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Tour Operations and Tourism Distribution Channel Management. Mike Morgan DG28 965174 mmorgan@bournemouth.ac.uk http://balm.bournemouth.ac.uk. The aims of the unit. Give an overview of the role of intermediaries in the tourism sector

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tour operations and tourism distribution channel management

Tour Operations and Tourism Distribution ChannelManagement

Mike Morgan

DG28

965174

mmorgan@bournemouth.ac.uk

http://balm.bournemouth.ac.uk

the aims of the unit
The aims of the unit
  • Give an overview of the role of intermediaries in the tourism sector
  • apply business management approaches to the sector in a practical assignment
  • provide an academic framework to convert your operational experience
  • provide a basis for a dissertation
the content
The content
  • The role of intermediaries in the tourism system
  • the elements of tour operations planning
  • the strategies of the leading companies
  • New distribution channels for tour products
  • delivering customer service quality
  • the future of tourism distribution
the work
The work

Assignment 1

  • Group project to design a tour programme
  • due 5 June

Assignment 2

  • Essay set by Derek Robbins
  • due 19 June
intermediaries
Intermediaries
  • Those who come between…
    • Producers/manufacturers
    • And the end-user customer
  • Independent organisations who assist the producers to make the product available to the customer
definitions
Definitions
  • EU Package Holiday Directive

‘a pre-arranged combination of two or more components when sold... at an inclusive price …includes overnight accommodation’

A tour operator = the organiser of a package holiday

the role of the tour operator
The role of the tour operator
  • Purchase in bulk components of a holiday
  • Package them into a standardised repeatable product
  • Brand them into a single entity
  • Offer them to the public at an inclusive price

Middleton

How does this differ from the role of the travel agent?

an agent
An agent
  • Acts for a principal (the producer of the product)
  • provides a service for a fee or a commission
  • in British usage a travel agent is someone who sells travel and holiday packages for a commission, usually from retail shops
  • This distinction is becoming blurred
exercise
Exercise
  • You are managing a hotel in a destination
  • Draw a map of the intermediaries involved in marketing your rooms to UK tourists
  • How do they add value to the end-product?
  • What does each party get from the interaction?
  • How easy would it be to find a substitute?
the value chain
The value chain
  • Devised by Porter (1980) to analyse what happens inside companies - where the value is added to the end product
  • Applied by Kogut (1985) to the whole external supply chain
  • Terpstra (2000) writes of ‘configuring the value-added chain’

- which activities to do yourself and which to pay someone else to do.

Specialisation

The same choice faces hotels, resorts, air and sea transport.

  • Where does your expertise lie?
  • Where can you add most value to the product?
the value added chain terpstra and sarathy 2000
The Value Added ChainTerpstra and Sarathy (2000)

Manufacture

Assembly

Distribution

Marketing

Retailing

Design

Components

Accommodation

Attractions

Transport

‘principals’

Package

Tour

Brochure

Reservations

Travel

Agent

How does the tour operator add value?

By providing the ‘principals’ with a marketing channel

for their products

marketing channels
Marketing Channels
  • Sets of inter-dependent organisations involved in making a product available to the end-user customer (Stern and El Ansary 1996)
  • Carry not only flows of product but information, promotion, payment and ownership
slide15
Offer the suppliers ‘contactual efficiency’ in reaching the end customer (Rosenbloom1995)
  • Make the product available in the ‘utilities’ of form, time and place required by the customer (Bucklin)
  • require members to subordinate their own needs to the success of the channel (Stern)
    • issues of control and leadership, power and dependency
slide16

Hotel

Tour Operator

Travel Agent

Customer

network theory
Network theory
  • Looks at relationships, networks and interactions (Gummesson 1988)
  • a complex web of influences on the quality of the product (Holmund and Kock 1995)
  • these influences can conflict with each other
  • Competition is between ‘networks of value-delivery systems’ (Kotler 1998) rather than individual firms
elements of a network analysis hakansson and johanson 1992
Elements of a network analysisHakansson and Johanson 1992
  • Resources needed to create the product
  • Actors - firms, organisations involved
  • Interactions - between actors to create..
  • Activities that produce the product
  • Relationships that develop to ensure long-term commitments
slide19

Attractions

Local agent

Resort

Amenities

Hotel

Tour Operator

Travel Agent

Customer

Conference

centres

Other hotels

Tourist

Board

Destination

Network

slide20

Attractions

Local agent

Resort

Amenities

Hotel

Tour Operator

Travel Agent

Customer

Conference

centres

Other hotels

Tourist

Board

Destination

Network

slide21

Transport Network

Airline

Alliance

Car rental

Airports

Attractions

Airline

Local agent

Resort

Amenities

Hotel

Tour Operator

Travel Agent

Customer

Financial services

-insurance

currency

Conference

centres

Other hotels

IT systems

Destination

Network

Tourist

Board

Support

Network

slide22

Transport Network

Airline

Alliance

Car rental

Airports

Attractions

Airline

Local agent

Corporate

clients

Resort

Amenities

Hotel

Tour Operator

Travel Agent

Customer

Retail

centre

Management

Financial services

-insurance

currency

Conference

centres

Other hotels

Web portals &

search engines

IT systems

Destination

Network

Tourist

Board

slide23

Easyjet’s Affiliate Network (2008)

  • Airline: Easyjet
  • Hotels: Hotelopia (part of the TUI group)
  • Car rental: Europcar (part of Volkswagen Group)
  • Ski Breaks: Erna Low (independent specialist tour operator)
  • Chalet rental: Chaletgroup (consortium of chalet owners)
  • Skiwear: BornForSports (community marketplace for sportswear)
  • Travel Insurance: Mondial Assistance (part of Allianz Group)
  • To/from the airport: Holidaytaxis
  • Airport parking: NCP
  • Travel guides: Arrivalguide.com in association with Fastcheck AB
formalising the relationship
Formalising the relationship
  • Vertical marketing systems – Star Alliance
  • administrative – consortia – Best Western
  • contractual - franchises, joint ventures - Opodo
  • corporate - vertically-integrated companies eg Thomson/TUI
systems theory see laws
Systems theory (see Laws)
  • Based on biological, ecological systems
  • each component is affected by and in turn affects the behaviour of the others
  • inputs, processes and outputs
  • organic growth

optimum size and efficiency

decline and decay

Includes interaction between tourism

and the host society and environment

slide26

Changes

in regulation

Fears of crime

& terrorism

Weather &

Climate change

Economies of

originating countries

Changing

Lifestyles

demographics

Destination

environment

Media

influences

Destination

Economy

Investment &

changes of ownership

New technologies

slide29

Inter-organisational relationshipsWhat each model reveals

  • Inter-dependent channel members
    • efficiency
  • Value-adding chains - value, profit
  • Complex and conflicting networks
    • understanding, trust
  • Organic and evolving systems
    • flexibility, responsiveness