What is Travel Alliances?
The term ‘Alliance’ refers to a state of being associated or allied. Corporate growth is usually based on 3 strategic pillars- Build, Buy and Partner. Here, alliance relates to the third strategic pillar-Partner. Alliances can be defined as a bond or relationship among people, groups, organisations etc for mutual benefits and is based on shared interests or aims.
Mutual benefits means, each partner/party which had entered into an alliance should benefit from the relationship. The ultimate objectives of alliances are to serve the customers efficiently and to bring economic benefits to the allies or partners. The development of alliances is a critical strategic requirement in the travel trade also.
Table of Content
- 1 What is Travel Alliances?
- 2 Importance of Tourism Alliances
- 3 Types of Tourism Alliances
- 4 Major Bodies of Travel Alliances
Modern tourism is marked by three important aspects-competition, complexity and interdependence among the stakeholders. It is imperative to understand that ‘Tourism’ is an umbrella term encompassing several industries within it and there would not be any ‘touristic activity’ possible without the liasioning and alliances of different bodies. For example, while planning tour packages, tour operators bring together the elements of transportation, accommodation, etc and therefore need to form relationships with the principle suppliers.
For Tourism to happen in any place or given time with all the amenities as may be required by the traveller for a seamless experience, tourism alliances play a vital role. This Unit explores the importance, types and major organisation/association involved in forming alliances in the travel trade. Since in tourism, forming relationships with the customer is also an important aspect, this Unit will also look into the Travel Loyalty Programme.
Importance of Tourism Alliances
Tourism Alliances are lesser talked about but have a huge impact on the industry and its players when it comes to touristic activities. The alliances can happen between the organisations in the linear or similar type of business or in horizontal or different categories of services. Before we move on to understand these types of alliances, let us understand the importance of these alliances:
Alliances between tourism organisations ensure a wider reach to the masses. With collaborative efforts, the marketing, sales and even operational capacity is increased or widened resulting in better approachability to the consumers.
It is generally noticed that when such collaborations happen, one of the organisations has expertise or the upper hand in one or the other field including technology. So imagine a well funded, technology-driven organisation getting in alliance with another party having experienced manpower and better consumer reach, what wonders can they do?
Wider and/or better range of services
Tourism alliances also ensure a better and mostly wonder range of services that can be provided. For example: if a tour operator has a strong alliance with the airlines, hotels, transporters, etc. a traveller can be provided with a wholesome package without any hassles whereas another operator with no such alliances might only be able to cater standalone services like accommodation or transportation only.
In the tourism industry, despite the cut throat competition, it is imperative to provide fair price deals to the travelers. Through alliances of tourism organisations with governing bodies, it is ensured that wrongful prices are not charged. For example: In India guide fees are annually revised by IATO in alliance with TGFI for uniform and rightful fee to be paid to the trained and licensed guides as per the services incurred.
Tourism Alliances with governing bodies or even with other business organisations always result in policy formulations, thus ensuring better clarity and control over the administration and operations. These policies directly or indirectly bring in the change and particularly a positive one making way for improvisation in conduct of operations and services provision including the protection of rights of the employees and consumers.
Types of Tourism Alliances
Tourism has a long tradition of intercultural interactions by its very nature. Increased international travel and the willingness of businesses to grow globally create conditions that put people and businesses from various national cultures together in a cooperative effort. Alliances come in a variety of types. These can be between:
- suppliers-distributors; and
- multiple suppliers, in various collaborative efforts.
We shall look at the above three types of alliances in relation to the segments of the tourism industry.
- Tour Operators – Hotel Alliances
- Airlines – Travel Agencies
- Airline-Airline/Tour Operator – Tour Operator
Tour Operators – Hotel Alliances
This alliance between a tour operator (buyer) and hotel/s (seller) is the most commonly known alliance. Here, rooms are the primary goods being sold by the hotel to the buyer, i.e. tour operator, for the purpose to be further sold to the traveller either as a standalone service or as part of a package.
It is imperative to understand that each tour operator may have their own choice of category of hotels to be collaborated with, depending on the standard of services that tour operators ultimately sell. In most of the cases, tour operators abide by a minimum number of nights occupancy to the hotel in exchange for very competitive room rates. They might enter into an agreement of even appointing a concierge at the hotel to specially cater the guests arriving through the specific tour operator. In return, the tour operator may promote the value added services that the hotel has to offer.
Such alliances are very much in trend among the tour operators operating in countries popular for MICE and charter groups. These alliances not only provide great services at competitive prices but also promote a healthy competition and co-dependence, hence flourishing the tourism industry.
For example Tripper’s Haven, a tour operator based in Mumbai is looking forward to better MICE business. The first thing apart from procuring clients that the management will do is to collaborate with hotels. Hence, they may approach a hotel with the following proposal for collaboration:
Sample Mail to be sent to Hotel/s for alliance
Greetings from Tripper’s Haven!
We are delighted to introduce ourselves as one of the best known tour operators and will be launching our MICE segment soon. For the purpose of the same, we are looking forward to having strong alliances with prestigious hotels, like yours.
Let me briefly inform you that we would need 45-60 rooms bi annually for the conduct of MICE activities for 7-15 days approximately depending on the requirements at the time of finalisation of plans. Additionally, services of the banquet hall for 2 days minimum shall be required for a welcome workshop and farewell cocktail party.
We will be happy to discuss this further in detail if the above mentioned interests you. In case of a fruitful alliance we will be happy to provide discounted/free advertisement of your hotel on our yearly catalogue or website.
More can be discussed for mutual benefit. Looking forward to your response soonest possible.
The above sample email gives us a better idea as to how the alliances between tour operators and hotels work.
Airlines – Travel Agencies
This kind of alliance between an airline (supplier) and travel agency/s (distributor) is also commonly seen. As we know that many travel agencies specialise in one particular type of service. The agencies collaborating with airlines generally have alliances with more than one airline flying on the same route.
There may be no minimum occupancy commitment here but alliance here is meant for wider reach to the travellers. The airlines get better marketing and sales through partnership with travel agents whereas travel agents get commission and sometimes free airline tickets for their exceptional services. Mostly in this scenario there is a pre-formatted agreement from the airline outlining the policies and distribution guidelines along with the benefits that travel agents will enjoy.
Example: Tara Air is a well known airline and has recently launched its new route: Khajuraho-Varanasi. For better reach to travellers, the airline marketing and sales team will identify the potential travel agents or ask their existing ones to promote this route with their frequent flyers through newsletters, phone calls, etc. In return, commission of the travel agents might be increased or a freebie is provided especially when there is good occupancy.
Airline-Airline/Tour Operator – Tour Operator
The alliance between multiple suppliers is not unknown however, they are seldom discussed. In order to provide the services that a traveller needs, despite the differences between countries or time zones and distances, several airlines come together to an agreement in coming together to form an alliance. Such alliances are largely impactful especially when it comes to international tourism.
An example of airlines alliance is Star Alliance, which incidentally is the first such alliance to be formed in the world. It was formed in 1997; today Air India is a part of this alliance. Alliances between or among airlines are most commonly seen in the form of ‘code shares’ which allow customers to book long-haul or multi-connection tickets with the same airline, even though the flights may be operated by multiple airlines. Instead of formally joining alliances through membership, some airlines also forms close partnership with other airlines which may involve only the provision of earning and redeeming miles through each others’ rewards programs.
Similarly, when there are international events which need the expertise of operations in more than one region, tour operators from different regions might form an alliance to provide seamless service. Examples of events like the Cricket World Cup Tournament can be sighted here as one company bags the opportunity to organize the travel plans for teams from several nations.
But, this company will get in alliance with other tour operators, hoteliers and airlines to compile all the services and conduct smooth operations of travel for thousands of players. In addition to above mentioned three types of alliances that happen in the tourism industry, many times many governing bodies also come together for better implementation of policies, smooth conduct of services and providing benchmarks for operations.
Major Bodies of Travel Alliances
The concept of tourism alliances also extends to the endeavour of various tourism organisations which collaborate and work together to ensure a healthy and competitive business environment. Such initiatives happen when the governing bodies are proactive and take their responsibilities seriously. Presence of a strong and efficient National Tourist Organisation (NTO) is a reflection of a healthy and competitive tourism environment in any country.
In India, the NTO is the Ministry of Tourism and it outlines the policies and future plans along with allocation of budget etc. to respective states and projects. In addition there are several autonomous and independent bodies which look into the overall conduct and welfare in several segments. Here we shall learn in brief about a few of the governing bodies of tourism in India to understand the role they play in furthering tourism alliances:
Indian Association of Tour Operators is a travel forum that promotes and supports the growth of tourism in India. It not only has the purpose to work towards the growth and expansion of the tourism industry but also urges the members to participate during national distress and national emergencies. IATO together with Tourist Guides Federation of India (TGFI) ensure rightful and fair payment policy for the trained and licensed guides through yearly revision.
Tourist Guides Federation of India is the apex body governing the conduct, training and other aspects of regional guides. This autonomous body ensures that the tourists have a memorable experience with the regional guides who are experts of their local area by providing them with proper training, license and a fair price policy.
Travel Agency Association of India is another body with an aim to develop and manage the travel agency segment with sound business values. It also promotes global goodwill and exchange of ideas. A body like such helps in collaborative efforts when more than one tour operators or travel agents are involved in accomplishing a project thereby absorbing any kind of friction and providing feasible solutions.
Indian Tourist Transporters Association is a premier body covering all the operators who are solely involved in providing surface transport facilities to foreign/domestic tourists. This body not only outlines the necessary documents required to conduct the business but also regularly discuss the problems being faced by the members and tourist transport segment all over India and then come up with suitable solution.
It also connects with other trade bodies for fruitful conduct of business and forwards common problematic issues such as taxes, increased fuel prices, special permits to the government for appropriate remedy.
The federation of Hotels and Restaurants Association of India is the governing body of hospitality industry setting the standard and works to encourage, promote and protect the interests of the hotel and restaurant industry. This body ensures not only the timely inspection of facilities of the hotels and restaurants to maintain their star category and retention of necessary licenses but also ensures the compliance of health and safety standards along with accessibility quotient and other requirements as and when published by the government.
It hence helps in maintaining the standards to promote healthy and competitive alliances with other organisations. There are several other autonomous and independent bodies but above were the important ones from Indian Tourism point of view. Considering that all the founds are by member business operating Units, a lot of networking, collaboration and informal partnerships which may be long term or on a project to project basis is expected.