Transcript Chapter Eighteen

Chapter Nineteen
Channels of Distribution:
Bringing the Customer to
the Product
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution

Consortium
– A group formed to
accomplish
objectives beyond
the scope of any
one of the
individual members
– Increase
distribution
channels by
decreasing
expenses
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition

Incentive houses
– Handle incentive
reward travel
 Is
a specialized field
for corporate travel
 Larger need for the
trip to be perfect
 Examples: Carlson,
Maritz
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution (cont.)
 Travel
agents
– Intermediaries in travel, usually working
on commission
– Can also form consortia
– The (changing) role of the travel agent
 Routine/agent
sells their time
 Complex/agent sells their knowledge
– How agencies book travel
 Sophisticated
travel agents
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution (cont.)
 Travel
agents
– Working with travel agents
 Need
clear, current, concise information on
products
 Timely payment of commissions
 Upgrading important clients
 Complimentary stays/promotions to gain
loyalty
 Agents get information via familiarization
trips, advertising
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution (cont.)
 Central
Reservations Systems (CRS)
– Integrated with the Global Distribution
System (GDS) and Property
Management System (PMS)
 Worldwide
chains can provide consolidated
access to consumers
 CRS can outsource the calls; “private label”
service
 Seamless connectivity provides immediate
information/two-way inventory management
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution (cont.)
 Global
Distribution Systems (GDS)
– Connects the travel agent with the hotel
– Started with airline flights, now hotels,
rental cars, train tickets
– CRS must link electronically with GDS to
book directly
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution (cont.)
 Tour
operators and wholesalers
– Tour operators take “nominal
possession” of inventory in order to sell
it
– Wholesalers negotiate the best deals
and re-sell it for a profit
– Usually function through a travel agency
– Advertise in print media
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Hospitality Channels of
Distribution (cont.)

Internet channels
– Book directly with the firm’s website or via
online travel agency
– Merchant model
– Agency model
– “Opaque” approach
– Challenges:
 Complete
transparency in pricing
 Control of Internet channels by business
 Lack of two-way interfacing
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Estimated Costs to Hotel to Book a Room
Customer
books via:
TollFree
Call to
Hotel
TollFree
Call
to
CRS
Bricks
and
Mortar
Travel
Agent
Online
Travel
Agent
Branded
Chain
Website
Hotel
Property
Website
GDS
Booking
Fee
Switch
Fee
Total
Cost
to
Hotel
Toll-free call to
CRS
-
$3-$5
-
-
-
-
-
-
$3-$5
Through
traditional
travel agent
-
-
$18-$22
-
-
-
$4-$5
$0.30
$22$27
Toll-free call
directly to hotel
$3-$5
-
-
-
-
-
-
-
$3-$5
Branded website
-
-
-
-
$5
-
-
-
$5
Online travel
agency—
merchant model
-
-
-
$18$22
-
-
-
$2
$18$24
Online travel
agency—
agency model
-
-
-
$66
-
-
Direct through
hotel website
-
-
-
-
-
$5 to $15
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
$66
-
-
$5 to
$15
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Strategies for Distribution
Channels
 Push-and-pull
strategies
– “Pull” the product down the channel or
the customer up
– “Push” the agent to sell to the consumer
 Promotional
tie-ins
– A “catch-all” for attempts by the
industry to expand via intermediaries
 Selecting
the channel of distribution
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
International Markets
 Heavy
reliance on external
distribution channels outside of
native country rather than within
 Some have toll-free numbers, others
rely on other channels
 International franchising increases
the distribution network
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Channel Management
 Control
depends on the strength of
the product
 Relationships among channels
– All agreements in writing and current
– “Give and take” philosophy for longterm success
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Channel Management (cont.)
 Evaluation
of the channel
– Critical for success
– Management should review the statistics
– Understand the “break-even” point
– Good relationships ensure customer
satisfaction
– Needs
 Motivation
and recruitment
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.
Shoemaker, Lewis, and Yesawich: Marketing
Leadership in Hospitality and Tourism, 4th edition
© 2007 Pearson Education, Upper Saddle
River, NJ 07458. All Rights Reserved.