Choose an airline and try to map its distribution channels as presented in Fig. 47

Section 4: Intermediation, Distribution and Travel

4. Choose an airline and try to map its distribution channels as presented in Fig. 47

176 Chapter 4.1 limitations of such devices (i.e. power supply and

memory capacity). As a result, mobile phones and personal digital assistants (PDAs; e.g. iPads) can access the Internet with a good quality standard.

New technologies offer travellers unprecedented mobility, enabling communication from anywhere.

Furthermore, the services available on airline web- sites can be purchased and consulted from any Internet-accessible equipment or location (with appropriate hardware).

Booths

In the case of large events, such as fairs, exhibitions, conferences and conventions, airlines may provide a booth either to facilitate assisting customers with airport transfers or to streamline rescheduling and other services. The booth functions just like the sales office, although it is temporary. This distribu- tion channel usually has minimal cost for the com- pany; it is often provided in exchange for tickets, or the event organizer may offer the space at no cost because of its added value to event participants.

Operationalizing

Flashpackers (a subculture of backpackers) have been seen as a key component of contemporary society, emerging from the economic, demographic, technological and social changes in the world. They are generally older than traditional backpackers and have more disposable income but travel with a backpack by choice rather than budgetary neces- sity. Flashpackers are an example of tourists medi- ated by communication technology, often through mobile devices, and they use distribution channels such as the Internet and virtual agencies during their travels. Flashpackers and backpackers are called ‘digital nomads’: individuals who adopt mobile technologies, allowing them to live an independent lifestyle from anywhere they have an Internet con- nection (Paris, 2012). Therefore, traditional commu- nication channels must increasingly use technology to meet the needs of both the consumer and the tourism market.

Exercises

1. What are the main functions of an airline’s

Tourism Distribution Channels 177 hospitality and tourism. International Journal of

Contemporary Hospitality Management 26, 727–750.

Law, r., Leung, r., Lo, A., Leung, D. and Fong, L.H.N.

(2015) Distribution channel in hospitality and tourism:

revisiting disintermediation from the perspectives of hotels and travel agencies. International Journal of Contemporary Hospitality Management 27, 431–452.

Pearce, D.G. and Schott, C. (2005) Tourism distribution channels: the visitors’ perspective. Journal of Travel Research, 44, 50–63.

Stuart, P., Pearce, D. and Weaver, A. (2005). Tourism dis- tribution channels in peripheral regions: the case of Southland, New Zealand. Tourism Geographies 7, 235–256.

178 © G. Lohmann and A. Panosso Netto 2017. Tourism Theory (G. Lohmann and A. Panosso Netto) Although travel-brokering initiatives have existed

since the beginning of the 19th century, this activity only acquired a professional character in 1841, with a domestic rail trip organized in England by the typographer and editor Thomas Cook (Conlin and Bird, 2014). Since that time, travel agencies have gained increasing importance as tourism distribu- tion elements to the point where, for many decades, they have been the main element responsible for selling various touristic products. Among other duties, travel agencies now sell travel packages, tickets for transport and tourist attractions, accommodation, rental cars and travel insurance. They also provide information related to these products and the tour- ism destinations to be visited. Some of the possible functions of travel agents include the following:

● Information: to give advice to travellers, provide information and help choose tourism destina- tions, itineraries and products to be reserved/

purchased.

● Intermediation: to maintain contact with suppli- ers (e.g. transport and accommodation) individ- ually or jointly, as in the case of tour packages prepared by tour operators.

● Personalized trip planning (also known as for- faits) for an individual or small groups (e.g. fam- ily or friends), in which various tourism services are reserved and sold jointly, according to client needs.

● Sale of travel insurance and exchange of foreign currency.

The travel agency is an indirect distribution chan- nel, because it functions as an intermediary between the potential tourist and suppliers. Agencies act as resellers in the place of their customers, making choices with the suppliers. Legally, however, they operate as an agent of the supplier and receive a sales commission. For tourists, agencies provide information and tips, recommending the best prod- uct that will satisfy their needs. For suppliers, they

represent a good cost-benefit value in distributing their product because the suppliers need not main- tain sales offices in all markets (Evans, 2000).

Travel agencies can be classified as emissive (when they send tourists to other tourism destina- tions), receptive (when they receive tourists in their tourism destinations) or mixed (those that do both).

Tomelin (2001), based on a study by Acerenza (1992), presented a classification of travel agencies, divid- ing them into different types. It is important to note that many agencies present several of the typologies below concurrently:

● Detail-oriented: they do not produce their ‘own’

products, but instead only resell packages or sell individual products (e.g. airline tickets and hotels).

Some agencies specialize in serving a particular tour- ist segment, such as corporate agencies, exchange agencies, ecotourism agencies or incentive trip agen- cies. Detail-oriented agencies exclusively distribute touristic products.

● Wholesale or tour operators: the wholesale agency operates travel programmes, selling packages that have been developed with a combination of different touristic products (e.g. hotels, airline and bus tickets, airport transfers) to both detail-oriented agencies and the general public. They are also called ‘operators’.

● Receptive: they provide inbound services for other travel agencies, event organizers and hotels, among others, through a wide range of services, including airport transfers, city tours and moni- toring the tourists while they are at the destina- tion. They can also put together itineraries for visits and excursions, which are offered and sold separately from the tour package.

● Consolidators: they work with airline compa- nies to resell tickets to travel agencies that are not authorized to buy directly from airlines (see

‘Tourism distribution channels’).

Douglas et  al. (2015) noted that the main responsibilities of corporate travel agents include

4.2 Travel Agencies

with

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Travel Agencies 179 maintaining relationships with suppliers, negotiat-

ing and maintaining contracts, developing corpo- rate travel policies, taking care of traveller safety, and responding to questions and complaints. More and more corporate travel agents are being impacted by technology, with the booking process primarily ensuring that reservations are made in line with established corporate policies. In the case of domestic travel, technology is expected to com- pletely eliminate any administrative interference from the agents. In this sense, the travel agent’s role is becoming one of a consultant.

The introduction of new technologies has changed the role of travel agencies because many potential tourists can purchase their own airline tickets or make reservations directly with suppliers, dispensing with the services of travel agencies alto- gether (Palmer and McCole, 1999; Tse, 2003). The Internet provides customers with much informa- tion about services, increased product customiza- tion, and time and cost savings, in addition to reducing the need for human interaction. Travel agents now understand that their roles are threat- ened by online sales through both tourism suppliers (e.g. airlines, hotels) and online travel agencies, which now compete with traditional travel agen- cies. This question is particularly relevant given that the Internet affects the security of some tradi- tional jobs, such as those of travel agents (Díaz et al., 2015).

Traditionally, a travel agency is organized into two areas: the front office, which has a direct rela- tionship with the client, and the back office, which aggregates the agency’s internal activities, ranging from operating packages, issuing tickets and send- ing documentation to the agency’s more general administration (human resources, finance and accounting). Marín (2004) analysed seven travel agency departments and their respective roles, as presented below:

● Administrative department: handles an agen- cy’s internal processes, managing information, resources and relationships with non-commer- cial organizations.

● Commercial department: responsible for acquir- ing and maintaining customers’ portfolios, nego- tiating commercial conditions and participating in tenders and bids, especially with regard to large companies and corporations.

● Control department: although it is not usually part of an agency’s organizational structure, this

department seeks to ensure that the production system adapts to management’s strategic objec- tives.

● Financial department: makes payments and charges customers.

● Management department: makes decisions and implements the agency’s business strategy.

● Product department: develops the products to be offered by the agency, selecting the most appropriate suppliers.

● Sales department: makes reservations, selects the best conditions for each sale and, more gener- ally, issues travel documents.

Many managers of tourism destinations and products forget that travel agents have enormous power to influence and persuade the consumer to choose a particular destination or product. An agent’s role as a consultant – or even an opinion former – is so important that many destinations and tourist enterprises invite travel agents to go on familiarization (FAM) tours. If a FAM tour is suc- cessful, it is expected that agents will begin to make more sales and recommend the products and desti- nations visited.

Hudson et  al. (2001) identified four possible scenarios in which consumers may or may not be influenced by travel agents in their purchasing deci- sions. In the first three scenarios, the consumer has access to tourism information through promo- tional material, but this is not true in the fourth scenario (see Fig. 48). In Scenario 1, the consumer has already chosen the vacation or product that they want to purchase. In this case, the agent can either make the reservation as requested or attempt to direct the consumer to purchase another destina- tion or product. In Scenario 2, the consumer seeks out the travel agency with a few alternatives in mind; in this case, the travel agent has some influ- ence on directing the consumer to purchase a par- ticular destination or product. In Scenario 3 (the consumer knows the destination and how much they want to spend) and Scenario 4 (the consumer seeks out the agent for advice on the availability and price of a last-minute vacation), the travel agent has a great influence and will employ sales- targeting techniques for preferred products and destinations.

Hudson et al. (2001) showed that, in the case of the UK, where the main tour operators had travel agencies in their business groups, consumers enter- ing an agency that was owned by Airtours or

180 Chapter 4.2 Thomas Cook had a high chance of being directed

to buy products from these operators. In many cases, the travel agents did not consider the cus- tomer’s real needs, preferring to sell packages from their own tour operators. Moreover, these consum- ers generally truly believed that they were receiving the best, most impartial recommendations and were unaware that the agency they were using had a business connection to the tour package they were purchasing.

Operationalizing

Flight Centre Travel Group is an Australian inter- national travel company that was founded by Graham Turner and Geoff Harris in 1981. Its operations have reached a global scale, including sales offices in New Zealand, the USA, the UK and Canada, and points of sale in India, China, Hong Kong, Singapore and South Africa. Flight Centre is a success story because it has quickly reached per- formance levels that exceed its competitors. It is a highly competitive travel agency and its success is attributable to its competitive and collaborative operations. Both the organization and the individu- als within Flight Centre have a spirit of competi- tion and collaboration with each other. At Flight Centre, travel agents have relative autonomy to

demonstrate excellence and personal performance, which makes it one of the most famous and com- petent agencies in the tourism market (Palmer and Dunford, 2002).

Exercise

Write about a travel agency in your city, describing both its type and all of its departments. What major tourism products are offered at this agency? Which tourism destinations are offered for sale?

References

Acerenza, M.Á. (1992) Agencias de Viajes: Organización y operación. Trilhas, Mexico City.

Conlin, M. and Bird, G.R. (2014) Railway heritage and tourism: themes, issues and trends. In: Conlin, M.V.

and Bird, G.R. (eds) Railway Heritage and Tourism:

Global Perspectives. Channel View Publications, Bristol, UK, pp. 3–14.

Díaz, E., Martín-Consuegra, D. and Esteban, A. (2015) Perceptions of service cannibalisation: the moderat- ing effect of the type of travel agency. Tourism Management 48, 329–342.

Douglas, A., Lubbe, B. and Ritalahti, J. (2015) Using tech- nology to align the needs of corporate travel managers with the functions of travel management companies.

In: Tussyadiah, I. and Inversini, A. (eds) Information Pre-booking time after

brochure analysis

Scenario 1: Enters travel