INterrelationships
Chain of distribution-
A chain of distribution shows how the products and services between different travel and tourism organisations move and how they all interrelate.
This is my chain of distribution showing how the different aspects of the Travel & Tourism industry link and interrelate with each other. I have also included examples of these organisations.
Chains of distributions can get more complicated at times change and businesses grow. For example, some tour operators are now investing in their own airlines.
There can also be integrated chains of distributions. For example, Thomas cook have their own airline (principle), tour operators (wholesalers), travel agents (retailers) and ancillery services.
Principles are component industries, companies such as accommodation providers and attractions.
Wholesalers are Tour Operators (mass market and specialist)
Retailers are Travel Agents
Consumers are the customers.
This is my chain of distribution showing how the different aspects of the Travel & Tourism industry link and interrelate with each other. I have also included examples of these organisations.
Chains of distributions can get more complicated at times change and businesses grow. For example, some tour operators are now investing in their own airlines.
There can also be integrated chains of distributions. For example, Thomas cook have their own airline (principle), tour operators (wholesalers), travel agents (retailers) and ancillery services.
Principles are component industries, companies such as accommodation providers and attractions.
Wholesalers are Tour Operators (mass market and specialist)
Retailers are Travel Agents
Consumers are the customers.
Integration-
Integration is when business or organisations combine together. There are two different types of integration depending on how a business decides to expand. There is horizontal integration and vertical integration.
Horizontal integration-
Horizontal integration is when two or more business which are on the same level on the chain of distribution merge together or are purchased by another. An advantage of horizontal integration is that it can increase the company’s market share. An example of this is when ‘’Go’’ a budget airline owned by British Airways was taken over by EasyJet in 2002. When the companies merged EasyJet ‘’power branded’’ this means that all of the logos and names that Go had used previously where replace by the EasyJet name and logo. This had a negative impact on customers, EasyJet has more market control, and this allows them to dictate what the prices can be. The positive side of this integration is that EasyJet now has more customers flying with them and therefore can have more market space to promote themselves.
(Source 41: easyjet-eliska.blogspot.co.uk)
(Source 41: easyjet-eliska.blogspot.co.uk)
Vertical integration-
Vertical integration is when businesses at one point in the chain purchases a business at a higher or lower level of the chain of distribution. An example of vertical integration is when the tour operator Thomson merged with First Choice Holidays in September 2007. This enabled Thomson (which is now part of the TUI group) to have greater dominance on the high street, online and in the UK travel industry as they now have more high street shops, employees and customers.
Interdependencies-
When companies are interdependent, it means that they are reliant on each other. Businesses cannot be successful if they work in isolation and need other businesses to work along side them to make even more profit. For example, visitor attractions such as Alton Towers, rely on transport companies from all over the UK to bring customers to the attraction. In addition to this, tourists boards such as Visit Britain support and promote tourism to domestic and inbound tourists.
interrelationship between Chester zoo and grayway coaches-
Chester Zoo work together with Grayway Coaches to transport visitors from all over the North West of England to their attraction. This makes it easier for both companies to gain more customers as they are working together instead of independently which is going to help them make more money and persuade customers to use their products and services again. Both Chester Zoo and Grayway Coaches are principles on the Chain of Distribution. This is an example of horizontal integration as both businesses are on the same level and they work together. One reason why Chester Zoo works with Grayway coaches and other coach companies all over the UK, is to make it easier for people to visit the attraction so they have more customers and make more money. These are examples of interdependent companies as Chester Zoo rely on Grayways to bring customers from the North West to their attraction and Grayways rely on Chester Zoo to offer deals for coach trips so they're able to organise the excursions. Grayways have 11 organised trips to Chester Zoo every year which gives people in the local area plenty opportunities to visit Chester Zoo along with many other attractions.
INterrelationship between thomson and first choice holidays-
In 2007, holiday companies Thomson and First Choice Holidays decided to merge and work together. This is an example of vertical integration as the companies are on different levels on the Chain of Distribution and combined to create one single travel company. Thomson bought out First Choice holidays in a deal that would create a new force in the European travel industry. However, customers can still book their holidays with First Choice as they have separate websites and travel agents but they will usually fly on a Thomson plane with a Thomson crew. The new company, called TUI Travel, has annual revenues of more than £12bn and 27m customers. It operates in 20 countries, serving more than 200 destinations. The deal brought together two of the best-known names in the UK travel industry and came just weeks after rivals MyTravel and Thomas Cook agreed merger terms. The new company is 51% owned by TUI and 49% by First Choice shareholders. Shares in First Choice surged almost 10% in the first morning, jumping 27p to 311p. The merge produced cost savings of £100m a year, the bulk of which came from combining back office operations of the two businesses. Around a third of the planned savings came from combining the airline businesses. First Choice currently employs 16,000 people while TUI employs 33,000. Being the new Thomson Airways, they offer a wider choice of destinations as they now have more planes and crew, their current fleet is made up of 59 aircraft: 33 x Boeing 737, 15 x Boeing 757, 5 x Boeing 767 and 6 x Boeing 787. Along with First Choice charter flights we work with more than 80 tour operators and provide bespoke flights they work with more than 80 tour operators and provide bespoke flights for clients ranging from Manchester United to HM government. In addition, this creates more customers for both companies as repeat customers from Thomson are more likely to use First Choice and repeat customers from First Choice are more likely to use Thomson.
(Source 36: www.theguardian.com, 2015)
(Source 36: www.theguardian.com, 2015)
Further interrelationships within thomson-
Thomson retail agents-
The relationship between Thomson Tour Operators and the Thomson Retail Travel Agents is extremely important as it allows the Tour Operators to increase their sales as the Travel Agents are selling their packages to customers. If the Tour Operators didn't work with the Travel Agents then there would be less people selling the packages so there would be less customers buying them. Thomson Tour Operators benefits from working with the Travel Agents as they're able to easily promote their packages to customers first hand. They're also able to offer good deals and discounts which will also attract more customers as they're being offered cheaper prices. In addition to this, the Tour Operators also sell packages alongside the holidays to offer the customer something extra with their holiday which will also attract more customers.
Website-
The relationship between Thomson Tour Operators and the Thomson website is also important as it allows customers to be sold Thomson packages from the comfort of their homes. If the Tour Operators didn't work with the website then less packages would be sold as technology is developing and more customers find it easier and more comfortable to use the internet to book their holidays so they're more likely to use a tour operator which has a website. Thomson Tour Operators benefits from the website as they're easily able to advertise and promote the packages. In addition, the website is also able to offer deals for various destinations and packages which the Tour Operators which may also be in competition with those offered by the travel agents.
Call Centre-
The relationship between Thomson Tour Operators and call centres is also important as it allows customers to book their holiday from the comfort of their homes but still having the re assurance of a travel agent. If the Tour Operators didn't work with the call centres then they would have less customers as some people are unable to leave their homes so they cannot see a travel agent or are not comfortable using the internet to book their holiday which means they're more likely to use a tour operator which offers call centre facilities. Thomson Tour Operators benefits from the call centres as they're able to appeal to more people and sell more packages.
First choice holiday hypermarket-
The relationship between Thomson Tour Operators and the First Choice holiday hypermarket is important as it allows customers to compare prices between Thomson/First Choice and other tour operators however, as First Choice work with the holiday hypermarket they will only advertise deals that show the Thomson tour operators having the better deals. If the tour operators didn't work with the holiday hypermarket then they will get less customers as it attracts customers as the offer good deals. For example, in 2013, customers saved on average £501 when they booked a First Choice holiday through Holiday Hypermarket. Thomson Tour Operators benefits from the holiday hypermarket relationship as they're able to easily advertise their deals to attract most customers to make more profit.
Thomson airline-
The relationship between Thomson Tour Operators and the Thomson Airlines is extremely important as TUI are able to use their own fleet of aircraft to transport their customers to a wide number of destinations without relying on other companies. If the tour operators didn't work with the airline then TUI would have to pay another airline to transport their customers making them loose money instead of making money. Thomson Tour Operators benefits from the Thomson Airline relationship as they can be independent and create their own profit.
Thomson cruises-
The relationship between Thomson Tour Operators and Thomson Cruises is also extremely important as it allows TUI to appeal to a new type of traveller by offering a wide range of different itineraries to various destinations. If the tour operators didn't work with Thomson Cruises then they would be missing an opportunity to appeal to the growing number of people who now prefer to cruise than have a normal holiday. Thomson Tour Operators benefit from working with Thomson Cruises as they're able to offer different deals to go along with the cruise packages. For example, cruise and stay packages offer customers the chance to visit different areas of a country for a week and then stay over at a popular resort for another week.
Airport handling agents-
The relationship between Thomson Tour Operators and Airport Handling Agents is also important as it allows TUI to ensure passenger's luggage and belongings are safe and well looked after as they work with companies such as Swissport within the various airports. If the tour operators didn't work with the airport handling agents then their passengers wouldn't feel at ease as they wouldn't know who were looking after and transferring their luggage to the aircraft. Thomson Tour Operators benefit from working with the airport handling agents as their customers will get clarity knowing that their tour operator is handling their luggage rather than the airport making them gain the trust of their customers, which will more than likely persuade them to book with TUI again.
Coach Transfer Companies-
The relationship between Thomson Tour Operators and the coach transfer companies is important as it allows TUI customers to feel relaxed as they don't need to stress about transportation to their resort as the tour operators organise this with various local coach companies at the destination. If the tour operators didn't work with the coach transfer companies then the tourists would have to arrange transportation themselves which can lead to high prices and unreliable companies taking advantage of the tourists. Thomson Tour Operators benefit from working with the coach transfer companies as it allows tourists to start their holiday straight away as they don't need to worry about how they will get to their destination which will make it more likely for them to book with TUI again.
Accommodation-
The relationship between Thomson Tour Operators and accommodation providers is extremely important as it allows TUI to sell packages offering a wide range of different accommodations to their customers. If the tour operators didn't work with the accommodation providers then they wouldn't be able to offer a wide variety of different packages. Thomson Tour Operators benefit from working with the accommodation providers as it allows TUI to create more appealing packages to different types of holiday makers. For example, they will include a range of 5* to 2* hotels and apartments.
EXCURSION companies-
The relationship between Thomson Tour Operators and excursion companies is also important as it allows customers to book a variety of different trips and excursions which they know will be reliable and at a good price. If the tour operators didn't work with the excursion companies they wouldn't be making as much money as the holiday makers would use local companies which could be unreliable, unsafe and at higher prices. Thomson Tour Operators benefit from working with the excursion companies as they're able to make more money by offering their customers add on deals which will allow them to enjoy their holiday even more and persuade them to book another holiday with TUI.
insurance companies-
The relationship between Thomson Tour Operators and insurance companies is also important as it allows TUI to offer extra add ons to their customers to ensure that they're safe abroad. If the tour operators didn't work with the insurance companies then they would lose out on money as many customers feel safer and more confident using their tour operator to buy their insurance for when they're abroad. Thomson Tour Operators benefit from working with the insurance companies as they're able to offer deals within their packages to ensure that their customers feel safe when they're on holiday which will make them more likely to re book with a TUI company.
ancillary services-
The relationship between Thomson Tour Operators and additional ancillary services is important as it allows customers to buy additional services that they'll need when on holiday. For example, Thomson offer a service which allows travellers to exchange their money into the currency of their destination. If the tour operators didn't work with the ancillary services then they wouldn't have as many customers as it would be harder and more complicated for them to to get all the extra add on services which they need to get everything for their holiday whereas TUI offer services which will sort these add ons out for the customers. Thomson Tour Operators benefit from working with the ancillary services as they create more trust between the customer and the tour operator as they're making it easier for the customer to get everything they need for their holiday as it is all offered in the same place.