Tourism/Travel Distribution Systems
The tourism and travel industry is comprised of a complex, informal global network of independent businesses which form the ‘travel distribution chain’. This network allows both domestic and international consumers to research, book and pay for your Australian-based product.
Travel distributors allow you to broaden your customer base far beyond the reach of your own limited marketing budget. They are particularly important to the inbound tourism industry as overseas consumers still rely heavily on the advice of local travel experts when planning their Australian holiday, particularly in long haul and emerging markets.
Travel distributors can also provide insights and advice on target markets and suggest changes or improvements to your product that will help you meet the needs of your consumers.
The travel distribution system covers all the channels through which an international traveller can buy your product.
Other than approaching you directly, international and domestic travellers may book your product via:
- Local travel agents
- Tour wholesalers/ operators that market directly to consumers (direct sellers)
- Inbound tour operators
- Meeting planners, and
- Online – through travel portals or individual Internet booking engines.
Distribution channels and consumer purchasing behaviour varies from market to market so you will also need to understand the structure of the distribution system specific to your target markets. When considering how best to distribute your product to international consumers, it is important to understand each channel and the relationships between companies within the distribution channel.
Pricing and commission structures are also an important factor in deciding which distribution system (or systems) you choose to rely on. The following is a guide to industry standard commission structures:
What are Travel Distributors looking for?
Travel distributors seek product suppliers that can offer:
- Quality products and experiences;
- Reliability (consistent operating hours and regular schedules);
- Efficient operations and procedures;
- Friendly, helpful reservations staff;
- High levels of customer service;
- Understanding of the cultural needs of different markets;
- Established and stable operations;
- Consistent pricing policies that consider all levels of distribution;
- Easy communication via email, toll free numbers and fax; and
- Fast and efficient turnaround and response times.
Building relationships and establishing your credentials takes time. Do not anticipate immediate results. The process of making key sales staff aware of your product, developing a new product range and brochuring a new product can take a minimum of 12 – 18 months, and even longer for some markets.
Inbound Tour Operators
An inbound tour operator (ITO), also known as a ground operator or destination management company (DMC), is an Australian based business that specialises in developing programs and itineraries for distribution through overseas travel distributors and organising land arrangements on behalf of overseas travel companies.
ITOs are a vital link between Australian tourism products and the overseas travel distributors that buy them, including travel wholesalers, direct sellers, travel agents, meeting planners and event planners.
An ITO provides consultation on itinerary planning and product selection, and coordinates the reservation, confirmation and payment of travel arrangements on behalf of their clients by working with overseas travel companies and with Australian tourism products. They bring the components of accommodation, tours, transport and meals together to create a fully inclusive itinerary.
In some cases, an Australian ITO is a subsidiary of a parent travel company in their home market. This is prevalent in Eastern markets, especially Japan and Korea, but it is not common in Western hemisphere markets.
Dealing with an ITO provides many benefits for overseas travel companies, including:
- Local expertise on existing and new Australian tourism experiences;
- Staff knowledge of Australia;
- Itinerary consultation and advice on packaging products together;
- Intant access to a wide range of tourism products, eliminating the need to contact individual suppliers, reducing paperwork and simplifying payment;
- Assisting in quality control by providing first hand feedback to overseas operators; and
- Acting as a local contact point for the clients of overseas agents visiting Australia.
ITOs understand the interests, needs and culture of Australia’s overseas markets and are familiar with new developments in Australian tourism products. When your planning and research is complete and you have developed a suitable product, it is a good idea to discuss your product with
several ITOs who work in the markets you are targeting. They can assist you to assess your product’s suitability – remember to remain flexible and stay open to advice during your discussions!
Dealing with an ITO offers many advantages for tourism product suppliers, including:
- Regular business from a number of markets;
- Extensive knowledge of international consumer needs;
- ITOs make regular sales visits to their overseas markets and act as an extension to your marketing arm and booking office;
- Access to international travel partners, expanding your distribution network;
- Easier communication and payment recovery; and
- Payment in Australian currency.
Where do you find ITOs?
Australian Tourism Export Council (ATEC) can provide members with a list of ITOs and the markets in which they operate. Destination Marketing staff at Capricorn Tourism can also provide you with contact details for suitable ITOs.
Tour Wholesalers
Tour wholesalers, also known as international travel wholesalers, are located in overseas markets and have traditionally provided a link between travel agents and ITOs or suppliers. Tour wholesalers
purchase programs developed by Australian based ITOs or develop their own packages and itineraries to make travel planning and advice easier for travel agents and consumers. These packages will usually offer transport, accommodation, tours and attractions.
Tying your tourism product to destination marketing campaigns such as Capricorn’s Reef to Outback or Dig the Tropic campaigns can streamline this process and strengthen the branding of the local area. To get more information on being involved in Capricorn Tourism’s international ready itineraries and packages, talk to a Destination Marketing staff member on +61 7 4927 2055.
The role of the wholesaler is changing and varies from market to market. In some markets, wholesalers are also ‘direct sellers’ who bypass travel agents to directly target consumers. In other markets, there are no wholesalers in the traditional sense and travel agents perform both roles.
Traditionally, travel packages are published in brochures and promoted and distributed via retail travel networks. Wholesalers may operate their own retail outlets, a common occurrence in North America, the United Kingdom and Germany, or work with an established network of travel agents in their own country.
Wholesalers may also specialise in particular market segments such as adventure, gay and lesbian, or the 50-plus market, and have access to consumer niches that may not be available through mainstream distribution networks. By researching wholesalers and their target markets, you can tailor your distribution methods and reach your chosen segments more effectively.
Many wholesalers rely on an ITO to identify and recommend new Australian products to include in their programs. It is essential that you establish good relationships with the inbound tour operators who specialise in your target markets.
Building a relationship with an international wholesaler is critical. This can be achieved by conducting “in market” sales calls to meet with and sell the benefits of your product to a Product Manager at a wholesale travel organisation. Participating in trade events such as the Australian Tourism Exchange (ATE) also provides an opportunity to meet with key wholesale travel decision markers. ATE is an annual event for major international wholesalers who brochure and promote Australian tourism experiences to meet with Australian tourism products.
Key Tips for Working with Wholesalers
- Research – find out which markets the wholesaler targets, the type of experience they sell and who their distribution partners are;
- Keep wholesalers up-to-date on any new product developments or changes to your product;
- Suggest ideas for packaging your product to make it easier to sell;
- Highlight your unique selling point (USP), the benefits of your product and the factors that set you apart from the competition;
- Make sure that you understand the overseas distribution system, commission structure and the need to set advance rates when setting your pricing; and
- Keep in mind any terms and conditions or consumer protection laws that the wholesaler must adhere to. In particular, Europe and Japan have strict consumer laws that require companies to deliver the promised standard of holiday experience.
Retail Travel Agents
Retail travel agents (such as Capricorn Holidays) are based in the consumers’ country of origin and act as the shop front of the travel industry, dealing directly with consumers. Retail travel agents offer wide distribution in prominent suburban locations and provide a convenient place for potential travellers to make bookings and buy holidays.
Traditionally, retail travel agents have provided a link between the wholesaler and consumers. With the integration of distribution roles, however, the retailer may deal directly with ITOs or Australian-based products, particularly in Asian markets.
Many retail travel agents belong to a larger chain of travel agencies or consortiums that use their combined resources to market the agency brand. In some countries, retail agencies may be operated by travel wholesalers. Independent agencies are increasingly turning to high yield, special interest travel niches to make up for falling airline commissions and increased competition.
Despite the increasing popularity of the internet, consumers still rely on retail travel agents to plan and book their travel. For complex, long haul destinations such as Australia, clients value their agent’s expertise in developing customised itineraries.
Retail travel agents can be used to sell standard tourism product such as accommodation, dining options, tours and transport, distribute packages that include value adding (such as complimentary dining, or co-operative rates from a partner operator) or offer last-minute rates. How you choose to work with travel agents is entirely up to you!
Capricorn Holidays is the premier travel agent for the Capricorn Region, offering tourism booking services through 5 information centres in Rockhampton, Emerald and Yeppoon, as well as online at www.capricornonline.com.au. These services are offered to all members of Capricorn Tourism as a membership benefit and are a great way to build upon existing distribution methods.
To get the most of your partnership with Capricorn Holidays, call a Membership staff member at Capricorn Tourism on +61 7 4927 2055.
Meeting & Incentive Planners
Meeting and incentive planners organise and manage all aspects of meetings and events including conventions, conferences, incentives, seminars, workshops, symposiums, exhibitions and special events. Incentive trips are awarded as a non-cash bonus for good performance and may include a corporate meeting or corporate team-building activity. All these events attract delegates and participants from Australia and overseas.
Meeting and incentive planners use a wide variety of services and products, including venues, tour operators, accommodation, team building companies and restaurants. They look for unique travel experiences and require different support and facilities to leisure tourism.
Meeting and incentive planners are also known as:
- Professional Conference Organisers (PCO);
- Destination Management Companies (DMC);
- Conference Managers;
- Event Managers;
- Incentive Houses;
- Travel Fulfilment Companies; and
- Special Project Managers.
Meeting and incentive program requirements vary from market to market. It is important to match your product offerings to the needs of the market. Business events is a high yielding tourism segments within Capricorn, with business travel accounting for approximately 1/3rd of overall visitors to the Capricorn Region. For more information on business events within the Capricorn Region, please contact Capricorn Business and Events on +61 7 4922 2855.
Key tips for working with Meeting and Incentive Planners
- Offer a variety of itineraries that include unique and diverse experiences;
- Ensure the ITOs and DMCs that handle business and incentive travel are familiar with your product;
- Suggest interesting ways to package your product together with other experiences; and
- Participate in cooperative marketing activities organised by Tourism Australia and your local Convention and Visitors Bureau (CVB), such as Capricorn Business and Events.
Online Distribution
With the continual growth of the internet as a tool for both planning and booking travel, the presence and importance of online distribution has grown. There are an abundance of websites currently offering a booking mechanism for travel related products. These websites fall into three categories:
- Last minute or distressed inventory sites such as Need It Now www.needitnow.com.au or Last Minute www.lastminute.com.au where suppliers can sell product at dynamic prices, based on the availability of the product on a particular date.
- Websites operated by established retailers, wholesalers and inbound tour operators as an extension of their traditional operations, such as Capricorn Holiday’s booking site, www.capricornonline.com.au. Some of these sites can be accessed by the consumer whilst others require a user password and are dedicated trade only sites.
- Dedicated ‘e-travel companies’ websites where consumers can purchase a product or an entire holiday package online. Examples of these are Expedia www.expedia.com.au or Travelocity www.travelocity.com.
Online distribution is less structured than the traditional travel distribution system. Commission levels vary from site to site, depending on how the site is operated. Before establishing a distribution deal with any online partners, it is important to research the site, how it operates and how it will promote your product, as well as how information is loaded and updated.
Many sites provide you with access to maintain and update your details on the site. While this does provide you with control over the information on your product it can also be very time consuming, especially if you are featured on a number of sites.
Capricorn Tourism members can access a number of e-Marketing services through membership benefits, including online profiles and booking services at www.capricornholidays.com.au and www.capricornonline.com.au, as well as consumer newsletters outline specials and hot deals.
To make the most of these opportunities, call an e-Marketing staff member at Capricorn Tourism on +61 7 4927 2055.
