Distribution for Hospitality

Chapter 10

Unit Essential QuestionUnit Essential Question

What intermediaries areWhat intermediaries are available to scheduleavailable to schedule travel and other hospitalitytravel and other hospitality needs needs and how has technology impacted and how has technology impacted scheduling?scheduling?

Essential Question 1Essential Question 1

What challenges face What challenges face traditional travel traditional travel agencies and what agencies and what strategies can they use strategies can they use in today’s technology in today’s technology world?world?

Traditional Travel Intermediaries

• The Role of Travel AgentsThe Role of Travel Agents– Travel agencies employ travel agents who receive a

commissioncommission: : a percentage of the sales revenue, to arrange hotel rooms, meals, transportation, cruises, tours, car rentals, and other travel amenities.

– Most travel agencies rely heavily on corporate or group accounts.

– A Competitive BusinessA Competitive Business• Travel agencies are losing their influence in the hospitality

industry.

• Commissions from airlines have been cut.

• Dot.com companies are doing a better job of promotion.

Traditional Travel Intermediaries

– Promoting IdentityPromoting Identity• Successful travel agencies promote themselves by writing a travel

column in the local newspaper, design an attractive company website, and above all keep the communication lines open with their clients.

• Successful agents market to the individual customer by mail, telephone, or email.

Traditional Travel Intermediaries

– Tracking EffortsTracking Efforts• Travel agents must track their marketing efforts to see which

methods are most successful.

• You do not want to waste time, effort or money on strategies that are not working.

• Create a customer database and use surveys, interviews, and sales records to determine the most effective marketing.

Traditional Travel Intermediaries

– Selling More CruisesSelling More Cruises• Travel agent’s main focus in today’s hospitality industry is on

cruises.

• Cruise packages must be flexible in order to accommodate the wide variety of choices demanded by customers.

• The flexibility factor provides the impression of individualized attention.

Traditional Travel Intermediaries

– Ways to SellWays to Sell• Travel agents use the usual promotional strategies; however, they

can put promotional materials together in different ways to attract a wide array of market niches.

• Customer service is the key to survival for travel agencies.

• Maintaining close relationships (relationship marketing) with the customer and offering the little extras separate successful travel agencies from faltering ones.

Traditional Travel Intermediaries

• Other Travel-Planning OutletsOther Travel-Planning Outlets– TourTour: : Any pre-arranged journey to one or more destinations

and back to the point of origin.– Travel WholesalerTravel Wholesaler: : A company that creates and markets

complete sets of tours for sale to travel agents.– Tour Operators:Tour Operators: Create their own product to sell at retail or

wholesale and are more likely to perform local services than wholesalers.

– Tour Consultants: Tour Consultants: Individuals in a travel agency who advise clients about tours in order to make a sale.

Traditional Travel Intermediaries

– Tour Escorts: Tour Escorts: Company staff members or independent contractors who conduct the tour.

– Tour Guides: Tour Guides: Take people on sightseeing excursions of limited duration.

– Tour RatesTour Rates• All-expense tours: All-expense tours: Offers all or most services – transportation,

lodging, meals, transfers, sightseeing, and other expenses – for a pre-established price.

• Inclusive tours: Inclusive tours: Lists the specific elements – airfares, hotels, transfers, and other costs offered at a flat rate.

Traditional Travel Intermediaries

• Tour-based fares: Tour-based fares: Reduced-rate excursion fares available only to those who buy prepaid tours or packages.

• Bulk fares: Bulk fares: Available only to tour organizers or operators who purchase a specified block of seats from a carrier at a low non-commissioned price and then must resell for an increased price in order to make a profit.

– Outsourced MeetingsOutsourced Meetings• Companies are becoming too busy to plan their own meetings, so

they hire (outsource) independent meeting plannersindependent meeting planners to organize all meeting details.

• Full-time meeting planners within organizations also use independent meeting plannersindependent meeting planners to assist in organizing meeting details.

Essential Question 2Essential Question 2

What are internet travel What are internet travel intermediaries?intermediaries?

Internet Travel Intermediaries

• The Rise of IntermediariesThe Rise of Intermediaries– IntermediariesIntermediaries: : Companies that provide a service between

the customer and the vendor.– Technology has dramatically changed the hospitality

industry by making the home computer with internet capabilities into a reservation center.

– Paying the Middle ManPaying the Middle Man• During the 1990’s, commissions to traditional travel agents grew

14% while revenue generated by travel agents only grew 6%.

• The internet intermediaries allow the customer to be their own travel agent without the middle man commission.

Internet Travel Intermediaries

– Unexpected ResultsUnexpected Results• The degree of success of internet intermediaries was unexpected.

• The dramatic growth of the internet and do-it-yourselfers created a new customer base for airlines and hotels.

• Has forced airlines and hotels to become more competitive on price and service.

Internet Travel Intermediaries

• Two Famous IntermediariesTwo Famous Intermediaries– Priceline.comPriceline.com

• Customers can name any price for a hotel reservation and the hotel sets a minimum price they will accept.

• Customers visit the website to select their destination cities, areas of the city where they would like to stay, minimum quality star rating, and price they would like to pay excluding taxes.

• Priceline assigns a hotel to a quality tier based on its own rating system, called Priceline star rating.

• Hotels manage Priceline rates and room availability in their revenue management systems.

• When a customer makes an “offer” for a reservation in a particular hotel market, Priceline tries to match a hotel to that offer.

Internet Travel Intermediaries

– Advantages to Hotels Using Priceline.comAdvantages to Hotels Using Priceline.com• Allows hotels to expand their market.

• There is no financial obligation for participating in the program.

• The hotel has complete control of rates and inventory.

• Priceline provides data to enhance the hotel property performance.

• Priceline collects information to gauge accurately what customers will pay which allows hotels to better understand their market’s price elasticity: change in customers demand when price changes.

• Priceline tells its hotel participants better to have an occupied room at a low rate then an unoccupied room making no money. It recommends:

– Hotels offer 20% off Corporate rates.

– Hotels offer 30% off weekday and weekend rates.

– Hotels offer deeper cuts during low occupancy periods.

Internet Travel Intermediaries

– Travelocity.comTravelocity.com• Travelocity is the leading online travel website, providing query

and reservation service for nearly every aspect of the hospitality industry.

– 95% of all airline seats.

– 47,000 hotels.

– 50+ car rental companies.

• Travelocity is a giant search engine that allows consumers to enter general parameters of desired hospitality products and returns comprehensive data about options available throughout the hospitality industry.

Internet Travel Intermediaries

• Travelocity features:– ““Best fare finder”: Best fare finder”: Offers multiple ways to search for economy class

travel.

– ““Flexible dates”: Flexible dates”: Searches for the lowest fares offered and shows dates on which those fares are available.

– ““Specific dates, best-priced trips”: Specific dates, best-priced trips”: Searches for the lowest fares offered for specific travel dates entered by the customer.

– ““Specific dates, choose flights”: Specific dates, choose flights”: Searches for the lowest fares offered for specific travel dates and times the customer enters.

– ““Modify search”: Modify search”: Used to change dates, times, and/or connections.

• Other resources and ServicesOther resources and Services– Travelocity allows customers to select specific seats for their flights.

– Offers a World MasterCard with various exclusive offers.

– Travel tools include search, custom mini-guides, maps, and up-to-date weather.

– Vacation finder, cruise finder, cruise deals, and vacation deals.

Internet Travel Intermediaries

– The Future of IntermediariesThe Future of Intermediaries• Internet intermediaries will continue to grow in the current market.

• More options will become available on numerous sites.

• Travel agencies will have to put their target marketing efforts on the Web.

• Travel agencies, using intermediaries and other tools, will make their living providing personalized and customized service to their customers.

Essential Question 3Essential Question 3

How can the internet How can the internet be used for hospitality be used for hospitality marketing?marketing?

Selling Hospitality Using Websites

• The Power of the WebThe Power of the Web– The internet has created a new way of thinking about

communication and marketing.– Use of the internet for the hospitality industry has been a

huge success.– Advertising on the InternetAdvertising on the Internet

• Websites are used as electronic billboards.

• Pictures allow business to show their products in ways that promote the image they wish to portray.

• Hotels can show off their properties.

• Restaurants may choose top-of-the-line meals and diners enjoying their visit to the restaurant.

Selling Hospitality Using Websites

– Distributing Information on the InternetDistributing Information on the Internet• People use the internet to obtain information.

• People just want facts from the website and do not want to be burdened with a lot of advertising.

• Websites can become cluttered with too much poorly organized information.

• To avoid clutter, some websites use a FAQ page: A page that contains the answers to Frequently Asked Questions.

• Good websites provide information walk-up customers would receive.

• Most hospitality businesses are reluctant to put precise prices on the internet, fearing that the information will quickly become obsolete.

Selling Hospitality Using Websites

– Data Collection on the InternetData Collection on the Internet• The interactive quality of the internet allows businesses to collect

information on individuals visiting their sites.

• Information is accumulated from hits: A measure of the traffic on a website.

• Information collected on customers through a website is referred to as cookies.

• Cookies are stored in a special folder and vary in the amount of information transmitted.

• Many businesses put customer surveys on their websites. The surveys allow customers to evaluate the product or site itself and allow business to ask for suggestions.

• Creativity and cleverness in designing surveys and polls can liven up a website.

Selling Hospitality Using Websites

– Booking on the InternetBooking on the Internet• Collecting orders is the ultimate goal of a website.

• Accuracy and security are important issues when designing websites that have the capability of making reservations or paying online.

• Most websites transfer payment and ordering to a secure server: A server that uses data encryption and other methods to ensure that a customer’s information is not intercepted.

Selling Hospitality Using Websites

• Effective WebsitesEffective Websites– Marketing the SiteMarketing the Site

• The largest generators of traffic to a website are search engines: Programs that search documents on the internet for particular terms called keywords.

• Examples of search engines include google.com, lycos.com, metacrawler.com.

– Create A BuzzCreate A Buzz• Include the web address prominently in all forms of advertising.

• Make the website entertaining, fun and informative.

• Emails and word of mouth generate an amazing amount of traffic and, if people enjoy it, they’ll be more receptive to its marketing message.

Selling Hospitality Using Websites

– Design A Good SiteDesign A Good Site• Must be attractive, secure, and simple to use.

• Ensure the home page fits a standard browser window.

• All pages need to have a similar look and links are identified clearly and kept updated.

• Navigation bars and other controls need to be easy to understand.

• “Home” and “Back” buttons need to be included on every page plus a site map page should be included.

• Graphics are important but too many will cause slow loading.

• Animated graphics and sound must be controllable by the viewer.

• Use medium sized dark type on a light background. Font should be professional and easily readable; avoid all caps and italic; and proofread carfully.