Tourism Export Council New Zealand & Tourism Distribution Channels July 2015
Tourism Export Council who are we, what do we do? Founded 1971 – Private sector 50 Inbound tour operator members (ITOs) 210 Allied member ‘product suppliers’ Commercially focused – Business 2 Business Promotes & sells your product outside NZ TECNZ “buys” your product in NZ TNZ RTO’s TIANZ Qualmark Promotes New Promotes your Shares A business Zealand region in New information assessment Zealand and system & mark of Advocacy internationally quality Business tools 2
Why is tourism considered an export industry? Tourism, like agriculture is an export sector industry but works slightly differently: • The product is still developed in New Zealand (just like the apple) • It is sold offshore (like the apple) • It is purchased by a consumer in an offshore market (again like the apple) • BUT it is experienced in New Zealand and therein lies the difference IRDs definition of ‘export’ is a non -resident who purchases a product or service from New Zealand
NZ Top Export Sectors Source : Tourism Satellite Account 2014 Note: Up until 2009, Tourism was the number 1 export sector for New Zealand
A Guide To Working With Inbound Tour Operators
A Guide To Working With Inbound Tour Operators Contents Page:
Traditional Distribution Channel
How does an international visitor book? OVERSEAS OVERSEAS OVERSEAS NZ INBOUND NZ PRODUCTS VISITORS TRAVEL AGENT WHOLESALER TOUR COMPANY Accom, Transport, Act & Attr 10% commission 10-15% commission 5-10% commission Pay 25-30% commission
A kiwi overseas holiday example
Modern Model of Distribution
PRICING Managing the Business Mix When each commission level is considered, it may seem that agents receive a large proportion of your takings, eroding your profits. It is important to consider the volume of international business coming from each channel as a percentage of your total business, as well as the benefits of working with the international travel distribution system. Your trade distribution strategy should allow for a business mix which will meet your volume and profit targets. The diagram below shows how a commission structure could work. If the supplier honours pricing as per the distribution system and the supplier receives an equal one third of their business from ITO’s, wholesalers and direct from consumers, the average commission works out at 16.67 per cent. You pay You receive BOOKING CHANNELS • Direct – through front door, website and may include domestic • Retail – via i-site, accom providers, other operators • Wholesaler – Anzcro, Grand Pacific Aust • Online – OTAs and aggregators • Inbound – NZ ground operators
Benefits of working with an ITO ITOs have hundreds of downstream relationships with off- shore travel agents. They will do your international marketing for you. Working with an ITO can bring you: • bulk bookings & repeat business • on-going (series) bookings • conference & event bookings • confidence if any adversity should occur eg. Chc • enjoyment being part of the tourism industry
How to work with an ITO? Do your homework: Work with your RTO who will work with ITOs Visit their website/brochures - check their itineraries ahead of time to determine: Who are their customers? Check their age and if any cultural considerations How long do they spend in your area and what do they do? How many passengers per group or are they FIT/SIT customers? Know their business before you tell them about your business!
How to talk to an ITO? 1- 2 minute ‘elevator talk’ 1. Describe your product/event/activity using images or what is new this year 2. How long does it take to experience your product/benefit of your accommodation 3. How many can you accommodate? e.g. 2 groups x 20 pax in 3 hours 4. Can you package with other operators? 5. Provide commissionable price
ITOs have adapted • Change from % group to % FIT (self drive) • Upgraded technology and work with tourism aggregators eg. Expedia, Wotif, Booking.com • Online travel agents (OTAs) able to have membership to TEC • Retail/promote other ITO product • New niche ITO start ups eg. eg. Education, Golf, Luxury sector
Q10: What percentage % of your business is: INBOUND TOUR OPERATORS Average rating Member survey Dec 2014
Q9: What percentage % of your business is: ALLIED PRODUCT SUPPLIER MEMBERS Average rating Member survey Dec 2014
ITOs working around the world on your behalf 35 30 25 Number of 20 TEC inbound companies working in 15 market 10 5 0
ITOs and Emerging Markets
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