4.2 Today’s Travel Trade
Meagan A. McGuire
This section describes the major players who make up the four pillars of travel product distribution.
Suppliers
Companies that offer original travel products are known as suppliers. These include the hotels, bed and breakfasts, and vacation rentals that supply overnight accommodations. These also include the museums, historical sites, amusement parks, and zoos that offer admission tickets and the airlines, trains, buses, and car rental companies that offer transportation services. The travel products sold by suppliers may be distributed through the travel trade before reaching the consumer.
DMOs are considered suppliers as well. Some DMOs have travel products that they sell. For example, purchase of a Tucson Attractions Passport from Visit Tucson provides the buyer with admission to over 100 Southern Arizona attractions for one price. However, most often DMOs do not sell anything. Rather, they act as a middlemen between buyers and suppliers. DMOs are considered suppliers because they often “sell” their destination to tour operators, travel agents, and consumers through sales and marketing activities. DMOs market their destinations to tourists and business travelers, represent their suppliers in meetings with buyers, and package suppliers’ travel products together into itineraries, which they, in turn, promote to tour operators and consumers.
When suppliers provide the elements of travel to wholesalers or retailers, they must negotiate a rate that both buyer and seller can agree upon. In order for the travel product to be viable in the marketplace, the retailer must be able to sell it at a rate that travelers will accept. In turn, the supplier, the wholesaler, and the retailer must all earn revenue on the sale. Therefore, the role of negotiating the contracted rate with the original supplier proves a vital first step in the distribution chain.
Travel products can be sold to a retailer, such as a tour operator, travel agent, or online travel agent. Or, travel products can be sold to a wholesaler and then resold to a retailer. Alternatively, travel products can be sold directly to the consumer. Therefore, the distribution chain can be short, or it can entail multiple steps to reach the consumer.
With the digital revolution, the travel trade distribution chain has radically changed. Travelers are no longer limited to purchasing travel products through travel agents, as they often had been prior to the internet. Now travelers can purchase directly from hotel, airline, and attraction websites, through travel agents and online travel agents like Expedia, or they can purchase packaged travel products through tour operator websites.
The chart above shows travel product distribution beginning with the supplier. Yet, the consumer affects this chain. Suppliers sell their travel products based on where and how consumers purchase. If suppliers find that their travel products are ultimately not being purchased by the c