Relationship between tour operators and hotels

relationship between tour operators and hotels

At times there can be confusion about the difference between tour operators and the various components of your tour such as your hotel, transportation, meals. The interdependencies and power asymmetries in the industrial relations between hotels and tour operators are examined by using secondary. The business relationship between hotels and tour operators/travel agents represents an important aspect of the tourism industry in any destination. This study.

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Khuong suggested some supporting factors, including: Potential critical success factors for hotel-intermediaries relationship. Power issues, exploiting market position and over-controlling practices tend to be serious threats for the relationship. Such market position gives them leverage in their relationship with the suppliers of tourist services, e. Inversini and Masiero [ 42 ] explained that hoteliers tend to adopt direct selling through online distribution channels which in its turn threatens the business of traditional channels, i.

De Jager further added that many travellers prefer to book tourism services directly through the Internet due to easiness and accessibility which minimizes the need for traditional tourism intermediaries.

Research Methodology A qualitative approach was adopted in this study. The survey was self-administrated by the authors who personally delivered and collected the forms to and from the respondents.

The Difference between Tour Operators and Travel Agents - Tenon Tours

The questionnaire form involved three major parts. The second part included one question and aimed to explore the CSFs for the relationship through examining a set of 12 potential CSFs Table 1 on a five-degree Likert scale. The third part consisted of three questions and aimed to identify the factors resulting in unsuccessful relationship by testing 10 potential reasons on a five-degree Likert scale.

The gathered data was checked, coded and entered into SPSS for analysis. The results are shown in Table 2 and discussed in the subsequent paragraphs. Second, participants were asked about the amount of transactions in a form of percentage of their overall business achieved through their business relationship.

On the other hand, Third, participants were asked to indicate the degree that reflects their satisfaction about hotel-tour operator business relationship on a five-degree scale. Fourth, participants were asked to describe the success of their business relationship on a five-response scale. More than half of the approached hotels On the other side, the results of the tour operator survey showed that In general, the mean rating of perceived success about the relationship revealed that hotels perceived the relationship to be slightly successful with a mean of 3.

In addition, a chi-square test was performed to examine the relation between business volume and relationship satisfaction Table 3. This result contradicts with the conclusion of the study of Khuong which revealed that high frequency of business interactions is crucial for maintaining a successful business relationship. Also, a significant proportion of these enterprises reported neutral regarding the satisfaction and success of the hotel-tour operator relationship, with small percentage reporting their relationship to be satisfactory and successful, indicating that the business relationship was not as satisfactory and successful as it should be and it needs to be improved.

Perceived satisfaction and success of the relationship. The results are shown in Table 4 and discussed in the following paragraphs. This result is supported by Medina-Munoz. A total of four factors out of 12 had recorded significant differences. The results showed that there were significant differences of the mean score of: The combined analysis of both perspectives, i.

In order to narrow down these factors to few three to six as suggested previously in the literaturefactors with a mean of importance less than 3.

In other words, any factor should score a mean of importance more than 3. Some of the CSFs concluded from the combined analysis Table 6 in this study are supported by results of previous studies, while other factors contradict previous studies.

The reason for this disagreement may be that CSFs for the business relationship can vary among different contexts or geographical regions. CSFs for the hotel-tour operator relationship separate perspectives. Results of the independent samples t-test. CSFs for a successful relationship unified perspective. The reasons they provided were categorized into two main sets: This result is supported by the results of Buhalis on conflicts between hotels and tour operators in the Mediterranean region which revealed that hotels struggled against the power of the tour operators.

This conclusion concurs with the results of the study of Lee.

Reasons for unsatisfactory relationship. This result agrees with the results of the studies of Bogdanovych and De Jager that a significant proportion of travellers as well as tourism service suppliers tend to directly book their tourist services using online channels.

Experiencing a failure business relationship.

relationship between tour operators and hotels

The e-mail addresses were taken from an existing hotel database. The hotels of the sample represent half of the total room capacity in the respective areas. The questionnaire was actually received by 1, businesses, as there were invalid e-mail addresses in the hotel database. The e-mails with the questionnaire were addressed to general managers. An introductory text stated the purpose of the survey and explained how the data provided would be used.

An attached MS Word file con- tained the questionnaire. Respondents had the choice of returning the completed questionnaire by e-mail or by fax. The actual response rate was 6. Research findings In line with experience from previous surveys, it was the larger and more upscale hotels that had a higher response rate to the present survey.

This explains the significantly larger average size of the responding hotels rooms as compared to the total population of hotels located in the resort areas of Greece 41 rooms. Four and five-star hotels represent 43 per cent of the respondents but only Most respondents are from Crete and the Aegean Islands with 38 per cent and 37 per cent of the sample, respectively.

The Ionian Islands and the resort areas of mainland Greece are represented with 13 per cent each. The business mix of Greek resort hotels in Table 6. Independent travellers account for Other client categories average 6. Some hotels are quite focused on these market segments, securing, for instance, up to per cent of Corporate rivalry and market power Table 6. Five hotels accepted only independent travellers in When calculating the average business mix only for those hotels accepting tour operator clients, then the share of tour operator-generated business reaches The highest degree of dependency on tour operator-generated business is registered in the case of one- four- and five-star hotels, with up to Above-average travel agency bookings characterise three- star hotels with Three out of ten guests of one- and two-star hotels are independent travellers, with two-star hotels securing another For instance, Cretan hotels depend to a much larger extent on tour operator- generated business 78 per cent of all customers as opposed to just 42 per cent of properties located on the Aegean islands.

The share of independent travellers among the clientele of Cretan hotels is only a third of the one secured by hotels in other resort areas. Properties belonging to hotel chains also have a significantly higher dependency on the inclusive tour market with The share of independent travellers is less than 10 per cent as is also the case with travel agency bookings. The leading nationality is Greeks with It is interesting to compare the preferences of each nationality according to hotel category and region with its overall average.

Greeks, for instance, favour mid-scale and economy hotels, with Germans preferring four-star hotels but avoiding two-star hotels. Britons, on the other hand, tend to go either to the high or to the low end of the hotel supply. Nordic travellers frequent budget accommo- dation, while French show a clear preference for four-star hotels. It is also worth mentioning the preference of East Europeans for luxury accommodation.

Greeks command only a small share among the clientele of Cretan hotels 9. Germans have a strong presence on Crete Cretan hotels also have a significant number of Nordic and French guests.

The hotels of the sample achieved an average room occupancy rate of Four-star hotels had the highest occupancy with The sampled hotels from the Aegean Islands trailed the others with a low 61 per cent occupancy inwhile Cretan hotels topped the list with The room rate charged to tour operators averages Five-star hotels command a high average room rate of The room rate charged to individual guests in averages Room rates charged to tour operators are on average The lower the hotel category, the higher the room rate discount provided to tour operators up to Members of hotel chains — predominantly upscale hotels — achieved better- than-average results in according to the findings presented in Table 6.

Their occupancy reached Hotel managers were asked how tour operator-generated business devel- oped over the last three years. The average increase was 5. The average room rate discount for tour operators see last column above is calculated by dividing the difference between the room rate charged to individual guests and travel agencies and the room rate charged to tour operators with the room rate charged to individual guests and travel agencies.

Tour operators and the hospitality industry —, i. Almost all five-star and half of the four-star hotels managed to increase their room rates, while Cretan and mainland hotels were also more likely to increase their room rates than the average hotel.

It seems that one- and two-star hotels as well as the ones based on the Ionian Islands are in the worst position, with about 40 per cent being forced to lower the room rates provided to tour operators. The average increase in customers was Low-category accommodation and hotels from the Aegean Islands lost the most in tour operator business.

As is evident from the data of Table 6. The tour operator-controlled distribution system represents a shrinking market both in terms of visitor volume and income for most of the hotels.

However, tour operator-generated business is shrinking faster in the case of hotel chain members. Despite the shrinking inclusive tour market, Greek hoteliers seem to be rather optimistic in their expectations regarding tour operator-generated traffic see Table 6.

Most optimistic are members of hotel chains as well as five-star hotels with One-star and two-star hotels tend to be more pessimistic, with Hotel managers were asked whether tour operators usually request lower prices, higher quality in services and facilities provided or other concessions.

relationship between tour operators and hotels

The large majority of Greek hotel resorts — or Among other concessions demanded, the request for added value offers was mentioned by 3. This finding is an indication of the commoditisation of inclusive tours to the Mediterranean and the constant pressure put on accommodation providers to lower costs.

Over half of them — The second most frequently mentioned tour operator is Thomas Cook by The hotels surveyed were asked to evaluate their cooperation with tour operators Table 6. The main advantage of working with tour operators is that hotels secure a large part of their guests that way, as was mentioned by Other advantages include securing significant traffic during the shoulder and low season mentioned by Five- and four-star hotels as well as hotels on Crete have a far more positive evaluation of their cooperation with tour operators than do other hotels.

The main disadvantage of working with tour operators is the constant pressure to lower room rates, as was mentioned by Mid-scale and economy hotels are most critical in regard to their cooperation with tour operators.

Half of the hotels participating in the survey posted a profit inwhile 26 per cent had a loss Table 6. However, hotels based on the Aegean Islands achieved the worst results, with Respondents belonging to hotel chains secured Nevertheless, these hotels appear to fare better than the average by achieving higher room occupancy and higher room rates, increasing room rates charged to tour operators during the last three years, being more profitable and more optimistic in their expectations regarding cooperation with tour operators.

Hotels working with the four major tour operators — i. They also achieve a higher-than-average room occupancy ranging between TUI leads the list of the highest room rate charged to tour operators, paying on average 70 Euros as compared Table 6.

relationship between tour operators and hotels

Tour operators and the hospitality industry Table 6. Hotels working with TUI, Thomas Cook and Rewe reported significantly better results than the total sample in regard to room rates charged to tour operators and tour-operator generated traffic see Table 6. However, hotels working with MyTravel did not as well as their counterparts. TUI partner hotels also were more optimistic in their expectation of tour-operator generated business than the other surveyed hotels see Table 6. The large tour operators get high marks in regard to volume of traffic, paying on time in the case of the three German companies and generating significant traffic during the shoulder and low seasons.

However, hotels are especially critical in regard to the pressure to lower prices and to not paying on time in the case of MyTravel partners. Many hoteliers working with the large tour operators also think that the latter are routing their clientele to other destinations.

The survey sheds some light on regional differences among Greek resort hotels. Despite their large dependency on tour operator-generated business accounting Corporate rivalry and market power for 78 per cent of total overnight stays, Cretan hoteliers seem to be faring better than their colleagues in other parts of the country.

They achieved the highest room occupancy and were more likely to raise prices charged to tour operators and to attract more inclusive tour customers.

They also have a more positive stance towards tour operators than hotels in other parts of the country.

Hoteliers vs Tour Operators - What is the Appropriate Relationship?

Upscale hotels reported better-than-average results in regard to room occupancy and profitability. They managed to raise business volume and prices charged to tour operators and to offer lower room rate discounts. They are also more favourable towards the inclusive tour market, while mid-scale and economy hotels are more critical in regard to their cooperation with tour operators.

Research limitations The conclusions drawn from the present survey reflect the following limitations: Most of the hotels were actually closed at the time the survey was conducted. Therefore, some bias towards month operations should be expected. Hotels not working with tour operators may have been less interested in participating in the survey. Discussion Tour operators greatly contributed to the development of tourism in Mediterranean resort areas over the last half century.

Thousands of local businesses were formed throughout the Mediterranean basin to cater for the huge tourist flows created mainly by operators from Northern Europe. Recently, however, the Mediterranean- bound inclusive tour market has become increasingly dominated by a handful of large tour operators following their accelerating horizontal and vertical expansion of the last ten years. The large market power gained by these operators is putting pressure on the providers of inclusive tour components such as the accommodation sector, with this pressure aiming especially at lower prices.

This policy of tour operators is based on their need to offer the lowest possible prices but ignores the viability of their providers, the latter facing a vicious cycle of declining quality and depreciated prices Bastakis et al.

Both individual hotels and entire destinations have become highly substitutable due to the commoditisation of Mediterranean-bound inclusive tours which constitute a price-sensitive mass market Gilbert The intense price competition among Mediterranean destinations was particu- larly strongly felt by Greek hoteliers after the introduction of the Euro in Greek resort hotels are now forced to compete against destinations with more favourable currency exchange rates and lower operating costs.

The Difference between Tour Operators and Travel Agents

This has led to a decline in inclusive tour business for these hotels over the last three years as has been shown in the aforementioned survey. There are, however, alternatives to competing on the price-sensitive mass market. Greek resort hotels are predominantly orientated towards the inclusive tour market as they secure 60 per cent of their clientele through tour operators. Most of these hotels actually outsourced their marketing function to tour operators, thus lacking the ability to market themselves in an efficient way on the international marketplace.

This has not been a problem for decades, as tour operators supplied a steady flow of business to resort hotels. However, the recent drop in Greece- bound inclusive tour traffic and the increasing pressure applied by tour operators to lower room rates is now forcing Greek hoteliers to explore other markets and distribution channels.

The dependency of Greek resort hotels on tour operator-generated business is the result not only of their limited direct access to the European market but also of the lack of sufficient Greece-bound airlift capacity other than charter flights. Major European tour operators control these charter flights that are used by 58 per cent of all foreign tourists arriving in Greece. Despite the growing market influence of tour operators and the recent decline in Greece-bound inclusive tour traffic, hotels working with the major operators appear to achieve better results than the average hotel according to the aforementioned survey.

However, the outlook in regard to inclusive tours is one of growing competition among Mediterranean destinations combined with a clear cost disadvantage in the case of Greek resort hotels.

The main target of resort hotels should be to limit their dependency on mass- market inclusive tour traffic, which is dominated by a few powerful tour operators.

Holiday packages to the Mediterranean have to a large extent become commodi- ties with the emphasis by both tour operators and consumers being on low prices. In order to avoid direct price competition with businesses from lower-cost countries, Greek resort hotels should employ the following strategies Krippendorf The first strategy aims at tapping an unexploited market potential found both in the major source markets of Western Europe and the emerging markets of Eastern Europe. For instance, Greece has not yet succeeded in attracting its fair share of independent Western European travellers, as in the case of Germans, considering that half of them travel independently to the Mediterranean.