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Marketing Quality Rural Tourism

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Negotiating with tour operators

document type: article
keywords: tourism
source: LEADER technical dossier
last update:3/95

Negotiating with tour operators

The tourist market is more and more structured by the intermediaries of tourism distribution who liaise between the producing areas and the clients. The LEADER I seminars in which tour operators and travel agencies took part demonstrated that a partnership between rural territories and tourist distributors is possible.

If direct marketing should be sought whenever possible (nearby markets, precisely targeted products), the rural areas cannot deadlock the distribution networks. This is particularly the case of high potential areas that can expect the development of a dynamic tourist economy.

1 The appearance of a paradox

The various activities of the LEADER I network that have involved tour operators enable us to draw a conclusion: these tour operators, although very different in terms of scale of activity, products, and clients, all have something in common: none of them refer to rural holidays in their catalogues.

"Rural tourism" is not a major concept in the marketing strategy of those tour operators met and they never speak of it as a tourist product. Tour operators are mainly concerned by the activities proposed and the corresponding clientele.

"Rural" areas are not of interest in themselves to tour operators. The latter are above all interested in territories:

- with a proven natural and cultural potential and able to avail themselves if possible of tourist fame linked to an image/destination that can sell (Andalusia, Bavaria, Crete, Mount Olympus, Tuscany, the Tyrol, etc.);

- proposing the conditions necessary for the organization of certain types of activity that correspond to the clientele.

2 Adopting a strong policy

The LEADER groups with products that could interest tour operators must have a strong policy with regard to the latter. The approach involves:

- making an inventory of the tour operators who open their range of products to rural territories;

- studying their catalogues so as to be able to adapt to the type of products that they market;

- contacting directly the tour operators and travel agents in the nearest towns and taking part regularly in professional fairs;

- drawing up an area presentation file: cartography, photographs, inventory of the sites and monuments, catalogue of the reception facilities and the leisure activities, promotional booklets of quality, press files;

- inviting the purchasing director of the tour company to visit the area;

- presenting the LAG as a body of partners which will facilitate negotiations with all of the service providers contributing to the creation of the product, without taking their place.

The experience of the Ballyhoura group (Ireland) which is part of the organization "Irish Country Holidays" (ICH) is a good example of skilful management of tour operators: the organization has a central reservation system and a team of full-time qualified commercial representatives. In this framework, several brochures are widely distributed to tour operators and travel agencies. The ICH representatives take part in a number of commercial fairs, seminars and workshops, and organize trips for the professionals in tourism to get to know the area.

3 The main handicap to overcome: mobilization of accommodation

Tour operators are not used to working with rural accommodation, apart from the traditional hotel trade. There are two main problems for them:

- they have to mobilize a minimum volume of reception facilities to justify the insertion of the proposal in a catalogue.

In rural areas, the volume of allotment (contract of option on a number of beds) that is of interest to tour operators cannot be under 50 beds. Tour operators have difficulty in finding this number and the option chosen by rural areas to develop diffused accommodation as a priority does not facilitate the integration of the products in the distribution circuits;

- they have to guarantee a certain standard of accommodation corresponding to the specificities of the catalogue. This is the reason why classical tour operators prefer working with the hotel industry rather than with dispersed rural accommodation.

To overcome this handicap, the LAG has to:

- ensure the grouping of the reception facilities dispersed in the area;

- constitute groups of "hotel off-shoots";

- develop contracts that enable negotiations with a grouping body, clarifying the legal and fiscal situation of the reception partners;

- establish approval grids that are certified and monitored in the framework of a charter of quality.

4 The tour operators' tariffs

The commission required by a tour operator from the accommodation provider is about 20% of the price of the hotel service when sold directly.

The justification for this commission should be that it brings in exchange an increase in the level of occupation of the reception facility, bringing profit for the owner.

The tour operators should be able to optimize holiday sales during the peak season but should especially be capable of selling stays during the periods in which the accommodation provider finds it difficult to sell by himself.

Knowing how to negotiate with tour operators implies that the suppliers of services in the rural areas should be familiar with their occupancy rates and with their tariff periods.

The LAGs should be able to facilitate access of accommodation providers to technical assistance tools that help them to negotiate prices, numbers, time-limits for retrocession (the period from which the accommodation provider can have the beds at his own disposal if they have not been sold).

The carrying out of a diagnosis in the LEADER area of the possible optimization of the occupancy rate and its division per period is necessary for negotiating with tour operators.

Generally-speaking, the period of occupancy should not be less than ten weeks.

5 Tour operators or direct selling?

If the strategy of the LAG makes it opt for direct marketing, the LAG should be able to compare the cost of distribution by both methods because direct marketing also costs. This is especially true for the central reservation desks which are being planned in the LEADER areas.

A partnership with tour operators is useful for two main types of area:

- those which are already traditional tourist destinations and which have a reception infrastructure that is sufficient to generate large production;

- those which possess a really specific nature/culture potential that makes it possible to practise activities that are really original making it a rare and thus expensive product.

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