One of the trickiest aspects of selling your product offshore is
getting to know the international travel distribution process.
Distribution refers to the way in which consumers find out about
your product and the channels they use to research it and make
bookings.
It's important to spend some time identifying the most
cost-effective and appropriate distribution method for your
business.
Travel distribution is different in each country and consumers
prefer to book different products in different ways. For example,
many travellers still book flights through their travel agent, but
may book their accommodation online through an online travel seller
and their activities direct with the operator once they arrive in
New Zealand.
The traditional channels in the distribution process are retail
travel agents, wholesalers, inbound tour operators and booking
agents. With traditional channels, bookings are usually made in
advance and paid for by the agent after the visit. These agents
will charge operators a commission for the sale, which should be
factored into your pricing.
In recent years, the distribution chain in some of our markets
has become more simplified, with fewer intermediaries involved in
the process. It pays to know how travel sellers sell their products
in the markets in which you plan to operate. You will need to allow
for appropriate commission structures, depending on the structure
of the distribution chain.
In addition to other changes, online travel sellers have joined
this group of distribution agents. Many consumers are now confident
booking through websites such as www.expedia.com, www.orbitz.com and
www.lastminute.com, and perceive these websites
as offering good value for money.
Key players
Inbound operators
Inbound tour operators (IBOs) can be a good solution for
operators that want to take their product offshore without actually
travelling themselves. IBOs are usually based in New Zealand,
although some will be based offshore with representatives in New
Zealand.
They are responsible for preparing itineraries and booking the
ground arrangements on behalf of internationally-based wholesalers.
They will give you access to new markets through their network of
existing contacts, but this will add an additional layer of
commission so ensure you plan for this in your pricing strategy. Find out more about working
with inbound operators.
Travel wholesalers
Wholesalers provide retail travel agents with brochured travel
packages, usually offering transport, accommodation and activities.
Most wholesalers are based outside of New Zealand. Some own retail
agencies or sell directly to the public.
If you work through a wholesaler, the wholesaler will present
your product to the retail agent within a package or alongside a
range of other products. This will give you easier access to a wide
range of agents, but you will need to allow for wholesale
commission as well as retail commission.
Retail travel agents
Selling directly to the public, retail travel agents are the
face of the travel industry consumers see everyday. They will
either deal direct with operators (particularly for short-break
holidays) or sell products out of wholesaler brochures.
As more consumers become confident booking travel online, online
travel sellers have begun to gain market share at the expense of
these traditional agents. However, in markets such as the US and
UK, consumers still have a high level of trust in travel agents and
some prefer the personalised service they offer, meaning travel
agents will remain a key booking channel for the immediate
future.
i-SITE Visitor Centres (New Zealand's visitor
information network)
The i-SITE Network has a central booking system that handles
bookings around New Zealand, so it's a good idea to ensure your
product is listed with your local i-SITE. i-SITE centres are one of
the most popular channels for booking aspects of a holiday once
visitors have landed in New Zealand. Many regions also have other
independent booking agents. Each will often offer brochure display
space at a cost. Find out more about working with the
i-SITE Network.
Guidebooks
National and regional guidebooks may be used as references by
wholesalers, inbound tour operators and retail agents. Independent
travellers use them to plan their own holidays, usually booking
direct with operators using contact details from the guidebook.
Popular guidebook publishers include Lonely Planet, Frommers and
Rough Guides. Writers often travel incognito to ensure they are
treated like ordinary holidaymakers and give unbiased reviews of
tourism products.
The Internet
The Internet has become one of the most comprehensive and easily
accessed sources of destination information. Internationally,
travellers are becoming increasingly comfortable making bookings
online, either direct through operator websites or through
international travel sellers.
Don't forget commissions
If you are selling your product offshore, it's essential that
you allow for commission payments within your pricing structure.
Each part of the distribution channel will receive a commission
payment at the rate you agree with them.
Levels of commission may vary, but the following offers a
guideline of what you will need to allow depending on the number of
stages in your distribution structure:
| Retail travel agents (selling direct to consumers) |
10% |
| i-SITE Visitor Centres (selling direct to consumers) |
10% |
| Wholesalers (selling to retailers, who then sell on to
consumers) |
20% |
| Inbound tour operators (who sell to wholesalers, who then sell
on to retailers) |
25% |
Although commission rates for wholesalers and inbound operators
are higher, these selling channels are likely to get your product
placed in brochures and databases, meaning your product will reach
more agents and consumers in the long-term.