P3 review the different types of
interrelationships and provide examples
What do those big words mean?
• Interrelate- connect (two or more things) or
(of two or more things) to become connected
to each other.
• Channels of distribution-Comprises all of the
businesses and people involved in the physical
movement and transfer of ownership of goods
and services from producer to consumer.
Big words continued
• Integration – this is the bringing together of
organisations.
• Interdependencies- This is when companies
depend on one another.
Interrelationships in the T&T industry
• No single component of the travel and
tourism industry can operate alone without
relying on other parts of the industry.
• For example who does a hotel rely on?
• Transport links
• Visitor attractions to bring tourists into the
local area.
Chain of distribution
• This is the way of getting a product
to a customer.
• Can you think of the chain of
distribution for milk?
• A traditional chain of distribution in
the travel and tourism industry
might look like this:
Accommodation
Transport
Tour operator
Travel Agent
Customer
However chains of distribution are
now a lot more complicated!
• Example – many airlines with the exception of British
Airways, EasyJet and Ryanair, rely on tour operators
and travel agents to sell seats on their aircraft.
• The tour operator often owns the airline such as Tui
and Thomas Cook . These companies have their own
aircraft s to fly their customers as part of their
package holiday.
• Even if the tour operator may not own the airline,
they rely on the tour operator to use their services in
their holiday packages.
• Tour operator packages, as we saw before are sold
through various travel agents
Fully integrated chains of distributions
• This is where the chain is owned by the same
company E.G:
Thomas Cook Airlines
Thomas cook tour operators
(Thomas Cook, club 18-30 ETC).
Thomas Cook Retail
Thomas Cook Ancillary Services (Currency exchange, travel insurance ETC)
TUI chain of distribution
MyTravel airlines
Going Places retail
MyTravel ancillary Services (Insurance,
Exchange, Parking ETC.)
• There are simpler chains. For example,
accommodation holidays, such as villas in
France, are sold through businesses that
promote France as a destination for a holiday.
The properties appear in the business’
brochure and bookings are made via the
business, which then handles the payment.
Integration
• Until recently booking a holiday could mean having to
deal with different businesses, which provided
different parts of the package.
• Now, as we saw before chains of distribution are
changing and businesses are starting to expand their
area of operation. This process is known as integration.
• The advantage of one business offering all elements of
a holiday is that the business is able to control its cost
and ensure that their customers receive a guaranteed
high standard of service.
There are 2 types of integration:
• Horizontal integration- where businesses at
the same level in the chain of distribution
merge together or are purchased by another.
• Vertical integration – where a business at one
point on the chain of distribution purchases or
acquires a business at a higher or lower level
of the chain of distribution.
• Accommodation provider
Accommodation provider
Vertical Integration
• Tour operator
• Travel agency
Tour operator
Horizontal
Integration
Travel agency
Example
• In 2000, the tour operator, Manos, which
specialises in holidays to Greece and Turkey,
was brought by another tour operator,
MyTravel. A press release issued at the time
described Manos as “a well-known and
successful specialist tour operator, which will
add to the Group’s existing product portfolio
and provide opportunities for cost savings and
distribution benefits.
Example
• The tour operator Thomson, brought Lunn
Poly, a chain of travel agents in 1972. The
Lunn Poly brand name was kept until 1994,
when the company was rebranded Thompson
Holidays.
Interdependencies
• Organisations can not work in isolation, each
are dependent on the other for its effective
operation.
• For example Visitor attraction reply on
transport industry to bring customers to the
attraction.
• Tourist boards (local and regional)
• Businesses enter into arrangements like this with
one another so that they can all benefit from a
single booking. If a customer has purchased a
flight, they may also need accommodation or a
car.
• By providing booking services for these two
components of the trip, Easyjet can earn more
from the initial booking of a flight. The customer
benefits from these arrangements because of the
convenience.