Educating… …The Clueless

Revenue Manager…

…Or, How 23 million

international room nights are

sold through a channel that

few have ever heard of: The

Receptive Operator (RTO).

What Is A Receptive Tour Operator (RTO)?

• Wholesaler to overseas wholesalers and Travel Agents

• Financial intermediary between U.S. suppliers

(hotels/attractions) and international wholesalers

• Develop products and contracts w/hotels and attractions

• Some aggregate hotels for resale via int’l travel agents.

• Provides Ground Service-Transportation

Type of Products They Offer

• FIT online booking systems

• Escorted group tours

• Fly-Drive programs

• Function as DMC’s for International incentives

• International ad hoc leisure groups

• M.I.C.E. tour programs

• Meet and greet and ground services

2013 Growth Receptive vs Total International Arrivals

• Total Overseas Arrival Growth

2013 : 4.8%

• Receptive Operators Growth

2013: 8.8%

Receptive Sub Sectors

• Bed Banks: Primarily Hotel Aggegators but most also handle groups

• Traditional “Legacy” Rto’s with full North America product

• Subsidiaries Of Major Overseas Travel Companies-

full North America product

• Regional Specialists: Southern USA, National Parks, NYC

• Specialised Niche Operators: Operate In specific countries or

specialized niches such As students, mice, etc.

DON’T CALL THEM RECEPTIVES…

Call Them: Bed banks, hotel aggregators,

but still included in the category of receptives

BED BANKS• TOURICO HOLIDAYS (INDEPENDENT)

• HOTELBEDS (OWNED BY TUI)

• GTA TRAVEL (OWNED BY KUONI)

CHARACTERISTICS:

• Technology Driven Hotel Aggregators

• Sell Mostly FIT’s (but most have group departments)

• Worldwide sales operations

TRADITIONAL “FULL SERVICE” RECEPTIVE OPERATORNumber in Category: 8

• ATI: Oldest US-owned Receptive Operator

• ALLIEDTPRO: (Groups-only division of Kuoni)

• TEAM AMERICA, MARK TRAVEL, TRAVALCO, CITY TOURS

CHARACTERISTICS

• Full Line of North American product

• FIT, Escorted Groups, MICE Ad Hoc

Groups, Fly-Drive)

• Sell offline Through Tariffs and Online

SUBSIDIARIES OF GIANT OVERSEAS TOUR COMPANIES

Number in Category: 15

• JTBI (Subsidiary of Japan Travel Bureau)w/ 300 offices in Japan)

• CTS (Owned by China Travel Service)

• New World Travel (Subsidiary of DER in Germany)

NICHE OR SPECIALIZED OPERATORSNumber in Category: 173

EXAMPLES:

ROCKY MOUNTAIN HOLIDAY TOURS (National Parks in West)

SWEET MAGNOLIA TOURS (Specializes in Southern USA)

EURO USA TOURS (Denmark, Norway, for MICE Groups)

CHARACTERISTICS

•Family Owned, Small to mid-Size

•Regional Expertise, Source Market

Contacts, Niches (MICE, Student

tours, etc)

How Large Is the Receptive Channel (Room Nights Sold)?

• Room nights sold by receptives in 2013: 23 million

• RTO channel represents: 19% of total “leisure” room night

sales from overseas visitors (excluding Canada, Mexico,

Business Travel and VFR)

Source: NAJ Trax™ Reports 2006-2013

NAJ Trax™ ROOM NIGHT PRODUCTION REPORTS*

• 11 Receptive baseline operators reporting from 2007-2013

• Described as “Starr Report” for RTO’s

• Trax partners sold 13.2 million room nights in 2013, (14.5 %

groups)

• Trax operators represent 53% of room nights sold by ALL

receptive operators

• Trax operators represent 8.2 % of all room nights sold to

overseas leisure visitors

*

GROUP TYPE

Sub Segment % OF GROUP TOTAL

% Y-0-Y Change

ESCORTED 40.4% -8.4%

AD HOC GROUPS 44.1% 15.3%

M.I.C.E. 15.6% 68.3%

Advantages of Working With Receptive Operators

• RTO’s assume currency and financial risk of collections

• Most efficient way to international travelers

• One RTO can take your product into up to 100 countries

• RTO’s deliver business during off-peak times

• RTO’s help overcome language barriers

• RTO’s work n North American time zone

• RTO’s have access to international groups and M.I.C.E.

• RTO’s require issuing relatively few contracts

Advantages (continued)

• RTO’s can move distressed inventory at yields higher than

OTA’s w/ less risk to hotel’s brand image

• RTO’s indirectly provide FREE MARKETING/ADVERTISING in

overseas markets via placement in tour operator brochures

• RTO’s Can Generate unexpected direct bookings for hotels

Disadvantages Of RTO Channel

• Another middleman between hotel and int’l visitor

• Must provide net rates 18 months in advance (in case of

traditional operators national operators)

• Perception of low-yield tourism class business (rarely true)

• Tiered rate discount can seem unnecessary in strong economy

• RTO’s may not always be able to fill their contracted allotments

• Sales from traditional brochure wholesalers

can take 2-3 years to materialize

WHO ADDS VALUE?Tier of Distribution % Discount Value Added

Receptive Operator 7-10% Assumes financial risk, sales force, distribution, language

In-Country Tour Operators

10-15% Distribution and marketing through travel agent network and/or direct to consumer retail websites

Travel Agent 10% Direct sales to customer base

Net rate: $ 100

Int’l Operator: $111

Travel Agent: $130.50

Consumer: $152.94

TIERED PRICING MODEL