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Travel Trade 101 & Working with Receptive Tour Operators

Travel Trade 101 & Working with Receptive Tour Operators. Don Prince Prescott Office of Tourism. Don Prince. 28 years in Travel & Tourism Arizona Office of Tourism Deputy Director, Director of Travel Industry Marketing & International Marketing Mgr.

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Travel Trade 101 & Working with Receptive Tour Operators

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  1. Travel Trade 101&Working with Receptive Tour Operators Don Prince Prescott Office of Tourism

  2. Don Prince • 28 years in Travel & Tourism • Arizona Office of Tourism • Deputy Director, Director of Travel Industry Marketing & International Marketing Mgr. • Sales & Marketing Consultant to hotel groups, resorts and destinations. • Tour Operators and Cruise Lines

  3. Travel Trade 101 Travel Trade • The hierarchy of businesses that operate between the long-haul/international traveler and the destination. • aka: Travel ‘Middle – Men’

  4. Travel Trade 101 • Access to long-haul / international markets • U.S. long-haul markets (Midwest, East Coast) • Canada • Mexico/Latin America • Europe • Asia Pacific

  5. Travel Trade 101 • Access to long-haul / international markets • USA • Canada • Mexico/Latin America • Europe • Asia Pacific • Navigate the International Protection Laws

  6. Travel Trade 101 • Access to long-haul / international markets • USA • Canada • Mexico/Latin America • Europe • Asia Pacific • Navigate the International Protection Laws • GUARANTEED RETURN ON INVESTMENT!

  7. Travel Trade 101 • LEISURE TRAVELER • FIT – Fully Independent Traveler, or • ForeignIndependent Traveler - a person traveling independently who is not part of an organized group tour

  8. Travel Trade 101 • LEISURE TRAVELER • Group - an organized group tour that has a tour leader/guide, and where transportation, accommodation, admissions and meals are generally included

  9. Travel Trade 101 • BUSINESS TRAVELER • MICE – Meetings, Incentive travel, Conference and Exhibition attendees • Incentive Trips – ‘gifts’ that businesses provide to clients or employees and are 100% paid for by the company

  10. Travel Trade 101 Tour Operators - the term represents 3 different business models: • Tour Operators– either contract products, ground and air services from a Receptive Tour Operator or a Tour Wholesaler or they may contract directly with the Supplier. They then package these products and resell to the Consumer. They market these products through brochures, websites, advertising and promotions. They often work through Travel Agents to sell their products, but there are also many Tour Operators that sell directly to the public, bypassing the Travel Agent.

  11. Travel Trade 101 Tour Operators - the term represents 3 different business models: • Tour Operators • Tour Wholesalers– may contract products and services from either Receptive Tour Operators or Suppliers and then resell them to other Tour Operators or Travel Agents. They do not traditionally sell directly to the public.

  12. Travel Trade 101 Tour Operators - the term represents 3 different business models: • Tour Operators • Tour Wholesalers • Receptive Tour Operators

  13. Travel Trade 101 • Receptive Tour Operators (RTO) • are ‘business to business’ U.S.-based Tour Operators who contract products and services with U.S./Arizona Suppliers. They resell these services to an International Tour Operator, who then resells these services to the Consumer, sometimes via a Travel Agent. Traditionally, they package individual services into multi-day packages for individuals and groups but they also sell stand-alone products and services. • A RTO is one of the strongest marketing partners a Supplier can have!

  14. Travel Trade 101 Travel Agents– sell or arrange trips or tours for consumers. They book services directly with suppliers and with tour operators and receive a commission for the booking.

  15. Travel Trade 101 • Travel Agents • Airlines- access by air is a key component in the success of the Travel Trade for a particular market

  16. Travel Trade 101 • Travel Agents • Airlines • Media- articles in newspapers, magazines and online are a reliable means of generating interest in a market

  17. Travel Trade 101 • Specialized Travel Companies • On-Line Travel Companies (OTAs) sell individual travel services or complete packages on their website. They generally contract products and services directly from the Supplier or Tour Operator. Will generally receive payment in the form of a commission from the supplier.

  18. Travel Trade 101 • Specialized Travel Companies • On-Line Travel Companies • Destination Management Companies (DMCs)– are companies that arrange ground services and events for business groups and conferences. They generally only service the region in which they are located.

  19. Travel Trade 101 • Specialized Travel Companies • On-Line Travel Companies • Destination Management Companies • General Sales Agent (GSA)– is an appointed sales representative of a company or tourism organization, usually located in an international market.

  20. Travel Trade 101 • Specialized Travel Companies • On-Line Travel Companies • Destination Management Companies • General Sales Agent (GSA) • Consolidators –are companies that buy large volumes of travel services (usually airline tickets) in order to secure a preferred rate and override commissions.

  21. Travel Trade 101 • Commissions– a percentage of the booking paid by the supplier (usually to Travel Agents) • Net Rates– an established rate for individual or packaged products and services made available to Tour Operators, typically 15% to 35% less than retail or rack

  22. Travel Trade 101 Net Rates – develop at a variety of price points to meet the needs of TO’s versus RTO’s

  23. Travel Trade 101 • Net Rates • Develop a Marketing Plan– identify and communicate with appropriate members of the travel trade (those that compliment your product). Trade shows such as NTA, Go West Summit, International Pow Wow are excellent for establishing a presence in the international marketplace.

  24. Travel Trade 101 Work with AOT and your local DMO. • AOT and most DMOs attend a variety of domestic and international trade shows. • AOT and DMOs communicate with the travel trade throughout the year – your new product/service is NEWS! Tell us about it.

  25. Receptive Tour Operators How receptive operators can make your life easier…

  26. Receptive Tour Operators Sales Chain: • Supplier • Receptive Operator / Wholesaler • Overseas Wholesaler • Overseas Retail Outlet / Travel Agent • Consumer

  27. Receptive Tour Operators What is an RTO ? • There are a wide range of sizes and types of Receptive Tour Operators but the common feature to all is that they buy U.S. Tourism products. Products are presented in confidential tariff’s or through customized quotes.

  28. Receptive Tour Operators The Overseas Wholesaler • These are tour operators outside of the U.S. which may buy a U.S. land package from an RTO and add on the air transportation. They produce glossy brochures which are distributed to the travel agents and into the hands of the consumer.

  29. Receptive Tour Operators The Travel Agent (overseas) • This is where the tour product reaches the consumer. The travel agent will discuss which of the multitude of different products will best suit their desires.

  30. Types of Receptive Operators • Geographic Market. The demands of the overseas markets vary considerably which requires specialized knowledge from the RTO. • Destination Area. Some RTO’s specialize in one state or region, ie; the Southwest USA and at the opposite end of the spectrum they represent the entire country. • Product Type. One of the main differences here is whether the RTO is selling to Groups or FIT (Individual Travelers) • Size. Smaller companies are usually more specialized by market, destination or product types. Usually the larger the operation the greater number of markets they reach and the wider the product range.

  31. Receptive Operator Organization • Product / Contracting • Sales and Marketing • Operations

  32. Advantage of RTOs to Intl. Operators • One Stop Shopping • Cost Savings • Reliable U.S. Partner • Protection of Interests – Tourism Laws • Marketing of New Products • Destination Education • Adaptable Tour Products

  33. Advantage of RTOs to Suppliers • Exposure to International Marketplace • Less Volume Fluctuations • Efficiency • Customer Service • Packaging of Your Product • Accounts Receivable

  34. Why Work Direct? • Control Over Client Relationship • Promotion of Your Product • Higher Price

  35. Some Things To Remember • You Can Work with Both! • Loyalty, Trust, Respect • Pricing Structure is Important

  36. Commission Structure • U.S. Receptive Operator = 20% to 30% • Overseas Tour Wholesaler = 15% to 20% • Travel Agents = 10% • Consumer Price Should Match Retail

  37. Why 25% to 30% off Retail? • Marketing Costs • Communication Costs • Questions / Complaints • Payment Issues • Expertise and Experience • Packaging with Other Products

  38. Sales Cycle • RTO Produces a Tariff • Meet with the Overseas Tour Operators • Finalize Product for Their Brochure • Overseas TO Produces a Brochure • Distribute Brochure to TA’s • Traveler Buys a Vacation Package

  39. Lead Times • International Markets Require Advance Pricing • RTO’s Tariff Production • Products and Prices Require 12-18 Months in Advance

  40. Making Your Product Export Ready • Description • Pricing – 12 Months in Advance • Terms and Conditions • Consistent Rates • Consistent Product • Key Contact • Images (High Resolution for Brochures)

  41. Other Issues • Consumer Protection Laws • Inventory (Hotel Block Allocations) • Liability • Assumption of Risk • Safety • Languages

  42. Marketing Your Product • Research the RTO’s • Book a Sales Call • Follow Up • Make Presentations to RTO Staff • Offer Familiarization Tours to RTO Staff & the Overseas TA’s via RTO Requests

  43. Supplier Type: Hotels Lodge / B&B Restaurants Boat Charters Coach Attractions Adventure product Limo’s Regional TO RTO’s Focus: All FIT & Small Groups Groups & Incentive Groups & Incentive Groups & Incentive All All FIT Only All Which Type of RTO is Best Suited for Your Business?

  44. Other Resources • Your Local DMO (CVB or Tourism Office) • Arizona Office of Tourism • Mary Rittman, Dir. Trade & Media Relations • Jennifer Sutcliffe, Travel Industry Marketing • Kristin Swanson, TIM Specialist • USTA • DMAI

  45. My Contact Information Don Prince, Director Prescott Office of Tourism don.prince@prescott-az.gov 928-777-1221 visit-prescott.com prescott-az.gov

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