Travel retail industry | Distribution Channels | Reason for using travel retail agents

Travel Retail Industry

In the era of intense competition, most companies contemplate different forms of distribution. Companies are able to sell direct to consumers from their place of location. Stores combine direct marketing by use of advertisements, catalogues telephone sales or electronic media with their retail outlets. Tourism industry also makes use of these distribution channels in reaching out to its customers.

Retail travel industry - Distribution channels, Reasons for using retail travel agents
Image: Retail travel industry – Distribution channels, Reasons for using retail travel agents

Structure of distribution channels in tourism industry

The distribution channels in tourism are shown in the image below.

Structure of distribution channels in tourism industry
Image: Structure of distribution channels in tourism industry

A wide network of travel agencies works across the country to promote tourism products. The rapidly expanding operations of airline business give rise to the need for travel agents. Transport providers require a means of distribution for their products. There is also an increasing demand for inclusive tours from holiday makers. Users of tourism products are largely not well informed on tourism related issues. Therefore, they look up to experts to buy tourism services.

Agents work on commission basis. They keep ready copies of companies’ brochures or sales literature about the various tourism services offered in the market.

The products sold by travel retail agents are both intangible and perishable. This is entirely different from the traditional type of retail market. Bookings for travel abroad are organized through either high street travel agents for holidays or by special business,travel agents for business travel.

The convenience of using the travel agents is an important element that promotes tourism products.

Travel agents offer opportunities for one-stop shopping. They allow the parallel purchase of insurance, car hire, rail travel to the airport, traveler’s cheques and so on. David Gilbert summarizes the following reasons for the use of retail travel agents and limitations of using direct channels.

Possible reasons for the use of retail travel agents

1. Easy accessibility:

  • to a range and choice of brochures
  • to product components of visas, traveler’s cheques, insurance etc.
  • to booking points in every main town and city
  • to an alternative agent as well as products and brands.

2. Convenience:

  • for obtaining information and advice
  • for making the purchase and payment for the holiday plans.
  • for making complaints and being available if things go wrong.

3. Habit: People can get into a pattern of behavior which becomes habit forming. Only a major campaign by direct mail operators could change this habit.

4. Security risk: Consumers feel more secure when dealing with a reputable operator or agent.

5. Environment / Atmosphere: Travel agents offer an environment which is part of the holiday experience. A travel agency’s office environment offers the perfect setting for personal selling methods which are a powerful means to generate booking.

6. Economic: Travel agents compete on price or added value and tour operators operate with the smallest of margins, there is little difference in the price between travel agents and direct sale.