The Lowdown on Promoting Destinations in the North American Travel TradeSeptember 19, 2019
At first blush, the travel industry can look like a complicated and highly structured ecosystem of specialized businesses. But if you understand how it all fits together, you can make smarter marketing decisions that can lead to high growth. That’s why DCI has an entire division dedicated to working with the travel trade, which is ultimately driven by how consumers travel and how they make purchasing decisions.
As we review the different types of businesses in the travel trade, it’s useful to understand how they interact together to form the supply chain.
Destination Management Organization (DMO)
For the visitor, DMOs are a gateway to a destination. Whether you call it a Convention & Visitor Bureau (CVB) or a tourism authority, a DMO functions as a tourism organization and is typically run with input from local stakeholders such as business owners and industry leaders.
DMOs guide the long-term development of a destination by developing an effective travel and tourism strategy. They design campaigns to attract conventions and other events to their destinations. DMOs interact directly with individual leisure and business travelers as well as with meeting planners, tour operators, and travel advisors.
Travel wholesalers are middle-man suppliers that do not sell directly to travel consumers. In many cases, they don’t create tours themselves but rather supply the various travel services (transportation, accommodation, meals, sightseeing and activities) to retail travel advisors and tour operators.
Tour operators typically work with wholesalers to create packages that bundle two or more travel services (e.g., transport, accommodation, meals, entertainment, sightseeing) and then sells them through travel agencies or directly to consumers.
Locally based inbound tour operators promote a destination (city, region, state or country) to travelers who live in other places and often greet visitors when they arrive. The inbound operator identifies target markets and develops products, events and services that will elevate awareness for their destination and attract visitors from near and far. ITOs often focus on targeting overseas markets, but they can also promote their destination to travelers who live in the same country or region.
A company that focuses on serving travelers wishing to travel to foreign destinations is an outbound operator. These include the enormous number of agencies that sell package tours to other countries or who target travelers with specific interests such as European architecture, nature, biking or cruising. The outbound operator monitors demand within its domestic market and creates products and services for outbound travelers.
Travel Advisor (Travel Agent)
A travel advisor’s job is to simplify the travel planning process for their customers, which might be individuals, groups or corporations. Travel advisors provide consultation and can function like project managers, handling many of the logistical elements involved in their customers’ travel experiences. Often travel advisors work with specific suppliers (e.g. tour operators, hotels, airlines, car rental companies, cruise lines, railways, travel insurance providers).
An advisor can be self-employed or he or she might work for an independent travel agency or be part of a consortium. Many travel agents specialize in leisure, business or other niche travel markets and can be generalists or specialists (e.g., cruises, adventure travel or conventions and meetings).
It’s a misconception that travelers pay more when they work with a travel advisor. Agents typically receive their commission from suppliers – airlines, hotels, cruise lines, and so on – in exchange for delivering customers to these travel services.
Online Travel Agency (OTA)
It’s impossible to overstate the enormous impact of the internet on the travel trade landscape. From Expedia and Booking.com to TripAdvisor and Airbnb, some of the largest Online Travel Agencies (OTAs) are household brand names that sell an enormous amount of travel experiences.
While selling direct to consumers, these digital platforms have leveraged technology to service more customers and offer the ability to customize online trips. Some of the largest and best-known OTAs include:
- The Priceline Group (Booking.com, Priceline.com, agoda.com, KAYAK, rentalcars.com, OpenTable)
- Expedia, Inc. (Expedia.com, Hotels.com, Egencia, Hotwire, Trivago, Venere.com, CarRentals.com, Classic Vacations, Expedia CruiseShipCenters, Expedia Local Expert (LX), Wotif Group, Orbitz.com, Travelocity)
- TripAdvisor Inc (Tripadvisor.com, Airfarewatchdog, BookingBuddy, FlipKey, Viator)
- Airbnb, Inc. (Airbnb, Trooly, Trip4real, HotelTonight)
- ODIGEO group (eDreams, GoVoyages, Opodo, Travellink, Liligo, and BudgetPlaces)
- Homeaway.com (VRBO, Vacationrentals.com, Homelidays, Abritel, FeWo-Direkt, Toprural, Bookabach, Stayz, Alugue Temporada)
The Cost of Doing Business
The entire ecosystem of the travel trade is based on commissions, with each party taking a slice of the pie. Preparing to expand your distribution within the travel ecosystem requires a knowledge of the compensation structure. Here are the average commission levels payable to third-party sellers along the supply chain.
Destinations should consider pricing their products 35 to 75 percent above their own profit margin in order to take full advantage of distribution channels in the international marketplace.
DCI’s travel trade team understands the industry and provides capacity building training for new local operators looking to expand their distribution in the North American market at every level of the distribution process.
To learn more about DCI’s training sessions for destinations on how to enter the U.S. and Canadian markets, please contact [email protected].