A supplier in the travel industry is a business entity or a company that owns, manages, and provides the basic travel products and services sold to the public. Suppliers are the base-level inventory of the travel ecosystem, which includes everything from airlines to hotels to car rental agencies, cruise lines, and tour operators who build and control the actual travel experience.
Suppliers are the makers of the core travel industry’s perishable inventory. A perishable product’s value is lost if it is not sold by a certain time, such as an unsold airline seat or an empty hotel room. A supplier’s ultimate objective is to maximize yield (revenue per unit) and occupancy (percent of units sold).
They use core technology systems such as a hotel’s Central Reservation System (CRS) or an airline’s Passenger Service System (PSS) to manage the rates and availability in real-time.
One of the critical challenges faced by a supplier in travel and tourism is the sale of its perishable inventory. This involves finding a balance between profit margins and market reach through two basic categories of channels, direct and intermediary.
This is the channel with the highest margin since the supplier sells directly to the customer. The main tool is the supplier’s own branded website, which is powered by an IBE (Internet Booking Engine). Selling direct allows the supplier to have control of the customer relationship, brand experience, and data; that’s why you see them promoting “Book Direct” offers.
These third-party channels offer enormous market reach in exchange for commissions or fees.
A central theme in travel tech is this “co-opetition”: suppliers depend on intermediaries for volume while investing in their own IBEs in order to promote a shift to the higher-profit direct channel.
A tour operator is often both. They provide their own unique, prepackaged tours, but they also serve as an intermediary by marketing bundles of components (such as flights and hotel rooms) purchased from other suppliers.
OTAs offer tremendous marketing ability to international clients that is not affordable for a supplier, particularly an independent hotel, to reach out to. It is a powerful, if expensive, tool for gaining new customers.
This refers to the integration of a direct API between a supplier’s reservation system (CRS) and a large seller (OTA or TMC). It bypasses traditional systems, such as the GDS, for faster and more flexible data exchange.
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