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    Add as FriendThe Retail Travel Environment

    by: Rogers

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    1 : The Retail Travel Environment BTEC National Travel and Tourism
    2 : Introduction This session covers the startof a new Unit of Study: Unit 7: Retail Travel Operations There are links and overlaps with earlier Units of Study, especially Units 1, 2, 3 and 5.
    3 : The Retail Travel Environment A good starting point is ABTA (Association of British Travel Agents). ABTA members account for more than 80% of all holidays and travel tickets sold in the UK. ABTA’s data shows their members employ in excess of 120,000 people in the UK.
    4 : The Retail Travel Environment The three largest firms employ more than 27,000 individuals. In the past 20 years, ABTA membership has fallen. There are now fewer small independent travel agents. The big firms have grown larger, ‘swallowing up’ many of the smaller agencies.
    5 : Recent Industry Data As of February 2005, there were 1,787 ABTA members in total. Many members have more than one outlet (or office). In total, ABTA members have over 6,700 offices.
    6 : Recent Industry Data More than 5,700 of these are travel agencies, over 450 are tour operators and almost 550 are dual members (acting as travel agents and tour operators). Source: ABTA Statistical Trends accessed from http://www.abtamembers.org/research/abtastatstrends2005.pdf.
    7 : Types of Travel Retailer There are three types of travel agent: multiples miniples and independents
    8 : Multiples Multiple travel agencies have offices throughout the UK. These national, sometimes international travel agency groups include firms such as * TUI * First Choice * MyTravel * Thomas Cook
    9 : Multiples Multiples dominate the industry, in terms of proportion of total turnover. They are usually dual ABTA members. They sell a wide range of holidays and other services such as flight tickets, car hire and hotel rooms.
    10 : Multiples Sometimes the multiples actually own the firms which offer these different services. When this happens, it is called ‘integration’. We will cover this concept in depth later.
    11 : Miniples Miniple travel agencies are usually based in regions of the UK. Their strengths are local knowledge of their markets and trusted local branding. Miniples often offer a simpler range of travel and tourism services than multiples.
    12 : Independents Independent travel agencies are usually single travel agencies. They often offer a small range of services, which may be highly specialised. There is a trend for independents to become part of a consortium.
    13 : Consortia ‘Consortia’ is the name for more than one consortium. A consortium can negotiate better prices from tour operators. It may also be able to share marketing costs. This helps independents compete with the multiples.
    14 : Consortia Worldchoice is an example of a travel agency consortium. In this case, each consortium member is independently owned. In 2006, it was estimated that there were 700 independent agents in the Worldchoice consortium.
    15 : Consortia In 2006, Worldchoice and two other groups, Global Travel and Advantage formed another consortium, called Triton Travel. This is the largest travel agency in the UK, with an estimated 15% share of the UK travel agency market.
    16 : Integration in the Retail Travel Industry One of the main trends in the industry is the move towards greater integration. This is where firms join together, through takeovers and mergers, to form bigger operations. Larger firms can achieve economies of scale.
    17 : Economies of Scale These happen where a firm cuts its unit costs by doing things on a larger scale. Larger firms sell more; their costs per unit are lower. It’s often in a firm’s interests to increase the scale of its operations
    18 : Vertical Integration Integration can be either vertical or horizontal. Vertical integration is where firms integrate at different levels of the distribution chain. If a tour operator buys a travel agency, this is known as forward vertical integration
    19 : Vertical Integration In the above case, the tour operator spreads its business towards the customer, down the distribution chain. Where a tour operator buys an airline, this is known as backward vertical integration The tour operator buys its own supplier, up the distribution chain.
    20 : Horizontal Integration Where two travel firms which offer competing services join together, this is known as horizontal integration. The aim is still to make economies of scale. Advantage Travel is a form of horizontal integration.
    21 : Future Trends Current conditions in the retail travel industry may persist or change. Some of these trends can be summarised as follows: Travel agency business becoming dominated by the multiples. Greater concentration of retail outlets in the hands of consortia.
    22 : Future Trends New services offered to counter the threat posed by the Internet Increased focus on business travel services
    23 : What Next? Now go to the Activity to take your understanding of the retail travel environment further.

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