ARE WE THERE YET? THE TRAVEL DISTRIBUTION SYSTEM WHAT IS IT? A TOURISM RESOURCE GUIDE

Transcription

1 ARE WE THERE YET? THE TRAVEL DISTRIBUTION SYSTEM WHAT IS IT? A TOURISM RESOURCE GUIDE

2 THE TRAVEL DISTRIBUTION SYSTEM WHAT IS IT?

3 CONTENTS What are the different styles of travel? 4 International vs Domestic Markets 6 Exactly what types of distributors are there? 7 What is a Retail Travel Agent? 8 What is a Wholesaler? 9 What is an Inbound Tour Operator? 10 What is an Online Agent/Distributor? 11 What is a Business Events distributor? 12 How does the international distribution channel work? 13 Are you export ready? 15 What is the Australian Tourism Data Warehouse and why participate? 16 Tourism NT acknowledges the Small Business Development Corporation of Western Australian for their permission to incorporate segments of the Tourism Boost guide into this resource. Tourism NT acknowledges Tourism Australia for their permission to incorporate segments of the Planning for Inbound Success guide into this resource. 3

4 THE TRAVEL DISTRIBUTION SYSTEM WHAT IS IT? To explain it simply, there are two ways of reaching potential clients: Like most industries, being a part of the tourism industry requires you to have industry specific knowledge and information to create and run a successful business. Understanding the distribution systems, recommended rates of commission, and the roles of various booking agents is essential for a sustainable, profitable business. This section has been designed to aid you in your understanding of the tourism industry. 1. Directly You can target visitors directly through advertising, brochure distribution, website, social media, client referrals etc. 2. Indirectly Another way to promote your business is through a third party (indirectly) by using tourism distribution channels such as retail travel agents, wholesalers and inbound tour operators. Additionally you need to decide if you are going to distribute your product in the domestic market and/ or international market place. What are the different styles of travel? Tourists often choose different styles of travel based on whether their trip is for leisure, business, special interest or family reasons. Fully independent traveller (FIT) This individual traveller buys from a wholesale brochure or buys a specially tailored itinerary. Group inclusive tour (GIT) a. Group travellers Buy from a wholesaler s brochure or have a specially tailored itinerary created to suit their needs. 4

5 b. Business travellers/incentive traveller Many businesses reward performance by providing travel rewards to employees as incentives. These travel arrangements usually require a tailor made product that is at the top-end of the market. c. Convention traveller Conventions involve the movement of large numbers of people and inbound operators can develop pre and post convention tours. Visiting Friends and relatives (VFR) A large percentage of travellers cite visiting friends or relatives as the reason for travel to Australia. They often arrange their travel independently or rely on recommendations and advice by their friends and family who live within the destination. Youth/Backpackers Essentially an FIT but someone who is defined as a traveller who spends at least one night in a backpacker/youth hostel during their stay in Australia. They are highly independent and are more likely to purchase travel experiences direct whilst travelling. Education travellers Student groups or international students are classed as education travellers. Student groups have specific requirements for accommodation and parts of their itineraries. International students tend to stay for extended periods within the country whilst studying and are able to spend extra time to travel, with long-term students generating more visitors with parents and friends visiting them while they are here. image caption 5

6 International vs Domestic Markets Domestic tourism accounts for 74 per cent of all tourism to the NT that is, more Australians travel to the NT than international markets. This is a similar trend across Australia. Being the largest source market for the NT, many operators focus on the Australian market before entering any international markets. International tourists often travel across Australia for longer periods and spend more money than domestic travellers however the NT is only one part of an international itinerary with the traveller visiting more than one state or territory when in Australia. It is important to note the following points when considering entering international markets: There are much higher marketing costs overseas Selling your product through international travel trade requires a commitment to working with their pricing and commission structures International markets vary considerably between each country and take considerable research and planning before entering a market Language and cultural differences create additional challenges when marketing your product overseas International itineraries are more complex than domestic itineraries and often have a longer lead time Entering and establishing your product in the international market is a long-term investment and may take several years before returns can be seen. Being successful in the international market requires a large investment of both time and money and is based on establishing and maintaining good business relationships over an extended period of time. 6

7 Distributing your product internationally is often referred to as Inbound Tourism or Export Tourism. Inbound because travellers are being brought into Australia; Export because international dollars are being brought into the Australian economy. After you have found success in the local market, you might consider promoting your product on a larger scale. If you wish to go down this path you can approach wholesalers, tour operators, carriers and travel agents. For further detailed information on international markets and how to distribute your product internationally, take a look at Tourism Australia s Planning for Inbound Success tool, which provides very detailed information on Australia s key inbound markets: documents/corporate%20-%20industry/planning-for-inbound-success.pdf To access key Inbound Tour Operators (ITO s) and for additional advice on Inbound Tourism, contact the Australian Tourism Export Council Why work with travel distributors? These companies allow you to broaden your customer base beyond your reach, and are particularly important to inbound tourism and accessing new markets to distribute your product. Travel distributors can also provide market intelligence, insights and advice on a specific market. Distribution channels and consumer purchasing behaviour differs from market to market, and travel distributors who already work with these markets will ensure your product is inserted within the right channels to maximise the exposure your product receives. Exactly what types of distributors are there? Travel distributors include: Retail Travel Agents Tour Wholesalers Inbound Tour Operators It is important to understand the roles of each type of distributor and how they will further enable the distribution of your product. 7

8 What is a Retail Travel Agent? Retail travel agents are based in the consumer s country of origin and sell travel services directly to consumers, acting on their behalf to book and purchase holiday packages, travel, accommodation, tours and so on. It is not feasible for small Retail Travel Agencies around the world to have specific information and up-to-date rates for every tour operator in rthern Territory. To source this information they rely on Tour Wholesalers who package tour products. FAST FACTS Retail travel agents are a one-stop travel shop as they can assist customers with several travel queries and make all bookings at the one location. Operators rarely deal directly with a Retail Travel Agent; instead they go through a Tour Wholesaler or an Inbound Tour Operator. Local Visitor Centres can also be considered as retail agents. Many retail travel agents belong to a larger chain of travel agencies or consortiums that use their combined resources to market the agency brand. Despite the increased use of the Internet to research and book travel, complex long haul destinations like the NT require more assistance by travel agents. 8

9 What is a Wholesaler? Tour Wholesalers are also located in the consumer s country of origin and operate in a very similar way to wholesalers in other industries. But, instead of supplying tangible products they supply touring options including transport, accommodation, tours and attractions. Wholesalers link individual tourism operators or ITOs with retailers. They consider what type of tour program would appeal to a particular market and promote that accordingly. FAST FACTS Domestic and International Tour Wholesalers package products together. Wholesalers are able to achieve lower prices because of the volume of business and exposure they generate. International Tour Wholesalers will mostly turn to a local, Australian-based, Inbound Tour Operator to book specific touring options. Tour Wholesalers specialising in NT products will deal directly with tourism operators. Every wholesaler will have a different price for operators to participate in their programs. Wholesalers will rarely include a product in their brochures that doesn t have a proven track record. BENEFITS Benefits to Operators of being included in a Wholesale Program: A comprehensive brochure is produced and distributed to travel agents in Australia, and often overseas, and an industry launch is usually held to promote the brochure. The Wholesaler s representatives will conduct sales calls on retail travel agents to promote the program and operators in it. Wholesalers have computerised, often global, reservation systems to record bookings. Familiarisation visits for the retail industry and media are conducted to give staff an opportunity to experience the product first hand. Wholesalers undertake advertising campaigns aimed at both consumers and retail travel agents. 9

10 What is an Inbound Tour Operator? An Inbound Tour Operator (ITO) is an Australian based business that specialises in developing programs and itineraries for distribution through overseas travel distributors. 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 an itinerary. An ITO is often referred to as a Destination Management Company (DMC) or specialist. BENEFITS Benefits to Operators of using an Inbound Tour Operator: Inbound tour operators conduct a number of activities to attract the interest of overseas wholesalers and retail agents, and to make them aware of the services and products in the rthern Territory. They create individually tailored packages e.g. farm-stay, self-drive, nature-based tourism, special events etc. They attend trade workshops, missions and shows and act as an extension of your product marketing efforts providing international exposure for your product. They understand and manage cultural nuances, foreign languages, visa and legal requirements for foreign visitors. They act as a local contact point for clients overseas and only work with international clients. Being based within Australia working with ITOs mean that you will be able to conduct business in the same currency, language and timezone. 10

11 What is an Online Agent/Distributor? Traditional and online distribution channels are converging. Consumers are using the Internet more and more to access information and book tourism products. They may research online and book offline, or vice versa. Either way, the use of the Internet to research and book holidays is growing every day. Therefore your presence needs to be broad and engaging. There are several options available to distribute your products online. First of all your website is an online distribution channel. You need to have live inventory where consumers can book your product in real time. Online distributors are tourism businesses whose objective is to represent many individual tourism businesses on their website, shop fronts and/or database. They will be able to see the real time availability of each tourism product and book online directly on the distributors website. There are many online distributors available and the Tourism Exchange Australia (TXA) allows you to easily distribute your product through them as long as you have a compatible online booking system. Because in most cases online distributors have a broader online presence than your own website, they often list higher than you on search engine rankings for the main keywords. 11

12 What is a Business Events distributor? Professional Conference Organiser A professional conference organiser, professional congress organiser (PCO) or simply a conference company is a company that specialises in the organisation and management of congresses, conferences, seminars and similar events. Business travellers comprise of both Incentive and Convention travellers. Incentive traveller Many businesses reward performance by providing travel rewards to employees as incentives. These travel arrangements usually require a tailor made product that is at the top-end of the market. Convention traveller Conventions involve the movement of large numbers of people and inbound operators can develop pre and post convention tours. 12

13 How does the international distribution channel work? The travel distribution system has traditionally been very structured with clearly defined functions for each role in the chain. However, online technology and company mergers have transformed the tourism industry, with an increasing amount of cross over in the roles and functions of various sectors of the distribution system. Businesses are engaging a mix of distribution partners to ensure the most effective way of reaching their target consumers. The traditional structure of the distribution system includes Inbound Tour Operators (ITOs) based in Australia, wholesalers based overseas and international retail travel agents the link to the international consumer. However, this varies considerably from market to market. For example, it is not uncommon for an ITO to be part of a larger company that may also operate a wholesale arm in an overseas market, or for a wholesaler to also operate the travel agencies that sell its packages. As the traditional distribution system continues to evolve, it is important to clearly understand the structure of the companies that you work with and their relationships with other organisations. With the growth of the Internet, many traditional travel distributors such as wholesalers and travel agents are taking an online approach as well as offering their services from a retail shopfront. There has also been an increase in online travel agencies (OTAs) who operate solely in the online environment. Both online and traditional distribution partners have the opportunity to work with each other and directly with products and customers. Therefore, it is vital to understand each partner s role and how your product can benefit from their part in the distribution network. Traditional distribution channel New distribution channels Supplier Supplier ITO Channel Manager Switch Global Distribution Systems Wholesaler Retailer Customer Online Travel Wholesalers Online Travel Agents Traditional Travel Agents Customer Trade Wholesalers/ Inbound Travel Management Companies 13

14 An example of how the traditional distribution channel can work An international TOURIST has seen footage of the rthern Territory on the TV and heard about it through his friends. He decides to find out more The tourist visits his local RETAIL TRAVEL AGENT to enquire about the NT, ends up booking a thorough 8-week adventure across Australia including the NT, with accommodation, tours and activities Travel agent plans a comprehensive NT itinerary through the brochure of a WHOLESALER and then proceeds to book all tour options through them The Tour Wholesaler contacts an INBOUND TOUR OPERATOR (ITO) to book each individual element of the tour itinerary, such as accommodation and tours The Inbound Tour Operator contacts individual LOCAL TOUR OPERATORS to book land content directly. 14

15 Are you export ready? Retail Travel Agents, Tour Wholesalers and Inbound Tour Operators are on the lookout for quality products that they can package and sell. Answer the questions below to determine if your product is export ready. The more yes answers you can give, the closer you are to working with international distributors. Questions answered with no need to be addressed in order to become export ready. CHECKLIST Have you been operating for at least 12 months? Can you provide instant confirmation of a booking? Do you fully understand the concept of commission and net rates? Do you fully understand the roles within the tourism distribution channels? Is your product reliable with consistent opening times and regular schedules? Do you understand the cultural needs of different markets? Can you deliver on the cultural needs of different markets? Is your pricing consistent across all levels of distribution? Are your rates set for at least 12 months in advance? Is it easy to make a booking with you via Internet? Is there a demand for your product from your global targets? Have you identified which international markets your product appeals to? Do visitors from this market already visit your region? Can you always deliver what you promise in your brochure and website? Do you attend industry briefings and updates? Have you considered joining the Australian Tourism Export Council (ATEC)? Can your product be packaged with other products? Do you have a credit management system in place? Do you monitor your cash-flow? Are you an accredited business? Is your public liability insurance relevant and up-to-date? Are you active in the social media world? 15

16 What is the Australian Tourism Data Warehouse and why participate? The Australian Tourism Data Warehouse (ATDW) is the national platform for digital tourism information on Australia. The ATDW system is a central distribution and storage facility for tourism industry product and destination information from all Australian States and Territories. This content is compiled in a nationally agreed format and is electronically accessible by tourism business owners (operators), wholesalers, retailers and distributors for use in their websites and booking systems. What are the benefits to operators? There are many benefits to tourism business owners when they join the Australian Tourism Data Warehouse (ATDW). Massive distribution ATDW contains over 60 travel websites including Tourism NT s consumer website and Tourism Australia s Operators only need to supply business information once this then automatically gets distributed to multiple partners. Operators can control what information and images are displayed in their listing. Operators get access to business information on who has been researching their product, on which sites, using which search terms and key words. This information can be leveraged to update both the operators homepage and ATDW listing. 16

17 What does an ATDW listing include? Direct links to your and website Booking and contact details Promotion description up to 200 words Service description up to 125 words for accommodation and up to 200 words for tours Digital images of your product - up to 9 images at the Product Level and 1 at Service Level PDF of your promotional brochure Detailed pricing information A Google Map location display Operator video for embedding in distributor website through YouTube Social media feeds Facebook and Twitter A booking URL filed to direct web users to preferred booking page of operator How do I get listed on the ATDW? Tourism NT enables accredited tourism businesses to access the ATDW. To register your interest, atdw.tourismnt@nt.gov.au For more information visit and 17

18 For further information contact: Tourism NT Business Development Level 1, Development House 76 Esplanade, Darwin NT 0800 Ph: Fax: industrydevelopment.tourismnt@nt.gov.au