ITTHI Chapter 7

Introduction to Travel, Tourism and
Hospitality Industry
INTRODUCTION TO TRAVEL, TOURISM &
HOSPITALITY INDUSTRY
Chapter 7
Travel Intermediaries
Lesson Objectives
At the end of this lesson, students should be able to :
1. Understand the basic sales distribution systems used within

the travel industry to sell travel services
2. Describe the role of tour operators, ground operators and
travel agents
3. Understand a travel package
4. Explain the future of travel intermediaries
7.1 Introduction to Travel Intermediaries
 For travel to occur, consumers need to purchase, arrange or

acquire the means by which they can travel from home to a
destination. One important party in this process are tour operators
and travel retailers
 The complexity of tourism can best be appreciated if we take a

look at the vast variety of organisations and firms that might be
involved in a tourist’s trip:
Airlines Travel Agents

Tour Companies Ships
Railways Buses
Taxis & Limousines Restaurants & Bars
Hotels or Other Attractions & Entertainment
Accommodations Places
Shopping Centres Embassies & Consulates
 Like other basic industries, the travel industry has its own system
of moving products and services from suppliers to the consumers
using the sales distribution system
7.2 Travel Sales Distribution System
 The link between tourism suppliers and the customers is known as

the distribution system. The purposes of the system of distribution are
twofold: to give potential travellers the information they need to
make a vacation choice, and to allow them to make the necessary
reservations once they have decided on their choice.
 The travel sales distribution system may be direct or indirect.

 A direct system of distribution is one where the supplier (destination,
airline, hotel, etc.) communicates directly with the customer.
 An indirect travel sales distribution system is one where there are one
or more intermediaries between the supplier and the customer. Some
of these intermediaries can be the:
Travel Agencies Speciality

Tour Operators
(Wholesale &Retail) Channellers
Class Discussion
List some advantages of the direct travel

sales distribution system.
 There are four different sales distribution systems that

are practiced in the travel and tourism industry. Sales
distribution system is defined as the method by which a
travel industry supplier sells its products and/or
services to customers
1. One-stage
2. Two-stage
3. Three-stage
4. Four-stage
7.3 Travel Agencies (Wholesale & Retail)
 A travel agent is defined as a member of a

travel agency who is qualified to sell travel
services offered by the agency’s principal
suppliers, including airlines, cruise ships,
railroads, bus companies, car rental firms,
hotels and sightseeing operators
 There are two types of travel agents –
wholesale and retail
1. Tour Wholesalers
2. Retail Travel Agent
 Tour Wholesalers
1. Defined as companies that put together
packages of tourism experiences for the
consumers.
2. The tour wholesalers work with airlines,
shipping companies, hotels, restaurants,
entertainment and attraction businesses,
auto rental companies and even with
governments to put together attractive
packages for potential tourists
 Retail Travel Agent

1. These are people who sell tours for
wholesalers and operators in addition
to hotel rooms, car rentals, and
transportation tickets.
2. The retailer acts as agent for the
supplier and is paid on a commission
basis by the supplier for sales made
7.4 Tour Operators
 A tour operator is defined as an independent travel agent who

combines travel and tour components to create a holiday
 Normally for most tour operators, they will assign a tour leader to
make sure that all arrangements are in order for each stage of the
tour and to solve any problems, if they arise.
Travel Principal
(Airline, hotel, car hire)
Tour Operator
Customers Packages together travel

elements from several Travel Agent
(Business & principles
Leisure
travellers)
7.4 Tour Operators
 Ground Operators
1. Ground operators provide the ground
services during a package tour
2. Ground operators who specialise in services
for tourists coming in to their country are
also known as inbound agents. Inbound
travel agents specialise by the FIT (Free
Independent Traveller) or GIT (Group
Inclusive Tour) market.
Define
FIT and
GIT
7.4 Tour Operators
 Specialty Channelers
1. People who are intermediaries
between the retailer and the customer
are known as specialty channelers.
2. They may represent either the customer
or the supplier and include incentive
travel firms, meeting and convention
planners, association executives, and
corporate travel offices.
Class Discussion
There are many benefits for hotels in

working with tour operators – a major
factor being the guaranteed bookings
for the rooms the tour operator’s
contract. However, the Internet has
made it easier for customers to book
with hotels directly.
Discuss whether or not you think that

the growing use of the Internet to book
travel products will mean hotels will no
longer need to work with tour
operators to sell their rooms.
7.5 Travel and Tour Packages
 A tour package is defined as a total tourism product consisting of

transportation from market area to the destination, accommodation at
the destination and recreational activities performed by the tourists.
1. Basic Elements
2. Optional Add-ins
3. Alternative Forms
Optional Add-ins
Basic Elements • Car Hire
 Aircraft seats • Tours
 Accommodation
 Return transfers
Alternative forms
 Services of a tour
• Multi-destination
operator
packages
representative
• Optional extensions
 Insurance
 There are four types of tour packages:

1. Independent Tour
2. Inclusive Tour
3. Escorted Tour
4. Business Tour
 Independent Tour
1. Independent tour is prepared to the
individual/particular traveller’s specification.
In this tour, a traveller is free and
independent to select any component for his
journey
An independent tour may be a package of

transportation and ground arrangements
specifically tailored to the individual’s
preferences and not advertised in a tour
brochure
 Inclusive Tour
1. The tour ingredients purchased, combined
and sold as a package at an inclusive price
to tourists by a tour operator is known as an
inclusive tour
An inclusive tour is a prepaid and well planned

tour covering all components including services at
special rates, requiring that all tour members must
travel on the same flight round trip and must
travel together during entire course of the tour
 Escorted Tour
1. A tour escort is provided from the starting
point back to the point of return to
accompany the tour members. This type of
tour is generally arranged by ground
operators on behalf of main tour operator.
2. Also known as “conducted tour” or “hosted
tours”
 Business Tour
1. Business tours have received a special attention
from the tour operators namely, Conference
Package and Special Events Package
These packages include a wide range of activities

such as venues for business meetings/conferences,
accommodation, transportation, secretarial services,
conference equipments, local sightseeing and other
facilities
7.6 Future of the Travel Agency Business
1. Consumer expectations are rising and

travellers are demanding more from agents,
including more choices, personalisation, and
an end-to-end experience.
2. Growing popularity of the Internet
3. Travellers looking for personalised service
 There are five possible trends that a travel

agency can look at:
1. Personalisation
2. Mobile & Payments
3. Rich Travel Content
4. Voice
5. Internet of Things
 Personalisation
1. Embracing customer data and predictive analytics is
critical to offer personalised travel experiences.
2. Many of the customers are now selective in choosing their
travel packages so the travel agent can study the
customer trends and personalise the travel packages for
their customers
 Mobile & Payments

1. Deliver new innovations in mobile and payments,
particularly in user experience and user interface.
2. For a mobile-first generation, instant messenger-style
interfaces will become a more popular way of booking travel
 Rich Travel Content

1. Will rise with the implementation of 5G and 6G high-
speed networks
2. Content management and integration with non-travel
related content such as concerts and museum tickets, as
well as value add services such as LiveChat and free Wi-
Fi, will be the success factors for future travel agents
 Voice
1. Voice recognition and assistance technology will transform how
travel agents interact with travellers, such as the use of digital
assistants to search flight details or book a hotel room last minute
 Internet of Things
1. Connect the customer with travel consultants at every stage of the
travel process and could allow for a “universal travel pass” that can
handle multiple currencies and bookings
Question & Answer
The End

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ITTHI Chapter 7

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Introduction to Travel, Tourism and

1. Understand the basic sales distribution systems used within

 For travel to occur, consumers need to purchase, arrange or

 The complexity of tourism can best be appreciated if we take a

Airlines Travel Agents

 The link between tourism suppliers and the customers is known as

 The travel sales distribution system may be direct or indirect.

Travel Agencies Speciality

List some advantages of the direct travel

 There are four different sales distribution systems that

 A travel agent is defined as a member of a

 Retail Travel Agent

 A tour operator is defined as an independent travel agent who

Customers Packages together travel

There are many benefits for hotels in

Discuss whether or not you think that

 A tour package is defined as a total tourism product consisting of

 There are four types of tour packages:

An independent tour may be a package of

An inclusive tour is a prepaid and well planned

These packages include a wide range of activities

1. Consumer expectations are rising and

 There are five possible trends that a travel

 Mobile & Payments

 Rich Travel Content

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