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Interrelationships in Travel and Tourism
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Horizontal Integration
This occurs if one operator buys another operator at the same level in the chain of distribution.
Most of the major tour operators in the UK are vertically and horizontally integrated, owning their own travel agencies, airlines and often hotels, besides different tour operating busniesses.
Tour operators have bought or created airlines, hotels and travel agencies. This means they own all the different companies in the chain of distribution and are able to control the whole operation.
Vertical Integration
This occurs when two companies at different levels in the chain of distribution merge or are bought. This may be backwards integration i.e a tour operator buys a hotel or forwards integration a tour operator buying a travel agency.
By doing this companies say it gives them economies of scale and allows them to offer better prices to customers. However smaller operators are forced out of business.
Interrelationships in Travel and Tourism
Vertical and Horizontal Integration
Companies buy or merge with other businesses to establish market penetration and commercial success. This is known as vertical or horizontal integration.
P3, M1, D1
All components in the travel and tourism sector need to work with others. The Chain of Disribution gets the product to the consumer.