Chapter 12

TOURISM DISTRIBUTION
CHANNEL
LESSON OBJECTIVES:
1. Define tourism distribution channel
2. Describe the types of travel intermediaries
3. Discuss the functions of specialty intermediaries
4. Compare travel agents with tour operators
5. Describe the distribution channel
6. Explain the relation of distribution to marketing
7. Discuss the distribution strategies
DISCUSSION QUESTIONS:
1. Define tourism distribution channel.
2. Explain the three types of travel intermediaries.
3. Differentiate a wholesale travel agent from a retail travel
agent.
4. Compare a travel agent with a tour operator.
5. Describe the distribution channels.
6. Discuss the impact of the Internet on the distribution
channels.
7. Explain the relation of distribution to marketing.
 THE MEANING OF TOURISM DISTRIBUTION
CHANNEL
• The tourism distribution channel produces the link between the suppliers
of travel services and the consumer. It is a system of distribution that
makes the product available.
• Robert McIntosh defined it as “an operating structure, system, or linkage
of various combinations of travel organizations through which a producer
of travel products describes and confirms travel arrangements to the
buyer.”

1. Direct distribution occurs when the producer sells directly to the

consumer.
2. Indirect distribution takes place when the sale to the consumer is
made through an intermediary
 TRAVEL INTERMEDIARIES
• A TRAVEL AGENT arranges travel services from suppliers such as airlines,
bus companies, railroads, cruise ship companies, car rental agencies,
hotels, and sightseeing operators. Types of travel agents include
wholesale and retail.

1. Wholesale travel agents or wholesalers organize tour packages

which are sold to the public through a network or retail agents. They
do not deal directly with the consumer and they may or may not
operate the tours it markets.
2. Retail travel agents sell travel services directly to the consumer. They
handle the actual sale of tours, air tickets, and other travel services.
They are compensated by the supplier or wholesaler for the sales he
or she made. The consumer does not pay any fee for the services of
the retail agents.
 TRAVEL INTERMEDIARIES
• TOUR OPERATORS deliver the services specified in an
advertised tour package. The services offered by a tour
operator may vary from basic airfare, transfers, hotels, meals,
and sightseeing, to entertainment.
1. Some operators own buses, hotels, or other facilities, or they may
obtain ground services from a contractor such as specific hotels, bus
companies, restaurants, car rental companies, or attractions.
2. They are organized according to the specification of a wholesale
travel agent who markets them under the agency’s name through
the retail agents of the agency or through airlines.
3. Tour operators who are referred to as ground operators normally
provide services at the destination only and they do not package
transportation to or from the destination.
 TRAVEL INTERMEDIARIES
• SPECIALTY INTERMEDIARIES include incentive travel firms, meeting and
convention planners, hotel representatives, interline representatives,
association executives, corporate travel firms, travel consultants, motor
coach brokers, and the like.
• They may represent either buyers or suppliers and have the power to
influence how, where, and when the travel product will be distributed.
They may receive commission fees from clients or serve as salaried
employees who offer travel services on behalf of their organizations.

• Incentive Travel Company

• Meeting and Convention Planners and Destination Planners
• Corporate Travel Firms
• Motor Coach Brokers
 DISTRIBUTION CHANNELS
1. Product supplier-consumer channel – A direct distribution
without going through intermediaries. It is the direct
selling of airline tickets and hotel rooms to the consumer.
2. Product supplier-travel agent-consumer channel – The
most popular form of buying services and products in the
tourism industry. An intermediary in the form of a travel
agent who provides products and services to the
consumer.
3. Product supplier-tour operator-consumer channel – They
make arrangements with the suppliers such as block
booking on airlines, hotels, restaurants, and attractions to
produce a travel package which is sold to the travel agent
or directly to the consumer.
 TYPES OF DISTRIBUTION CHANNELS
Distribution channels have three classifications: consensus channels; vertically
integrated channels controlled by intermediaries/retail travel agents; and the
vertically-coordinated channels led by producers/tours operators.

1. Consensus Channels - No part of the channel exercises control

over the system. The several participants in the system work
together for their mutual interest.
2. Vertically-integrated Channels - The functions of production and
retail distribution are owned and/or controlled by a single company.
3. Vertically-Coordinated Channels - The tour operator’s control over
the channel comes from contractual or financial commitments with
retail agents. Franchising is an example of such a system.
 THE RELATION OF DISTRIBUTION TO
MARKETING
• Once marketing objectives and the appropriate targets have
been established, an appropriate mix is determined. The
chosen marketing mix will reach the market segments and
fulfill its objectives. The system of distribution selected will
affect parts of the marketing mix.

1. The product offered may be modified.

2. The promotion strategy may also change once the retail agent does
not carry any inventory, as there is little or no incentive for the agent
to promote a specific destination.
3. The pricing policy of the supplier will also change depending on the
decision to distribute directly or indirectly.
LESSON SUMMARY:
• The tourism distribution channel is an operating structure, system, or
linkage of various combinations of travel organizations where a producer
of travel products describes and confirms travel arrangements to the
buyer.
• Direct distribution happens when the producer sells directly to the
consumer. Indirect distribution occurs when the sale to the consumer is
made through an intermediary.
• A wholesale travel agent organizes tour packages which are sold to
consumers through retail agents, not directly to the consumer.
• A retail travel agent sells travel directly to the consumer.
• A tour operator delivers the services specified in a tour package.
• Specialty intermediaries are channels based on specialization.
• The three distribution channels are product supplier-consumer channel,
product supplier-travel agent-consumer channel, and the product
supplier-tour operator-consumer channel.
LESSON SUMMARY
• The product supplier-consumer channel is the direct selling of services to
the consumer.
• The product supplier-travel agent-consumer channel is the selling of
services to the consumer through the travel agent.
• The product supplier-tour operator-consumer channel is the selling of tour
packages organized by tour operators to the consumer.
• The chosen system of distribution will affect the parts of the marketing
mix such as the product, the promotion strategy, and the pricing policy.
• The three types of distribution channels are consensus channels,
vertically-integrated channels controlled by intermediaries or retail travel
agents, and vertically-coordinated channels led by producers or tour
operators.
• The intensive distribution strategy distributes the travel product through
all available intermediaries. Exclusive distribution strategy limits the
outlets for the products. Selective distribution strategy is between
intensive and exclusive distribution strategy.
APPLICATION AND ASSESSMENT
1. Prepare a complete incentive travel package to a desirable location as
a reward for employees in your organization who have exceeded the
corporate goal. Select a travel destination, mode of travel to the
destination, local transportation, accommodations, and restaurants in
the area for this travel incentive package.
2. As the president of a newly formed tour company, you must now
decide if your tours will be marketed through retail travel agents, or
whether you should sell them directly to the consumers. Identify the
advantages and disadvantages of each alternative.
3. You are a marketing director for a cruise line which operates luxurious
ships with excellent service and cuisine. How would you identify the
most promising distributors?
CHAPTER QUIZ. Identify the following.
_______________ 1. Travel agents who sell travel service directly to the consumers
_______________ 2. An agent who distributes travel service from suppliers to the consumers
_______________ 3. The link between the suppliers of travel services and the consumers
_______________ 4. A type of distribution in which the producer sells directly to the consumer
_______________ 5. A distribution channel in which production and retail distribution are owned
and controlled by a single company
_______________ 6. Intermediaries who organize motor coach tours to full-time professionals
_______________ 7. He or she combines the individual components of a holiday into a product
which is sold directly to consumers or through travel agents.
_______________ 8. They specialize in planning and organizing meetings.
_______________ 9. Travel firms which handle the travel accounts of corporations
_______________ 10. A type of distribution which is suitable for products with a high unit price
CHAPTER QUIZ. Enumerate the following.
11–14. Kinds of specialty intermediaries
15–17. Types of distribution channels
18–20. Kinds of distribution strategies