What is vertical integration in travel and tourism. What is horizontal integration? Why is it important? 2019-01-09

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Interrelationships in the travel and tourism industry by Samantha

what is vertical integration in travel and tourism

Direct marketing may require huge costs on advertisement and selling through a tour operator guarantees the occupancy rate throughout a holiday season. Travel is changing location using different types of transport. For many years, it was easier to make a profit by offering the full package tour because a small profit at each of these levels meant a larger profit at the end. Vertical integration means that the same company owns each stage of the tourism. The range of benefits that could accrue to synergising firms supports this contention. Thomas Cook's first commercial venture took place in the summer of 1845, when he organised a trip to Liverpool.

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Interralationships

what is vertical integration in travel and tourism

Tourism can be divided into three categories: Domestic tourism This is when people take holidays, short breaks and day trips in they own country e. Small businesses in the nearby town also, other attractions will benefit as customers are encouraged to go to different attractions. The positive side of this integration is that EasyJet now has more customers flying with them and therefore can have more market space to promote themselves. It can be a voluntary decision by both companies or it can be the take-over of one company by another. Thomson Tour Operators benefits from working with the Travel Agents as they're able to easily promote their packages to customers first hand. For example, The Travel Corporation owns thirty tourism brands Golan, 2016. Often original brand names are retained so the general public are unaware of the takeover.

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What is horizontal integration? Why is it important?

what is vertical integration in travel and tourism

Interdependancy- When organisations depend on one another. Engaging in vertical networks cuts cost by allowing firms to enter or expand markets and tourism sectors without much capital investment Theuvsen, 2004 such as a travel agency gaining a niche market by partnering with a spa resort. These tours are sometimes offered as a package, but sometimes the tourist is still expected to purchase meals, drinks and excursions separately. If a tour operator buys another tour operator at the same level in the chain of distribution, this is know as horizontal integration. There can also be integrated chains of distributions. For example, in 2013, customers saved on average £501 when they booked a First Choice holiday through Holiday Hypermarket.

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Interralationships

what is vertical integration in travel and tourism

Buhalis, 2000 A third disadvantage is the adverse impact on independent players and consumers. In this manner, it will improve the competitiveness and profitability of the business. Integration in the travel and tourism industry occurs when one company owns or controls more than one part of distribution process. Company expansion is the major reason for this type of merging. In 2012 the company carried 10. Merlin is a privately owned company. By applying this system to your organization, it is possible to develop and invest in products that you offer.

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Working Together and Interrelationships

what is vertical integration in travel and tourism

People benefited from Thomsons and First Choice merging with Tui because it mean they were able to buy holidays from a bigger company therefore they have more holidays available because they have the staff and transport. There is still scope for monopoly power. Tour operators packages traditionally have been sold through various travel agents. British airways and Iberia airways have both dedicated lounges for their customers. They also integrated backwards to control the production of tyres and steel for car parts. There is also a waterpark you can visit which is at a very reasonable price. Interrelationships are important to organisations such as Tui since it generates more income, for instance if the interrelationships were not present then Tui would not be getting as much money.

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The components of the Tourism and Travel industry

what is vertical integration in travel and tourism

Thomas Cook provides food, drink, ancillaries, accommodation and entertainment. Chanel distribution-the movement of products or services between organisations. When we train the human resources with motivational way it is going to bring the most efficient manpower to handle the different situation. An example of this is shown above, Thomson brought the airline, Britannia Airways and also Lunn Poly, a travel agent. The Chain of Distribution is a chart which explains where agents involved with the Travel and Tourism Industry are linked together through the Chain of Distribution.

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Integrating the tourism industry: problems and strategies

what is vertical integration in travel and tourism

This paper addresses two interrelated issues in tourism development: horizontal integration within tourism's component sectors and attempts at vertical integration between them. It can lead to diseconomies of scale where the new bigger firm is more inefficient. This latest merge highlights a major change in the tourism industry which has in the last 10 years seen a decline in mass tourism and an increase in people travelling with smaller operators. Thomson Tour Operators benefits from the Thomson Airline relationship as they can be independent and create their own profit. A bookshop may know what kind of books sell well so they can develop the right kind of paper and attractive design. Horizontal integration, as in the case of Carnival Cruise Lines, focuses on the same stages of production. A tour operator with its own airline will be much higher in the chain than a tour operator without its own airline.

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What Is Vertical Integration in Travel and Tourism?

what is vertical integration in travel and tourism

List Of Disadvantages Of Vertical Integration Here are a few thoughts with reference to the significance of vertical integration to be implemented in your company. This is the chain of distribution. However, it will increase the flexibility in the coordination of vertically-related activities. Vertical Integration focuses on many stages of production as was illustrated by Ford — automobile production finished good , steel and tyre production raw materials. The fourth advantage is financial gains from economies of scale Renshaw, 1994 Lafferty Van Fossen, 2001 Ratz Katay, 2007. The report will explain the appeal of Marrakesh for different type of visitors, using motivator theories.

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What Is Vertical Integration in Travel and Tourism?

what is vertical integration in travel and tourism

The largest travel groups such as Thomson, Riotous now known as Moderately and Thomas Cook own the tour operators who are responsible for putting together the package holidays. The size of the tourism market and ease of entry of competitors led to fierce competition. In the present competitive world of Tourism Industry all are expecting the quality of services in the destination. The encompassing disadvantage is business risk or the likelihood that vertical integration would fail or would have an adverse effect. This means they own all the different components in the chain of distribution and are able to control the whole operation. This means they own all the different components in the chain of distribution and are able to control the whole operation. The Hilton also has resorts overseas in places such as Canada, America, Europe.

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