The Management Of Tourism Distribution Channel

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27th Apr 2017 Tourism Reference this


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After the tourism organization have decided in selecting the distribution channel, the tourism organization such as hotel must implement and manage the distribution that being choose in order to gain revenue. Therefore in distribution channel management it includes selecting and motivating individual channel members and also evaluated their performance. For the hotel to generate higher revenue, they must work together with the intermediaries such as tour operator and travel agencies in term of sharing the information of the product.

In order to effectively evaluate the effectiveness of involving only retail travel agencies instead of a combination of travel agencies and tour operators, one must first examine what represent a tour operator and a travel agency. Therefore Hilton Hotel selected certain tour operator and travel agencies to selling their room based on their brand position their ability to reach the customer such as Ping Anchorage Travel & Tours to promoting and selling the room for Hilton Hotel.

The Ping Anchorage is establish in 1990 and was the Malaysia professional tour operator that promote the nature, people, culture and heritage of Malaysia. Till now the organization has been operate 21 years in the tourism industry as the tour operator. The offices located in four different countries which are Kuala Terengganu, Kuala Lumpur, Penang and Kota Bharu. The organizations have modern mini coaches, tour coaches and speedboats services to give convenience to the consumer to travel to the destination. These are to ensure providing the better services and ensure a great holiday to the consumer. The organization was recommended by the international travel guidebook such as Lonely Planet, Rough Guide, Stefan Loose, Insight Guide, Japan Gio Glode Trotter, Thomas Cook. In addition the organization cooperated with all the hotels, resorts, and local operators. The organizations have recognized as the Malaysia best tour operator that win the Prestigious Malaysia Tourism Award in 2000 until 2009 such as Malaysia Best Tour Innovative 2009, The Best Domestic Tour Operator 2003, Malaysia Best Tour Program of Adventure & Nature 2006, Malaysia Best Tour Program of Special Interest/Merit 2006 and The Best Inbound Tour Operator 2004.

Hilton Hotel choosing Ping Anchorage based on the organization reputation because the organization is familiar with the local market conditions and culture customs. This will give advantages to the Hilton Hotel to create a customer relationship and brand trust in the mind of the consumer. Therefore it will make Hilton Hotel to concentrate on the quality services. With the reputation and image of the Ping Anchorage it can help to promote and selling the room of the Hilton Hotel toward consumer. The services and product the organization provided were the hotel online reservation, online transaction, comment through online and information of the tourism product such as accommodations, transportation and entertainment. Therefore with the services provided by the Ping Anchorage the consumer can check the room rate of the Hilton Hotel by browser through the organization web site.

In order to make sure the Ping Anchorage keeps selling and promotes the Hilton Hotel, the hotel continually motivate it member to perform their roles. There are incentive that commonly used by Hilton Hotel to motivated their intermediaries such as Ping Anchorage such as commission which Hilton will pay up to 10 percent commission toward Ping Anchorage on all general public and other commissionable rates for selling the room. Other than that the Hilton Hotel also provided Ping Anchorage with the reduces-prices holidays. It is for the organization to stay at the hotel itself and give them an information and knowledge of the product and services that the hotel sell to the consumer. In addition it will help the Ping Anchorage to create the package that suitable for the hotel. Hilton Hotel also has giving approval right to the Ping Anchorage to use the hotel information in term of hotel history, facilities and services to promote in their website. In return it can promote the hotel to the consumer. Furthermore act of beyond Ping Anchorage authority is strictly prohibited for the organization to use.

Mkumbo J. P. (2010) stated that distribution channel performance is evaluated using mainly two criteria which were the business volume the distribution member and the profit margin made by the distribution member of distribution channel. Hilton Hotel evaluates the Ping Anchorage through the promotion that the organizations generate to increase the sales of the hotel booking. In addition Hilton Hotel evaluates Ping Anchorage performance as the intermediaries are basically with the award that the organization gets throughout the year. With the achievement of the organization it creates the brand trust for the Hilton Hotel to colorations with Ping Anchorage.

Meanwhile Hotel Hilton also has their own website in order to consumer to booking the room. These for the consumer to deal directly to the Hilton Hotel without interfere with travel agencies and tour operator. Therefore internet has changed channel relationships between some types of customers, principals and intermediaries, and this process is continuing to evolve. Internet is cutting into the traditional intermediaries’ business. Using ICT Hilton Hotel can develop and tighten supply chain relationships which reduce costs and bring higher quality travel products to the consumer. Other than that Hotel Hilton also can employ various price policies and loyalty programs that yield a higher price transparency and more user-friendly interfaces. With the evolving the reservation through the internet reservation system (IRS) it will help Hilton Hotel to increase their percentage of people booking the room via internet.

Using the IRS the Hilton Hotel can replacing the weaker member which is tour operator and travel agencies that can harm the effectiveness of the distribution system. By using the Hilton Hotel website perhaps it gives customer the opportunity to provided feedback regarding services quality of Hilton Hotel. Pearce G.D. (2009) evaluate that consideration of the strategy in evaluates and analysis can assist distribution member in term old deciding the best distribution channel for their organization. hence it help to determine and assist the distribution member about which channels might be expanded, reduced, added, abandoned, or improved.

Identify the relationship between the member of tourism distribution channel such as travel retailers and operator, accommodation, airlines, and national tourist organization in the marketing of tourist destination (local or broad).

In the distribution channel there are relationship arise between members of distribution channel such as travel retailers and operator, accommodation, airlines, and national tourist organization in the marketing of tourist destination. In this study, the authors examine the ways to increasing their effectiveness in marketing market Pan-Amazon ecotourism destinations based on the roles and function of travel agencies and tour operator because travel agencies and tour operators have a role in the marketing tours package between supplier, tourism destination and consumer. Tour operator is normally can be define as creating inclusive holidays which are combining the travel, accommodation, food, beverage, activities, entertainment and sightseeing. In addition some tour operators are specializing in certain particular product or destination. In tourism industry tour operator is focusing on huge volume of sales, offering attractive tour package and creating all-inclusive prices to generate high sales with low cost margins.

Other than that travel agency is a business that sells a wide range of tourism related products and services to end-user customers on behalf of third party travel suppliers. Travel agencies are without their own product, and modify the packages offered by producers to the needs of the consumer. There were arguing that arise saying that they are independent agencies. They retail to consumers on an individual basis. Thus, they are considered intermediaries in the hospitality distribution channel and are responsible for bringing customers to a product. Meanwhile the author stated that ecotourism destination can be defined as sustaining and conservation of natural environment and culture heritage. This study investigates the function of Uakari Lodge in tourism distribution channels websites in order to measure how it ranks in these distribution channels, as well as to identify key competitors to Mamiraua

In this study it indicated that among the intermediaries such as travel agencies and tour operator that selling and promoting the ecotourism in Brazil, Mamiraua was the destination that have a higher rating in the ecotourism destination that visited by the tourist. This is due to the destination is basically international agencies and operators recognize as the profitable destination. Whereby Mamiraua demonstrates a good market image against other competitors such Peru and Ecuador in term of ecotourism destination. In addition in term of price competitive advantages also Mamiraua destination were enable for the travel agencies and tour operators to create and providing the tour package which tourist can visited the mountain, sea, jungle destination and used facilities at the lower prices compare to other destination.

Throughout the study it indicated that tourist went through travel agencies and tour operator was slightly higher rather than tourist that travel through backpackers or travel alone. This because by refereeing through the data in year 2009 about 56 percent of tourist travel through agencies but only 11 percent travel through backpackers because of the lack of knowledge about the ecotourism destination. Therefore it can be stated that with regard to the efforts to attract the traveler, the behavior of the distribution channels has been more passive rather that active to marketing the Mamiraua as ecotourism destination. Whereby traveler looks for travel agencies and tour operator compare by searching through the internet to get the information about Mamiraua.

With the finding, it giving the information for the Uakari Lodge which is the only place for accommodation to identify the behavior of the traveler and investigated the need for more advance web-based marketing and sales strategy in order to traveler to identify that Mamirau as ecotourism destination and stay at the Uakari Lodge. In this study also it indicated that the increased participation of travel agiencies and tour operator was not just due to the increased number of traveler that went to Mamiraua, but also increased the total number of travel agencies and tour operator that came to marketing the Mamiraua as ecotourism destination. This increase in the number of tourism distribution channels indicates a good positioning of Mamiraua in the ecotourism destination.

Although there are increasing of participation of the travel agencies and tour operator, some issues occur whereby only 11 travel agencies and tour operator are sending the traveler to Ukari Lodge to stay overnight. Because working with a large number of travel agencies and tour operators limit the capabilities of the Ukari Lodge to establish closer ties with all the travel agencies and tour operator in the distribution channel. Therefore it is important for the customer to understand the relationship between the destination marker and the travel agencies and tour operator so that the Uakari Lodge is sold toward traveler in line of marketing Mamiraua ecotourism destination. Furthermore it is important to monitor the level of visitor satisfaction in order improving the strategic of increasing the number of distribution channel that can related to marketing the Mamiraua as ecotourism destination.

Therefore the emerging of the internet can reacts as the alternative intermediaries. By using the internet it enables direct communication between the tourism supplier and the consumer. Therefore it can be as a medium to reduce the conflict that arises. Therefore internet can changed the distribution channel relationships between some types of customers, principals and intermediaries. For the tourism supplier by using the internet it can be as method to reduce the distribution cost of deliver the product and services toward the consumer. Before emerging the ICT as the alternative intermediaries, tourism supplier are burden by the high cost of intermediaries’ commission and the cost of GDS that being charge to the tourism supplier.

However, using the Internet for marketing applications is not without costs. There can be significant hardware, software and human resource costs attached to developing and operating a direct to- customer distribution strategy. The process of cutting out the intermediary is called disintermediation, and accommodation providers clearly favor this approach. However, the role of the intermediary is well established the major tour operators and travel agents organize travel and accommodation for millions of tourists every year. Intermediaries are obviously aware of the threat posed by the Internet, but they also embrace the Internet as a tool for communicating with their own customers.

Kazandzhieva (2010) noted there are advantages and disadvantage of ICT in the distribution channel. For the disadvantages of using the internet as a trade the author have stated several disadvantages which is lower security services level. The consumer fell afraid to giving their profile and credit card number to the travel agencies to make the transaction. Other than that the services that provided by the agencies are intangible product and the consumer rely on the services and information that provided through the internet. The consumer also always misunderstood with the low price that promote through internet. For Example the consumer Air Asia buying and booking the airlines ticket via internet. Meanwhile consumer is lack of protection against unconscientiously actions because every country there is different in national legislation. In addition most of the consumer prefer to shop and purchasing the product via intermediaries that are well establish and recognized on the market. This because consumer already know the services and the quality that provided by the establish travel agencies.

About the advantages using the internet toward the travel agencies stated by the researcher were the using the electronic commerce it can help to optimizing the travel agencies activities by creating different approaches to electronic purchase and sale to giving the consumer convenience to purchasing the tourism product. By using the internet the tour operator can promote their product and price through the internet. Therefore it makes the consumer known about the new package that being created by the travel agencies. In addition using the internet it can direct the intermediaries such as travel agencies toward modern operation, type of tourism, and destination when the necessity of the consulting and information services.


Tourism industry is very competitive businesses which generate increase of demand and supply in tourism product. Many individual, enterprise and government indentify the opportunity of tourism to generate income. As the result of many tourism suppliers in the market it creates a competition among them. Therefore tourism supplier needs to take an effective and efficient strategic approach to distribute their product and services in order to survive in tourism industry.

The distribution channel can be defined as the entire of cooperating organization that helps to ensure the consumer can use a product. Jafari (0000) define as linkages between actual and potential tourist and the supplier by using the distribution channel system. The system maybe categorize either direct system which is from producer to the seller which is consumer can by directly airlines ticket through the counter or indirect from consumer through an intermediaries which by using travel agencies’ or wholesalers to purchase the holiday package. Therefore tourism services supplier can choose either this two distribution system to selling their product to the consumer.

Therefore the distribution channel concept is easily to understand but in the real world it was extremely complicated for the large organization. The function of distribution is to assist the consumer to search for the information regarding the product and to make purchasing of the product simple. Meanwhile in distribution channel travel agents, tour wholesalers, and specialist act as the intermediaries. For example travel agent and tour operator serve the consumer to choose the travel product such as accommodation, transportation, restaurant and entertainment. By providing the serve, they basically get the revenue by charging the commission from the booking of the hotel. For example accommodation like hotel companies need distribution channel to reach their entire potential consumer in order to fill their room reservation.

In distribution channel the relationship between distribution members is complex, especially for the organization likes hotel that depending to the travel agencies and tour operator to generate their sales. Hence the information communication technology (ICT) takes part as important roles in distribution system because ICT is a medium that will evolve the distribution channel in term of development of computerized system. But the theories of distribution are the same despite it using the ICT as intermediaries.

The evolution of ICT and electronic commerce continue to improve in distribution channel of hospitality and tourism industry. It depends on the size of the business and market segmentation. Meanwhile accommodation such as hotel needs to use intermediaries to obtain advance booking to generate occupancy. But with the high cost of distribution force the distribution member to look for alternatives such as develop their own website to marketing their product and services. Therefore it will make the distribution member not depending on the intermediaries. With emerging of the ICT such as internet it has become an important toll in the distribution channel and help hotels to reduce their distribution cost. Nevertheless the roles of travel agencies and tour operator as the intermediaries are remain important for the distribution members to generate sales and promote their product.


As conclusion the tourism distribution channel is an operating structure, system or link of various combination of travel organization. These travel organizations create a travel package and make arrangement for the consumer. It has two purposes to make sure their consumer obtains information they need in choosing a trip and to make the necessary reservation after they made a choice. Tourism distribution channel can be categories in two type of channel which is direct and indirect. There are three types of travel intermediaries which are travel agents, tour operator and specialty intermediaries. The roles of travel agencies are to organize tour package which sold to consumer through retail agents. It is not directly sells to the consumer. There are the three distribution channel are product supplier to consumer channel, product to supplier to travel agent to consumer channel and the product supplier to tour operator.

Meanwhile the distribution system is an important component of the marketing mix. The chosen system of distribution will affect the parts of the marketing mix such as the product, the promotion strategy and the pricing policy. In distribution channel management it includes selecting and motivating individual channel members and also evaluated their performance. The Ping Anchorage is tour operators which have establish 21 years in the industries. It located in four different countries which are Kuala Terengganu, Kuala Lumpur, Penang and Kota Bharu. In order to make sure the travel agent continues to generate sales for the hotel Hilton, the hotel giving 10 percent commission to the Ping Anchorage. Beside that Hilton Hotel evaluate Ping Anchorage the promotion that the organizations generate to increase the sales of the hotel booking. Hotel Hilton also has their own website in order to consumer to booking the room. Using ICT Hilton Hotel can develop and tighten supply chain relationships which reduce costs and bring higher quality travel products to the consumer. Therefore the internet reservation system (IRS) it will help Hilton Hotel to increase their percentage of people booking the room via internet

Throughout marketing the Pan-Amazon ecotourism destinations is basically based on the roles and function of travel agencies and tour operator. It related to the relationship between the members of tourism distribution channel in the marketing of tourist destination.


Buhalis (2000) acknowledge that the distribution member should keep the record of different channel which being use for the purpose of evaluating and measuring channel performance since distribution decisions are critical for tourism industry because its influence the entire marketing mix because it reduces the cost and increasing the revenue toward the distribution member such as hotel. In addition tourism distribution channels difference according to product, industry structure and countries. Therefore with the consideration it can make a huge difference in the hotel competitive advantages.

Fu and Zhang (2010) noted in order to determine the effective and efficient of the distribution channel that used by the distribution member they should implement the distributors star rating system. Under this strategic approach the tourism organization can recognize which tour operator or travel agencies that perform well in generating sales and promoting the distribution member. With this the distribution member can rely only on the intermediaries that achieve the higher star rating.

The authors also acknowledged that in order ensuring the relationship between distribution member and the intermediaries, the distribution member should pay regular visits to the intermediaries such as travel agencies and tour operator in order to strengthen the bond giving the support between them. Therefore it ensure that the distribution member realize the issues that occur and can give consultation when dealing the encounter the problem rather than ignore their intermediaries.

Distribution member like hotel should implement the variety of promotions using the ICT to across the border of country because many consumers get the information about accommodation via internet. Social media sites are growing fast and being used to distribute the tourism product and services. In addition the most popular sites that addressing attention of consumer audiences are Facebook and Twitter. The distribution member should make used of the twitter to post special offer, information, suggestion, links and advices to the consumer. With this strategy it can increase the selling the product of the distribution member and delivery the information to the consumer.

With the emerging of the mobile technology it can play important role in distribution channel for tourism and travel industry. This is because many corporate travelers are likely to be carrying their mobile which is Smartphone that will enable them to gaining access information regarding visitor attractions, restaurant, transportation and accommodations. Therefore with existing of the mobile technology it allowed hotel to create mobile specifies sites with booking capabilities which create a new channel to distribution the product and services.

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