4.5 Chapter Conclusion
Meagan A. McGuire
Summary
The travel trade is important to understand because it permeates the buying and selling process for hospitality and tourism industries. Travel product availability and price is affected by this distribution process, impacting suppliers, consumers, and travel trade businesses alike.
The travel trade refers to the businesses involved in the buying and selling of travel products. They are often unseen by the consumer and misunderstood by the supplier. There are, in general, four links along the travel product distribution chain; suppliers, wholesalers, retailers, and consumers. Technological innovation has and will have the most influence on how these entities buy and sell to each other and, therefore, their business models.
Suppliers, such as accommodation, entertainment, and transportation providers, provide travel trade products to the marketplace, either directly to the consumer, through a wholesaler, or to a retail travel trade business. Wholesalers include B2B tour operator companies who package travel products together for resale and consolidators who use their buying power to secure net rates for airfare, hotel rooms, and more. Retailers sell directly to the consumer. They are B2B tour operators who combine travel products for resale as packaged tours or packaged travel, travel agents who help consumers with making and booking their travel arrangements, destination management companies (DMCs) who assist companies and others with travel arrangements to a particular destination, and online travel agents who offer an online platform where the public can book travel products. The ultimate consumer, the traveler, group leader, or company, has a myriad of choices when it comes to purchasing their travel, which keeps the travel marketplace diverse.
Travel product distribution is often unseen by the consumer yet influences the available rates, offerings, and options. Each link in the chain and each business segment under those links are interconnected, relying on each other to succeed. The travel trade industry is vital to travel as a whole, contributing to global economic growth, job creation, and the health of the travel and hospitality industries as a whole.
Review Questions
- What is the primary role of travel trade businesses?
- To provide transportation only
- To sell travel insurance exclusively
- To manage, package, and resell travel products
- To offer guided tours only
- What does a wholesaler in the travel trade do?
- Sells travel products directly to consumers
- Only provides transportation services
- Resells travel products to retailers
- Manages individual hotel properties
- How do DMCs (Destination Management Companies) differ from travel agents?
- DMCs specialize in packaging travel products together, while travel agents sell individual travel products.
- DMCs negotiate net rates with travel product suppliers, while travel agents act as intermediaries between suppliers and consumers.
- DMCs coordinate events and experiences within a specific destination, while travel agents provide travel advice and assistance to individuals.
- DMCs work with wholesalers to resell travel products, while travel agents work directly with consumers.
- What is a Global Distribution System (GDS)?
- A marketing strategy for travel products
- A security system for online transactions
- A computerized network used to coordinate travel bookings
- An international regulation for travel agencies
- What trend has significantly affected the travel trade in recent years?
- Decrease in travel due to technology
- Growth of digital and online booking platforms
- Less interest in international travel
- Movement away from using travel agents
- What challenges do travel retailers face when selling third-party products?
- Too many product options
- Lack of control over service quality
- High costs of digital marketing
- Regulations against selling foreign products
- How do B2C tour operators differ from B2B tour operators?
- B2C tour operators sell directly to consumers, while B2B tour operators sell to other companies in the travel trade.
- B2C tour operators specialize in inbound tourism, while B2B tour operators focus on outbound tourism.
- B2C tour operators package travel products together for resale, while B2B tour operators negotiate net rates for travel products.
- B2C tour operators work with DMCs to plan events and coordinate experiences, while B2B tour operators work with wholesalers to resell travel products.
- What are the primary responsibilities of travel agents?
- To negotiate net rates for travel products and sell them directly to consumers.
- To package travel products together and sell them to retailers or other tour operators.
- To act as intermediaries between travel product suppliers and consumers, selling travel products at a discounted rate.
- To sell travel-related products, such as accommodation and transportation, to the public on behalf of travel product suppliers.
- What is the role of technology in the travel trade?
- Technology has made the travel trade more complicated and less efficient.
- Technology has simplified the travel distribution chain and improved the booking process.
- Technology has increased the cost of travel products and reduced customer satisfaction.
- Technology has had no impact on the travel trade.
- What are some services that DMCs often offer?
- Marketing services and event security
- Transportation and entertainment
- Gift sourcing and guest speaker coordination
- All of the above
- Who are intermediaries in the travel trade?
- Explain the function of an Online Travel Agent (OTA).
- What are Receptive Tour Operators (RTOs) known for?
- Describe the role of consolidators in the travel trade.
- What is the significance of ‘FIT’ travel?
- Discuss how the rise of online booking platforms has impacted traditional travel agents. Consider both negative effects, such as decreased demand for in-person services, and positive effects, such as the ability to offer more personalized service.
- Critically assess how sustainable practices are integrated into the operations of different players in the travel trade, such as DMCs and tour operators.
- Predict future trends in the travel trade industry over the next decade. Consider technological advancements, consumer behavior changes, and global economic factors.
- Evaluate the relevance of Global Distribution Systems in today’s travel market, given the rise of direct booking tools and platforms.
- Analyze the specific needs of corporate travel management and how they differ from leisure travel services.