It can be considered that a correlation ofthe price policy with that ofthe firms
which offer Services must be assured due to the heterogeneous structure
of the touristic product.
Taking into consideration the touristic product‘s specificity which is immaterial
and intangible, it is “distributed” only as information, image and its acquisition means
only the access to a future consumption right, confirmed and guaranteed through
a touristic title

Nedelea, Alexandru

A Galileu Revista de Economia e Direito

English

Camões - Repositório Institucional da Universidade Autónoma de Lisboa

GalileuRevista de Economia e DireitoVol. IX, n.° 1, 2004, pp. 49-56Strategies of Price and Distribution in the HospitalityIndustryAlexandru Nedelea'I Price Strategies in the Hospitality IndustryThe price of the touristic product is of a global type, being established bycumulating the taxes of different Services. Taking into consideration the heterogeneousstructure of the touristic product it can be considered that a correlation of the pricepolicy with that of the firrns which offer Services must be assured.1. The high price strategy can be practised in the case of offer exclusivity (whichgives a status and a prestige to the buyer) or in the case of limiting the offer of thecompetition ( for example some products regarding the medicai tourism, the touristicproducts having as a destination The Danube Delta, the monasteries in the North ofMoldavia, the “Dracula” touristic programs etc.).2. The lump price strategy presupposes the comercialization by the tourism agenciesof some complex touristic products including a minimum of obligatory Services(transport, transfer Services, trips, cultural programs etc.) at a certain confort levei.3. The diferential payment strategy presupposes making a difference in price takinginto consideration:a) The volume of consumption: long sejour, groups of tourists - individual touristsand full services-separate Services;b) Consumer segmentation. Thus there can be practised reduced payment for pupils,students, young married, national tourists against intemational ones;c) The tourism form. The contractual payment lower than those applied to the touristson their own;1 Lecturer Ph.D, “Stefan cel Mare” University Suceava, RomaniaGalileuRevista de Economia e Direito50 Alexandru Nedelead) The position occupied by the distribution channel (the direct carrier of touristicServices, tourism agency).4. The bonifications and rebate strategy is adopted by the touristic firms which adjustthe prices of the products in order to stimulate and offer reward to a certain type ofclients: those soliciting a big number of Services, clients who accept holidayarrangements.IL The Distribution Policy in TourismIn the hospitality industry distribution is an important component of marketingmix which consists of a range of activities which take place in space and time whichseparates the one presting the Services by the consumer. It reunites a network ofactions which have the role to offer the touristic products to the consumers and anensemble of relations in which participants in distribution enter (tourists, intermediaries).2.1. The Role of Distribution in TourismTaking into consideration the fact that the tourist firms are conditioned by theeffective presence of the client and that the touristic product cannot be sent to theclient it is necessary a certain attraction of the touristic consumer towards the prestationand consumption spaces of the touristic Services in a certain station or country. Thisrole is played in tourism by the distribution through an activity of stimulation andinforming the potential tourists on the characteristics of the offered products. We cansee that in tourism there is a close relation between the distribution policy and thepromotional one.The touristic product is not often bought by the unexperienced tourists due tothe lack of time and competence regarding the research activities and the contacting ofnumerous market supplies. By reducing the effort which must be made by the consumers,intermediaries fiom tourism are able to group the Services of various suppliers and tosynchronize them in a combination which arise the tourisfs interest.There also must be mentioned that,taking into consideration the tourisicproducfs specificity which is immaterial and intangible, it is “distributed” only asInformation, image and its acquisition means only the access to a future consumptionright, confirmed and guaranteed through a touristic title.GalileuRevista de Economia e DireitoStrategies of Price and Distribution in the Hospitality Industry 51Taking into consideration the distribution role it can be considered that usingthe intermediary agencies in the distributive processes is necessary as the areais oftouristic distribution are at distance from the demand forming area. At the same timethe degree of dependence also rises as the distributors decide upon the structure ofthe touristic Services which they commercialize taking into account the consumers*preferences and not the interests of the providers.2.2. Distribution ChannelsCommercializing the touristic products is achieved either by a direct distributionin which the providers sell their Services to the final consumer or by an indirectdistribution and in this case intermediaries have a great role.Taking into consideration the sezonality of the touristic offer, the firms manifestin some periods a preference for the short channel of distribution and in extraseason,for the long channel.R.C. Mill and A.M. Morrison classify the distribution channels in tourismaccording to the control degree:• The consensous channels are characterized by the fact that none of theelements of the channel exercise any control over the distribution system, theparticipants realising that it is not in their interest to collaborate.We mentionthat in North America and Great Britain the distribution channels in tourismtend to be of this type.• The vertically integrated channels are controlled by a tourist agency or antouroperator.• The vertically coordinated channels by the touroperators. The exercisedcontrol over the channels is due to the contractual or financial arrangementsestablished with the tourism agencies in franchising system.The touristic distribution through direct channels by the providers is specific tothe unorganised forms of tourism, on their own (individual tourists, small groups ofpersons, families, etc.). The touristic Services commercialization through direct channelsallows for a control over the distribution and the touristic producfs characteristics,the price ait which this is sold to the consumers.The short distribution channel is the most appropriate for the simple touristicproducts such as the reservations at the accommodation structures while more complexproducts (circuits, cruises) impose the intervention of a tourism agency oranother intermediary.GalileuRevista de Economia c Direito52 Alexandra NedeleaThe touristic operators organise a system of place reservation,selling by mail,telephone and automatic means (ATM-s for reservations and tickets fortransport companies).At the intemational levei it can be noticed that the explosive development ofthe informational technology implies the use of the telematic distribution channel intourism also. Thus, the potential touristic consumers who are connected to the Internetcan access the sites of the firms which provide with touristic Services in order toobtain information regarding the offer, the touristic products selection and reservationscan be made on-line.The indirect distribution of the touristic Services is characteristic for the organizedand semiorganized forms of tourism. Appealing to the voyage agencies which takeover the task of ensuring the necessary Services the tourist has the possibility toinform himself on the diverse destinations and touristic programs offered by the market,he can compare them, evaluate and then pick up the touristic product that suits hispreferences. Moreover, it has the advantage that it can accumulate all complementaryServices necessary during the voyage at a smaller price and in a shorter time than if itwould have appealed directly to the providers of touristic Services.2.3. IntermediaryTypesThe touroperators (Wholesale dealers) select, assembly, constitute andcommercialize the touristic offer on the market taking the form of some Services. It isestimated that touroperators sell approximately 80% of their products through agenciesand 20% directly. As these voyage producers make place reservations at theaccommodation unities, alimentation, plane they are the beneficiaries of price reductionfrom the providers and this allows them to practise more accessible global prices ascompared to the situation when each consumer would pay on his own all prestations.At the intemational levei the main touroperators can be found in Germany (TIUand NUR own over 50% of the German touristic market, Touristik Union Internationalbeing the greatest travei producer in the world), Great Britain (Thomson, First Choice,Airtours; the first two own over 60% of the national voyage market), France (ClubMediteranee-greatly implanted by the externai market; Nouvelles Frontieres, Sotair)and the United States of America (American Express Travei, Thomas Cook, Cartan).The retailer voyage agencies distribute to the touristic consumers the productsmade of and promoted by the travei agencies. It is estimated that at present over 70,000travei agencies (possessing tourism licence) activate having over 200,000 selling powers GalileuRevista de Economia e DireitoStrategies of Price and Distribution in the Hospitality Industry 53of which 45,000 are from Europe. These intermediaries offer specialized assistance tothe tourists (counselling Services regarding the possible touristic programs, the itinerary,payment). They present the touristic products of the touroperators, commercializeinternai and intemational travei tickets, sell individual Services (reservations, treatment,guide assistance, touristic visa, tourists* insurance, transfers).Another category of intermediaries are: stimulation travei organizers (those whoassembly Services which are offered by firms as a reward to those employees whohave achieved the objectives established by the managers), the reception agencies(localized in the touristic destination regions), congress organizations, selling agenciesofthe transportators (companies which distribute theirown touristic products), touristicclubs, centres of touristic Information, tourism offices, commercial centres (Carrefour,Euromarche, Karstadt), the representing societies of the accommodation unities, thespecialized departments of corporations (for the organization of the personnel traveis),implants (the offices of the travei agencies), banks, the postal system (selling planetickets, travei insurance).Great groups or hotel chains have organized their own systems of reservation byComputer: Intercontinental (Global II), Holiday Inn (Holidex), Ramada (Roomfinder),Marriot (Marsha), ACCOR (Resinter), Meridiens (Alpha 3), Sheraton (Rezervatron),Hilton (Hiltron).The global systems of distribution have been created by the aircompanies and subsequently the travei agencies joined, the touroperators, hotel chains,cruise organizers (Worldspan, Sabre, Amadeus, Galileo, Pars). These systems initiallyaccessible only through tourism agencies connected to these networks have begun todevelop ways of direct access (for Information and on-line reservation) and for touristson their own, by Internet and Minitel.The ubicuity of the Internet offers the possibility of touristic operators functioningwhich are completely virtual (electronic tourism agencies) which do not have personnelor an organized physical structure, the totality of the intermediate operations beingprovided by the Internet.2.4. Distribution StrategiesThe complexity of the touristic market, the offerers* typological diversity and thecompetition among them, the permanent evolution of the tourists* buying behaviorimpose the elaboration of more distribution strategies.From the point of view of the intermediaries* number one can distinguish threestrategical variants of distribution in tourism:GalileuRevista de Economia c Direito54 Alexandrii Nedelea• The exclusive distribution which implies the restriction to a very small nurnberof intermediaries ( even one) which exercise -on a certain market or geographicalarea-the exclusivity of the product distribution or the touristic products, as apriviledge assumed by contractual clauses which reglement the relationprovider-distributor ( for example exclusivity for the benefice of the NipponTravei operator for the “Dracula” touristic program in Japan).• The selective distribution implies choosing and utilizing a limited number ofintermediaries whose activity of distribution is appreciated as being moreefficient than that of the competitors, having the capacity of assuring a highervolume of touristic products sales.• The intensive distribution presupposes utilizing a great number of channelsand intermediaries by whom the touristic Services reach the consumers.On the touristic market a vertical integration tendency of the accommodationServices, transport and distribution is manifested and thus societies capable of assuringall the elements of the touristic offer are formed. In this context the touristic operatorslike Club Mediterranee, Nouvelles Frontieres, TUI, Owners Abroad represent examplesof success of the distribution network integration. The main objectives are to improvethe control over the touristic product, to have advantages from smaller distributioncosts. Thus, the Nouvelles Frontieres products for exa\iple are sold only throughagencies belonging to this network. Taking into consideration the tendency to integratethe direct sale function by the consumers from some touroperators and also from thatof the tourism agencies to organize traveis, we can anticipate the disappearance of thetourism agencies which are totally retailed. The vertical integration requirec someimportant investments in the structures (hotels, holiday camps) and in the means oftransport (planes, buses). The touroperators who own accommodation units andtransport vehicles tend to orient their clients towards their own touristic productswhich explore these capacities. Such an integration example constitutes the Thompsonfirm-the greatest touroperator in Great Britain which owns hotels, air companies(Britannia Airways) and a distribution network (Lunn Poly). Some air transportcompanies have adopted vertical integration strategies by creating their own hotels inorder to be able to propose to their clients complete touristic products (United Airlineshave created the Western International Hotels and Trans World Airlines have createdHilton International). Confronting with financial difficulties the air companies havebeen forced to sell step by step their hotels.The air companies have similarly integrated the travei organization activity andin this context the AirFrance line and Jet Tours touroperator of the companies BritishAirways and Lufthansa are representative. Following the same logic some networks of GalileuRevista dc Economia c DireitoStrategies of Price and Distribution in the Hospitality Industry 55touristic receiving structures have created their own air company in order to insuretheir clients* transport. Creating Air Liberte by Club Acquarius, the vertical integrationprocess Air Liberte -Look Voyages and the acquisition of the air transporter Corsair bythe touroperator Nouvelles Frontieres have followed the same objective and that isexploiting at the smallest price the component of the touristic product distributed tothe consumers.The Accor group reunites Sofitel, Novotel, Mercure, Ibis, Etap Hotel, Formule 1,Motel 6 and it gave birth to the Episodes agency, specialized in short sejours andweekends and also achieving a vertical integration of the Services distribution.On the intemational touristic market we can identify a horizontal integration(concentration) tendency by grouping the tourism firms which exercise identicalactivities. Among the objectives and advantages of such a development a tendency inmaintaining a dominant position on the market can be noticed, a better coordination ofdifferent types of activities, a better position regarding the banks, sales controlanda greater economic efficiency.The adoption a horizontal integration strategy can be found at the levei of:• Hotels and here we can mention the voluntary and the integrated ones whichare also developed as franchise networks ( Holidays Inn, Hilton, Marriott,Choice Hotel, Inter-Continental);• Alimentation units ( Mc Donald‘s, Burger King, Kentucky Fried Chicken,Pizza Hut);• Companies which offer automobiles to be rented (Hertz, Avis, Budget);• Touroperators who have constituted very powerful groups almost in eachcountry: Thomson, Owners Abroad and Airtours in Great Britain, TUI andNUR in Germany, American Express in USA.• Travei agencies, some of them more powerful enlarging the number of salesby integrating another agencies which are not so powerful (Lunn Poly inGreat Britain, Selectour in France and Ask Mr Foster in SUA). The independentsmall tourism agencies disappear step by step losing their clients at the sametime with the development of some big agencies networks which proposemore elaborate touristic products.Despite the fact that the automatic distribution modalities in tourism (ATMs,computerized reservation systems, global distribution Systems) have developed in thelast years the specialists advance the idea that they will not eliminate the intermediariesas the tourists feel the need to appeal to the tourism agencies counseling Services. Aquestion is being raised for the marketers: in what way will the automatization attackmodify the role of the intermediaries within the distribution system in tourism.GalileuRevista de Economia e Direito56 Alexandru NedeleaBibliography:1. Durand, H., Gouirand, P. -Economie etpolitique du tourisme, L.GD.J., Paris, 19942 Foster, D. - Trave! and Tourism Management, Macmillan Education, Hampshire,19863. Gray, H.P. - International Travei - International Trade, Heath Lexington Books,Lexington Maine, 19704. Greene, M. - Hotels 1990. Un marketing nouveau pour l’hotellerie, Ed.Delta&Speces, Denges, 19845. Howell, D. - Passport - An Introduction to the Travei and Tourism Industry,South-Western Publishing, Cincinnati, 19896. Laws, E. - Tourism Marketing, Service and Quality, London, 19917. Lickorish, A. - Marketing Tourism, Longman, Harlow, 1988GalileuRevista de Economia e Direito

Strategies of Price and Distribution in the Hospitality Industry

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