Scott Mehrtens Managing Director Leisure Time Tours Travel Time South Pacific. TECNZ Board Member

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3 Scott Mehrtens Managing Director Leisure Time Tours Travel Time South Pacific TECNZ Board Member

4 Who am I? And why am I talking to you today? I run a family-owned tourism operator business that s been delivering inspirational tours for over 30 years. We are a full-service Inbound Tour Operator (ITO) and Destination Management Company (DMC) for New Zealand, Australia and Fiji. We create innovative tailor-made itineraries and provide quality ground arrangements for international wholesalers, agents and their clients. Group travel Special Interest Independent travel (F.I.T.) Small group escorted tours Incentive travel Privately guided luxury travel

5 As an ITO it s essential we can: build exceptional relationships with suppliers throughout the region/country provide our overseas travel partners with competitive rates, product information and customised tours Put simply We can make your product become part of an internationally-sold tourism package I m pleased to be talking to you today about the Travel Distribution Channel and the part we all play in it.

6 TOURISM EXPORT COUNCIL OF NEW ZEALAND BOARD OF DIRECTORS

7 NEW ZEALAND TOURISM DISTRIBUTION CHANNELS What to expect of your ITO and what they will expect of you

8 WHAT IS AN ITO/IBO/DMC? AKA: Inbound tour operator Inbound operator Destination management company A common misconception An Inbound operator is just a middle man who does nothing to add value to my business and takes a huge cut for doing nothing

9 WHAT IS THE VALUE OF AN ITO? Reality of what an ITO does Promote and sells your product outside New Zealand AND purchases your product in New Zealand

10 SO WHAT DO ITOs ACTUALLY DO? FOR OUR OVERSEAS CLIENTS: Research and recommend product to suit client specific requirements Provide product updates Offer a one-stop-shop to book all NZ product including 24/7 support and one payment Protect space for brochure programs e.g. allotments Prepare and distribute a tariff (all info in one place) Organise client famils (make easier to sell product) Participate in marketing partnerships with offshore clients to promote New Zealand Proactively seek new wholesalers to work with who are often not yet selling NZ Often operate offices overseas to support clients in converting sales/training their staff ITOs often enter emerging markets before TNZ has the funding to do so: - teach trade how to sell New Zealand - introduce your products to new clients

11 SO WHAT DO ITOs ACTUALLY DO? FOR NZ SUPPLIER PARTNERS: Help spread news of your product with our clients and grow your sales Welcome supplier partner visits to update our staff on your product and changes Provide business year round through the variety of markets we cover Provide regular business of many types: FIT, group, series, incentive, special interest Enable easier payments don t have to chase your money down in the back alleys of Timbuktu (assume any credit risk or deal with foreign currency) Invest in your product and ours by visiting our clients in-market sometimes 2-3 times per year to grow the relationships and encourage more NZ brochure space We can easily invest several hundred hours of time and effort before any bookings are made that you don t see and ITOs invest thousands of dollars in international travel costs to achieve all bringing business to NZ and your business

12 WHAT DO ITOs ASK FOR IN RETURN? Wholesale pricing Access to inventory Rates needed 18 months in advance Clear and consistent Terms and Conditions Product information with descriptive text and imagery Same day turnaround for booking/quote requests Vital operational updates (planned power cuts etc.) Be proactive in providing solutions to adapt products for different markets COMMISSION $ But remember. commission is only paid when a sale is made

13 DISTRIBUTION MODEL It is important you understand a commission is a fee you are paying someone else to promote your business. It should be viewed as an investment to generate sales, not as a cost to your business. If you do not wish to pay commission and you want to work with international visitors, the alternative is for you to go direct to each market to generate sales.

14 WHOLESALE DISTRIBUTION CHANNEL Pay 25-30% commission

15 ITOs ARE DIFFERENT Different travel type: Global representation or single market Group coach tours only - Series tours - Ad hoc tours - Special interest & incentive Seat and coach tours (scheduled service) F.I.T. and self drive Different travel client: General sightseeing Premium or luxury Cruise Business Events and Incentives Special interest or bespoke e.g. golf, food Education Family groups

16 PREPARING TO WORK WITH AN ITO? Do your homework: Visit the TECNZ website to check which markets ITOs work in and type of client e.g. group, FIT Visit the ITO website/brochures - check their itineraries to determine: - Who are the ITOs customers? Their demographics? - How long is the itinerary in your area and what do they do? - How many passengers per group or are they FIT/SIT customers? Consult RTO regarding ITOs who work in your region Helpful to visit ITO office or offer ITO staff to famil your product/service/tourism offering Know their business before you tell them about your business!

17 ITOs HAVE ADAPTED: Change from % group to % FIT (self drive) Upgraded technology and direct connect links with suppliers eg. Site-minder, Tour Connect Online booking engines and online tariffs Having to work harder to realise value More detailed in presentation and itineraries Diversified product range and itineraries Retail/promote other ITO product New niche ITO start ups Education, Golf, Luxury sector

18 Distribution into the Future Inbound Tour Operators are reporting record levels of business from all markets, increasing year on year the wholesale channel is certainly not dead! Tourism goes through highs and lows at the moment we are riding the wave Recognise the Distribution Channel and where each player sits Pay commission and/or rebates according to the placement of that player in the food chain Every business wants a good MIX of all types of business, YIELDED to the highest level: - NEWS FLASH ITOs want that too!! - work out your lowest acceptable nett rate and work up the distribution chain from there - don t bow to pressure from Online Travel for inventory access - get your market segment mix right, the price right and work with partners you know and trust

19 SUMMARY BENEFITS OF WORKING WITH AN ITO ITOs do your international marketing for you and act as a sales agent on your behalf Access to new market intelligence, promote at tradeshows and coordinate famils Provide long lead time wholesale bookings which helps you plan in advance and assists with business efficiency Volume bookings and repeat business year round Offer security of working with a New Zealand partner

20 The Tourism Export Council of New Zealand (TECNZ) is a B2B network. Your investment in TECNZ will offer many opportunities to stimulate your business and encourage connections between New Zealand tourism buyers and sellers. If you would like to learn more about TECNZ or would like to become a member, please visit the website: Or contact: Judy Chen Chief Executive Mobile: ceo@tourismexportcouncil.org.nz Lisa Sinclair Tourism Executive Ph: info@tourismexportcouncil.org.nz

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