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Table of Contents




Structure of distribution channel in tourism and hospitality............................2


Functions of Distribution Channels.......................................................3


The intermediaries of distribution system of tourism and hospitality...................3


Selecting an Appropriate distribution channels Channel................................5


Benefits and disadvantages of distribution channels.....................................5


Conclusion.................................................................................. 7



1. Introduction
Meaning and definition
Distribution is the process of delivering the products manufactured or service provided by a
firm to the end user. Various intermediaries are involved in this process. This chain of
intermediaries which helps in transferring the product from one intermediary to the next before it
reaches the end user is called the Distribution Chain or Distribution Channel. Each intermediary
has a specific role and need which the marketer caters to.
Tourism distribution
Channels of distribution are the most powerful element among marketing mix elements. Tourism
distribution channels are similar to those of other basic industries such as agriculture or
manufacturing products flow to the ultimate consumer through wholesalers, distributors, and
middlemen. While there are similarities with other industries, the tourism distribution system is
unique. Tourism produces mainly services that are intangible. There is no physical product that
can be held in inventory to flow from one sales intermediary to another. Instead, the product is,
for example, a hotel room that is available on a certain day, which is very temporal. If the room
is not sold, that revenue is lost forever.
Generally several scholars attempt to define the tourism distribution channel concept.
A distribution channel is any organized and serviced system, paid for out of marketing budgets
and created or utilized to provide convenient points of sale and/or access to consumers, away
from the location of production and consumption (Middleton, 1994a: 202).
McIntosh defines tourism distribution channels, as an operating structure, system or linkages
of various combinations of travel organization, through which a producer of travel products
describes and confirms travel arrangements to the buyer (Mill and Morrison, 1985).
The World Tourism Organization (WTO, 1975) suggests that a distribution channel can be
described as a given combination of intermediaries who co-operate in the sale of a product. It
follows that a distribution system can be and in most instances is composed of more than one
distribution channel, each of which operates parallel to and in competition with other channels.

2. Structure of distribution channel in tourism and hospitality

The structure of the distribution system in tourism and hospitality may be either direct (from the
producer to the consumer) or indirect (the sale to the consumer through an intermediary). In
direct there is no intermediary involved whereas in indirect there is intermediary involved.
Direct distribution channel this is distribution system where there is no intermediary is
involved, it is comprised of principal or producer and The consumer of these goods and services
will be tourists, business travelers, weekend travelers.
Indirect distribution channel that is it involves intermediaries sells to goods or services directly
to the end users, the intermediaries in a hotel channel of distribution consist of tour operators,
retail travel agents, specialists, consortia, reservation systems, global distribution system, the
internet and concierges.
Structure of distribution channel in tourism and hospitality

Source: Charles R (2009)

3. Functions of Distribution Channels

1. Information, gathering and distributing marketing research and intelligence information
about actors and forces in the marketing environment needed for planning and aiding
2. Promotion, developing and spreading persuasive communication about an offer.
3. Contact, finding and communicating with prospective buyers.
4. Matching, shaping and fitting the offer to the buyers needs, including such activities as
manufacturing, grading, assembling and packaging.
5. Negotiation, reaching an agreement on price and other terms of the offer, so that ownership
or possession can be transferred.
6. Financing, acquiring and using funds to cover the costs of the channel work.
7. Risk-taking- assuming the risks of carrying out the channel work.
4. The intermediaries of distribution system of tourism and hospitality
Tourism intermediaries are Middle-Men, acting as a link between the customer and the
supplier. In the travel business, the suppliers consist of airlines, cruise and ferry companies,
coach/bus companies, railways, hotels and motels, and car rental agencies. The customers
include holiday makers, business travelers, and those visiting friends and relatives.
The following are the intermediaries of distribution system of tourism and hospitality and
intermediaries can be categorized under the following broad headings;
Tour Operators, an organization who buys individual travel components, separately from their
suppliers and combines them into a package tour, which is sold with their own price tag to the
public directly or through the middlemen, is called a tour operator. Package tour is a prearrangement, prepaid trip that combines two or more travel components like airfare, airport
transfers, accommodation and other services
Travel agents are one of the oldest and most widely used traditional distribution channels, acting
as the intermediary between customers and room providers. Travel agents are retailers in travel
and tourism who buy from the wholesalers and principals and sell to the tourists for commission.
The role of the travel agent is to provide information to the customer as well as to effectuate the
booking and purchase of the hospitality product.

Global Distribution System, GDS is a type of computer reservations system or central

reservation system (CRS), which is used to store and retrieve information and conduct
transactions related to air travel, hotel booking, and car rental services. GDS serves as product
catalog for travel agents and other distributors of hospitality products. At the very beginning, it
was designed and operated only by airlines, and later extended for broader usage, such as by
travel agencies. The GDS originally consisted of a set of private networks listing only air flights
for use by travel agents. With the boom of Internet computer usage, GDS systems have grown to
serve a worldwide clientele, with nearly 500,000 access points offering a full array of travel
services. There are currently four major GDS systems in operation: Amadeus, Sabre, Galileo by
Travelport, and Worldspan by Travelport.
The Internet, it is necessary to talk about the Internet as a channel of distribution. It makes
direct selling from the supplier to the consumer more possible than ever before. In travel, there
have always been direct sales, from suppliers to consumers, via suppliers offices or the
telephone. People are more likely to plan their vacations online instead of visiting travel agencies
in person. Physical travel agencies are not as attractive as before, since it is easier to find better
travel deals just by surfing online, several new distribution channels have appeared and are
growing fast. Most of these are operated online, such as Online Travel Agents (OTAs), individual
hotel websites, and mobile phones.
Specialty intermediaries include such organizations as incentive travel firms, business meeting
and convention planners, corporate travel offices, association executives, hotel representatives,
travel consultants, trade shows, and supplier sales offices. While specialty intermediaries are a
small force in distribution compared to travel agencies, they have considerable power to
influence when, where, and how people travel. Such groups can represent either buyers or
sellers, receiving either a commission or a salary from their employer. Specialty intermediaries
are experts in their particular aspect of travel. As tourism becomes more specialized, these types
of channels will become increasingly important.
Hotel Representative firms, some companies specialize in representing hotels, motels, resorts,
and destination areas. Hotel representatives sell hotel rooms and hotel services in a given market
area. Hotel representatives are more useful when the market is a distant one and when cultural

differences make it hard for an outsider to penetrate the market. For example a hotel in Mauritius
shall hire a hotel representative in India than to send sales manager to India.
5. Selecting an Appropriate distribution channels Channel
The following the factors to be considered before choosing a suitable channel of distribution
Market considerations, the nature and type of customers and size of market are important
considerations in the choice of a channel of distribution. For example, if the market size is large,
there may be long channels, whereas in a small market direct selling may be profitable.
Company considerations, the nature, size and objectives of the business firm also play an
important role in the selection of distribution channel. It includes financial resources, market
standing, volume of production, desire for control of channel, services provided by producers.
Middlemen considerations, the cost and efficiency of distribution depend largely on the nature
and type of middlemen. It includes characteristics of middlemen such as availability, attitudes,
services, sales potential, costs etc. For example, if the terms and conditions of engaging
wholesalers are unfavorable, a producer may decide to channelize his products through retailers
6. Benefits and disadvantages of distribution channels
The advantages for tourism and hospitality organizations using intermediaries include:
More effective demand management for perishable products
Convenient global/local access points for customers away from the hospitality location
The provision of relevant information and guidance to potential customers by knowledgeable
travel experts
The bundling of hospitality products into combined travel packages
An advance reservation and payments system
The opportunity to work with specialist intermediaries who understand the dynamics of their
own markets.

The disadvantages for tourism and hospitality organizations using intermediaries include:

The loss of margin paid to agents through commission

The loss of margin caused by charging tour operators low accommodation rates for volume
The loss of control of a key element in the marketing mix (the distribution channel), which
can lead to an unhealthy dependence upon intermediaries (for example, large travel agency
chains will not allow principals to promote their own products at point-of-sale)
Intermediaries can be closer to the end user, taking ownership of the customer away from
the hospitality organization.

7. Conclusion
Finally tourism distribution decisions are crucial for tourism enterprises, as they influence their
entire marketing mix. Suitable intermediaries should be utilized by suppliers, as they influence
both branding and image of tourism products as well as speed up the maximization of profits for
the respective organizations. A good distribution system is essential to overcome challenges of
perishability and Intangibility and reach the target customer and also it shall help the customer
for making choice of the hospitality services and thus having a satisfying experience. With the
growth of internet, new distribution channels have emerged which are changing the rules of

8. References
David Bowie and Francis Buttle (2009). An introduction Hospitality Marketing, Elsevier
Butterworth-Heinemann. Linacre House, Jordan Hill, Oxford OX2 8DP
Charles R. Goeldner J. R. Brent Ritchie 2009 Tourism: Principles, Practices, Philosophies edition
7th Published simultaneously in Canada.
Middleton, V. (1994) marketing in travel and tourism, 2nd edition Butterworth-Heinemann,
Middleton, V. and Jackie Clarke (1998) marketing in travel and tourism, 3th edition ButterworthHeinemann, London.
Mill, P., and Morrison, A., 1985.The tourism system: an introductory text, Prentice Hall
International Editions, New Jersey.
Matthew A. Gana (2008) Principles of Marketing, National Open University of Nigeria
WTO, 1975, Distribution channels, World Tourism Organization, Madrid