These are some definitions that are used in the travel and tourism industry:
Interrelate- when two or more businesses become connected to each other.
Channel of Distribution- the movement of products or services between organisations
Integration- when businesses/organisations combine together.
Interdependency- when organisations depend on one another
No single component of the travel and tourism industry can operate alone without relying on other parts of the industry. Each relies on others for its success.
For example, Transport providers are dependent on Alton Towers has they gain money. Accommodation is dependent as they will gain customers and money when customers want to stay at near by hotels of B&B's. Food services such as pubs, restaurants and cafes will benefit. Small businesses in the nearby town also, other attractions will benefit as customers are encouraged to go to different attractions. Tourist boards will promote Alton Towers and it has links with websites, newspapers, food packaging and TV adverts.
Interrelate- when two or more businesses become connected to each other.
Channel of Distribution- the movement of products or services between organisations
Integration- when businesses/organisations combine together.
Interdependency- when organisations depend on one another
No single component of the travel and tourism industry can operate alone without relying on other parts of the industry. Each relies on others for its success.
For example, Transport providers are dependent on Alton Towers has they gain money. Accommodation is dependent as they will gain customers and money when customers want to stay at near by hotels of B&B's. Food services such as pubs, restaurants and cafes will benefit. Small businesses in the nearby town also, other attractions will benefit as customers are encouraged to go to different attractions. Tourist boards will promote Alton Towers and it has links with websites, newspapers, food packaging and TV adverts.
The chain of distribution and integration
The chain of distribution is the means of getting the product to the consumer. In the chain of distribution, businesses fit neatly into a category such as retailer and perform the role of that business. This is a diagram showing the chain of distribution in the travel and tourism industry:
The chain of distribution is the means of getting the product to the consumer. In the chain of distribution, businesses fit neatly into a category such as retailer and perform the role of that business. This is a diagram showing the chain of distribution in the travel and tourism industry:
Chain of distribution are now a lot more complicated.
Example- many airlines rely on tour operators and travel agents to sell seats on their aircraft. The tour operator often owns the airline e.g. TUI and Thomas Cook. These companies have their own aircrafts to fly their customers as part of their package holiday. Even if the tour operator does not own the airline, they rely on the tour operator to use their services in their holiday packages. Tour operator packages traditionally have been sold through various travel agents.
Integrated Chains of Distribution
This is where the chain is owned by the same company.
Example- many airlines rely on tour operators and travel agents to sell seats on their aircraft. The tour operator often owns the airline e.g. TUI and Thomas Cook. These companies have their own aircrafts to fly their customers as part of their package holiday. Even if the tour operator does not own the airline, they rely on the tour operator to use their services in their holiday packages. Tour operator packages traditionally have been sold through various travel agents.
Integrated Chains of Distribution
This is where the chain is owned by the same company.
There are simpler chains
e.g. self catering holidays such as cottage as in the Lake District, are sold through brochures and organisations that promote the Lake District as a destination for a holiday. The properties appear in a brochure and bookings are made via the organisation which has promoted the accommodation, handles payment (organisation will take a commission) and liaises with the customer.
e.g. self catering holidays such as cottage as in the Lake District, are sold through brochures and organisations that promote the Lake District as a destination for a holiday. The properties appear in a brochure and bookings are made via the organisation which has promoted the accommodation, handles payment (organisation will take a commission) and liaises with the customer.
Integration
Until recently booking a holiday could mean having to deal with different businesses which provided different parts of the package. However, Chains of Distribution are changing and businesses are starting to expand their area of operation. This process is known as integration. The advantage of one business offering all elements of a holiday is that the business is able to control its cost and ensure that their customers receive a guaranteed high standard of service.
Until recently booking a holiday could mean having to deal with different businesses which provided different parts of the package. However, Chains of Distribution are changing and businesses are starting to expand their area of operation. This process is known as integration. The advantage of one business offering all elements of a holiday is that the business is able to control its cost and ensure that their customers receive a guaranteed high standard of service.
There are two types of integration:
Horizontal Integration- where businesses at the same level in the chain of distribution merge together or are purchased by another.
Vertical Integration- where a business at one point on the chain of distribution purchases or acquires a business at a higher or lower level of the chain of distribution.
Vertical and Horizontal Integration
Companies do not stick to one line of business. They tend to buy or merge with other businesses, always striving for greater commercial success and market dominance. When companies do this it is known as vertical or horizontal integration. Vertical integration occurs when two companies at different levels in the chain of distribution merge or are bought. This may be backwards integration- for example, a tour operator buys a hotel - or forwards integration, for example a tour operator may buy a travel agency.
Tour operators have bought or created airlines, hotels and travel agencies. This means they own all the different components in the chain of distribution and are able to control the whole operation. They claim that this gives the economies of scale and allows them to offer better prices to customers. It can also mean that smaller operators are forced out of business. If a tour operator buys another tour operator at the same level in the chain of distribution, this is know as horizontal integration. Most of the major tour operators in the UK are vertically and horizontally integrated, owning their own travel agencies, airlines and often hotels, besides different tour-operating businesses.
Horizontal Integration- where businesses at the same level in the chain of distribution merge together or are purchased by another.
Vertical Integration- where a business at one point on the chain of distribution purchases or acquires a business at a higher or lower level of the chain of distribution.
Vertical and Horizontal Integration
Companies do not stick to one line of business. They tend to buy or merge with other businesses, always striving for greater commercial success and market dominance. When companies do this it is known as vertical or horizontal integration. Vertical integration occurs when two companies at different levels in the chain of distribution merge or are bought. This may be backwards integration- for example, a tour operator buys a hotel - or forwards integration, for example a tour operator may buy a travel agency.
Tour operators have bought or created airlines, hotels and travel agencies. This means they own all the different components in the chain of distribution and are able to control the whole operation. They claim that this gives the economies of scale and allows them to offer better prices to customers. It can also mean that smaller operators are forced out of business. If a tour operator buys another tour operator at the same level in the chain of distribution, this is know as horizontal integration. Most of the major tour operators in the UK are vertically and horizontally integrated, owning their own travel agencies, airlines and often hotels, besides different tour-operating businesses.
Interdependencies
No travel and tourism organisation can work in isolation. Each is dependent on others for its effective operation. For example, a visitor attraction depends on the transport industry to bring its customers to the attraction. It also needs the service of the local and regional tourist boards to promote it.
No travel and tourism organisation can work in isolation. Each is dependent on others for its effective operation. For example, a visitor attraction depends on the transport industry to bring its customers to the attraction. It also needs the service of the local and regional tourist boards to promote it.