a young family might be found via online and social media . First, check over your previous customers and try to pull out any obvious trends amongst your clientele, then research which channels best suit your audience.

Research channels

It’s important to research which channels are available to promote your services. But also, it’s essential to understand the reputation of your potential strategic partners. When engaging in indirect marketing, you are aligning your brand with your distributors, so choosing platforms and businesses which align with your values is important. It’s also essential to understand the costs and benefits of each channel and make informed decisions based on what will work for your business. 

Evaluate costs and benefits

Each platform and distribution channel will have different pricing models. Some may charge a flat fee for promotional services, others may purchase and resell your services, while others may charge a fee when you receive a booking. It’s essential to understand what level of return you can expect. If you are starting out, finding performance-based pricing options will allow you to pay as you go. Alternatively, flat fee services can sometimes provide a higher return as your budget can go directly to marketing spend.

Track performance

Once you choose one or more channels to distribute your services, ensure you track the performance versus how much it costs to attain them. By understanding the performance of your partnership, it enables you to eliminate ineffective channels and double down on your marketing efforts, thus, cutting you costs.

How can you manage all distribution channels easily?

It can take a lot of time to form and manage strategic partnerships with multiple resellers. Luckily, technology is here to help. A channel manager such as Rezdy Channel Manager can be accessed regardless of your booking system or size of business, and makes it simple to negotiate agreements, manage inventory, rates and manage commissions with a vast range of resellers, from local visitor centers to the big-name OTAs. Live availability of your tours, activities or attractions are visible from one dashboard, dropping the risk of pesky double bookings as well.

You can access the broadest reach of resellers in the industry, connect with desired resellers and easily distribute rates and availability in real-time. Rezdy is integrated with a number of alternative reservation systems and is continuously adding more, providing suppliers access to channel management tools, directly from their existing system. Suppliers with a custom built booking system can connect with Rezdy Channel Manager as well. For Rezdy booking software customers, channel management is included. 

Find out more about how Rezdy’s channel management platform can support your business .

Ready to  join the thousands of Rezdy customers that managed to grow their bookings by over 25% in 2022? Book a free channel manager demo with a product specialist to see how our products can fit the needs of your tour business. If you are interested in Rezdy’s booking software that includes channel management, you can start a free 21-day trail trial.

If you enjoyed this article, be sure to sign up to receive the  Rezdy newsletter , a valuable resource for those who want to stay up-to-date on the latest industry happenings.

Want to know more about reseller commission rates? Read our guide to industry standard commission rates

Broaden your distribution channels with Rezdy

Enjoy 21 days to take a look around and see if we are a good fit for your business.

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Distribution

eBook: Guide to growing your tourism business through distribution & channel management tools

How to navigate API connections with resellers

Case Study: Wendella Tours & Cruises

What are the main types of tourism distribution channels?

The travel and tourism chain of distribution

Variations in the chain of distribution, what is a tourism distribution channel.

For the owners and employees of travel businesses, it’s important to have a good understanding of the distribution channels available to you. The digital revolution means there is a wide choice of online channels today. But do not forget your strategic partnerships and offline channels too. To avoid spending unnecessary time and money, you need to know which channels do the best job of getting your travel products in front of your target audience.

But before we look at the various sales and marketing avenues at your disposal, we need to focus on the chain of distribution first. In order to maximize opportunities and efficiencies, it’s essential to understand the chain of distribution and where your company is positioned within the chain.

Generally speaking, there are four key stages within the chain of distribution . These are: principals, wholesalers & aggregators, retailers, and consumers (see chart 1).

Chart 1: The Travel and Tourism Chain of Distribution

The principals are the separate components of a travel product. For example, a leisure traveler buys a three-night stay in Paris that includes flights, accommodation, entrance to the Louvre and the Eiffel Tower, with other ancillary services such as travel insurance and foreign exchange thrown in too. In this case, each of the principals could have been sold separately. Instead, they were bundled together by a travel business and sold as a mini-break promotion.

Wholesalers & aggregators

Tour operators take various components of the travel experience and create a travel product which is then traditionally sold by a travel agent.

At the wholesaler stage in the distribution chain, the tour operator is providing a business-to-business (B2B) service by selling the product to a travel agent who then sells it to the consumer (a B2C service). They have their tour operator business plan which they follow to provide the best options to other travel-related businesses.

A global distribution system (GDS) is a computer system that holds records of availability from airlines, hotels, and car hire. Retailers such as OTAs and B2C travel agents are able to directly access this inventory.

As the oldest type of distributor in the travel industry, GDS are predominantly involved in the sale of air tickets rather than accommodation.

Destination Management Companies (DMCs) or Destination Management Organizations (DMOs) often contract travel products and sell on packages and itineraries relevant to their destination to a tour operator.

A bed bank is a B2B company that buys rooms from hotel groups and other accommodation providers in bulk at discounted and fixed prices for specific dates.

Some bed banks might also sell ancillary services such as tickets to visitor attractions or car hire.

Bed banks are middlemen, or intermediaries, between hotel companies and retailers. They might sell on their discounted bulk accommodation products to airlines, other bed banks, travel agents, OTAs or tour operators (see Chart 2). Chart 2: Bed Bank Distribution Chain

Retailers and consumers

Retailers are the organizations that sell the travel products directly to the consumer. These include traditional travel agents with a physical store in the high street such as TUI, Hays, and Cooperative Travel in the UK, for example. Other travel retailers are found online and include OTAs, B2C tour operators, and travel agents that specialize in business travel. Consumers are the end-users who buy the travel products or services. The main types of consumers are business travelers, leisure tourists (either domestic or international) and people who are visiting friends or relatives.

Chart 1 identifies the four key stages in the chain of distribution, although this process can vary and be more direct or indirect. For instance, a leisure traveler booking accommodation directly from a hotel website means there is only one stage in the chain. A bed bank that sells to another bed bank, results in five stages in the chain.

The wholesaler and retailer stages may be carried out by the same company . This is known as vertical integration , which happens when two or more organizations at different stages in the supply chain merge.

It is fairly common for tour operators and travel agents to buy each other. After all, the role of tour operators in sustainable tourism is quite significant. When mergers occur at the same level in the distribution chain, this is called horizontal integration . The original brand names are often retained, so consumers may not be aware that booking.com, KAYAK, Agoda and priceline, for instance, are all owned by one company: Booking Holdings. Digitalization and corporate mergers have resulted in plenty of crossover and consolidation in the travel and tourism distribution system.

As a B2C travel agent or tour operator, distribution channels represent the various ways to sell or market your product. You need to have a multi-channel presence to maximize your sales opportunities and brand presence, and to reduce your risk. There is specialized tour operator software that can help you manage this workload more efficiently. At the same time, depending on the size of your business and the resources you have available, it could be an error to spread yourself too thinly over too many channels.

Choosing the best distribution channels for your business needs to be done with care and attention.

Generally speaking, we can divide distribution into three main categories: online channels, strategic partnerships and offline channels (see Chart 3).

Chart 3 Travel & Tourism Distribution Channels

Online channels

As a tour operator or travel agent, the overriding benefit of optimizing your own website is that you pay no commission on direct bookings and have full control over how consumers interact with your brand.

Being listed on Google My Business is essential today. Google is the default destination for most consumers to gather information of any kind. Your listing will come up in Google searches and on Google Maps and registering is free.

Online travel marketplaces like Bookmundi and Viator have large audiences. Most are free to join but take a significant amount of sales commission, so monitor performance carefully.

Select one or two and keep your profile and listings current. The same goes for review sites such as Tripadvisor and TrustPilot . Only concentrating your energies on one or two review sites is a sensible strategy.

Channel managers, such as HRS , provide a service that sources hotel accommodation for corporate clients from a wide variety of OTAs instead of the client having to go directly to each separate OTA.

Similarly, instead of having individual accounts with OTAs, many hotel companies – big and small – will use channel management technology.

Omnibees , for example, allows hoteliers to sell to end-users and intermediaries through a single platform connected to the hotel’s property management system. Such solutions can automate sales and reduce the amount of commission paid by hotels.

Strategic partnerships

Working with other travel agents or tour operators is a great way to increase your sales. Working directly with Destination Marketing Organizations (DMO) will allow travelers to book with you directly when you advertise on the DMO website.

Building a relationship with travel bloggers will help get your name out there, as will close involvement with trade bodies associations.

To attract more bookings made directly on your website , a ffiliate digital marketing services are an option .

Offline channels

It would be a mistake to overlook offline distribution channels. The worldwide web may give you global reach, but cross-selling partnerships with local businesses such as stores, restaurants, cafes and hotels can turn out to be extremely valuable distribution channels.

Visitor information centers can be useful too because many tourists do not book tours and activities until they are in the destination.

Attending trade shows and industry events can be costly, especially for small businesses, but the resulting contacts and sales leads are often invaluable.

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Cristóbal Reali, VP of Global Sales at Mize, with over 20 years of experience, has led high-performance teams in major companies in the tourism industry, as well as in the public sector. He has successfully undertaken ventures, including a DMO and technology transformation consulting. In his role at Mize, he stands out not only for his analytical and strategic ability but also for effective leadership. He speaks English, Spanish, Portuguese, and Italian. He holds a degree in Economics from UBA, complementing his professional training at Harvard Business School Online.

Mize is the leading hotel booking optimization solution in the world. With over 170 partners using our fintech products, Mize creates new extra profit for the hotel booking industry using its fully automated proprietary technology and has generated hundreds of millions of dollars in revenue across its suite of products for its partners. Mize was founded in 2016 with its headquarters in Tel Aviv and offices worldwide.

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The Best Distribution Channels in Travel and Tourism

Distribution channels in travel and tourism are the medium tour operators, attractions, travel agencies and other travel companies use to sell their products to their customers.

This article aims to answer the following question:

What are the main types of tourism distribution channels?

Before giving you the answer, you must understand how distribution channels can help you grow your tour company.

Understanding the distribution channels in travel and tourism

The chain of distribution in travel and tourism has grown with the surge of new technologies. Nowadays, distributing brochures to hotels is not enough to stay competitive in the market.

Not only being listed in the right distribution channels will assure better exposure for your tour company , but it will also make it more credible. That is the combination you are looking for to increase your profits.

Basically there are two ways of reaching customers in tourism :

• Directly – In a travel agency or through a travel agency’s website.
• Indirectly – Through a partnership with third-party distribution channels.

The distribution channels in travel and tourism can also be divided into offline and online channels .

Offline channels are more traditional and most tour operators are familiar with them. I’m talking about hotels, hostels, B&Bs, souvenir stores, restaurants, cafes, visitor information centers, trade shows and local partners .

Social networks, review platforms, mobile location-based services, and online travel agencies are examples of online distribution channels.

The role of these new technologies in distributing travel products and generating revenue has grown a lot in the past years.

However, the virtual landscape changes fast. For that reason, it’s important to be aware of new opportunities to list your products to remain competitive and successful.

After this brief introduction, time to break down the distribution channels in travel and tourism.

The best distribution channels in travel and tourism

We’re highlighting five distribution channels for tours and trips , where a tour company should be, to stay competitive.

1. Tour company’s website – the number one direct distribution channel in travel and tourism

When was the last time you didn’t start planning a trip online? Not for a long time, right? It’s obvious, the internet changed the traveler’s behavior.

The time from finding travel inspiration to packing your bags for a new travel adventure has never been shorter. And travelers love it!

That said, we can guarantee that remarkable tour photos published on your tour company’s website will attract curious eyes. Videos from the trip you share on social media profiles will bring you sales too!

At the same time, you can integrate an online tour booking system to your website, turning it into a direct distribution channel. That way your future customers can easily book a tour with you and you pay no commission for that!

Did you know that in 2019 $755 billion worth of travel was booked online ?!

By the end of 2023, travel and tourism revenues are expected to reach this same level again.

Nowadays, travelers start and finish their travel arrangements online. Because of that, it’s so important to maintain an updated and optimized website.

2. Google My Business – a must for a successful tour company

Google My Business is one of the most important indirect distribution channel in travel and tourism to sell your trips online.

Most of it is related to Search Engine Optimisation (SEO). Being listed in Google My Business helps your organic reach on Google search because it improves your SEO ranking .

Another benefit is having your business featured on Google Maps, which includes relevant details, such as opening hours, website link, contact number and customer reviews .

If you don’t have a business profile in Google My Business, creating one should be your priority right now. Use this guide to create the perfect listing for your business in Google and other platforms.

3. Hostels & tourist information centers – sell more tours and activities

After checking-in at a hostel, visitors often ask an employee at the check desk for a tour recommendation. Hence, tour and activity operators can benefit from a partnership with their local hostel.

On the other hand, travelers who are not staying at a hostel usually seek information in a tourist information center. So, it would be wise to contact your local tourist information center and see how you can partner with them.

Tour companies usually drop off flyers and brochures to hostels and tourist information centers. And interested travelers will call to set up a reservation with your tour company .

Now you know how important it is to stay in good grace with the front desk and to develop perfect relationships!

4. Review sites – they will make or break your tour business

Is there a traveler who hasn’t heard about TripAdvisor ? I don’t think so.

Depending on the reviews you get , they will either make or break your tour business. All your marketing efforts won’t be able to reverse the negative effect of a couple of negative reviews.

However, not so much effort will be needed to marketing your travel packages , if your tour business has hundreds of positive reviews.

This is because only 14% of consumers trust traditional advertising, while 92% respect reviews on sites such as TripAdvisor .

That makes it a very important distribution channel in travel and tourism. So, you better be good!

5. Online travel agencies – online giants with huge audiences

Online Travel Agencies ( OTAs ) are powerful distribution channels in travel and tourism, boasting millions of users to their websites every month.

OTAs will list your tours and trips on their site and allow their users to book with you.

Usually, this works through a pay-per-click format. But it might worth the money, considering that bookings through those platforms are expected to grow year over year .

Three global OTAs that tour operators should consider partnering with are:

• GetYourGuide
• Touriosity (commission-free OTA)

There are also much less known local OTAs. Consider partnering with them, too.

Finally, choosing wisely the right distribution channels in travel and tourism means a strategic advantage for your tour company .

It takes a bit of time to figure out which one works best for your tour business. Anyway, starting from enabling direct online sales through a tour company’s website is always a good practice.

If you liked this article, consider downloading our infographic 5 Channel Ideas to Sell your Tours.

What are the distribution channels you find the most suitable for your tour business?

ORIOLY on May 5, 2021

by Lidija Šomodi

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Tourism distribution channels : practices, issues and transformations

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• Buhalis, Dimitrios
• Laws, Eric, 1945-
• London ; New York : Continuum, 2001
• xviii, 378 pages : illustrations ; 25 cm
• Includes bibliographical references and index.
• Pt. 1. Tourism distribution: theory, practice and issues. 1. Introduction: tourism distribution channels: practices, issues and transformations / Eric Laws and Dimitrios Buhalis. 2. Tourism distribution channels: practices and processes / Dimitrios Buhalis. 3. Distribution channels for tourism: theory and issues / Dorota Ujma. 4. Distribution channel analysis for leisure travel / Eric Laws. 5. Distribution channel analysis for business travel / Rob Davidson. 6. Distribution channels: ethics and sustainability / John Swarbrooke. 7. Quality issues in tourism distribution: practices and prospects / Denis Harrington and John Power. 8. Service quality and the distribution chain for inclusive tours / Oystein Jensen -- Pt. 2. Tourism distribution structures. 9. Tourism distribution channels in Europe: a comparative study / Francesco Casarin. 10. Who owns whom in the European travel distribution industry / Marion Bywater. 11. Travel retailing: 'switch selling' in the UK / Simon Hudson, Tim Snaith and Graham A. Miller / [et al.]. 12. Accommodation distribution: transforming YWCA Australia into Travel Ys International / Brian King and Carina Slavik. 13. Transforming relationships between airlines and travel agencies: challenges for distribution and the regulatory framework / Jaco Appelman and Frank Go. 14. Airline distribution systems: the challenge and opportunity of the Internet / Bruce Prideaux -- Pt. 3. Destination and regional approaches to tourism. 15. Communication issues in NTO distribution strategies / Linda Osti and Harald Pechlaner. 16. Tourism distribution channels in Canada / Atsuko Hashimoto and David J. Telfer. 17. Distribution strategies for regional and national tourism organizations: an Australian case study / John Jenkins. 18. Attracting Chinese outbound tourists: Guanxi and the Australian preferred destination perspective / Grace Wen Pan and Eric Laws. 19. Use of tourism destination channels for destination marketing: a model and case study / Noel Scott and Eric Laws -- Pt. 4. Transformation in tourism distribution. 20. Transformation and trends in the tourism industry: implications for distribution channels / Chris Cooper and Jan Lewis. 21. The transformation of tourism distribution channels through information technology / Peter O'Connor, Dimitrios Buhalis and Andrew J. Frew. 22. A new paradigm for tourism and electronic commerce: experience marketing using the virtual tour / Yong-Hyun Cho and Daniel R. Fesenmaier. 23. Tourism distribution channels: agendas for future research / Eric Laws and Dimitrios Buhalis
• Tourism -- Management.
• Marketing channels.

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Distribution Channels in Tourism

According to Moutinho (2011) tourism distribution channels involve supplier products to be public (consumers) through channels members. Mourinho specifies individual parties in each category in the following manner:

Tourism services, distributors and target population

Source: Moutinho (2011)

Mohapatra (2013) also discusses various aspects of distribution channels in tourism presented in above, and observes an interesting tendency in relation to these channels. Namely, according to Mohapatra (2013), the share of online sales transactions through these channels have been consistently and rapidly increasing compared to the volume of offline sales transactions during the two decades. However, Mohapatra (2013) fails to refer to any official statistical data to back up this claim.

References 

Mohapatra, S. (2013) “E-Commerce Strategy: Text and Cases” Springer Group

Moutinho, L. (2011) “Strategic Management in Tourism” CABI

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TNECD Announces Recipients of Tennessee Historic Development Grants

·        Nearly $6 million allocated to renovate and preserve Tennessee’s historic buildings

NASHVILLE, Tenn. –  The Tennessee Department of Economic and Community Development (TNECD) announced today the recipients of Tennessee Historic Development Grants.

“The Historic Development Grant program assists in preserving and revitalizing some of Tennessee’s most historic and notable buildings so that they once again have the opportunity to serve as a hub for commerce and tourism,” said TNECD Commissioner Stuart C. McWhorter. “I congratulate the communities receiving funding through the latest round of the program and thank the Tennessee Historical Commission for their partnership.”

Approved by the Tennessee General Assembly in April 2021, the program will provide $5.7 million to projects that aim to renovate and preserve historic buildings across the state. The program encourages communities and private developers to invest in buildings that have contributed to a community’s history but now sit idle. These buildings can once again contribute to the economy through job creation and commercial opportunities.

For this round of the program, the state’s $5.7 million investment is expected to leverage more than $13 million in private investment.

TNECD partnered with the Tennessee Historical Commission (THC) to structure application requirements and review grant applications to ensure that each proposal would rehabilitate the structures while maintaining the historical integrity. The THC’s mission is to protect, preserve, maintain and administer historic places and encourage the inclusive diverse study of Tennessee’s history for the benefit of future generations.

“The Tennessee Historical Commission is proud to take part in providing assistance to ensure that the legacy of Tennessee’s historic landmarks continue to inspire our future generations,” said THC Executive Director and State Historic Preservation Officer Patrick McIntyre. “Many of the state’s historic properties are being rehabilitated thanks to the economic incentives from the Historic Development Grants and Federal Historic Tax Credits, and we look forward to seeing the impact these grants make across Tennessee.”

The grant recipients include the following individuals, developers, nonprofit or local government agencies:

Bingham Properties – $300,000 to rehabilitate the RC Kefauver House in Madisonville, TN

Black Feather Botanicals, LLC – $20,000 to rehabilitate the Lawrence County Advocate in Lawrenceburg, TN

City of Lawrenceburg – $300,000 to rehabilitate the Crockett Theater in Lawrenceburg, TN

Clinch-Powell RC&D Council, Inc. – $150,000 to rehabilitate the Rutledge Church in Rutledge, TN

County of Hardeman – $296,625 to rehabilitate the Hardeman County Historical Records/Archives in Bolivar, TN

Dynamix Physical Therapy, LLC – $10,000 to rehabilitate the Varsity Theater in Weakley, TN

Friends of Franklin Parks, Inc. – $300,000 to rehabilitate Harlinsdale Farm in Franklin, TN

Hawkins County Government – $300,000 to rehabilitate the Clay-Kenner House in Rogersville, TN

Hiram Masonic Lodge No. 7 Foundation – $300,000 to rehabilitate the Hiram Masonic Lodge No. 7 in Franklin, TN

HREH, LLC – $113,000 to rehabilitate the Earles Drug & Professional Building in Franklin, TN

Jamey Fillers – $300,000 to rehabilitate the Greeneville Historic District in Greeneville, TN

KBD LLC – $125,000 to rehabilitate the Felkner Building in Morristown, TN

Lakeway Holdings Co. – $300,000 to rehabilitate the Southern Bell and Telegraph Building in Morristown, TN

Masquerade Theatre Inc. – $68,000 to rehabilitate the Capitol Theatre in Union City, TN

Michael P. Johnson – $100,000 to rehabilitate 115 North Main Street in Jellico, TN

Regents Park QOZB, LLC – $300,000 to rehabilitate the Lowenstein House in Memphis, TN

Rogersville/Hawkins County Chamber of Commerce – $286,650 to rehabilitate St. Mark’s Church in Rogersville, TN

Scott P. Ledbetter – $300,000 to rehabilitate 119 N Main Bolivar Court Square in Bolivar, TN

Sean Zearfoss – $67,200 to rehabilitate the William M. Gailbreath House in Gainsboro, TN

Sterling Hedrick, LLC – $300,000 to rehabilitate the Sterick Building in Memphis, TN

The Dermon Building OZ LLC – $300,000 to rehabilitate the Dermon Building

 in Memphis, TN

The Sevierville Commons Association – $300,000 to rehabilitate the Sevierville Post Office in Sevierville, TN

Tivoli Theatre Foundation, Inc. – $400,000 to rehabilitate the Tivoli Theatre in Chattanooga, TN

United Way of West Tennessee – $200,000 to rehabilitate the Stanton School in Stanton, TN

Watauga Property Group – $300,000 to rehabilitate the Elizabethon Post Office in Elizabethton, TN

Wilson County Black History Committee – $100,000 to rehabilitate the Pickett Chapel in Lebanon, TN                                                                                         

Various criteria must be met in order for a structure to be eligible for a grant. Eligible properties that qualify as certified historic structures are defined  here . 

Additional information about the grant, eligibility and application can be found  here . 

About the Tennessee Department of Economic and Community Development The Tennessee Department of Economic and Community Development’s mission is to develop strategies that help make Tennessee the No. 1 location in the Southeast for high quality jobs. To grow and strengthen Tennessee, the department seeks to attract new corporate investment to the state and works with Tennessee companies to facilitate expansion and economic growth. Find us on the web:  tnecd.com . Follow us on  Twitter ,  Instagram  and  LinkedIn . Like us on  Facebook . Subscribe to our  YouTube channel.

TNECD Media Contact Lindsey Tipton Director of Communications (615) 339-6608 [email protected]

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Marketing Tourism and Hospitality pp 285–315 Cite as

Tourism Distribution

• Richard George 2  
• First Online: 09 May 2021

2762 Accesses

This chapter explores distribution channels and their role in the international tourism industry. It begins with a definition of the role of distribution channels in the tourism industry. The chapter then outlines the benefits of using marketing intermediaries (the middlemen who sell offerings within the tourism industry). Further, it explains the concepts of commission and horizontal integration. The chapter then focuses on the activities of key marketing intermediaries such as the tour operator, the travel agent, and the online travel retailer. Next, the various direct intermediaries such as the multimedia kiosks, video conferencing, virtual reality, and global distribution systems are discussed. This technology is changing the role of distribution channels in the industry. The chapter concludes with a discussion of the factors that influence the selection of an appropriate distribution channel. The chapter’s in-depth case study applies the principles of distribution (or place) to Reality Tours and Travel: Slum Tours , in Mumbai, India.

Download chapter PDF

This chapter will provide you with an understanding of distribution channels and their role in the international tourism industry.

After reading this chapter, you should be able to:

Explain the role of distribution channels within the industry

Describe the concepts of commission and horizontal integration

Explore the roles played by tour operators, travel agents, online retailers, destination management companies, and other marketing intermediaries

Understand the impact of information and communications technology on marketing intermediaries

Explain the factors that influence the choices of distribution channels in various sectors of the international tourism industry

Apply tourism distribution principles to Reality Tours and Travel.

Distribution channels are involved in the process of making tourism and hospitality products available and accessible to consumers. We begin the chapter with a definition of the role of distribution channels in the tourism industry. We then outline the benefits of using marketing intermediaries (the middlemen who sell offerings within the tourism industry). We explain the concepts of commission and horizontal integration. The chapter then focuses on the activities of key marketing intermediaries such as the tour operator, the travel agent, and the online travel retailer. Next, we discuss various direct intermediaries such as the multi-media kiosks, video conferencing, virtual reality, and global distribution systems. This technology is changing the role of distribution channels in the industry. We conclude with a discussion of the factors that influence the selection of an appropriate distribution channel.

The chapter’s in-depth case study applies the principles of distribution (or place) to Reality Tours and Travel : Slum Tours, Mumbai, India.

1 Introduction

Tourism products are intangible (Rathmell, 1974 ). This means that they cannot be delivered from point A to point B, as physical goods can. Tourism organisations must get consumers to come to them by selling their offerings directly or indirectly through one or more distribution channels. The industry’s distribution channels are unique because they have an influence on travellers’ itineraries and consumers also participate in the distribution process. In addition, distribution is based on a tourism provider paying a commission to an intermediary (such as a travel agent) who supplies a customer; for many tourism firms, this can affect pricing, competitiveness, and profits (Pike, 2018 : 207) (see ► Chap. 8 ). Intermediaries also play an important role in providing both information and services to tourism consumer markets. These channels are sometimes referred to as the “travel industry”.

The value of place within the marketing mix must not be underestimated, as it is where tourism businesses can gain a competitive advantage. It is the battleground of strategic tourism marketing (Evans, Campbell & Stonehouse, 2003 ). Consumers may have heard of a particular offering. They may also desire the offering and may even be willing to pay its price, but if it is not accessible or available, then they cannot purchase it.

2 Distribution Channels in Tourism

Distribution is regarded as the place of sale in the traditional marketing mix, along with product, price, and promotion (Borden, 1964 ). It describes the location and availability of the product-offering and the method by which it is distributed to consumers. The term “distribution channels” (also known as “the chain of distribution”) describes the system by which an offering is distributed from a tourism provider to a consumer (Holloway & Humphreys, 2020 ).

In the manufacturing industry, distribution channels are used to move tangible goods from the manufacturer to the customer. In the tourism industry, they are used to move the consumer to the supplier (see ◘ Fig. 9.1 ). A supplier (or principal) is any individual or corporate entity in the travel industry contracting with consumers to organise or provide a facility or service directly rather than acting as an intermediary (Beaver, 2012 ). The term “principal” is meant to differentiate agents from tour operators (wholesalers). However, as we will discuss later, this is not always a clear-cut distinction; in some cases, depending on the circumstances, a tour operator can take the role of a supplier.

Distribution channels: other industries versus the tourism industry. (Source: Author’s creation)

Tourism products are traditionally distributed through a number of intermediaries that link tourism businesses with consumers. These intermediaries are either wholesalers, such as tour operators, who consolidate products into packages, or retailers, such as travel agents, which form the link in the chain of distribution and sell bundled packages or individual offerings to end-consumers. However, even before the internet changed everything, this concise description was never that simple. As shown by the dotted lines in ◘ Fig. 9.2 , travel agents did not always go through tour operators, and consumers have always been able to book airline tickets, hotel accommodation, and car rental directly, but many chose not to because it was always too much trouble to make bookings themselves. Similarly, tourism providers are not obliged to sell their offerings through the chain of distribution. Indeed, many of these providers choose to sell directly to the consumer or retailer, thereby cutting out some or all of the middlemen. The latter method is referred to as “disintermediation”.

The theoretical travel supply chain. (Source: Author’s creation)

A retailer is another term for an agent who provides a downstream link between providers and users (Baines et al., 2019 : 539).

The role of intermediaries is to bring consumers (buyers) and providers (sellers) together. Intermediaries improve the flow of information and offerings (termed “distribution channels”) between suppliers or principals and consumers.

2.1 Levels of Distribution in Tourism and Hospitality

Tourism products can be sold to the consumer in a number of ways. In other words, there are several types of distribution (or marketing) channels that can be used to access tourism product offerings and information about services. A marketing channel is a chain of organisations that are concerned with the management of the processes and activities involved in creating and moving products from suppliers to end-user consumers (Kotler et al., 2016 ). These channels range from one-level direct access to more complex three-level arrangements involving several intermediaries. In general, the longer the distribution channel, the higher the cost of the tourism and hospitality offering is to consumers. ◘ Figure 9.3 shows one-, two- and three-level distribution channels for tourism organisations.

The principles of distribution, and the important role of travel agents and tour operators. (Source: Author’s creation)

The simplest form of distribution is to sell directly to the consumer. This single-level channel or unbroken chain is represented by the first arrow in ◘ Fig. 9.3 . This might be a hotel selling a room directly to the person who will stay in it, for example. (In the manufacturing industry, the parallel would be the customer going directly to the factory.) A principal or a tour operator can also sell directly to the consumer. However, in each case, staff will need to process and administer the bookings.

The second form of distribution is indirect, with longer multi-level channels or broken chains. This is known as a “multi-channel distribution system”. A multi-channel distribution system is a system in which a single tourism organisation sets up two or more marketing channels to reach one or more consumer segments (Teltzrow, Berendt & Günther, 2003 ). A single tourism firm may set up two or more direct or indirect marketing channels to reach one or more consumer segments. A tourism principal (or supplier, such as a hotel, a resort, an airline, or a cruise-liner company) can choose to sell through intermediaries such as travel agents (for example, The Co-operative Travel ) or tour operators (for example, Jet2holidays ). Tour operators sometimes use travel agents as intermediaries. A simplified example of distribution in tourism is when tour operators liaise with hoteliers and airlines to buy hotel bed spaces and airline seats. They then produce a travel brochure of their holiday packages. Travel agents stock the brochures and sell the packages for a commission from tour operators. In this way, the tour operator acts as a wholesaler and the travel agent acts as a retailer.

The number and types of links in the chain of distribution vary, depending on the nature of the tourism offering to be distributed, the type of customer, and the type tourism organisation. For example, smaller tourism businesses may sell directly and through one type of intermediary to one type of customer. Most of the larger tourism organisations and multinational corporations (MNCs) have more complex distribution strategies. They use a variety of distribution methods, which reflects the different market segments that the organisation aims to target. The different levels in the travel industry are therefore becoming less defined, as many of the bigger companies fill every link in the supply chain.

2.2 Issues in Distribution in Tourism

Two trends that impacted on tourism distribution over the last couple of decades are commission and horizontal integration.

2.2.1 Commission

A commission is a rate paid to a third party for a sale on behalf of a business (Pike, 2018 : 208). A commission is only paid when a sale is made. It is a cost of getting a sale through a distributor, much in the same way as advertising is a cost to achieve direct sales (Pike, 2018 : 209). When a commission is payable, the range of product offerings that a travel agency chooses to provide varies depending on the commission rates (also known as “commercial agreements”) as well as the demand from the consumer marketplace. Services range from accommodation bookings and transportation arrangements (air, rail, coach and cruise tickets, and car rental) to hotel and tour packages. Different commission rates are paid by different subsectors and commission levels vary around the world. Usually the commission rate is whatever was agreed to between the tourism supplier and the intermediary. Car hire commission, for example, is generally higher than rail or cruise commission. Travel agents can expect in the region of 10–20%, concierge services 10–20%, inbound tour operators 25–30%, airlines 25–30%, and visitor information centres 10% (Pike, 2018 : 209). Most of the leisure travel agent’s revenue comes from selling package tours and holidays. Over the last decade, airlines have reduced the amount of commission paid to travel agents for international flights, under international agreement, to as low as 5%. Commission paid by hotels to online sites (such as ► Booking.com and ► Expedia.com ) is usually at least 15 per cent, but hotels can pay extra for more “visibility”; in other words, given a higher profile in search engine results (Calder, 2019 ). In some cases, if tourism businesses are unable to absorb this fee (which can in fact be as high as 25% of the overall cost) they may be forced to increase prices.

2.2.2 Horizontal Integration

Horizontal integration is where a business forms an alliance with other businesses that are at the same level in the supply chain (Lafferty & van Fossen, 2012 ). This integration allows one organisation to offer various elements of the holiday product to consumers because it owns the travel agency, the tour operator, the transport providers, and sometimes the accommodation provider too. The extent of integration in the global tourism industry has been such that there are large tour operators now linked with travel agency chains, yet these linkages are not always recognised by consumers.

Horizontal integration is where an organisation owns two or more companies, on the same level of the buying chain (Holloway & Humphreys, 2020 ).

2.3 Intermediaries in Tourism

As we saw earlier, an intermediary refers to any dealer – a business or a person – in the chain of distribution that acts as a link, go-between, or middleman between the tourism principal or supplier and its consumers (see ◘ Fig. 9.4 ). An intermediary, therefore, is a person or an organisation that liaises between the tourist and the tourism supplier or provider. The best-known intermediaries in the tourism industry are travel agents, who mainly transact with tourism principals such as airlines, hotel groups, car hire companies, coach operators, destination management companies (DMCs), and tour operators. Intermediaries such as tour operators, wholesalers, travel agents, and online travel agents (OTAs) play a significant role in attracting international visitors to tourist destinations. While consumers are increasingly organising and planning their own trips directly, intermediaries remain effective in reaching large numbers of potential tourists in several markets, particularly long-haul ones. The travel trade can help open up new markets, attract more visitors to a destination, and encourage tourists to spend more time exploring what the destination has to offer.

The elements of a holiday package. (Source: Author’s creation)

Nowadays, both tourism principals and consumers have a great deal of choice of distribution methods, from travel agencies and call centres to sales representatives and supermarkets. Distribution channels influence consumer behaviour and determine the ability of the industry to respond efficiently to consumers’ requests (Cooper, 2016 : 422).

In tourism, the concept of intermediation is complex as principals and intermediaries are able to switch roles in the chain of distribution (see ► Industry Insight 9.1 ). An intermediary, such as a tour operator may act as a principal and vice versa. is A hotel that becomes a tour operator by packaging its surplus capacity to offer midweek breaks aimed at the domestic leisure tourism market, and sells airline tickets and admissions to visitor attractions is an in an all-inclusive package is an example of a principal acting as an intermediary. Similarly, airlines entice consumers to book flights online, and in doing so, encourage them to access a range of third-party services such as car rental and hotels. Some travel companies take on the role of several companies. Indeed, several of the bigger companies or multi-national companies (MNCs) fill every link on the supply chain. For example, TUI Group owns travel agencies, hotels, airlines (see ◘ Image 9.1 ), cruise ships, and retail stores (see ◘ Image 9.2 ). The company owns TUI Airways , which is the largest charter airline in the world with a fleet of 64 aircraft, and was formed by the merger of Thomsonfly (formerly Britannia Airways ) and First Choice Airways .

A TUI aircraft. (Source: TUI)

Integration also takes place within smaller travel trade businesses. Flamingo Tours & Disabled Ventures , for example, functions as a tour operator, a travel agency, and a DMC in that it also runs tours aimed at travellers with special needs. While this integration has the advantage of maximising revenue, it may also be done to ensure service quality.

Retail travel agents not only compete with other travel agents, but also with the internet, with OTAs, and with tour operators that are encroaching into the retail sector by selling directly to end-consumers. Tour operators are also feeling vertically threatened as product owners take advantage of the numerous channels that enable them to sell at the same prices that they give tour operators while retaining a bigger profit margin.

While tourism consists of a number of different sectors, including accommodation and transportation, it is the travel agencies and tour operators that drive the industry and enable it to continue to grow.

TUI Grou p is the world’s largest tourism business with 1600 travel agencies, six airlines with around 150 aircraft, over 380 hotels with 250,000 beds, 17 cruise liners. The TUI Group is listed on the LSE (London Stock Exchange).

Source: ► https://www.tuigroup.com/en-en/about-us/about-tui-group .

2.3 Industry Insight 9.1

2.3 back to basics ryanair selling ‘no-frills’ holidays.

Ryanair, the low-cost airline, moved into the tour operating sector and is not only selling no-frills flights but is selling no-frills holidays. It is offering flight, hotel, and transfer packages on its website, for example, a fully-inclusive seven days’ holiday in Costa Brava at £176 (€200). The strategy was met with ambiguous reactions online; with one person asking: “I wonder if consumers will have to pay for extras such as adding a bed in their hotel room?” Some of the hotels on the website appear to have only basic facilities and some even lack that, according to online reviews. The Aquarium II in Benidorm, for example, has been deemed on TripAdvisor as “the worst hotel”, with many guests saying that they had to bring their own toilet paper and were asked to pay to use sun loungers at the pool. Another guest wrote that “the sofa bed was a disgrace, we got eaten alive every time we slept on it.”

Source: Ellson, Andrew. (2017). ‘Ryanair starts selling budget holiday deals’. The Times , Monday 27 February, p.9.

2.4 Marketing to Tourism Intermediaries

Tourism businesses need to work with travel trade intermediaries to access consumers. There are several tools that can be utilised.

Sales calls: Making appointments with intermediaries such as visitor information centres (VICs), travel agents, tour operators, and professional conference organisers (PCOs) are a useful way promoting travel trade services.

Brochure distribution: Professionally produced brochures should be displayed in VICs, travel agency stands, and hotel foyers to target consumers.

Educationals: Also known as “familiarisations”, educationals entail hosting intermediaries on a visit to the business or destination to experience what is offered first-hand (Pike, 2018 : 13).

Travel trade shows: Participating in travel trade shows is an excellent sales tool for tourism businesses, particularly SMEs. There are two types of travel trade events: travel trade expos and travel industry exchanges. Examples of a travel trade expo include the World Travel Market (WTM), hosted in London annually in November, and the Tourism Indaba, hosted in Durban, South Africa annually in the month of May.

3 The Range of Tourism and Hospitality Intermediaries

There is a wide range of intermediaries between tourism suppliers and consumer markets at various levels in the distribution system. Some of these channels are indirect, while others are direct. Indirect channels tend to be more personal than direct distribution channels. Direct channels tend to be technological in nature.

We begin by looking at indirect marketing channels, and then discuss direct marketing channels.

3.1 Indirect Marketing Channels

There are a number of indirect marketing channels or intermediaries in tourism. These intermediaries are usually referred to as the travel trade (or travel industry).

3.1.1 Tour Operators

The primary function of a tour operator is to assemble the main elements of a holiday (transport, accommodation, ancillary services, and so on) into a single product (or package) and sell this to consumers through a travel agent, airline sales office, or other intermediary (Page & Connell, 2020 ). Tour operators have played a significant role in the growth of international tourism over the last 40 years. For many tourism principals, especially those with limited resources, tour operators have been the only means of reaching international markets (although the internet has changed this). The business of tour operating is an important and dynamic subsector of the tourism industry. It is highly competitive, and is characterised by expansion, mergers, and acquisitions.

A tour operator is any bulk buyer and seller of a single travel and tourism service (for example, acting as a broker in the sector of air transport or hotel accommodation) (Dwyer & Forsyth, 2006 ).

Essentially, tour operators negotiate prices called “special tour operator” (STO) rates from tourism providers, add a mark-up, and consolidate them into packages. In the chain of distribution, tour operators are the wholesalers (or middlemen) of the tourism industry, buying in bulk from principals (for example, airlines, hotels, and car rental companies) and reselling through retail travel agencies. In the tourism industry, tour operators take on the role of wholesalers, since they buy their different tourism offerings (for example, airline seats or hotel bed spaces) in bulk for subsequent sale to travel agents or directly to the tourist. The terms “tour operator” and “wholesaler” are often used interchangeably; however, wholesalers generally develop and market inclusive tours to sell to other elements of the travel trade (via travel agents) rather than to the public.

Inbound tour operators (ITOs) are companies that package individual travel services within their own destination and act on behalf of international tour operators in coordinating components of an independent itinerary or package. Tour operators also carry out several functions, including conducting research, contracting suppliers, costing the package, and marketing and selling the holiday package.

The components of a typical inclusive tour might include transport (for example, a return flight from London Heathrow to JFK Airport in New York with Virgin Atlantic ), a transfer from the airport to the hotel (with a local ground handling agent), accommodation (for example, seven nights’ half board at Holiday Inn Times Square in New York), and optional travel services, such as car hire (see ◘ Table 9.1 ).

The Specialised Roles of Tour Operators

When people think of tour operators, they almost always tend to think of them as outbound tour operators (transporting tourists out of a country). However, tour operators fulfil several different roles. They may organise holidays domestically (within a country), handle incoming foreign tourists (inbound tour operators), arrange holidays in other countries (outbound tour operators), or specialise in an aspect of operating. At one extreme, for instance, there are the mass market operators – the larger integrated tour operators – such as German-owned TUI Travel Group , which owns over 100 brands. TUI owns the UK sun-and-sand operations Thomson Holidays and First Choice (although these band names have been phased out in recent years and been replaced by ‘ TUI ’), the ski operator Crystal, and the Italy specialist Citalia , as well as Hayes & Jarvis, Sovereign, Sunsail, Exodus, Le Boat , and hotel booking online portal ► LateRooms.com . Other examples of mass operators are Jet2holidays (the sister company of ► Jet2.com ), Trailfinders ; all offer a range of holiday brands to appeal to very broad market segments. Then there are the specialist tour operators that target particular niche markets and special interest tourism activities. Each of these kinds of tour operators is briefly examined below.

Domestic Tour Operators

Operators that organise package holidays and tours in a particular country form a much smaller component of the tourism industry than operators who organise tours beyond its borders. The reason for this is that it is relatively easy nowadays for tourists to organise their travel arrangements within their own home country. An example of one of the leading domestic tour operators in the UK is Abercrombie & Kent.

Outbound Tour Operators

Outbound tour operators (OTOs) offer holidays abroad. They sell a package tour to an individual or a group of people of his/her own country to another country or a number of countries for a specific time period.

Outbound tour operators arrange travel documents, transportation to a central point where the tour starts and contracts with inbound tour operators or destination management companies (DMCs) and ground handlers to provide accommodation, transportation, local sightseeing, and other services as needed throughout the tour. Generally, OTOs work in liaison with the inbound tour operators/ground handlers and offer services involving meeting the inbound tour group at the airport, transferring the tour group from the airport to the arranged accommodation in a town or city hotel, arranging or organising local sightseeing that may be a single day or multi days tour of the home county, region or area. These may be in the form of business or leisure-oriented tours.

Inbound Tour Operators

Inbound tour operators (ITOs) specialise in handling incoming foreign (or overseas) tourists and have a different role from that of outbound operators. Some are ground-handling agents, ranging from agents who organise hotel accommodation on behalf of an overseas tour operator to agents who offer a comprehensive range of services, including coach tours (and other modes of transportation), booking of theatre tickets, currency exchange, arranging sightseeing tours and other trips to visitor attractions as well as study tours, and special interest tourism holidays. Various tour-operating companies also specialise according to the markets they service, for example, the UK tour operator Abercrombie & Kent Safaris works with inbound North American tourists.

Specialist Tour Operators

Specialist (or independent) tour operators cater for niche tourism markets (domestic, inbound, or outbound). Tour operators may specialise in terms of the activities that they offer, by destination or by the markets that they serve. Some outbound operators even choose to specialise according to the mode of transport by which their customers travel, for example, coach travel, cruise liners or railway companies.

Specialist tour operators target particular niche markets and special interest tourism (SIT) activities, for example, sports enthusiasts (golf, angling and so on), single travellers, female travellers, pink tourists (gay and lesbian travellers), cruisers, hobby tourists (tourists who are interested in activities such as bird-watching, antique-collecting, painting, photography, naturism, cycling, wine-tasting, and gastronomy), adventure tourists, and marine tourists (see ► Industry Insight 9.2 ).

Carry out research into one of your country’s major tour operators. Describe the scale and structure of the organisation and the offerings it provides.

3.1 Industry Insight 9.2

3.1 specialist marine tourism operator.

Specialist tourism company Marine Travel is an independent marine travel specialist. It caters for the individual traveller as well as servicing larger maritime organisations from its UK and Manila (Philippines) offices. Marine Travel provides a bespoke travel service including flights, hotels, and car hire and many other ancillary products for a cross section of marine-related businesses throughout the UK and worldwide. Marine Travel is the founding partner of mta7 Global Alliance, an alliance of Marine travel companies.

Source: ► http://www.themarinetravel.co.uk/our-company/

3.1.2 Destination Management Companies

Destination management companies (DMCs) manage/handle all tourists’ (or delegates’) travel arrangements when they arrive in the country (Pike, 2016 : 122). The DMC manages all of the visitors’ ground arrangements from booking accommodation, restaurants, and golf tee-off times to arranging transportation, tourist guides, entertainment and adventure activities, and tours. According to the website of a Mexican DMC, “a DMC is a service professional company with a wide-range of knowledge and experience over the conditions and touristic resources of a region” (Tropical Incentives DMC, 2018 ).

DMCs are usually based in the destination and create and manage an infrastructure that allows the various products of that destination to be marketed effectively, and to be sold to tour operators and end-users. Knowledge of the destination (for example, amenities, activities, and attractions) and information about clients (for example, knowing whether clients have been on a safari before) are key to successful destination marketing. For instance, Nomad Africa Adventure Tours puts together trans-Africa expeditions, camping tours, and dive tours.

DMCs are essential agents that work on behalf of international and inbound and domestic tour operators, travel agents, and suppliers. They are also referred to as “ground handlers”, “ground operators”, “reception operators” (in the United States), and “handling agencies” (in India). A DMC works with an outbound agency who gives it a budget within which to design a suitable programme or itinerary on behalf of the client. Partnerships with airlines, car hire companies, hotel groups, and international tour operators enable the DMC to offer its clients competitive deals. The DMC may also be expected to manage corporate branding on behalf of the organisation. This may include items such as signage, gifting, and t-shirts. In addition, the DMC manages everything at the destination, including conferencing arrangements. Some DMCs own all the travel products along the chain of distribution.

3.1.3 Tour Brokers

A tour broker is an individual or a firm that sells coach tours, which are attractive to a variety of markets (Holloway & Humphreys, 2020 ). Tour brokers assemble tour packages for groups and clubs (for example, a religious group, a group of pensioners, or a sports club). These tours are usually organised by a tour leader, who may charter a coach. The tour leader arranges details of the travel itinerary, including booking tickets to visitor attractions, making restaurant reservations, and hiring the services of a tourist guide. These intermediaries play an important role in transporting tourists to hotels and visitor attractions.

3.1.4 Air Brokers

An air broker (also known as a “consolidator”) is a person or organisation that specialises in selling airline seats in bulk to other tour operators. Air brokers can also arrange charter planes or executive jets for individuals, groups, or people who need to transport people or goods by air.

3.1.5 Coach Operators

Coach operators range from small driver-owned companies to large operators that publish their own brochures offering various coaching holidays.

3.1.6 Retail Travel Agents

Travel agents are perhaps the best-known intermediaries. They act as the retailing arm of the tourism industry and are key intermediaries in the distribution chain (Holloway & Humphreys, 2020 : 321). Essentially, they function as convenient outlets at which holidays and other travel-related offerings can be purchased. The first travel agency appeared in the mid-1700s; with the inception Cox & Kings in 1758. The company is still in business and is the longest-established travel agency in the world; it celebrated 250 years of being in business in 2018 (► www.coxandkings.com/about-us/index.shtml ). Travel agents organise personal travel and accommodation for travellers. Travel agents generally act on behalf of principals (such as hotels, airline companies, railways, and cruise-lines) as well as other intermediaries (including package tour operators, DMCs, and tour brokers). Therefore, (unlike tour operators and principals) they do not purchase tourism offerings or hold stock of any travel product offerings. (This is sometimes referred to as consignment sales, which involve no actual transfer of ownership.) Only when a consumer has decided on a purchase do travel agents approach the principal on the consumer’s behalf to make the purchase. This has an important implication for the business of tourism distribution, as travel agents do not carry any financial risk in terms of unsold stock or sales (unused bed spaces, empty seats on aircraft or unused places on tours) because they do not purchase offerings in advance. This means that any financial risk lies with the principal or tour operator. Nonetheless, when there is high demand for a particular offering and supply is short, the travel agent can only make the sale if the tour operator provides sufficient availability. Thus, travel agents cannot adjust supply for popular destinations. They do, however, have to have a guarantee for the value of their air-ticket sales, which is often a substantial amount.

In many ways travel agents are similar to tour operators. The main difference is that a travel agent builds the business around their retail space. Tour operators are less likely to have retail space - as they sell via travel agents - they place more emphasis on selling tailor holiday packers to suit individual groups of customers.

The main task of a travel agency is to supply the public with travel services. Most travel agents handle some leisure and some corporate travel. Besides their main role of selling holidays and business travel, travel agents act as a source of information and advice on travel services. For example, they offer advice on visa applications (nowadays, visa procedures and applications are outsourced to companies appointed by consulates in order to facilitate the process), make reservations for visitor attractions and entertainment venues, and plan itineraries (see ► Industry Insight 9.3 ). Many full-service travel agents have evolved into more specialised holiday shops, which are one-stop travel shops where consumers can purchase a variety of travel-related products and services ranging from selling travel insurance, coffee, and luggage to exchanging money and arranging visas. Customers pay an additional fee for some of these value-added services.

Characteristics of Travel Agents

Most travel agents charge a service (or “management”) fee (built into the cost price). Some travel agents charge a percentage while others charge a flat fee. A travel agency company, for example, may charge a standard fee of £10 (€12) for a domestic holiday booking and £15 (€18) for international travel. However, the fee is only payable if the client actually buys from the agent. Some travel agencies charge for giving information and charge for brochures (usually refunding when a booking is made). Travel agencies earn their income mainly from the commission that they receive from each sale involving principals, tour operators and other intermediaries. Up until about fifteen years ago, commission from airlines was the main source of income for travel agents, but only a few airlines continue to pay commission.

Browse this website to view Virgin Atlantic’s Fares & Ticketing courses: ► www.gsmlondon.ac.uk/professional/travel-and-tourism/virgin-atlantic-fares-and-ticketing

Quality customer service (QCS) is paramount if an agency is to succeed in the competitive retail travel business. Travel agents are expected to be on call 24/7 in order to make last-minute changes to itineraries in response to delayed flights, airlines strikes, or natural disasters (for example, severe weather conditions). QCS ensures that the needs and wants of an agency’s customers are satisfied, helps gain repeat business, and gives the agency a competitive advantage. Travel agency managers need good interpersonal skills to be able to manage a team of people as well as the technical skills required for financial management of accounts and cash flows, the invoicing of customers, and the control and running of a business. Most travel agencies have an online presence – these are known as “hybrid” agencies – offering both online and brick-and-mortar retail stores; OTAs, however, generally do not have a so-called “bricks-and-mortar” presence.

Travel agencies have responded to technological advances such as the internet as well as to adjustments to earning levels (caused by a reduction in commission rates) by offering value-added services (or “add-ons”), charging fees for various professional services (itinerary planning, for example), and providing QCS. In essence, travel agents are becoming agents for the traveller instead of for the tour operator or principal.

There are three several ways of categorising travel agencies: multiples, miniples, and independent agencies, discussed below.

Multiple travel agencies are private companies that usually have a presence on the main high street of all of a country’s major cities and most large towns. Many of these, for example, American Express (USA), The Flight Centre (Australia), Going Places (UK), TUI Holiday Store (Europe) (see ◘ Image 9.2 ), ► Yatra.com (India) are household names in the international tourism industry. Multiples comprises a number of national chains, often part of large (or parent) organisations. Airtours , for example, are owned by Thomas Cook (now Hays Travel ), while Student Flights is part of the Flight Centre Limited group. These types of agencies deal with high volumes of clients and are equipped to sell all types of leisure and business travel to individuals or groups. As with tour operators. Some multiple travel agencies such as Student Universe and Trailfinders cater specifically to the Higher Education (HE) student market and list exclusive airfare deals and travel products. STA Travel , a travel agency specialising in student travel since 1971, ceased trading in August 2020 due to the coronavirus pandemic.

A TUI high street/shopping mall store. (Source: TUI)

Miniple travel agencies have a number of branches located in particular parts of a district or area, meeting a regional demand. For example, Althams Travel (established in 1874) has most of its branches in Lancashire in the North West of the UK. Miniples do not benefit from economies of scale to the same extent as multiple travel agents, but they are able to build close relationships with business and leisure tourists. However, their success often makes them prime targets for takeovers, mergers, or acquisitions by the multiple travel agencies.

Independents

Most independent travel agencies are small, family-run businesses. The owner usually acts as manager and employs two or three members of staff. The independent travel agency market in many countries is extremely competitive, and thus is making increasing use of marketing tools and modes of distribution to maintain its presence. Some travel agents employ independent travel consultants (ITCs) who work from home while the head office plays a supportive role. Many are specialist agencies focussing on a specific market, destination, or activity, such as birding or golf. Birdfinders, for example, sells only specialist products to a niche market (avitourism) and is therefore a niche travel agency.

3.1 Industry Insight 9.3

3.1 southall travel ltd.

Southall Travel is a privately-owned UK-based travel agency located in the Municipal Borough of Southall, Middlesex. The company is part of Southall Travel Group and operates both physical retail outlets and online booking. Formed in 1984, Southall Travel Ltd. has over 40 years’ experience in the air travel business. The company provides air booking services, hotels, and package deals to clients throughout the UK. Southall Travel Ltd. has an ever-increasing network of customers in the entire UK including individual travellers, small, and medium enterprises as well as major businesses. The company’s high degree of customer orientation is the key for their exponential growth in the past. The company arranges airline reservations, hotel bookings, visa services, car rentals, and holiday package deals. Efficient and knowledgeable travel consultants are available 24 hours-a-day, 7 days-a-week to help clients with planning and scheduling of their travel.

Source: ► http://www.southalltravel.co.uk / ► www.holidayhypermarket.co.uk/operators

3.1.7 Online Travel Agents

Online travel agents (OTAs) are electronic retailers. They provide a convenient booking mechanism for consumers and are therefore an integral part of the distribution system for some tourism businesses, such as hotels (Pike, 2018 : 13). OTAs conduct business via the internet and do not have any bricks-and-mortar presence (that is, stores or locations). One of the features of an OTA is that consumers often search online through hotel choices, and then visit the.com to book the reservation. It is for this reason that hotels and other travel companies aim to have a good presence in terms of photographs and descriptions on OTA sites (Kotler et al., 2017 ). Traditional travel agencies now have to compete with OTAs, such as Travel Supermarket, ► Yatra.com , ► Lastminute.com , ► Expedia.com ( Expedia acquired Trivago in 2013), Holiday Hypermarket, Travel Republic , and Travelocity.

► Booking.com , ► Priceline.com , ► Agoda.com , ► Kayak.com , fare aggregator and travel metasearch engines where consumers can search for best prices for flights, hotel rooms, and holidays. These website platforms offer consumers the ability to choose between thousands of hotels from around the world. But contrary to popular belief, they do not always have the lowest prices available. In some cases, it may in fact be less expensive for consumers to telephone and e-mail directly to the hotel to make a booking. Some of the large OTAs enforce rate-parity clauses which ban hotels from offering cheaper rates anywhere else online (Hern, 2020 ). This, however, does not exclude consumers booking using e-mail, telephone, or walk-in visits.

According to the ABTA’s Holiday Habits Report 2019 there has been a drop in the number of UK consumers using a PC to book a holiday from 92% to 85%. Tablet bookings have remained steady, being used by 23% of people. Mobile bookings, however, have seen a significant jump from 13% to 20%.

3.1 Industry Insight 9.4

3.1 ota: on the beach.

On the Beach is an online travel agency/retailer, which sells beach holidays to places including the Canaries, the Balearic Islands, the Algarve, Turkey, and Greece. The company is one of the UK’s leading OTAs of beach holidays. From humble beginnings in 2004, as a start-up business in a terraced house in Macclesfield, England, to a listing on the London Stock Exchange (LSE) in 2015, the company sends over one million holidaymakers away on beach holidays each year.

► https://www.onthebeach.co.uk/about-us

3.1.8 General Sales Agents (GSAs)

GSAs are business to business (B2B) entities that represent the interests of a group of independent tourism businesses (such as an airline or hotel group) in a particular market (Pike, 2018 : 216). The GSA acts as a local agent in a country in which the tourism product has no presence. An example is Aviareps, an international company with offices on every continent that acts as a local agent for a number of airlines and other tourism providers.

3.1.9 Alliances or Consortia

Tourism intermediaries and suppliers can also market themselves by becoming part of an alliance or consortium. An alliance is a partnership formed when two or more organisations combine resources and work together to achieve a common objective (Kogut, 1988 ). An example of this affiliation is the marketing consortium, which allows independent organisations to carry out mass marketing or compile a joint brochure Indian Hotels Company Limited (IHCL) Taj Hotels is an example of a hotel consortium operating, across South Asia, such as the Taj Mahal Palace , in Mumbai, India.

Organisations can combine their resources into a partnership in order to promote their respective tourism offerings. An example of this is the BestCities Alliance , a global convention bureau alliance that includes the cities Berlin, Cape Town, Chicago, Copenhagen, Dubai, Edinburgh, Houston, Melbourne, Singapore, and Vancouver. The alliance enables these cities to align international marketing campaigns and to share knowledge as well as to collaborate on information distribution, online campaigns, events, and travel trade shows.

Consortia are widely used in the marketing of visitor attractions, tour operators, travel agents, hotels (see ◘ Image 9.3 ), B&Bs, and destinations. For example, a marketer of a number of visitor attractions and tour destinations (such as a city walking tour, a trip to a museum, and a visit to an art gallery) can combine resources (also known as “clustering”) to produce marketing collateral, such as a brochures and an online portal (website) and (see ► Industry Insight 9.5 ). Tour operator and travel agency consortia (for example Carlson Wagonlit Travel in the USA) enable a number of smaller businesses to join together to gain market share in a region, compete with major operators, and provide competitive rates. &Beyond, for example, is an upmarket tour operator consortium that organises conservation wildlife holidays in Africa, Asia, and South America.

The Red Carnation Hotel Collection – an example of a consortia

3.1 Industry Insight 9.5

3.1 the vanilla islands.

The “Vanilla Islands” is an alliance of Mauritius, Reunion, Seychelles, Madagascar, and Comoros Island with the aim of boosting tourism to the islands of the Indian Ocean. The tourism sector, which is the backbone of the economies of most of these countries, is facing competition from emerging tourism products. In order to tackle this threat and to increase their attractiveness to tourists, the countries are working together on a shared marketing strategy and a common selling point to promote their different cultures. The Vanilla Islands Organisation’s objective is to position the Indian Ocean region as a quality world-class holiday destination that offers unparalleled diversity and one of the last frontiers of sustainable tourism.

Source: International Coalition of Tourism Partners. (2019). Vanilla Islands Organisation. [Online], Available: ► http://ictp.travel/vanilla-islands-organization/ Accessed 31 May 2019.

3.1.10 Franchises

Franchises are businesses in which a franchiser permits a franchisee the right to engage in selling, offering or distributing its offerings using its trademark, name and advertising. Typically, a firm must be large enough to offer management support, a good business concept and finance. Franchising has become popular in the tourism industry, particularly in the hotel sector. Some popular hotel franchises include Best Western Hotels and Holiday Inn Hotels. Examples of travel agency franchises that have proliferated throughout Europe and the USA include Flight Centre and Travel Leaders (USA) . Likewise, in the car rental business Thrifty Car Rentals have global franchising operations as do Costa Coffee in the restaurant sector.

3.1.11 Sales Representatives

Sales representatives are hired by principals or intermediaries to develop existing business and to generate new business in a region or country. It is often more cost effective for a large tourism organisation to hire a sales representative than to use its own sales staff, especially when the market is overseas and there are cultural differences.

The main functions of sales representatives (also known as “contractors”) are to call on and make deals with existing and potential contacts (such as hotels), advise and update travel agents about the services they offer, support them with merchandising material, and to provide their agents with suitable marketing collateral. (This is a similar arrangement to that of representatives of pharmaceutical companies who service medical doctors.) Multi-national companies such as Kuoni Travel has sales representatives who conduct business in the Maldives, Mexico, Dubai, Switzerland, and so on. Smaller travel companies such as Bike Tours Portugal have sales representatives in the UK, USA, and Canada. Sales representatives receive a commission on the bookings that they make.

3.1.12 Professional Conference Organisers

Professional conference organisers (PCOs) specialised companies that plan and co-ordinate external conferences on behalf of organisations. They are employed by corporations, associations, government agencies, educational institutions and large non-profit organisations. PCOs play an important role in the meetings industry. The term ‘professional conference organiser’ is used interchangeably with a range of other titles such as meeting planner, conference co-ordinator and meetings executive (see ► Industry Insight 9.6 ).

3.1 Industry Insight 9.6

3.1 events plus: a one-stop service.

Events Plus Egypt, a professional conference organiser (PCO) based in Cairo, Egypt, started operations in 2004. Events Plus Egypt (EPE)is a full-service events management company. It has the advantage that an in-house network of services, including public relations, advertising and design, investor relations and client services, is at its disposal. This sets the company apart in the marketplace. According to Omar Mohamed., manager of EPE, “The role of a professional conference organiser is to act as a conductor, bringing all the variety of services and suppliers to order. It is also to act as a conduit between the client and all the subcontractors involved with the conference.” EPE offers a one-stop service that provides a very tailored and detailed offering for its clients. Omar says, “We take buying behaviour extremely seriously... we carry out market research to help us identify potential clients, specifically corporates, and to make sure that we know everything about a potential client’s buying behaviour before we approach it to promote our services.” Omar adds, “If our client’s delegates play golf, we want to know whether they need to hire golf clubs and if so, should the golf clubs be right- or left-handed?”

3.1.13 Incentive Travel Planners

Incentive travel planners (ITPs) are specialised tour operators that primarily serve corporate clients. They arrange and put together tailor-made packages that include accommodation, meals, transportation, special functions, and tours (Holloway & Humphreys, 2020 : 325). The packages that they assemble are given to certain of their clients’ employees or dealers as a reward for outstanding sales or work performance. Romania’s unique locations, (see ► Industry Insight 9.7 ) and the wide range of leisure activities on offer (i.e. adventure tourism, mountains, beaches, Dracula tours, and Gothic architecture) make it a leading player in the incentive travel market.

3.1 Industry Insight 9.7

3.1 bucharest: one of the world’s top ten incentive travel destinations.

Over the last decade, Romania’s capital city Bucharest has become one of the most popular tourist destinations for executives. According to the International Congress and Convention Association (ICCA), in 2017 Bucharest was placed among the world’s top ten incentive travel destinations.. The largest of the Balkan countries, Romania offers outstanding mountain scenery and a coastline on the Black Sea. The capital, Bucharest, is known as “Little Paris”, featuring beautiful architecture and the second largest building in the world – the Palace of Parliament – with over 3000 rooms. The Balkan City is competing against the likes of New York, Dubai, and Barcelona. Businesses in the UK, the USA, Germany, France, and Italy are finding that Bucharest and a Romanian holiday with mountains and beaches are terrific ways of motivating and rewarding their best executives (◘ Image 9.4 ).

Bucharest – a popular incentive travel destination. (Source: Unsplash)

Source: ► http://incentiveandmotivation.com/the-worlds-10-best-incentive-travel-ideas-for-2016-incentive-motivation/

3.1.14 Visitor Information Centres

Local tourism offices (or organisations), visitor (or tourist) information centres representing villages, towns and cities are often the first contact or point of entry for domestic and international tourists seeking accommodation, transport, and tours in these regions. The purpose of a visitor information centre (VIC) or a local tourism office is to provide tourist information that is accessible to all. These organisations have the responsibility of selling their destinations’ unique selling propositions or points (USPs). VICs are intermediaries between tourism suppliers or destinations and tourists. Besides handling visitor enquiries, local tourism organisations and visitor information centres also make bookings on behalf of visitors. Communication facilities such as multi-media kiosks (discussed in the next section) are often available at these information centres. Visitor information centres are increasingly under threat from technology as more and more tourists make use of smartphones and tablets to access travel information.

3.1.15 Destination Marketing Organisations and Convention and Visitor Bureaux

The term “destination marketing organisation (DMO)” is generally used to refer to a convention and visitor bureau (CVB), a provincial office, a regional tourism organisation, a local tourism organisation or a national tourism organisation. Most DMOs are information brokers in the tourism distribution system (Pike, 2018 : 214). ► Chapter 14 discusses DMOs in more detail.

Convention and visitor bureaux (CVBs) are located in cities that have the appropriate meetings products and services to meet the demands of the meetings industry. The prime function of these bureaux is to promote these cities to the national and international tourism industry. CVBs play an important role in positioning the destination in the tourism industry as a conference and meetings destination. Meetings and events provide important economic benefits to the host destination, city or country.

3.1.16 Accommodation Booking Agents

Accommodation (hotel) booking agencies specialise in procuring accommodation facilities and services on behalf of their clients. They range from large organisations run by global hotel brands, to independent properties. Perhaps the best-known accommodation booking agency is Airbnb whose members can use the service to arrange or offer lodging, primarily homestays, or tourism experiences. The broker, which is considered part of the “sharing economy” offers you someone’s home to stay in, instead of a hotel. Airbnb has caused controversy in many destinations around the world because it is perceived as taking business away from hotels and traditional accommodation providers (Zervas et al., 2017 ).

3.1.17 Tour Guides

Tour (or tourist) guides and couriers travel with tourists, working to ensure travellers’ needs are met and that their visit runs smoothly. Their work often involves researching on behalf of the traveller, making travel arrangements for accommodation and sightseeing, and organising excursions. Many tour guides and travel couriers are freelance, and work for tour operators.

3.1.18 Concierge Services

Most upmarket hotels, resorts, and cruise liners offer a concierge service. A concierge essentially provides information and bookings for local services (Pike, 2018 : 214). In the hospitality industry, a concierge is a person who is employed in a hotel or resort to help guests by performing various tasks, such as booking theatre tickets, making restaurant reservations, booking hotels, arranging for spa services, recommending nightlife hot spots, booking transportation (including taxis, limousines, airplanes, and boats), and co-ordinating porter service (luggage assistance requests). Concierges are usually well-informed on where to go and what to do in the local area.

3.2 Direct Marketing Channels

Having considered the various indirect marketing channels, we will now consider direct marketing channels. Direct booking systems are growing rapidly with developments in digital technology, enabling consumers to book a tourism product from the comfort of their homes, workplaces, or while on the move (accessing the internet via a mobile phone or iPad/tablet). In addition, technology provides consumers with all of the information that they need to make a decision about travel.

There has been a surge in the provision of information and booking using online communication systems over the last decade. The same technology that renewed the role of the travel agency is now available to the consumer (see ► Industry Insight 9.8 ). Digital technology – in particular the internet and call centres – has been the driving force behind disintermediation, a term that refers to the way in which consumers bypass traditional intermediaries to deal directly with principals and suppliers of tourism offerings (Middleton & Clarke, 2001 : 293). Disintermediation can provide market access for sole traders and tourism SMEs in developed and developing countries. For example, tourism and hospitality brands such as Uber , the global taxi firm where customers can request a taxi using an app on their mobile phones, has provided opportunities for people with cars to earn income by providing personalised transport at prices lower than established operators. The likes of Uber and Airbnb are considered part of the “shared economy” and have changed the rules of the competitive environment in the sector where existing companies are bypassed entirely through the use of apps and mobile technology.

Direct marketing channels include information and communications technology and the internet, global distribution systems, electronic point-of-sale systems, multi-media kiosks, virtual reality (VR), and call centres.

According to research carried out by ► compareholidays.com 80% of tourists book their holidays online (► www.travelweekly.co.uk/articles/41280/80-booking-holidays-online-finds-study ).

3.2 Industry Insight 9.8

3.2 travel agents versus the internet.

With the arrival of the internet in the early 1990s, travel changed for good. Many people were concerned that the high street travel agency would become obsolete. However, traditional travel agencies are fighting back against the internet. Why? Firstly, consumers are becoming confused by the overwhelming amount of information that is available on the internet. There are more than 50 million holidays available on offer on the internet. Type in the word “travel” and you’ll get five billon responses on Google! Secondly, a travel agent provides travellers with a personal touch (especially if there are travel disruptions) not afforded by the internet. Thirdly, a travel consultant at a travel agency can give personal knowledge and experience. That said, the online travel market is still expected to grow. Booking travel via the internet is convenient. Consumers can book in the comfort of their own homes or on the move via their mobile phones. In addition, consumers booking travel online can shop around and know what they are paying for.

Source: Adapted from information on the BBC programme The Travel Show , 13 October 2018.

3.2.1 Digital Technology

Travel distribution has been affected most by digital technology. Internet-based (online) booking systems are increasingly being used, and in doing so, are eliminating traditional travel agents from the distribution chain (Buhalis & Jun, 2011 ). It is becoming ever easier for leisure tourists to search for travel information and to make their own bookings, buying individual elements of the holiday package from different providers. In addition, the growth of OTAs, such as ► Expedia.com and Travelocity , has decimated traditional “bricks and mortar” travel agents and as such they are rethinking their roles as “specialist” travel agents (Cooper & Hall, 2019 : 116). Nevertheless, tour operators appear to have benefited; internet technology has enabled tour operators to provide flexible packages (“dynamic packaging” – see ► Chap. 8 ) and deal directly with consumers (travel agents again be at a loss).

The use of mobile devices used to access travel websites has proliferated. A mobile phone, which is essentially a “smart computer”, is a single point of contact for people (Wang, Park, & Fesenmaier, 2012 ). Mobile phones and other mobile devices, such as tablets and iPads enable consumers to search for travel information, shop around for travel services, and access travel apps (24 hours a day, 7 days a week while on the move or in the comfort of their own homes.).

Consumers, travel agents, or tour operators can use a fare aggregator or meta-search engines, such as Google Flights, Google Hotel Finder, TravelFusion, ► Booking.com , or ► Kayak.com . These tools utilise powerful search functions and redirect users to airline, cruise liner, hotel, car rental websites, or OTAs for the final purchase of an e-ticket. For instance, Google’s Hotel Finder allows users to find hotel prices with Google. However, it does not offer to book hotels; it merely compares rates. Unlike global distribution systems (GDSs), meta-search engines have no capacity to analyse the information, but merely find it and make it available to the user. Aggregators generate revenues through advertising and charging OTAs for referring clients. The difference between a ‘fare aggregator’ and ‘metasearch engine’ is unclear, although different terms may imply different levels of cooperation between the companies involved. ► Orbitz.com is a travel fare aggregator website, and travel metasearch engine. The website is owned by Orbitz Worldwide, Inc. , a subsidiary of Expedia Inc.

Airlines, especially low-cost carriers, tour operators, travel agents, and hotels (particularly small hotels) are controlling distribution and driving down costs by using the internet. Even companies that are not typically associated with tourism or travel distribution such as supermarkets, retail shops (e.g. in the UK: WH Smiths ), post offices, petrol stations, universities, and car rental companies. Are offering travel bookings. ► Chapter 12 examines the role of the internet in tourism marketing in more detail.

New innovations offering “seamless” travel arrangements as practical solutions to travellers include artificial intelligence (AI), virtual reality (VR), and speech recognition technologies Examples of these include keyless hotel room-access using a mobile phone, a robotic multi-lingual concierge, real-time luggage tracking through a mobile app, and having a single app for all travel planning, booking, and travel needs. Research conducted by the travel fare aggregator ► Booking.com shows that almost a third (31%) of global travellers like the idea of a “virtual travel agent” in their homes (similar to virtual assistants, such as “Siri” and “Alexa”), using voice-activated assistants to answer travel queries, and 20% of “new travellers” want to see technology such as augmented reality (AR) helping them to familiarise themselves with a holiday before they arrive at the destination (Booking.com, 2019 ).

Global Distribution Systems

While it is easy enough for a consumer to book a flight and/or accommodation via the internet, travel agents have access to global distributions systems (GDSs) that give them real-time access to a vast range of travel products and services, including flights, accommodation, and car rental services. It is impossible for the end-consumer to replicate this usability on the internet because these global distributions systems utilise highly sophisticated software to access and analyse all available flights in order to build an itinerary to specified criteria, for example, by price, by routing or by preferred airlines. When a booking has been made through a global distribution system, payment is made for the booking through a billing and settlement plan (BSP). A BSP is a unified worldwide system that facilitates billing and payments between travel agents and approximately 400 IATA-affiliated airlines (IATA, 2018). The three biggest global distributions systems are Amadeus, Sabre, and Travelport. These systems are dominated by American and European airlines, since they developed the systems.

Electronic Point-of-Sale Systems

Electronic point-of-sale (EPOS) systems allow consumers to buy tickets directly at supermarkets, petrol stations, shops, and travel departure points such as airports and train stations. In most countries, self-ticketing machines can be found at airports and train stations, enabling consumers to avoid long queues. Electronic point-of-sale systems are particularly convenient for business people who are frequent travellers and need to purchase tickets at the last moment (see ◘ Image 9.5 ).

An electronic point-of-sale system (EPOS) in action. (Source: Unsplash)

Multi-media Kiosks

Multi-media kiosks provide educational information, information directories, and point-of-sale systems. Multi-media kiosks are alternatives to traditional printed travel literature and brochures, which take up a lot of space, and can quickly become disorganised and out of date (Fesenmaier & Kingsley, 2010 ). Kiosks provide an interactive guide to a variety of tourist attractions, activities, and offerings and promote tourist destinations.

Call Centres

Call centres are sophisticated telephone information and booking companies. The purpose of a call centre is to establish a single point of contact for people wanting to communicate with an organisation. In recent years, call centres have been one of the fastest-growing industries in countries such as the Philippines (coined ‘the call centre capital of the world’) and India. They enable larger tourism organisations such as airlines and budget hotel chains to process consumers’ telephone calls more efficiently. Call centres were developed to cater for trends such as increased usage of telephones, demand for services 24 hours-a-day, and expansion of the use of mobile phones. Online booking site SafariNow , which has over 100 staff, utilises call centre agents. However, call centres are becoming increasingly automated, which may well result in fewer jobs in the sector, particularly in countries such as India and the Philippines (The Economist, 2016).

Online Video Conferencing

Virtual conferencing is now widely available and has significantly increased in popularity over the last few years largely due to the outbreak of the coronavirus pandemic in 2020. It is really an extension of the telephone system, with video cameras and television screens linked by high-speed telecommunication lines to enable users to hold discussions. Speed is a key factor in video conferencing (VC); A meeting may be conducted without the need for travel. Participants in the average virtual conference meeting (also known as “virtual meetings”) need to invest only 4 hours of their time. Videoconferencing provides cost savings for firms. Costs are saved on flights, hotel rooms, car-rental services, food, and employee time. An example is Zoom Meetings, a video- conferencing company based in the USA that specialises in video and audio conferencing, webinars and wireless communication across electronic devices and room systems. Microsoft Team, Slack, and GoToMeeting are other video-conferencing offerings.

What do you think are the advantages of travelling to meet someone face-to-face rather than talking by video conference?

Virtual Reality

Virtual reality (VR) is defined as the use of a computer-generated three-dimensional environment that allows the user to experience a virtual world, resulting in real-time simulation of one or more of the user’s five senses (Guttentag, 2009 : 638). Nowadays, many tourism organisations and products make use of VR or VR-type technologies to attract tourists. For instance, consumers can find hotels, DMOs, theme parks, museums, national parks, wine farms, and other destinations offering 360-degree virtual tours on the internet. VR allows the user to experience a situation visually and audibly. (Flight simulators are examples of more advanced and interactive forms of virtual reality.) With this type of VR programme, the user wears a visual headset with earphones (see ◘ Image 9.6 ). The machine provides a simulated travel experience. Although it is a very recent technological addition, VR may affect demand for tourism destinations in the future (see ► Industry Insight 9.9 ).

VR being used at a travel trade show. (Source: SA Tourism)

VR can give users a taste of what a particular resort is like, including the weather, the beach, and so on. It also allows consumers to go to places that are inaccessible (such as the planet Mars) or even to places that do not exist except in the imagination. The internet provides opportunities for browsers to take virtual tours of key visitor attractions around the world. For example, on the Open Heritage website, it is possible to view detailed 3D models of unique heritage sites such as Pompeii in Naples, Italy, the Brandenburg Gate in Berlin, Germany, and a WWI one battlefield at Flanders Field in Belgium using a web browser and VR interface developed by Google.

Augmented Reality

Augmented reality (AR) allows travellers to experience three-dimensional models of destinations and ‘meet’ tour guides. AR also helps with navigation in unfamiliar places and destinations. Details about local destinations and visitor attractions can also be displayed as a tourist points his/her smartphone at them, providing information at the exact time that it is most relevant. Over recent times, AR has become increasingly popular within the travel industry. This is primarily because it enables hotels and other tourism and hospitality businesses to enhance the physical environments that they are trying to encourage customers to visit, including local attractions and hotel rooms. Mobile augmented reality (MAR) can help tourists in the process of obtaining such information in a simplified way. MobiAR is an Android service platform for tourist information based on AR, which allows users to browse information and multimedia content about a city through their own mobile devices (Marimon, 2010 ).

3.2 Industry Insight 9.9

3.2 vr at the national archaeological museum, madrid, spain.

In 2017, the National Archaeological Museum (Spanish: Museo Arqueológico Nacional) in Madrid, Spain teamed-up with the technology company Samsung to transform cultural experiences inside and outside the Museum by using the latest mobile devices and VR technology to enrich visitor experiences. The “Living in...” (in Spanish: Vivir en...) offers visitors a virtual journey through the history of Spain. The collaboration between the National Archaeological Museum and Samsung included the installation of a large video wall in the Museum’s main lobby, made up of 12 LED panels with Samsung’s most advanced visual display technology. In addition, Samsung supplied 80 new tablets to the Museum for use as multimedia guides for visitors. The VR experience includes five scenarios of the History of Spain (Prehistory, Protohistory, Roman Hispania, the Middle Ages, and the Modern Age), which form part of the permanent exhibition. A virtual guide narrates visitors through time; visitors pass through spaces such as the caves inhabited in the Palaeolithic period, the streets of a Celtiberian village, the forum of a city in Roman Hispania, a market from the age of the caliphates, and a home from the Golden Age. The virtual journey has been designed with the scientific input from the Museum’s history and archaeology team. To ensure visitors enjoy the experience to the fullest and discover more about the past, each of the Museum’s rooms corresponding to each historical scenario has a station with Gear VR goggles, Samsung Galaxy S9 smartphones, and headphones. The VR experience in the National Archaeological Museum was designed by Magoga Piñas Azpitarte, a specialist in historical digital recreation and animation. Magoga, who is the Museum’s Director of the ‘Living in…’ has worked on major exhibitions, audio-visual productions and film projects such as the HBO’s Game of Thrones, National Geographic’s Cosmos, a Spacetime Odyssey, and Alejandro Amenábar’s Ágora. In 2018, a multi-platform virtual visit, accessible via smartphone, tablet, or laptop was devised allowing users from outside the Museum – anywhere around the world – to visit the rooms of the National Archaeological Museum remotely was launched.

3.3 Selecting Marketing Intermediaries

Tourism marketers must choose the intermediary that is most effective and appropriate in reaching their target markets. They must take care when selecting intermediaries. Since they make direct contact with consumers, intermediaries can influence levels of quality and satisfaction. The choice of intermediary also depends on the size and type of the organisation. For example, a large organisation such as Emirates Airline uses several distribution channels to reach different target markets. A small business, such as a B&B, in contrast, deals directly with consumers, many of whom will purchase at the location of the business. (These consumers are known as “walk-ins”.) Three factors that may influence a tourism and hospitality organisation’s intermediary selec-tion are cost, control and level of service, and efficiency (Holloway & Humphreys, 2020 : 240).

Distribution channels (the place component of the marketing mix) deal primarily with two main issues: accessibility and availability. The channels of distribution in the tourism industry are vastly different from the ones used by all other industries. The consumer has to be enticed or attracted to travel to the offering. In this chapter, we examined the role of distribution in tourism, and then discussed the concepts of commission and horizontal integration, two trends that have impacted the sector in the last couple of decades. We then discussed the functions of tour operators, travel agents, online retailers, and other marketing intermediaries We also looked at how the recent pace of technological advances has affected the role of intermediaries in tourism. The growing importance of digital technology in giving participants in the tourism industry a competitive advantage is clear, although the human interface will always remain a crucial element. Technological developments have revolutionised the travel trade affecting all tourism enterprises, from small to medium enterprises (SMEs) to multinational corporations (MNCs). Technology, in particular the internet and online booking, has created a digital form of distribution for SMEs bound by limited resources for reaching customers. Product distribution and markets no longer have to be dictated by location. However, this same digital technology can pose a threat to traditional travel agents and other traditional intermediaries, since consumers can book flights and hotel rooms directly at a lower cost (in most cases) than they would pay through an intermediary. In addition, there are concerns over the security of financial data and personal identity as online fraud increases and consumers lose confidence in online business transactions (Mills & Law, 2015 ).

For many tourism businesses, distribution is an important facet of strategic management. Tourism marketers need to be familiar with the diversity of distribution channels now available as well as how best to manage them.

Review Questions

Explain why place (distribution) is such a key component of the tourism and hospitality marketing mix.

Briefly explain Why might a supplier or principal choose to sell directly to the consumer?

Explain the major differences between a distribution channel for a manufacturing company and a distribution channel for a tourism organisation.

Why do companies use marketing intermediaries?

Discuss how you think technology will affect distribution channels in the tourism industry over the next five years.

What is the difference between a tour operator and a travel agent?

Can a business have too many distribution channel members?

Select two channels of distribution for these tourism principals:

A low-cost airline

A hotel group

A mass-market tour operator.

Compare the two distribution channels and explain why they are best suited for these companies.

Explain the advantages and disadvantages of tourism companies forming an alliance.

Go online to find a tourism or hospitality company that allows consumers to make a booking directly through its website. Is the design of the site effective? What market segment is the company and this functionality targeting?

In-depth Case Study 9: Distribution Strategies: Reality Tours & Travel, Mumbai, India: A Slum Tour Oper ator

To understand the role of intermediaries in tourism

To apply the principles of distribution to the case study.

If you visit Dharavi slum, as many tourists do, the weather may be hot and the locals friendly, but there will be no golden sands, museums, or luxury hotels. So why does Dharavi, a locality in Maharashtra, India, attract such high numbers of inquisitive tourists? It is because Dharavi, the second-largest slum in the continent of Asia, and the third-largest slum in the world, is a renowned location which forms part of the growing tourism sector known as ‘slum tourism’, which falls under the broader umbrella concept of ‘dark tourism’.

It is useful to make the distinction between slum tourism and dark tourism. Dark tourism grew from the 1990s and is so named as it involves travel to sites of death, disaster, and the seemingly macabre (Lennon & Foley, 2000 ). Examples of dark tourism sites include Robben Island in Cape Town, Auschwitz in Poland, the Killing Fields of Cambodia, and the Fukushima in Japan. Slum tourism is a type of tourism that involves tourists visiting impoverished areas. It entails the arrangement of tours in poor areas which do not have death as its main theme. Indeed, slum tourism can be a richly rewarding experience as it can offer an exchange of culture with local inhabitants and a more real, authentic representation of society and the host people.

These tours combine history with social issues and are usually frequented by Western tourists. The concept of ‘slum tourism’ was first coined back in the Victorian era (the 1880s), when wealthy UK citizens visited poor areas in London’s East End to observe the conditions in which poor people lived. Contemporary slum tourism emerged in developing countries in the 1990s in the inner-city slums of India, the crowded favelas of Brazil, and the bustling townships of South Africa. The international tourism industry is today embracing the concept; other countries where slum tourism is on the rise are Kenya, Egypt, Mexico, and Indonesia (George & Booyens, 2014 ).

Slums generally have negative connotations and are typically characterised by urban decay, fed by high rates of poverty, illiteracy, ill-health, and unemployment. With a population of over one million citizens in an area of just over 2.1 square kilometres, Dharavi is one of the densest areas in the world. It is a city within a city; one unending stretch of narrow lanes, open sewers, and cramped huts. Dharavi has a large number of thriving small-scale industries that produce embroidered garments, export quality leather goods, pottery and plastic. It is essentially a recycling centre for the Maharashtra state, where literally anything can and is recycled from car batteries and computer parts to plastic bags and wire hangers. The state government has plans to redevelop Dharavi and transform it into a modern township, complete with proper housing, and shopping complexes, hospitals, and schools.

Due to changing social conditions and the growth of international tourism, slum tourism has become increasingly popular and organised tours have generally replaced the initial gang-run provision of unlicensed visits. A slum tourist is often seeking an emotional response by experiencing ‘reality’ and a taste of others’ lives, which may tie in with ethical sentiments. Slum tours in Dharavi are provided by a handful of tour operators; the longest-running is Reality Tours and Travel (RTT): a company based in Dharavi and set-up in 2005 with the twin objectives of using walking tours to challenge the negative stereotypes about slum life, and at the same time, raise funds for local community projects. The ‘Dharavi Tour’ and the concept behind Reality Tours was originally inspired by the favela tours in Rio de Janeiro, Brazil.

RTT’s mission statement is “to provide authentic and thought-provoking local experiences through our tours and to use the profits to create change in our communities”. RTT’s modus operandi is that tourism can and should be a force for local development. RTT is a social enterprise with a profit-sharing model which funds its sister non-governmental organisation (NGO): Reality Gives. Eighty-percent of RTT’s post-tax profits and 100 per cent of merchandise sales go to Reality Gives, who in turn, provide quality educational programs for young people from under resourced communities.

The walking tours of Dharavi were launched in 2005/6 and quickly grew from 367 visitors to 677 the following year. In 2017, RTT escorted over 16,000 tourists on its slum tours and over 4000 tourists on its city tours. On RTT’s signature Dharavi Tours, visitors see on foot why Dharavi is at the heart of small scale industrial landscape in Mumbai. The educational walking tours offer the opportunity to visit a wide range of business activities including recycling, pottery-making, embroidery, bakery, soap factory, leather tanning, and poppadom-making. Dharavi boasts two community centres and a school, which RTT supports with teachers, materials, and a syllabus. Other tours of Mumbai have been added in recent years including bicycle, car (with a stop off at Dhobi Ghat, the largest open-air laundry in the world), street food, night, and family lunch tours. The company has also expanded into Delhi offering both slum and city tours.

Initially, a distribution strategy was difficult for RTT as hotels and backpacker hostels wouldn’t work with them for fear of endorsing slum tours and tarnishing their reputation. RTT’S big break came when it was included in the Lonely Planet India 2007 travel guidebook (regarded by many as ‘the travellers’ bible’). A decade later, business has moved on for RTT. Today, it is internationally recognised for its positive social and economic impact it provides as an ‘ethical slum tour operator’. Domestic and international agents and operators feature and promote its tours, including industry leaders such as tour operator Trailfinders in the UK. RTT has been invited to speak at the annual World Travel Market (WTM) in London, where they were awarded the WTM Community Award in 2015. RTT entertains multinational corporations such as Facebook and Google who have visited Dharavi to seek inspiration by understanding this unique community.

Today, RTT employs 19 tour guides in Mumbai and six in Delhi and has an office team of around 10 in management, sales, accounts and marketing. It promotes itself via tour operators, sales agents, hotels, and backpacker hostels. RTT has since expanded its offerings and now promotes tour packages around Rajasthan, South India, and Delhi.

In a chaotic, challenging location and in a busy, competitive marketplace, RTT stands out by providing responsible, authentic and fun tours. RTT is a shining example of mining the curiosity of certain tourists to visit a challenging environment and transforming it into a meaningful and beneficial experience for all involved (◘ Images 9.7 and 9.8 ).

Reality Tours and Travel. (Source: Joseph Bird, former CEO, Reality Tours and Travel)

A Reality Tours and Travel tour of Dharavi in Mumbai. (Source: Joseph Bird, former CEO, Reality Tours and Travel)

Source: Interview with Krishna Pujari, Founder, RTT

Website: ► http://realitytoursandtravel.com/about.php

Questions and Activities

What type of tour operator is RTT?

Do you think slum tourism is ethical? Is it a force for the good? Does it have a beneficial impact on the host destination? Discuss.

Why is quality customer service so important in the retail travel agency sector? What are the benefits of quality customer service to retail travel agents?

Visit RTT’s website (► http://realitytoursandtravel.com/about.php ) and compare it with the websites of other dark tourism websites such as

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George, R. (2021). Tourism Distribution. In: Marketing Tourism and Hospitality. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-64111-5_9

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