4.1 Introduction
Meagan A. McGuire
What is the Travel Trade?
The travel trade is a term that refers to those companies and organizations whose business revolves around managing, packaging, organizing, or reselling travel products, such as airfare, car rental, hotel or cruise accommodation, tours, and more. The players in this field are the intermediaries between the travel product suppliers (hotels, airlines, etc.) and the consumers who purchase the final travel product.
Chapter 3 discusses the concept of tourism products, which are the elements tourists consume during a travel event. The term ‘travel product’ has essentially the same meaning, however, it is used more often than ‘tourism product’ in the travel trade industry. The term ‘tourism product’ is more commonly used in destination management and strategic planning. It is not necessarily something that can be bought and sold and can therefore include hiking trails, the people and culture at the destination, scenic views, or other activities or sites of interest to tourists. The term ‘travel product’ is more often used in association with elements that require a financial transaction to consume.
Understanding the travel trade can be complicated because travel products can potentially go through many hands without the traveler’s knowledge before the products are purchased by the traveler. If a person is traveling for business, they may purchase their airfare from a corporate travel agent or travel management company, but the plane ticket might actually be sold by an airline consolidator who obtained discounted rates from the airline. If a person is traveling with a group on a tour, such as a school or church, the tour may have been packaged by a tour operator and sold through the group leader to the traveler. Or, if the consumer is traveling for leisure, they may purchase their hotel room through an online travel agent (OTA), who resells rooms on behalf of a hotel. These paths of travel product distribution will be described in further detail in this chapter.
Travel Product Distribution
The diagram below outlines the path travel products can take, from production to distribution, to reach the ultimate end consumer—the traveler. Generally, there are four links in the travel distribution chain, the supplier, the wholesaler, the retailer, and the consumer.
Travel suppliers sell travel products to consumers, to wholesalers, or to retailers. Wholesalers (described below), such as B2B (business to business) tour operators and consolidators, do not sell directly to consumers, but instead resell travel products to retailers, such as B2C (business to consumer) tour operators, travel agents, and online travel agents. These companies earn revenue at each stage through markups on the travel products, commissions on products sold, and through service fees.
While the above diagram shows a simplified travel distribution chain, travel products can take alternative paths before reaching the traveler. The cha