CONNECTED DISTRIBUTION
How your visitor experience can benefit from adopting connected distribution
WHAT’S INSIDE
Introducing connected distribution
Starting your connected distribution journey
How connected distribution works
Working with resellers
The connected distribution landscape
It starts with tech
The costs of connected distribution
Advantages of digital distribution
Connected distribution toolkit - terms and conditions of use
This toolkit is best viewed on a desktop.
Please note: this content is provided for information purposes only and whilst every effort has been made to ensure accuracy, Fáilte Ireland makes no representation or warranty, express or implied, as to its accuracy, completeness or suitability, or in relation to thirdparty intellectual property rights in or to any part of the content. No responsibility for loss or distress occasioned to any person acting, or refraining from acting, as a result of this content can be accepted by Fáilte Ireland, its servants or agents. Visitor experience imagery in this toolkit does not represent participation in our programmes.
©Fáilte Ireland 2022
Jargon Buster PROVIDERS
Throughout this will see the term “visitor experience
This refers to any or individual entrepreneur that creates and day tour, activity, or other experience destination for local, or international
Examples include: tours, boat tours, activities, cultural culinary experiences, art galleries, visitor and amusement
OPERATORS
A commonly used refer to visitor experience provider businesses day tour and activity including transportation, accommodation, activities or services.
this toolkit, you term “provider” or experience provider”. any business entrepreneur and operates a activity, attraction, experience in a local, domestic visitors. include: walking tours, outdoor cultural tours, experiences, museums, visitor attractions, amusement parks.
used term to experience businesses such as activity providers. transportation, accommodation, and other services.
Introducing connected distribution
Our Connected Distribution Toolkit is designed to help you grow your business and meet your commercial goals through a broad range of channels. In the three chapters of this toolkit you’ll learn how to connect your booking system and integrate other digital and sales channels to ensure your operations are as efficient as possible. Connected Distribution is about helping your customers find and book your experience in the easiest way possible.
Chapter 1 covers how to best distribute your business offerings through both traditional and digital channels.
In this chapter, you’ll get to grips with the basics of connected distribution and learn about the various types of resellers. We also discuss the costs involved with distribution, the key elements of tourism distribution, and how the success of connected distribution relies on specific technologies. You’ll get the resources you need to assess your business and start your connected distribution journey.
Throughout this toolkit, we have included jargon busters to explain key terminology, quick checklists to kickstart your connected distribution journey, and helpful resources for further reading.
Let’s get started.
Learn from industry experts
This Connected Distribution Toolkit has been created in collaboration with expert contributors from Arival. Arival works with businesses to create innovative in-destination experiences and their team of experts have shared their knowledge, establishing an informative, educational and accessible starter guide to the world of Connected Distribution.
How distribution works
Distribution is how a company’s product or service reaches its customers. This section explains how distribution works in tourism, and what tourism and hospitality providers should know about distributing their tours, activities and tickets.
THE TRAVEL DISTRIBUTION CHAIN
Visitor experiences
Day tours
Activities
Attraction tickets
Distribution channels
Websites
Call Centre
Ticket Office
Indirect
Online travel Agencies
DMCs & inbound tour operators
Travel agencies
Distribution is how a creator or provider of a product or service gets that product to customers. In the case of travel, day tours and experiences, distribution is the process of providing tour, activity, and attraction products to distribution channels for eventual sale to consumers.
A distribution “channel” refers to a group of similar resellers. For example, online travel agencies (OTAs), such as Viator, Expedia and GetYourGuide, are considered part of the OTA distribution channel.
Distribution includes “B2C,” or direct to consumer, such as when you sell a tour or ticket via your own website directly.
It also includes indirect sales through resellers. Resellers could include a third-party website, such as an online travel agency.
TYPES OF DISTRIBUTION
Direct offline Sales made directly to consumers through the provider's offline channels such as a call centre, direct sales representatives, or physical storefronts.
Indirect offline Sales made through partners such as destination management companies (DMCs), inbound tour operators, and travel agents for a commission.
Direct online Sales made directly to consumers through the provider's own website, including where consumers are referred by hotel concierges or other 'affiliate' partners.
Indirect online Sales made through online reseller partners such as online travel agencies or marketplaces, usually for a commission.
HOW IMPORTANT IS DISTRIBUTION?
Distribution channels, specifically indirect online and offline, account for a substantial portion of total sales for tour, activity, and attraction operators. Here we find out just how important distribution is.
A recent survey of European experience providers found that 55% of their total sales came from third-party distributors, including online travel agencies (OTAs) at 32%, and “Offline Indirect” channels at 23%.
The chart here highlights how important it is for visitor
experience providers to sell online in real time. Providers across Europe, according to an Arival survey of over 900 operators in the region in 2021, report that 59% of their bookings came from online channels (their own websites or through OTAs).
Visitors now expect to be able to book their experience online, and this trend is expected to grow. The Covid-19 pandemic resulted in great uncertainty for the travel industry, translating to an increase in advance bookings and a fall in walk-up purchases.
Visitors now expect to be able to book their experience online.
DISTRIBUTION CHANNEL SHARE OF EUROPEAN OPERATORS
Research source: Arival
WHY VISITORS USE DIFFERENT DISTRIBUTION CHANNELS
Visitors use different sources to make travel planning decisions, and they use a range of distribution channels for purchasing travel. There are several factors that influence that decision, such as the type of trip, where they are going, how much they want to spend, and other factors.
How Travellers Research Tours & Activities, 2021
Each experience provider should know who their customers are, where they come from, what influences their booking decisions, and how they purchase.
For example, a family planning a big holiday may organise that trip through a travel agency or tour provider, and they may book tours and attraction tickets through the agency when they book the full trip. A young couple may plan a
city break and book their tickets online at the last minute, or they may get a recommendation from a friend on Facebook and call the tour company to see if they can join the tour the same day.
Different distribution channels have different strengths and serve different customers. Each provider should understand those channels and determine whether that channel is right for their business.
Get connected with Arival
Meet Arival, a company designed to help businesses create world class in-destination experiences. Check out informative insights and dynamic events developed for a community of creators and sellers of tours, activities, attractions, and experiences.
Arival Path to Purchase: Today's Tour Taker 1,000 US Travellers, September 2021
WORKING WITH DISTRIBUTORS
This toolkit can help you understand the benefits and implications of distribution, and get you started on growing your business through different channels.
The basic relationship between you and the reseller is simple: the distributor, or reseller, sells your product and receives a commission for the sale.
However, there is a lot of important detail, and executing a mutually
beneficial distribution partnership requires preparation and attention to detail. That partnership will include a contract with important terms and conditions, including:
the commission rates
how many products the distributor can sell
how to handle cancellations and refunds
how payments are made
how the distributor will display and market your tours and tickets
In addition, each visitor experience provider should consider the operational implications of working with distributors. How do you pass information back and forth regarding products and bookings? What resources do you need internally to manage the partnership and incoming business?
THE ROLE OF CONNECTED ONLINE BOOKING SYSTEMS
How do booking systems work?
They are the backbone of tour, activity and attraction operations, providing sophisticated business management systems.
They support live inventory management and reservations across all of a provider's channels (not just 'online'
ones), as well as customer relationship management, pricing, connectivity to distribution partners, and much more.
The booking system provides the distributor with availability information and the ability to book and confirm reservations in real
time, enabling providers to sell tickets through multiple distributors from a single source of inventory.
The provider can then minimise (or eliminate) the risk of overbooking and reduce the need for manual intervention to manage bookings and equipment.
Jargon Buster
CONNECTED ONLINE BOOKING SYSTEM
A connected online booking system is the core business operations system that handles bookings, tickets, vouchers, inventory, customer information and more. These systems may also be referred to as reservation systems, 'restechs' or ticketing systems.
Working with resellers
Here, we explain the benefits and implications of working with resellers so you understand what resellers are, how they work, and how they can help you grow your business. There are many benefits, but there are also costs, not least the commission. This section describes each of these to help you make the right decision for your business and establish the ingredients of a successful distribution partnership.
01 GROW YOUR BUSINESS
This is the primary reason visitor experience providers work with distributors. Distributors can bring in new bookings and customers that a provider, especially if you have a small business, might not reach on their own.
02 ACCESS NEW MARKETS
Distribution partners can help you access a new market or source of customers. For example, a distributor that specialises in an international market such as China or Japan can help you reach people coming from that country. A reseller like Trip.com (formerly Ctrip) or JTB (Japan Travel Bureau), for example, has direct access to their respective markets.
They provide local sales support, offer local payment methods that may not be easily accessible to businesses outside of China or Japan, and they can help tailor your product and guest experience to service those visitors.
This is especially valuable if you have a small team and do not have the resources to create direct marketing campaigns in several countries and different languages. Distribution partners can also
help you target a specific type of customer. For example, if you offer an upscale or luxury tour or service, you may want to partner with specialist tour operators or travel agencies that have a luxury clientele.
03 FILLING SEATS AND SPOTS DURING LOW SEASON
Distributors may be able to help you fill empty seats or sell more tickets. This can be especially valuable during the shoulder season or low season. Many visitor experience providers try to limit their sales through resellers during high season because they have more demand and do not need the extra sales help. One approach is to reduce or disable channels to maximise direct sales and profits. However, some reseller partners may request, or even require
Jargon Buster
THE "BILLBOARD EFFECT"
access to your inventory during high season. This may be one of the trade-offs for you to consider – is it worthwhile to provide some access to supply during high season for more sales support during the off season?
04
A MEASURABLE MARKETING CHANNEL
Measuring the return on advertising and marketing is always a challenge, but distribution channels can offer a simpler means of measuring return. This is because you only pay for the bookings you receive, it is performance-based marketing spend. Some providers think of OTAs as a marketing channel and count the commission spent as part of their marketing budget. Every provider should be able to track each sales channel, both direct and indirect, to check its performance against the others.
Most people search online and visit dozens of sites before making a shopping decision. If your company and brand is visible on a variety of sites including OTAs, this can provide brand reach and credibility. Visitors will see the products and brands through those channels.
05
MARKET EXPERTISE
Distribution partners should be expert in their own marketplace, so they can provide you with advice on products and pricing to help you reach their customers. They have data and information about what is performing and where the market is heading and will develop their products to fit those demands and increase sales.
Some OTAs, for example, provide data to visitor experience providers on what kinds of products customers are searching for, or what kinds of features make a product more likely to be booked.
For example, Viator has continued to emphasise the importance of offering last-minute availability and booking, because of an increase in visitors searching and
choosing to take a tour within 24 hours of the experience.
Inbound and holiday tour operators specialising in some markets should provide you with key trends and insights on what their customers are looking for. This could include changes to your product such as group sizes, departure times, preferred food and beverage components, or other suggestions.
Key Resource
Find out more with additional reading from Fáilte Ireland on the market profiles of different inbound visitor segments to Ireland.
Get Research
COSTS AND IMPLICATIONS
While there are multiple benefits to working with resellers, there are some things to consider. Certain costs may arise and there are associated implications when working with resellers which we will outline here.
COMMISSION
The cost of distribution is a key issue when it comes to working with distributors. Costs vary widely depending on the type of distribution channel as well as individual companies. Your distribution partners will always want a lower net rate or a higher commission. You must evaluate the cost of selling your product in that channel to ensure that the channel can be profitable for your business.
You should not have to pay extra fees. Viator does charge a fee to list new products on their marketplace and some OTAs offer additional marketing opportunities (more prominent placement on their website) for higher commissions or on an advertising basis such as the Viator Accelerate programme.
LIMITED CUSTOMER DATA
Distributors may not provide detailed customer data when they make a booking. They may claim ownership of the customer and their data and include terms that limit your ability to communicate with and market to that customer. This could impact your ability to provide customer service and develop detailed reporting and analytics on your visitors.
It is possible to acquire customer information through other means, such as capturing data on site when your visitor arrives, as well as through waivers.
Most online travel agency (OTA) contracts prohibit you from marketing directly to the customer who booked your experience through the OTA. So, while nothing stops you from collecting visitor information when your guest arrives, make sure any follow-up communication does not conflict with the terms of your partner agreement.
Jargon Buster
LOWER NET RATE
A rate below your retail price which the reseller can mark up.
COMMISSION
A % of total retail sale paid to the reseller.
NEW PARTNERS
You should evaluate the additional costs associated with working with a reseller partner, such as marketing costs, support and customer service, payment processing, and other internal costs for you to manage the partnership.
Key Resource
Find out more about the Viator Accelerate programme.
Explore Viator Accelerate
CUSTOMER SERVICE AND SUPPORT IMPACT ON YOUR BUSINESS
As with the ability to collect customer information, a distributor will usually provide support to your guests. Depending on whether the distributor is online or offline, they may provide the guest different support:
1 OTAs provide support via email or an FAQ section about your offering.
2 Offline distributors such as package holiday operators or travel agencies may provide more in-person support (this may depend on how integrated your offering is with their overall tour package and service).
This can be positive and reduce demands on your customer service staff. However, you must ensure your distribution partners have the information they need to answer questions about your
products and services. One way to approach this is to provide an easy-to-read FAQ document to your distribution partners. This could help you address any queries they may have.
For some providers, it can help to allow pre-sales customer support from a distributor as it reduces the need for back-office support.
TERMS & CONDITIONS
These are all the contract terms that govern how the reseller can sell your product, as well as obligations you may have as the supplier. They typically address topics such as the “cut-off” window (how close to a tour departure can a distributor sell a ticket), cancellations and refunds, payment terms, insurance requirements, and more. Carefully review the terms and conditions of each contract and make sure that they are acceptable to your business. If they are not, ask for a change!
Contract terms to consider
Whether you get paid if the customer is a no-show.
Payment terms – how often and when you will get paid.
When customers can cancel – cancellation policy.
Rescheduling guests when date changes are requested.
Use of your brand name in online advertising.
Whether you get to determine the pricing of your products.
Rate parity or lowest price guarantee.
PROTECTING YOUR BRAND
In most distribution channels, your brand is hidden. Distributors do this for different reasons –multiday tour and package holiday tour operators may want to include the experience in their own branded tour experience. Another reason is so customers will book with them rather than booking directly with you.
If you are a provider with a well recognised brand, you may be able to negotiate for more leniency. However, the distributor makes this decision.
Many distributors edit or rewrite marketing content and experience information provided to them to fit their house style, reducing the ability to build a brand further. You need to
ensure these changes accurately reflect the experience on offer.
MANAGING THIRD-PARTY REVIEWS
Many distributors, especially OTAs, enable, collect, and publish user reviews of supplier products. Some take a hands-off approach, leaving it up to the supplier to monitor and respond to reviews; others will call supplier attention to unaddressed negative reviews, and others will do the monitoring for you. Regardless of what the distributor does, you must make sure you have a process in place to track those reviews and respond when needed. Remember that all customer feedback can be useful in continually improving the guest experience.
Experiences with bad reviews hurt the reseller’s brand and increase the level of support they must provide. Most will downrank providers with
poor reviews in their listings. OPERATIONAL IMPACTS OF WORKING WITH
MULTIPLE TRADE PARTNERS
When choosing what channels and partners to work with, each step should be managed, staffed, and resourced. The requirements of each channel or partner can vary.
This is where having the right technology and booking system in place can be critical. Modern booking systems should be able to support your business in connecting with distribution partners and managing bookings and workflows. Your goal should be to automate as much as possible and to ensure that all booking sources, both offline and online, are managed in a single system.
The connected distribution landscape
This section describes the structure of the connected distribution landscape, describing the three main elements: supply, connectivity, and distribution, with examples and definitions for each component. We will discuss how to connect with distributors, the various distribution channels available and examples of resellers.
1. TYPES OF VISITOR EXPERIENCES
Visitor experience providers are operators or suppliers of experiences, who own and operate the tours, activities, attractions, events and more.
01 ATTRACTIONS
All types of ticketed and free attractions, such as museums, zoos, amusement parks, monuments, and landmarks.
02 ACTIVITIES
Any organised activity such as snorkeling, wellness, skydiving, educational or cultural classes, sporting activity (golf, tennis or skiing for example) or recreational activity (examples include escape rooms, miniature golf, zip line, bike or gear or bike rental).
03
DAY TOURS
Providers of tours and excursions in destination, whether by bus, car, boat, plane, or foot. Tour providers in the context of visitor experiences refers to day tours who operate within a destination and should not be confused with holiday, packaged, or escorted tour operators, which
offer full travel vacation packages with flights, accommodation, and experiences.
04
EVENTS
Performing arts, sporting events, or other non-recurring ticketed events (e.g., fairs or festivals)
that the visitor attends as a spectator. Many travel resellers do not focus on offering events because they present challenges for travel distributors (events create unique requirements that some travel distribution systems can’t support).
3 KEY ELEMENTS OF TOURISM DISTRIBUTION
1. Visitor experience providers
Attractions Activities
Day Tours Events
2. Connected distribution methods
Consumer Booking Portal
Reseller Booking Portal
Back Office Booking Portal
API Connections
Independent Channel Managers
3. Distribution channels
Direct (website, phone and ticket office of operator)
Multi-Attraction Passes
Non-travel Channels
Online Travel Agents (OTA)
Tour Operators & DMCs
Travel Industry Resellers
2. CONNECTED DISTRIBUTION METHODS
Here, we discuss how visitor experience providers make products bookable through resellers and online directly to consumers. Connectivity is becoming increasingly automated to make the process of handling bookings and payments between suppliers and resellers more efficient, and here are some of the methods.
01 CONSUMER
BOOKING PORTAL
This is your website or online booking facility for visitors to book a tour or buy a ticket online directly with you or your business. This could be a booking engine integrated with your website, or a form of embedded white label or iframe method powered by your online booking system.
02 RESELLER BOOKING PORTAL
This is an online booking facility integrated with your booking system that enables tour operators, DMCs, hotel concierges and other resellers to access and book your tours or experiences.
A reseller portal would let you set up specific accounts for each reseller with products, prices, and commission rates for that reseller.
03 BACK-OFFICE
BOOKING PORTAL
This is an online booking facility integrated with your booking system that allows staff in your call centre, ticket office or elsewhere, to create and manage bookings manually on behalf of individual visitors, groups, or resellers.
04 API CONNECTIONS
An API, or application programming interface, is a mechanism that allows your online system to communicate with other systems to facilitate bookings. APIs send information back and forth on inventory and pricing, bookings, customers, and more.
APIs increasingly represent the future of distribution, as resellers want suppliers to connect via an API and most online booking systems offer APIs into the major online resellers. A tour or activity supplier that does business with certain resellers should consider an online booking system that has robust API capabilities.
05
CHANNEL MANAGERS
This is a technology service that enables connectivity to multiple distribution channels through a single API. Many booking systems include ‘built in’ channel managers but some providers may want to access other channels which their booking system is not yet connected to.
One option is to use an independent channel manager which would enable providers to access multiple distribution channels through a single API connection – including, in some cases, tens or even thousands of potential resellers. Since they are connected to multiple providers and products held on different booking systems, independent channel managers unlock new opportunities for distribution.
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CHANNEL MANAGEMENT COMPANIES
Companies offering channel management include Gateway Galaxy Connect, GlobalTix, Ingresso, LIVN, PrioTicket, Redeam and Rezdy. Magpie Travel offers channel management specifically for tour content (descriptions or photos, etc.).
A tour or activity supplier that does business with certain resellers should consider an online booking system that has robust API capabilities.
Your website or online booking facility allows visitors to book a tour or buy a ticket online directly. ” “
3. DISTRIBUTION
Here are some of the many distribution channels for tours, activities, and attractions:
DIRECT (B2C)
Direct, or direct to supplier, includes offline (over the phone, or in person at a ticket office or counter) and online (a provider’s website or mobile app). This is where a customer visits your website to book or walks into your venue and purchases a ticket.
AT A GLANCE: Direct Offline: Phone and email Direct Online: Website Direct In-person: Walk-in
ONLINE TRAVEL AGENCIES (OTAS)
OTAs primarily sell directly to consumers online. Example companies include Viator, GetYourGuide, Klook, Musement, Tiqets and many others.
TOUR OPERATORS & DMCS
Traditional holiday package companies, escorted tour operators and local DMCs, or destination management companies, which put together travel packages including flights, accommodations, and ground transportation and activities in-destination.
They may sell those packages to visitors directly, as well as to other travel companies (OTAs and travel agencies for example). TUI is an example of a package tour operator.
B2B DISTRIBUTORS
Like OTAs but focus on selling through other businesses or providing white-label activity booking options through another
website, such as an airline, hotel, or credit card rewards program. Examples here include HotelBeds, Holibob and Servantrip.
MULTI-ATTRACTION PASSES
Passes that provide access to multiple attractions or activities in a destination. They are increasingly popular and provide visitors with two key benefits:
1 A discount to the standard ticket price (if the visitor were to purchase tickets to each attraction separately) and
2 The flexibility to visit the attraction whenever they want on their trip. However, some pass providers do not have API connectivity or support more advanced requirements such as timed entry.
TRAVEL INDUSTRY RESELLERS
As demand for activities and experiences grows, more travel companies are seeking to offer them to their customers. This category includes travel companies that also resell tours, activities, and attractions: Hotel concierges are still a significant source of bookings for many visitor experience providers even as more visitors book online.
Hotels and airlines are increasingly offering tours and activity bookings through their websites and apps, often through a partnership with an OTA or B2B distributor.
DMO (destination marketing organisation)
is typically a non-profit entity funded through a public-private partnership to drive inbound tourism to a destination. Some DMOs have reservation desks or offer attraction tickets and tour bookings at their visitor centres or online.
Ticket wholesaler or reseller
These are companies that contract with attractions and other suppliers to resell their tickets or tours.
Travel agency
Despite the rise of online booking, traditional travel agencies continue to play a key role in cruise sales, international travel, luxury travel, and more complex trips.
Local day tour providers often include attraction tickets within their tours, and they are increasingly forming local partnerships to cross-sell their products.
NON-TRAVEL INDUSTRY SELLERS
These are sales channels that are not directly a part of the tourism industry but may provide valuable access to other customer segments. These could include companies that provide discounted tickets and rates into company employee benefits programmes, corporate groups (for example team offsites and activities), affinity groups (students, camps, religious groups), and gifting sites, such as Europe’s Smartbox or Virgin Experiences.
Key Resource
Check out the Arival Guide to Multi-Attraction Passes to learn more about how to work with them. Get Guide
It starts with tech
Connected distribution requires the use of certain technologies to be successful. Keep reading to find out how to get more from your tourism tech.
WHY BOOKING SYSTEMS MATTER
We want to ensure you have what you need to take advantage of connected distribution. These include Reservations Systems, APIs, and the Tech Essentials of Connected Distribution.
Online booking systems, reservation systems, booking software, and
other similar terminology describe what can be classified as “Online Booking Systems.” There are more than 100 vendors of online booking technology.
The purpose of all these solutions is to automate manual tasks, while improving the organisation of
the operation. In most cases this software becomes the backbone or the core of an operation. This technology provides much more than just a booking widget or shopping cart. A good online booking system provides essential management tools for the everyday operations of the business.
It starts with tech
11 BENEFITS OF USING A BOOKING SYSTEM
01 DIRECT BOOKING WEBSITE
A booking website or widget integrated directly with the provider's own website to facilitate customer bookings.
02 BACK-OFFICE BOOKINGS
The ability to manage bookings made via a call centre or through a direct point of sale such as a storefront or activity desk.
03 PRODUCT MANAGEMENT
To book products, they must exist in the booking system. Most booking systems now act as a single source of truth for product data including product descriptions, photos, and pricing.
04 RESOURCE MANAGEMENT
Supports and informs staffing, guides, equipment allocation and scheduling.
05 DISTRIBUTION
Can offer an Application Programming Interface (API) connectivity to major resellers such as Viator, GetYourGuide, and others. This connectivity is a direct programmatic link between the booking system and the reseller allowing availability and booking data to flow between the two systems.
06 PROMOTIONS AND COUPONS
Can include the ability to create date-based promotions or coupons to incentivise bookings.
07 TRACKING AFFILIATE SALES
Many systems support the ability to create unique affiliate links that can be provided to sales partners such as hotels or concierges. Sales made through these links can be attributed back to the sales partner who receives a commission or incentive payment.
08 MESSAGING
The ability to email or SMS customers before and after the activity to ensure critical information is shared in a timely manner. For example, sending meeting point information on the day of a booking.
09 REVIEWS AND CUSTOMER FEEDBACK
The ability to capture customer feedback after a tour or activity and post those reviews publicly. This may be done by having reviews
Key Insight
fully integrated into the system or by connecting to a third-party review platform and potentially back to your website.
10 ACCOUNTING
Many systems support advanced reporting and accounting capabilities. This allows you to manage aspects of your business in a single system rather than relying on additional software. Some systems may support invoicing, accounts receivable, and reconciliation functions.
11
REPORTING
Most systems now support reporting that allows a business to analyse booking data, costs, and trends. These reports are particularly useful when reconciling bookings from distribution partners against reports provided by third parties.
A SINGLE SOURCE OF TRUTH
In addition to the benefits mentioned, the booking system serves as the single point of truth for all your product information and inventory availability and confirmed bookings at a single point in time. This means that your staff, wherever they are, should be able to access the system and have real-time, accurate information about any tour, booking, resource, customer, distribution partner, financial transaction, or other aspect of the business.
WHAT IS CONNECTIVITY?
In the connected distribution landscape, connectivity is how visitor experience providers enable distributors to book their products and exchange information on products, bookings, and customers.
One of the key benefits that booking systems bring is the ability for providers and resellers to exchange that information through automation. For example, system-to-system connectivity enables resellers to check realtime availability. The booking system manages all the timeslots, departure times and capacity for any given time and date.
When a reseller has a customer trying to purchase a product, the systems talk to each other (via an API) to check if there is availability for a specific number of guests.
Once the booking is made, the reservation information is sent directly to the system, ensuring that these slots can’t be sold again. This is particularly critical as many sales are made last-minute through mobile phones.
The right technology makes it much easier to sell every slot to maximise revenue. Hotels and airlines have used systems like this for decades.
Jargon Buster
WHAT'S AN API?
An API is the acronym for Application Programming Interface, which is a software intermediary that allows two applications to talk to each other. For example your reseller may be able to 'talk' to your booking system via an API.
Digital connectivity has revolutionised travel and will continue to do so. The easier it is to transfer information between a visitor experience provider and their sales channels, the more efficient the process becomes. Most resellers want “connected” providers because it eliminates the need for manual work in the reservation process.
The costs of connected distribution
Distribution, whether it is through a traditional travel agency or via a marketplace, comes with costs. Those costs are sometimes fixed listing fees or variable commissions. We will outline the costs you can expect as you distribute your offerings through a variety of channels, including the less common costs such as the cost to your brand and customer service implications.
Digital connectivity has revolutionised travel and will continue to do so.
AVERAGE COSTS PER CHANNEL
02
PACKAGE TOUR OPERATOR
01
TRAVEL AGENCY
Some markets are heavily influenced by travel agencies such as China and Germany. As such, you may find that working with a travel agency, especially ones that specialise in travel to Ireland, may be a good fit for your business.
In general, travel agencies ask for a net rate when offering your tours to a customer. This is primarily because the travel agent will act as the merchant of record processing the customer’s credit card and bundling your product as part of a larger itinerary. Expect this net rate to be a 15-30% discount off the retail rate of the offering. In many cases, travel agencies may ask for credit terms, especially if they are a higher-volume operation. To reduce your administrative costs, offering your tours via an agency website where agents can pay for your tour at the time of booking is a recommended approach.
Like travel agencies, inbound or outbound tour operators will request a net rate of 15-30%. You can treat tour operators as specialty travel agents and use a similar programme for both. It is important to differentiate between them however, since they tend to sell your products in different ways. Tour operators tend to be highly specialised and will bundle your products into group packages. Some operators may request a lower net rate as they also sell through travel agencies and must pay commission to those agencies.
03
ONLINE TRAVEL AGENT
(OTA) Online travel agencies such as Viator, GetYourGuide, Expedia, Tiqets, TUI Musement and others have played an outsized role in the online distribution landscape primarily because of their brand impact and large marketing budgets. Many OTAs have global reach and market to consumers in international markets that may be too expensive or difficult for local visitor experience providers to reach by themselves.
Typically, the OTA will market your tours directly to consumers, collect payments, and handle presale customer support. In exchange for this, they require a 15-25% commission on the retail price of the tour. Since the OTA collects payment, they reconcile with the supplier on a weekly or monthly basis depending on volume.
04
BOOKING SYSTEM MARKETPLACE
Some booking systems now offer their own reseller platforms which allow interested parties to become resellers of tours directly managed on their platform. For example, the travel website Kayak works with FareHarbor, the online booking system, to access the tour products in the FareHarbor Distribution Network to sell them on Kayak. In addition to Fareharbor, other booking systems including Bookingkit, Bokun, Rezdy, and Peek also offer marketplaces within their platforms.
Some businesses, such as local tour companies or destination marketing organisations, use booking systems to create micro OTAs to focus on a specific destination. These platform marketplaces charge a commission. The most common range is between 15-25%. One example is the Bokun system in Iceland, used by local agencies and hotels to offer tours and experiences in the country.
05
DESTINATION MANAGEMENT COMPANY (DMC)
Destination Management Companies are local resellers who work with local suppliers to offer tours and activities to visitors already in the destination. Many DMCs will run concierge programmes with local hotels or set up activity desks at tourism hotspots. They may offer transportation services as a separate service and provide a modified version of your product that includes transportation to differentiate their service. Some may offer bundled products that include transportation and several products from different providers. DMCs act in a similar manner to tour operators and can be managed in a similar way. Depending on the volume of customers a DMC may be able to provide, commissions can range from 10-40%.
06
CRUISE
SHIPS Cruise companies have a captive audience for shore excursions. Because of the high cost of internet access at sea, cruise guests tend to book in advance of their cruise, or they book directly with the cruise company. The cruise company will contract with providers in the same way a travel agent, tour operator, or group sales agent might. The cost for partnering with a cruise company is on average 40%. In addition to the cost, the volume of guests that a cruise ship provides at port can cause logistical problems for providers.
07
COUPON SELLER
Discount coupon sellers have changed their model over time, but the essentials remain the same. They require the business to offer a discount on the service, in some cases up to 50% off, and then they take a commission of 1025% on the remaining 50%. More recently, some have reduced their discount requirements because the costs associated with this distribution method are high. If you choose to work with a coupon seller, it is recommended that you only do so for a specifically designed product with sufficient margin to cover the costs. In addition, the sales through this channel can act as a vector for upselling or to attract repeat customers. International inbound visitors generally do not visit destinations repeatedly and do the same activities in the destination. Coupon sellers are not particularly effective for building repeat customers and should only be used if you have a significant local clientele. The
ADDITIONAL COSTS
It's important to understand all the costs associated with connected distribution. Here we look at additional costs.
CREDIT CARD PROCESSING
If you are taking payment, whether from the distribution channel or the customer directly and you are the merchant of record, you will pay a credit card processing fee. This fee is usually around 2–2.5% of the transaction value, deducted before it comes into your bank account.
BOOKING SYSTEM
Some booking systems will charge a processing fee when you use their system to manage a booking. If the booking comes through an agency login directly into the system, the fee may be different than if the booking is made through a customerfacing front end or is processed through an API (system to system) connection. The fee will range from 0 –2%. Some booking systems charge a fixed fee of a few euros.
Indirect Costs
DIGITAL MARKETING
Online resellers use digital marketing to drive customers to their website. They buy ads on Google as well as use search engine optimisation strategies to rank highly for keywords specific to your products as well as your brand. This results in added costs
CHANNEL MANAGER
Channel managers are platforms that connect many resellers to a single connection. Examples include LIVN, Redeem, PrioTicket and several others. This should make it easier to manage multiple relationships without having to make separate connections with each partner. If you choose to use a channel management system to manage your distribution connections, you may have to pay a processing fee on a per booking
in marketing if you choose to compete with the OTAs for the same customers.
ONLINE REPUTATION
Resellers like TripAdvisor and GetYourGuide solicit their customers for reviews. These reviews help the products on
basis. Some channel managers charge a flat monthly fee for their service while others charge on average 2% per booking. The volume of bookings you expect through your connected channels will help you determine the most cost-effective solution for your business. The Channel Managers section in Chapter 3 of this toolkit provides an in-depth discussion of channel managers and how to evaluate whether they are right for your business.
their websites to rank better in online search engines and increase the likelihood that customers will book on the distributor website. You must therefore spend more on advertising if you want to compete for direct sales from customers online.
THE OPERATIONAL COSTS OF MANAGING DISTRIBUTION
There is more to consider than commission when evaluating the cost of distribution. You must also consider the impact on your staff and other resources when you add a distribution channel.
Your operational costs depend on how many channels you choose to manage as well as managing the automation. Some channels such as OTAs, those managed through a reservation platform, and those that are available through a channel manager, may require little to no ongoing maintenance other than periodic product updates or price changes.
Other channels such as a travel agency or tour operator programme may require more administration. If you have large travel agency client accounts, this will often require a dedicated sales manager (usually referred to as a trade or group sales manager) responsible for managing all group sales or those for trade partners.
Often, these relationships require dedicated accounting, invoicing, and reconciliation processes that are generally not as well automated in traditional online booking systems. If a dedicated employee is required to manage
your distribution, the costs associated with that employee should be included in the overall cost calculation for distribution through those specific channels.
In addition to additional human resources, there may be additional customer service costs. Resellers are generally not well positioned to provide post-sales or pre-trip support and often do not have the ability to send the same detailed pre-trip communications to customers who book directly. This may result in an additional burden on customer service staff if reseller or OTA customers call or email for assistance.
MEASURING THE COST OF DIRECT DISTRIBUTION
Direct distribution or direct bookings from consumers to you are recognised as the least costly type of booking. But this is often misunderstood and not correctly calculated. Businesses need to understand what the actual costs of direct distribution are and how to measure the costs when compared to other distribution methods.
MARKETING
Consider costs associated with direct-to-consumer marketing. These costs may include traditional (print, television, radio)
as well as digital marketing, for example Google Ads, social media channels, email marketing and other digital marketing channels. You should also include the internal costs of creating and managing those advertising campaigns in addition to the direct cost of purchasing ads.
SOFTWARE
Include software related to direct distribution. For example, if your booking software charges a subscription fee or per booking processing fee, that should factor in your costs.
If you pay for review management software, include these costs also, as product reviews have a direct impact on conversions. Do not include software unrelated to sales, for example waiver or accounting software.
ADMINISTRATIVE
If you have staff dedicated to direct sales and marketing, consider their costs in the overall cost of direct distribution. If part of the staff person’s time is also spent on managing other distribution channels, include the portion that is relevant.
Businesses need to understand what the actual costs of direct distribution are and how to measure the costs when compared to other distribution methods.
Advantages of digital distribution
In an increasingly connected world, it is vital to have a distribution strategy that includes a variety of channels. It’s time to recap on the multiple benefits associated with distribution.
ACCESS TO NEW OR EMERGING MARKETS
Large distributors such as the OTAs have a global presence and reach into markets that an individual visitor experience provider may not have access to.
LOCALISATION & TRANSLATION
In addition to new markets, distributors have the resources to translate and localise their content to support global customers. This often includes live customer support in local languages, something few providers can afford on their own.
ACCESS TO DATA
Distributors have access to vast amounts of data to help visitor experience providers understand where and when their customers are booking. In addition, many share follow-up reviews and feedback with providers to continually improve the customer experience.
INDUSTRY EXPERTISE
Distributors often work with providers to help them understand trends in the market and to develop or modify offerings to meet market demand. By not distributing, you lose these potential benefits but in addition to the benefits of distribution, it is
important to discuss the costs of not having proper connectivity with your partners. Some common costs associated with a manual or partial connection (non-API) include:
inability to process bookings in real-time (request-based bookings)
increased staffing costs
increased booking errors
increased customer service demands (pre- & post-sale)
reduced booking volumes
Assessing your connected distribution needs
Assessing your connected distribution needs
In this section you will learn how to assess your current needs with regards to connected distribution. Based on your understanding of the first part of this guide, think about what you need to manage connected distribution as part of your business.
CHECKLIST 1-8: PRODUCT DATA READINESS
If you answer some of the checklist items 1–8 as “Poor, needs work”, we recommend you address these issues before proceeding with a distribution strategy. Although you do not need to be “excellent” at everything in this checklist, having the basics in place is critical to your success. This is important when it comes to having your product information in a format you can easily share with distributors, whether they are connected or not.
CHECKLIST 9-12: BOOKING SYSTEM READINESS
If you answered “Poor, needs work” for any of the items listed 9–12, consider re-evaluating your booking software or system. Some systems are particularly good for direct selling but may not have the distribution capabilities you require to effectively execute a distribution strategy.
CHECKLIST 13-19: BUSINESS PROCESS READINESS
Items 13–19 outline your business readiness for distribution. If you answered “Poor, needs work” for any of these items, your business may not be ready to manage the additional internal requirements for distribution. Remember that just because your booking system supports distribution, you may not have the resources to manage the additional administrative burden.
CHECKLIST 20: OVERALL READINESS INTENT
If you answered item 20 with “Good” or “Excellent” but have not addressed the other items in the list, this may signal a strong desire to distribute but you may have work to do. The following sections in this guide will help you address these needs, so your intention and execution align.
Key Resource
Download the assessment Excel sheet to work on this with your team. Get Assessment
PRODUCT DATA READINESS
1 My offerings have full and complete descriptions
2 My offerings have high quality photos and thumbnails
3 My offerings are structured for sale online
4 My offerings have an easy-to-understand pricing structure
5 Customers can view detailed information about my offerings on my website
6 Customers can check the live availability of my offerings on my website
7 Customers can easily book my offerings on my own website
8 Customers can easily pay for a booking on my website
PRODUCT SYSTEM READINESS
9 Our reservation software is modern and has the capabilities we need to sell directly
10 Our reservation software has the capabilities to support our distribution needs
11 Bookings require little to no human interaction to process
12 Payment for online bookings does not require any manual intervention (automatic processing)
BUSINESS PROCESS READINESS
13 We have people responsible for managing distribution partnerships
14 We understand the accounting implications of distribution partnerships
15 Our business is ready to manage the accounting and bookkeeping requirements of distribution partnerships
16 We are ready to get more customers
17 We have the resources to service customers in different languages
18 We have the resources to manage the increased customer service requirements of distribution
19 Our offerings are priced so that they include ample margin for resellers
OVERALL READINESS INTENT
20 Overall, we feel ready and capable of managing a distribution strategy that includes both digital and manual distribution
NEEDS WORK GOOD, CAN IMPROVE EXCELLENT, WORLD CLASS
Next steps
Congratulations, you've made it to the end of this chapter. At this stage you will have a good understanding of connected distribution and how it can benefit your business.
Now that you have started your journey, it's worth noting that this guide is not meant to persuade you one way or the other. The decision to add digital distribution must be your own, taken with consideration for your resources, budget, and technical capabilities. To continue on your journey, please explore Chapter 2 and
Read more
CHAPTER 2
Understanding resellers, partner channels and getting your products online-ready
Chapter 3. And of course, you can always reach out to your digital support team for help as you go.
CHAPTER 3
Understanding technical considerations and booking system requirements