Travel intermediaries are some of the most critical agents in the tourism distribution channel. Thanks to tourism intermediation, among other factors, the travel and tourism industry is one of the fastest-growing industries worldwide.
It’s also one of the most resilient industries. Although it took a massive hit due to COVID-19 travel restrictions, which made its revenue plummet by more than 50%, the market is expected to recover and start growing again.
According to Statista, the travel and tourism market is expected to reach $385,865 million in revenue in 2021. If it shows the projected CAGR of 24.03%, it will reach the market volume of $913,275 million by 2025, generating 72% of total revenue through online sales.
How do travel intermediaries help the market grow? What are they, really, and what is their role in tourism? Read on to find out.
What Are Travel Intermediaries?
The simplest definition of a travel intermediary is a “distribution agent that participates in the sale and/or brokerage of travel and tourism-related products and services.”
Travel intermediaries act as middlemen between suppliers and consumers, buying and reselling products and services related to tourism, such as packaged holidays, tickets, tours, accommodation, car hire, etc.
For instance, a B2B tour operator can sell one-day tours to a travel agent, who then sells them to consumers.
Travel intermediaries can act as middlemen between multiple parties in the tourism distribution channel, resulting in several stages in the supply chain, including principals, wholesalers & aggregators, retailers, and consumers.
For instance, a bed bank that buys accommodation products can sell them to other bed banks, tour operators, travel agents, airlines, and online travel agencies (OTAs).
Travel intermediaries are key agents in the tourism distribution channel
Using Hotelmize, travel intermediaries can increase their profits by up to 40% automatically.
Who Was the First Tourism Intermediary?
The first tourism intermediary was Thomas Cook, a famous English businessman and founder of Thomas Cook & Son (later Thomas Cook Group), the first travel agency as we know it.
Thomas Cook was a passionate advocate of the temperance movement. Back in 1841, he wanted to attend a rally in Loughborough, so he made a deal with the Midland Railway to organize a group tour for a commission. His return rail journey was an excursion that made history, leading to other leisure and commercial trips.
In 1855, Thomas Cook organized the first international tour, offering the first holiday package ever, which included travel, accommodation, and food.
The agency’s successor, Thomas Cook Holidays, bought the brand in 2019 when the company went into liquidation.
What Are the Functions of Travel Intermediaries in Tourism?
The primary role of travel intermediaries in tourism is to provide travel-related products and services to consumers. Whether they offer tours, tickets, transportation seats, accommodation, or any other related service, they purchase them from suppliers and resell them to travelers.
As such, they can perform a variety of value-added functions, including:
- Providing information about the available travel and tourism products and services
- Making reservations and travel arrangements
- Creating travel packages
- Preparing tickets and confirming bookings
- Contacting leads, prospects, and customers
- Buying or reserving products in bulk to resell to businesses or travelers
- Promoting excess inventories
- Reducing customer acquisition costs
Types of Travel Intermediaries
There are two main types of travel intermediaries:
- Wholesalers & aggregators
When it comes to wholesalers & aggregators, travel trade intermediaries can be:
- B2B tour operators – they sell tours to travel agents
- Bed banks – B2B companies that buy bulk accommodation products at a discounted, fixed price for specific dates and resells them to travel agents, OTAs, tour operators, airlines, and other bed banks
- DMCs (Destination Management Companies) or DMOs (Destination Management Organizations) – they sell tours, events, activities, transportation products, and travel packages to tour operators;
- Global Distribution Systems (GDSs) – computerized network systems with availability records from hotels, airlines, travel agencies, and car rental companies, providing real-time inventory access to retailers.
- As for retailers in tourism intermediation, there are:
- Travel agents – brick-and-mortar travel agencies, the main of which are high street travel agents and specialist business travel agents
- OTAs – online marketplaces that allow consumers to book travel products and services and explore travel reviews
- B2C tour operators – online platforms that offer access to OTAs, hotels, car rental companies, and other tourism suppliers.
Examples of Travel Intermediaries
Some of the most popular travel trade intermediaries are Booking, Expedia, Viator, Hotels, Trip.com, Despegar, and Travelocity. Those are some of the top online travel agencies worldwide that hundreds of travel and tourism suppliers have partnered with.
TravTravel and Miki Travel are excellent examples of B2B tour operators, while Exodus Travels, Intrepid Travel, Trailfinders, Holiday Architects, Wild Frontiers, and Selective Asia are their popular B2C counterparts.
If you’re looking for a good GDS, you can’t go wrong with Amadeus, Galileo, Sabre, Pegasus, Worldspan, and Apollo.
As for DMCs or DMOs, some of the most notable include Marketing Manchester, Global DMC Network by JTB Group, Hosts Global, Terra Events, PRA, IVI DMC Enterprises, Terramar, and Ovation Global DMC.
Some of the most popular bed banks are Hotelbeds, Bonotel, Travco, HotelsPro, WebBeds, and Stuba.
Last but not least, some of the most renowned high street travel agents include Cooperative Travel, TUI, and Hays Travel, while TravelPerk and DIB Travel are a few prominent specialist business travel agents.
Negative Impacts of Intermediaries on Tourism
While travel intermediaries help the travel and tourism industry grow, they have posed particular challenges to the market’s infrastructure.
As there are more and more intermediaries out there, many service providers find it challenging to cut through the noise of competition and reach potential customers. That’s particularly true of small and medium-sized businesses that can’t match the big players’ budgets.
Another issue appears with many OTAs remitting occupancy taxes based only on the discounted purchase prices, not on the retail prices. That makes it challenging for hotels to recover the lost revenue, as they apply their occupancy rates to their room’s total prices.
That’s why many governments are stepping in to collect total tax revenues on accommodation and other travel services that intermediaries sell in their jurisdictions.
If you’re looking for ways to increase your booking profits, Hotelmize can help. With our AI-based platform’s price-prediction algorithms, you can unlock hidden revenue opportunities, achieve maximum arbitrage, and supercharge your profit margins.
Book a demo today to see it in action.