Trade Distribution Toolkit
Finding Your Route to Market
Learn how the tourism trade works, from wholesalers and travel agents to online booking platforms, and discover the pathways that help connect your business with more visitors.
UNDERSTANDING TRADE DISTRIBUTION
Tourism trade distribution refers to the way tourism-related products and services are bought, sold, and distributed within the tourism industry. It involves the flow of goods and services from suppliers to consumers through various channels.
The tourism trade distribution system aims to connect suppliers with potential customers efficiently and effectively, making it easier for travellers to access the products and services they desire. Efficient distribution ensures that tourism businesses can reach a broader market and that travellers have access to a wide range of choices for their travel needs and preferences.
Online technology like product channel managers and company mergers have transformed the tourism industry, with an increasing amount of crossover in the roles and functions of various sectors of the distribution system.
TOURISM DISTRIBUTION DICTIONARY
This industry has more terms and acronyms than you can ever learn by heart. Here’s a handy cheat sheet for you!
PREPARING YOUR BUSINESS FOR TOURISM TRADE DISTRIBUTION
IMPORTANT NOTE: The following is covered in BT’s Trade Mentoring programs where you are supported by qualified mentors and BT staff.
PRICING, RATES & COMMISSIONS
When developing the sale price of your tourism experience it is important to factor all costs, including advertising, operational, fixed and variable. If you want to expose your experience to the wider distribution of tourism trade it is important to factor distribution costs when setting your price.
Depending on which markets or the breadth of exposure you want to achieve will determine the cost you need to factor in.
DISTRIBUTION CHANNEL
COMMISSION REQUIRED (Considered Distribution Cost)
EXPLANATION
Inbound/DMC
25-30%
Provide a nett rate 25%-30% less than your sale/retail price so they can distribute your experience to wholesalers and retailers
Wholesale & Online Wholesale
20%
Provide a nett rate 20% less than your sale/retail price so they can distribute your experience to retailers
Retail
10%
Retail agents retain 10% for the promotion and sale of your experience
Online Travel Agents
12-15%
Provide a nett rate 12%-15% less than your sale/retail price so they can expose your experience on their travel booking platforms.
Not all sales are going to come from the distribution system and if you add 30% to your sale price, you run the risk of price yourself out of the market. If this is the case, we recommended that you forecast the sales from each channel and add an average distribution cost to your sale/rack price. Bear in mind all direct sales will result in the distribution cost being added to your profit margin!
Another benefit to distribution is you only pay these costs when you get a booking through the distribution system. The exposure your experience achieves by working with the distribution system will always outweigh the costs associated with receiving the agent bookings. Tourism distribution provides a measurable advertising strategy when compared to printed advertising or billboards. If you don’t see increases in agent bookings, measure what markets are visiting your website or experience. How did these markets here about you?
CHANNEL MANAGERS
Channel Managers are software solutions that enable tourism businesses, such as hotels, resorts, tour operators, and travel agencies, to efficiently manage their online distribution across various online channels. These platforms are vital tools for tourism businesses seeking to maximize their online visibility, optimize distribution efforts, and improve overall operational efficiency in an increasingly competitive industry.
By utilizing these platforms, businesses can reach a wider audience, manage their inventory effectively, and drive more bookings and revenue.
Today, channel manager’s also have Booking System capability. Below are a list of some of the channel managers we have experience with that may be suitable for your business:
Accommodation:
Site Minder
ResOnline
CloudBeds
Experiences:
Rezdy
Booking Boss
RezPax
EXPERIENCE
Agents are looking for quality products and experiences that are delivered consistently. It is also the agent’s reputation at stake when they sell or refer your experience. Tourism Australia recommend the follow experience attributes when working with the tourism trade distribution system:
- Reliability and efficiency (consistent operating hours and regular schedules);
- High levels of customer service and helpful reservations staff;
- Understanding of the cultural needs of different markets;
- Consistent pricing policies that consider all levels of distribution and offer commissionable rates;
- Easy communication via email, toll- free numbers and fax; and
- Fast and efficient turnaround and response times for bookings and enquiries (within 24 hours)
DIVE DEEPER
Understand the tourism distribution system with support from BT.
- Visit our Trade Training and Upskilling page for resources.
- Visit our Tools & Templates page for tariff calculators developed by BT.
- Email Bundaberg Tourism’s Industry Development Manager Loni Hammond for more details. loni.hammond@bundabergregion.org
WORKING WITH TRADE PARTNERS
Once you have your rates, product fact sheets, brochures, images and booking terms and conditions developed the next step is to make them available to and through the different channels across the system.
- Be Prepared – The tourism works on a calendar beginning 1 April to 31 March and agents want rates at least 18 months in advance;
- Be Informed – Today most intermediaries will offer connection through your channel manager to have access to your inventory, and/or your dynamic rates as well as asking for a static rate contract. Do your research on the agents you are looking at partnering with, what markets do they work with, what type of experiences do they offer, what standard of experiences are they looking for (e.g., Luxury) and prioritise which partners suit your experience.;
- Be Patient – Don’t be surprised if it takes some time to build relationships with the different sellers in the distribution system. They typically have loyalty to existing product suppliers and stringent consumer protection laws in some major markets. They also need assurance that you are an established operator that will remain in business for many years.;
- Be Available – Stay in contact with your partners. Provide updates, develop a trade specific newsletter, offer training tools or online training webinars for their reservation staff, participate in trade shows and where possible visit them at their offices to have tactical sales meetings.
HOW TO BEST WORK WITH YOUR TRADE PARTNERS
INBOUND TOUR OPERATORS (ITOs) & / DESTINATION MANAGEMENT COMPANIES (DMCs)
These organisations have contracting departments and normally focus on specific markets. If you are an ATEC members, you will have access to their ITO buyer database.
WHOLESALERS
Wholesalers are located in overseas markets and rely on Australian based ITOs to develop packages for travel agents and consumers. It is essential that you establish good relationships with ITOs who specialise in your target markets to have the connection to wholesalers overseas.
ONLINE WHOLESALERS
Most agents have a supplier sign up page on their website. Global wholesalers may ask for up to 25% commission based on the breadth of the exposure they can offer your experience. Normally you are responsible for ensuring your experience content and information is accurate through an online portal. As an emerging channel to the distribution system, they are having a great impact on the traditional inbound channel of the system.
RETAILERS
Retailers rely heavily on information provided to them by ITOs and Wholesalers. The most effective way to reach retail agents is to ensure you provide tools to ITOs and Wholesalers to effectively train their retail partners about your product.
ONLINE TRAVEL AGENTS
Most agents have a supplier sign up page on their website. Normally you are responsible for ensuring your experience content and information is accurate through an online portal. Some larger OTAs can give additional exposure to your experience in specific markets. They will ask for more commission to widen the exposure your experience to overseas markets.
