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The Retail Travel

Environment

BTEC National

Travel and Tourism

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Introduction

This session covers the start
of 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.

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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.

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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.

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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.

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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/abtasta
tstrends2005.pdf

.

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Types of Travel Retailer

There are three types
of travel agent:

•

multiples

•

miniples

•

and independents

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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

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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

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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.

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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.

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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.

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Future Trends

•

New services offered to counter
the threat posed by the Internet

•

Increased focus on business travel
services

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What Next?

Now go to the Activity to take your
understanding of the retail travel
environment further.