Transcript BTEC National Travel and Tourism

Introduction
to the
Tourism Industry
Module 2
Adapted from BTEC National Travel &
Tourism 2007 specifications (c)Travel
and Tourism Publishing Ltd
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Learning Outcomes
1. Understand the retail and business travel
environment
2. Understand how advances in technology have
affected retail and business travel operations
3. Understand how retail travel organisations
seek to gain competitive advantage
4. Be able to produce complex itineraries for
retail and business travel customers
5. Implement Green Tourism products &
marketing
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Icebreaker
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Make a list of all the ‘products’ that travel agents sell
Think of some differences between a leisure travel agent and a
business travel agent
Write down the names of all the travel agencies in your area and try
to work out who owns each one
What can a travel agency do to be more successful than its
competitors?
Write down how you think the role of the travel agent will change in
the future
What changes in technology have affected travel agencies in recent
years?
Make a list of all the different components of the travel and tourism
industry that travel agencies work with
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The retail travel environment
• ‘Retail travel’ is the sector of the travel and
tourism industry concerned with selling holidays
and other travel products, such as flights, car
hire and travel insurance
• Traditionally, the bulk of these sales have been
through the familiar high street travel agency
chains and independent agents, catering for the
needs of a range of leisure travellers
• Today, however, there are many more ways for
people to buy their holidays and travel products,
not least via the Internet, by ‘phone and via TV
channels linked to call centres
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The retail travel environment
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Independent agents
• These are single, independent businesses that
are not part of a chain and are often managed
by the owner and a small team of staff
• Unlike multiple agents that have links with their
own tour operating companies, independent
travel agents are free to offer their clients a wide
range of holiday companies
• Independents trade on their ability to give their
clients a very personal service and they rely on
word-of-mouth recommendation from satisfied
customers for extra business
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Multiple agents
• This group of agents operate ‘chains’ of retail outlets
under a single brand name and are some of the most
familiar companies in the UK travel and tourism industry,
for example Thomas Cook, TUI/Thomson, Going Places
and First Choice
• They rely on having large numbers of clients and
advertise widely in newspapers, magazines and on
television
• Because of their size and buying power, multiple
agencies can negotiate the best deals with principals
and benefit from the highest commission rates
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E-agents
• The growth in the use of the Internet has led to
the development of e-agents (where e stands for
electronic) which offers services to both leisure
and business travellers
• These are a kind of ‘virtual travel agent’ as they
have no branches and usually operate from a
single base with the latest IT systems and
equipment
• Examples of e-agents include lastminute.com,
ebookers, Travelocity and Expedia
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Home workers
• Developments in technology mean that travel agents no
longer have to be located in a branch to carry out their
work
• Selling leisure and business travel is well-suited to home
working, offering flexibility to staff and the benefit of
lower overhead costs to travel agencies
• One of the biggest home working companies in the UK is
Future Travel, part of the United Co-op Travel Group,
which also has high street travel agency branches
• Home working is particularly suited to people with
previous experience of selling travel products and a high
degree of motivation
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The business travel
environment
• Business travel is concerned with providing products and
services for business people travelling to meetings,
attending conferences and conventions, and taking part
in trade fairs and exhibitions
• It also includes ‘incentive travel’, where holidays, short
breaks and other travel services are offered to members
of staff as an incentive to reach work targets
• It is an increasingly important sector, since it is often
‘high value tourism’, earning hoteliers, caterers, transport
providers, travel agents and a host of other companies
significant income
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The business travel sector
The business travel sector can be
divided into four distinct elements:
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General business travel (GBT)
Corporate hospitality
Conferences, exhibitions and meetings
Incentive travel
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General business travel
• This part of the business travel sector consists of
travel agents making a variety of travel
arrangements on behalf of business clients
• The agent may deal only with business
customers or may be an agent that sells to both
leisure and business clients
• Many larger business travel agencies prefer to
call themselves travel management companies
(TMCs), reflecting the wide range of services
they offer to their clients – examples include
American Express, Hogg Robinson Group and
Carlson Wagonlit Travel
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Corporate hospitality
• Corporate hospitality is a specialist sector of travel and
tourism that focuses on providing hospitality and
entertainment to business clients
• It may be offered as a reward to a customer for placing
business with a company or to encourage businesses
that are not yet customers to deal with the company
• It is also seen as a good way for a company to make
new business contacts
• Corporate hospitality events take many forms, ranging
from lavish events at Wimbledon or the Henley Regatta
to the owner of a business inviting his or her bank
manager for a meal in a local restaurant
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Conferences, exhibitions and
meetings
• There is a sizeable industry that has developed
to meet the needs of organisations and
individuals looking to organise business
meetings, conferences and exhibitions
• These include conference organisers, venue
finding companies, destination marketing
organisations and event management
companies, many of which are members of the
Meetings Industry Association (MIA)
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Incentive travel
• ‘Incentive travel’ is defined by the Society of Incentive
and Travel Executives (SITE) as:
‘A global management tool that uses exceptional travel
experience to motivate and/or recognise participants for
increased levels of performance in support of
organisational goals’
• Typically, incentive travel comprises a luxury holiday or
short break offered to an employee as a reward for
meeting a specific work target or goal
• It also refers to the industry that supplies, develops,
markets and operates incentive travel programmes
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Markets, products and
services
• Travel agencies serve the needs of two main markets – leisure and
business travellers, with most gaining the majority of their revenue
from leisure travel, i.e. holidays, short breaks, etc.
• However, there are agents that specialise in meeting the particular
needs of business travellers, who often have to travel at short notice
using premium services
• Most people associate travel agencies with selling one particular
product – package holidays abroad
• A closer inspection of the work of a typical agency, however, shows
that it actually offers a wide range of products and services to leisure
and business clients, including flights, hotel bookings, coach
holidays, cruises, car hire, rail travel, ferry bookings, travel
insurance, theatre and event tickets, foreign currency, visa and
passport services
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Business environment
• Retail and business travel
operates in a dynamic, fastmoving business environment
where companies of all sizes
are constantly trying to keep
costs to a minimum, maximise
their revenues and increase
their share of the market
• In the following slides we
investigate important aspects
of this environment, including
trade associations, consortia,
membership bodies, licensing
and the legal framework of
retail and business travel
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Trade associations
• Trade associations are set up to represent the interests
of companies in a particular industry sector, for example
ABTA in retail and business travel, and ATOC (the
Association of Train Operating Companies) in the rail
industry
• Many trade associations draw up codes of conduct that
lay down the minimum standards under which member
companies of the association are expected to conduct
their business with customers and suppliers
• The Guild of Travel Management Companies (GTMC) is
a specific trade body representing the business travel
sector in the UK
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Consortia
As well as becoming members of ABTA, travel agencies sometimes
decide to join other trade bodies, known as consortia. Often, these
are groupings of independent agents that come together to increase
their influence and buying power, and join forces to compete with
the big multiple agency chains. There are a number of consortia in
the retail travel sector, including:
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Freedom Travel Group
Global Travel Group
Worldchoice
Travel Trust Association
Advantage Travel
Midconsort
Advantage Travel is the biggest travel retail consortium in the UK,
representing some 750 independent agents. Worldchoice has more
than 600 member companies
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Memberships and licensing
• In addition to becoming a member of ABTA
and/or an independent consortium, travel
agencies can also apply for an IATA licence to
sell airline tickets
• An agency may also need to obtain an ATOL
(Air Travel Organisers’ Licence) from the CAA
(Civil Aviation Authority) if it intends to take on
the role of a tour operator by selling flights or
flight-based package holidays on its own behalf
(rather than acting as an agent for another tour
operator)
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Package Travel Regulations
• The main aim of the Package Travel, Package
Holidays and Package Tour Regulations 1992 is
to give people buying package holidays more
protection and access to compensation when
things go wrong, while at the same time
harmonising the rules covering packages
operated throughout European Union countries
• In the normal course of events, travel agents are
not bound by the requirements of the
Regulations, since they are not the 'organiser' of
the package, but the 'retailer'
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Consumer protection
• In addition to the Package Travel Regulations, another
important piece of consumer protection legislation
concerning travel products and services is the Trade
Descriptions Act, which protects consumers against false
descriptions made knowingly or recklessly by anybody
selling products and services, including holidays and
other travel products
• The Act places a duty on owners and operators of travel
and tourism facilities to produce brochures, websites and
other promotional materials that are not intended to
deceive customers
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Contract Law
• From a lawyer's standpoint, a contract is any agreement
that the law will enforce, whether in writing, verbal or
implied, i.e. assumed from the conduct of the parties
• It is important to remember that when a holidaymaker
books a package holiday through a travel agent, the
contract is between the customer and the tour operator,
with the travel agent merely acting as an intermediary. It
is against the tour operator that the customer must seek
legal redress in the event of a breach of contract,
although the travel agent may be liable for any other
extras that are not part of the brochure holiday, such as
currency exchange, airport car parking, travel insurance,
etc.
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Financial Services Authority
(FSA)
• The sale of insurance of all types (including
travel insurance) has been regulated by the FSA
since January 2005, to protect the paying public
• However, sales of travel insurance as part of a
package holiday are currently exempt from the
FSA rules
• This has created the odd situation where the
purchase of travel insurance, separate from a
holiday, is governed by the FSA’s tough rules,
but if the purchase is part of a package holiday
there is no such regulation
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Integration in retail and
business travel
Vertical integration occurs in the retail travel sector when a company
controls more than one level of the distribution chain for products
and services, in order to gain a competitive advantage, for example:
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Thomas Cook retail travel shops are part of Thomas Cook AG
Thomson travel agencies are owned by TUI AG
Going Places retail outlets are part of the MyTravel Group
First Choice shops and Holiday Hypermarkets are owned by the
First Choice Group
All four have their own tour operating companies under many
different brand names and operate their own charter airlines. All four
of these travel groups have recently agreed to merge - Thomas
Cook with MyTravel and TUI/Thomson with First Choice Holidays
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Integration in retail and
business travel
Horizontal integration occurs when a
company owns or controls other
businesses at the same level of the
distribution chain, e.g. a multiple travel
agency chain taking over an independent
travel agency in a town, or a hotel chain
buying up an independent hotel
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Agency agreements
• All of the business conducted by travel agents
on behalf of principals is strictly controlled by
individual agency agreements
• These contractual arrangements set out the
obligations of each party to the agreement, the
terms of trade and remuneration details
• The most common agency agreement will be
that between the travel agent and a tour
operator, where the agent undertakes to sell the
tour operator's products in return for a
commission on sales
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Commission levels
Commission rates vary enormously between companies and
different holiday products. Average commission rates are in the
region of:
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Package holidays
Airline tickets
Ferry bookings
Travellers' cheques
Travel insurance
Coach holidays
Cruises
10%
0 - 9%
9%
1%
25% - 40%
10%
9% - 15%
These figures should only be taken as a rough guide, since
commission levels fluctuate daily in response to competitor activity
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Racking policies
• ‘Racking’ is the practice
of deciding which
brochures a travel agency
will put on its shelves
• An agent’s racking policy
is crucial to the holiday
companies and other
principals looking to sell
their products and
services – if their
brochure is not on the
shelves, sales are likely
to be low
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Financial bonding
• Bonding is the process of providing a sum of
money, or a formal undertaking from a bank or
insurance company, that can be used to repay
debts if a company fails
• All ABTA members must provide a bond when
they join, which is used to compensate
customers or allow them to continue their
holiday arrangements
• The CAA and AITO also operate similar bonding
schemes to cover the same eventualities
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Working with other sectors of
the travel and tourism industry
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Working with other sectors of
the travel and tourism industry
Retail and business travel agencies work with:
• Tour operators – these could be mass-market, e.g. Thomson,
specialist, domestic or incoming
• Transport providers – for example airlines, ferry companies, cruise
operators, car hire, coach travel, rail travel, etc.
• Entertainment sector – including theatres, events, ticket agents,
festivals, conferences, etc.
• Ancillary services – such as travel insurance, airport parking,
luggage transfer, guiding, etc.
• Accommodation suppliers – including hotels, self-catering agents,
holiday centres, etc.
• Tourism organisations – such as tourist boards, which supply
brochures and posters on destinations in the UK and overseas
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Technological advances in
retail and business travel
• Advances in technology are
revolutionising the travel and
tourism industry in general,
and the position of travel
agencies in particular
• Technological advances
include the growth of the
Internet for researching and
booking holidays,
developments in transport,
advances in computer
systems, changing reservation
systems and new methods of
communication
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The Internet
• The dramatic growth in the use of the Internet is
having a major impact on the work of leisure and
business travel agents
• Travellers are increasingly using the Internet to
research their holidays and make their own
travel arrangements direct with airlines, hotels,
car hire companies, etc., a process known as
‘dynamic packaging’, which offers people
greater flexibility than buying standard package
holidays from a travel agency
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The Internet
• The Internet gives business travellers the
opportunity of searching for particular travel
products and making their own bookings direct
with travel companies
• However, this can be a very time-consuming
process and many companies still prefer to use
the services of a business travel agent with their
experience, industry knowledge and buying
power, especially when complex travel
itineraries are involved
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The Internet
• Leisure and business travel agencies are
developing sophisticated websites of their own,
to compete with the well-known e-agents such
as lastminute.com, Expedia and ebookers
• The retail travel parts of the big integrated travel
companies – Thomas Cook/MyTravel,
TUI/Thomson/First Choice – all have a
significant ‘web presence’ and are reducing their
numbers of travel agency branches and
diverting investment into web-based
technologies as they plan for the future
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Transport developments
• Advances in technology affect transport in two
ways – the modes of transport themselves and
distribution methods used to sell transport tickets
and products
• Technology enables aircraft, trains and coaches
to travel faster, more safely and with less impact
on the environment
• Developments in aircraft technology mean that
tourists can travel further afield and explore new
destinations all over the world
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Effects of advances in
technology
• Advances in technology are having profound effects on retail and
business travel in respect of sales, types of products and services
sold, and administration systems
• Agencies that are unwilling or unable to adapt to Internet-based
technologies are seeing their sales of traditional package holidays
fall
• Use of the Internet also leads to much more late booking than has
historically been the case, with customers being able to research
holidays 24/7
• Those agencies that are embracing the Internet as a way of
maintaining and developing sales are having to invest in new
administration systems to adapt to new ways of selling and
recording sales
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Effects of technology on
travel operations
• As well as having impacts on travel agency
sales, products and administration systems,
advances in technology also affect operations,
for example distribution methods, booking
processes, payment methods and security
• The Internet enables customers to book direct
and cut out the need for an agent, although
many people still prefer to use an agent to
benefit from specialist advice on destinations
and travel queries
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Gaining competitive advantage
in retail travel organisations
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It stands to reason that if the main aim of a travel agency is to maximise its
profits, it will need to compete with other retailers for business; sitting back
and waiting for customers to come through the door is not an option!
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This could be competition with similar types of local travel agencies or
alternative types of travel retailers, for example the e-agents that we
discussed earlier in this unit, such as Expedia and lastminute.com
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Ultimately, a travel agency will seek to gain competitive advantage to:
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Increase its income and profits from sales
Generate revenue to re-invest in the business
Attract more customers
Increase its market share
Provide a return for any shareholders it may have
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Techniques used to gain
competitive advantage
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Improving service levels in the business
Increasing staff training, e.g. selling skills
Promotional activities, e.g. discounting, advertising,
etc.
Expanding the range of products and services
Increasing add-on sales, ancillary products and
services
Dynamic packaging
Becoming part of a larger integrated organisation
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Levels of service
• In an industry where there are so many
ways of buying holidays and travel
products, the standard of service offered
by a travel agent can often be the
difference between success and failure
• ‘Going the extra mile’ for a customer can
pay dividends for a travel agent
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Staff training
Training can play a vital part in gaining an
advantage over the competition by:
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Increasing efficiency and profitability
Improving customer service
Reducing absenteeism and staff turnover
Increasing staff flexibility
Triggering innovation and new ideas
Reducing business costs
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Promotional activities
• Promotional activities can help an agency to gain
competitive advantage by making more people aware of
its existence and persuading customers to buy its
products and services
• Activities range from advertising in national, regional and
local newspapers and magazines, offering promotions
such as free child places or low deposits, creating
effective window displays, arranging evening
presentations in conjunction with travel principals,
sending out press releases to the media and distributing
mailshots and newsletters to clients
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Range of products and
services
• By offering a wider range of products and services than
its competitors, a travel agency can attract extra custom,
thereby gaining a competitive advantage
• Multiple travel agency chains have strict guidelines on
which products they promote and sell
• Independent agents have more freedom to promote a
wider range of specialist holidays and travel products
• Some independent agents offer their own escorted tours
as a way of increasing income and gaining an edge over
the competition
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Ancillary products and
add-ons
• As profit margins on the sale of holidays can be
very low, travel agents are always keen to give
clients the chance of buying add-ons to their
holiday and ancillary products and services,
such as airport car parking, travel insurance and
car hire
• Percentage commission on these products is
often much higher than for package holidays, so
staff are encouraged to offer them to clients
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Dynamic packaging
• ‘Dynamic packaging’ is when travellers use the Internet
to research their holidays and make their own travel
arrangements direct with airlines, hotels, car hire
companies, etc.
• It offers people greater flexibility than buying standard
holidays from a travel agency
• Dynamic packaging is a serious threat to travel agencies
as they stand to lose business to these ‘DIY travellers’
• Many agencies are fighting back by offering customers a
more ‘tailor made experience’, using new web-based
technologies. In effect, the travel agents are themselves
getting involved in dynamic packaging on behalf of their
clients, thereby hoping to gain competitive advantage
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Integrated organisations
• Multiple travel agencies are part of much bigger travel
groups, which own their own their own tour operating
businesses and even airlines
• Travel companies become integrated to improve their
competitive position in the marketplace and increase
their market share by having more control and benefiting
from ‘economies of scale’, e.g. when a travel agency and
tour operator are owned by the same organisation,
company functions such as purchasing, finance and
human resource management can be carried out by
fewer staff, thereby reducing costs
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Producing complex itineraries for
retail and business travel customers
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Retail travel itineraries
• One solution to the growing threat to travel agencies from ‘dynamic
packaging’ by customers is for travel agents to offer their customers
a more ‘tailor-made’ experience, rather than just selling standard
package holidays
• Many travel agents would say that they do this already, especially
the independent agents, who pride themselves on their personal
service and high standards of customer care
• Creating tailor-made travel arrangements for clients is more timeconsuming for the travel agent, but new technology systems such as
www.onlinetravel.com (part of the lastminute.com group) make it
easier for agents to offer clients a more personalised holiday that
meets their requirements
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Additional products and services
• As profit margins in retail travel become
squeezed, agents are always keen to give
clients the chance of buying add-ons and
ancillary products and services, such as
travellers’ cheques and foreign currency, prebooked airline seats, airport car parking,
passport and visa services, travel insurance and
car hire
• Percentage commission on these products is
often much higher than for arranging flights and
other transport services, so staff are encouraged
to offer them to clients
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Business travel itineraries
• Producing business travel itineraries can be very
demanding, particularly if a trip involves crossing many
borders and continents
• Many itineraries developed for business clients are
‘multi-sector’
• A multi-sector itinerary is one that involves more than
one ‘leg’ of a journey, i.e. a trip that consists of a flight
from Birmingham to Brussels followed by a train journey
from Brussels to Cologne is considered multi-sector as it
is made up of two legs
• Similarly, a business trip from London to Shanghai, with
a stopover on the way out in Bangkok and one on the
way back in Hong Kong, is multi-sector since it consists
of four separate legs
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Content and format of itineraries
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Client details
Check-in details
Transport type, e.g. aircraft, train
Flight or service numbers
Transport operator, e.g. which airline, train company
Class of travel
Departure and arrival date/time (in local time)
Intermediate stops
Reconfirmation of flight or service details
Transfer details
Accommodation details, e.g. name, room type, meal arrangements
Additional services, e.g. car hire, event tickets, pre-bookable seats, guided
tours
Notes section covering passport, visa and health requirements
Additional information and procedure for alterations to booking
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Content and format of itineraries
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Research sources
• Travel agents need to be able to access and process a great deal of
information when planning itineraries for clients, particularly when
multi-sector itineraries are involved
• Much of the information needed for producing travel itineraries is
sourced from computer systems, increasingly using Internet-based
technology
• Brochures and guide books, such as those published by Lonely
Planet, Fodor’s and Rough Guides, provide useful material when
planning itineraries
• Manuals are aimed at people working in travel and tourism (the
‘travel trade’) rather than the general public
• Individual airlines, ferry operators, cruise companies, tour operators,
rail companies and coach/bus operators produce their own
timetables to help travel agents and members of the public plan
journeys
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