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CHAPTER 7 ORGANIZATIONS IN THE DISTRIBUTION PROCESS LEARNING OBJECTIVES Become familiar with tourism distribution system organizations and their functions. Understand the role of travel agents and their dominance in the distribution system. Consider the impact of the Internet on the distribution system. Examine the role of the tour wholesaler. Recognize that a combination of all channels of distribution can be used by travel suppliers. CHAPTER OUTLINE Outline Summary Points of Emphasis 1. How do channel They consist of a structure or system through which a travel supplier sells organizations work? its product rather than selling it directly to the traveler. It is impractical for suppliers to have sales offices in every market area. Travel agencies are the principal distributors, but products can also be sold through corporate travel offices or through tour companies or associations such as an auto club. The supplier pays a commission to most distributors for each product sold. The products are intangible. 2. Travel agents Are the dominant distributors – over 25,000 agencies in the U.S. and they are found in most other countries as well. An agency is an agent middleman acting on behalf of the client, making arrangements with suppliers of travel – airlines, hotels, tour operators, cruise lines – and receiving a commission from these suppliers for each product sold. A travel agent is an expert counselor, advising the clients on travel concerns and making itineraries. As some suppliers have reduced or eliminated the commissions paid, a number of agents are charging fees. 3. Dimension of the travel In 1999 there were 32,200 agency locations in the U.S. doing $142.8 agency business billion in volume. With the reduction and elimination in commissions paid by the airlines the number of agencies is declining because small agencies are closing their doors or consolidating with other agencies so the dollar volume of agencies is still increasing. Virtually all agencies are now automated. 4. Types of Air travel is first with 54 percent of volume followed by cruise sales at 19
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arrangements made percent. Other categories such as tours, hotels, car rentals, rail and other miscellaneous services are much smaller. As airline commissions fall or are eliminated, agencies are shifting their mix and the future will see increases in cruises, tours, and other non-air segments. 5. Travel agency The American Society of Travel Agents (ASTA) is the most influential. A organizations smaller group is the Association of Retail Travel Agents (ARTA). On a global scale, organizations include the Universal Federation of Travel Agents Association
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