Distribution

1. What is the purpose?

   • Ensure a steady flow of customers.

   • Help a company stand out as a market leader or avoid falling behind competitors.

2. Why is it important?

   • Modern businesses need complex distribution networks to succeed.

   • Reservation center or sales team are no longer enough in today's competitive market.

3. What are the key functions?

   • Make it easier for customers to access information about services.

   • Help customers book services in advance.

Quote: "The goal of distribution in tourism is to give potential customers better access to service information and make booking simpler."

Includes all the infrastructure, processes, and strategies required to support those channels.

• Definition:

  • A system of independent organizations that work together to get products or services to customers or businesses.

• Purpose:

  • Deliver products or services from the maker to the buyer.

  • Reduce delays and distance, ensuring items are available where and when people need them.

The flow of the product to the customer, focusing on the intermediaries involved

1. Information: Collect and share details about the market and customer behavior to keep the company informed.

2. Promotion: Create and spread messages that attract and inform potential customers.

3. Contact: Reach out to potential buyers to establish connections and grow relationships.

4. Matching Supply and Demand: Adjust products or services to fit the specific needs of customers.

5. Negotiation: Price Negotiation and terms to complete the sale and transfer ownership.

6. Risk Management: Manage financial risks, such as the possibility of unsold goods or market changes.

1. Channel 1: Direct Distribution

   • No intermediaries; the manufacturer sells directly to the customer.

   • Examples:

     • A hotel sells rooms on its website.

     • A restaurant serves meals directly.

     • An amusement park sells tickets at the entrance.

2. Channel 2: One Intermediary (Vermittler)

   • Typically involves a retailer.

   • Examples:

     • A hotel, airline, or tour operator pays commissions (Provisionen) to travel agencies for selling their services.

3. Channel 3: Two Intermediaries

   • Includes a wholesaler and a retailer.

   • Examples:

     • A vacation hotel or airline sells capacity to a tour operator, who sells it through travel agencies.

4. Channel 4: Three Intermediaries

   • Involves multiple layers: a provider, another wholesaler, and a retailer.

   • Examples:

     • Airlines or hotels sell capacity to brokers, who sell to tour operators, who then sell to retail businesses.

• Tour Operators: Companies that create and sell vacation packages, including hotels, transport, and activities.

• Travel Agencies: Businesses (physical or online) that help customers book travel services like flights, hotels, and tours.

• Online Travel Agencies (OTAs): Websites where customers can book travel services, such as Expedia or Booking.com.

• Brokers: Intermediaries who buy travel services in bulk and sell them to tour operators or agencies.

• Global Distribution Systems (GDS): Large networks that connect service providers (like airlines and hotels) with travel agencies to manage bookings.

• Tourist Consortia: Groups of independent travel agencies that join to get better deals and share resources.

• Reservation Centers or Bed Banks: Platforms that links hotels and travel agencies to simplifying the booking process

• Definition:

  • Tour operators are wholesale travel agencies that create and sell vacation packages.

    Structure and Integration:

    • Often part of large companies through vertical integration (owning airlines or hotels) or horizontal integration (partnering with travel agencies).

    • They use their own resources for accommodations or transport to save costs.

    Key Features:

    • Create multiple brands to market different products.

    • Operate globally to reach more customers.

    • Conduct (Durchführen) market research to understand consumer needs and adjust accordingly.

    Distribution:

    • Sell package tours through travel agencies or directly to consumers.

    Focus:

    • Mainly target the holiday market.

    • Serve as the primary distribution channel for vacation hotels and independent charter companies.

• Overview: Businesses (physical or online) that help customers book travel services like flights, hotels, and tours.

  Functions:

  • Create and sell tourism products and services.

  • Facilitate (vereinfachen) the sale of tourism offerings.

  • Provide expert advice

  Revenue Model:

  • Earn money from booking fees and commissions.

  • Commission rates depend on the suppliers, types of products, and the agency’s negotiating power.

  Challenges and Trends:

  • Decreasing Margins: Increased competition and direct sales have lowered the profits of intermediaries.

  • Growth of Large Networks: Big players like Viajes el Corte Inglés and Viajes Ecuador dominate the market.

  • Threat from Online Sales: Online platforms selling directly to consumers are a big challenge. Agencies are focusing on offering personalized advice and services that online platforms can't provide.

  Types of Travel Agencies:

  • Receptive (Empfangliche) Agencies: Focus on tourists once they arrive at a destination, offering services like transfers and excursions.

  • Outbound Agencies: Focus on customers traveling to other locations, offering individual services or travel packages.

  • Receptive-Outbound Agencies: Provide both inbound (to a destination) and outbound (from the destination) services.

• Definition: Websites where customers can book travel services, such as Expedia or Booking.com

  Key Features:

  • Offer easy-to-use websites or apps for booking flights, hotels, car rentals, and other travel services.

  • Operate fully online, with no need for physical stores.

  Examples:

  • Well-known OTAs include Expedia, Booking.com, and similar platforms.

• Primarily operate in the flight sector and partially in hospitality

• Business is based on in-depth knowledge of the industry and extensive contact

• Act as wholesale intermediaries, buying and reselling seats or simply connecting supply and demand

• Are usually tour operators

• Work stably with only a certain number of companies, so when they need specific hotel or flight seats, they turn to brokers

• Large networks that connect service providers (like airlines and hotels) with travel agencies to manage bookings

  • Example: Real-time access to booking major services )(flights, hotel rooms, and car rentals) as well as additional services (tourist attractions, train tickets, insurance, etc.)

    • Currently, Amadeus, Sabre, and Travelport are the main Global Distribution Systems

• In addition allow management operations by incorporating programs for accounting, quality control, customer management, etc.

• Essential intermediary between airlines and travel agencies

  • Because it enables the airline to have global reach, because their information about its flights reaching thousands of sales points worldwide

• For hotels, connecting to GDS helps open new markets

  • for many establishments, especially smaller ones, the costs of connecting to these systems can be too expensive

    • cost for a hotel consists of an annual fee and a fixed amount per booking.

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• Groups of independent travel agencies that join to get better deals and share resources

• Mainly formed in the hotel sector

• Usually established among companies that do not directly compete with each other

• Membership in a consortium allows many individual hotel establishments to access international distribution.

• Examples:

  • include hotusa, leading hotels of the world, relais-chateaux, design hotels, etc.

• Bridge between hotels and travel agencies, simplifying the booking process

• These centers facilitate (erleichtern) reservations by travel agencies.

• Intermediaries that any type of hotel can join in exchange for payment of a commission.

• Additionally, through the reservation center, hotels gain access to agencies in all international markets that would not be easily accessible otherwise.

• Examples include utell international, hotelbeds, etc