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Understanding the Supply Chain of Travel

3 January 2023

Even for industry veterans, it can be a confusing process to fully understand the supply chain of travel due to the many layers and different terminologies used. This can lead to confusion and a lack of understanding around the complexities within the industry, the cost of doing business, as well as the advantages and disadvantages of the various supplier layers. In addition, innovation, technology, and modernization are changing the travel supply chain model on a regular basis. 

This article will explore the businesses involved in the supply chain, the different terminology used, and also how those terms vary based on where you do business around the globe. For simplicity's sake, here is a classic traditional model that is used often and starts with the traveling consumer.

In this example, the consumer works with a travel advisor, the travel advisor works with an outbound tour operator, the tour operator works with a Destination Management Company (DMC), and the DMC works with local suppliers (operators, accommodations, and transportation). Let’s explore those different layers and the terminologies and meanings of each.


The consumer travels to the destination and experiences the travel product. When a consumer books a trip “direct” with a local supplier or operator, they can skip through many of these intermediaries, which is also referred to as disintermediation. For example, the chain could look like one of these examples: 

While booking direct is a growing trend in the travel industry, in adventure travel the consumer is often looking to  experience more remote destinations and combine various locations and activities. As a result, there is still a greater need for an intermediary than in other tourism sectors. Post-pandemic, having a trusted partner to provide reassurance and protection is more important and valuable than ever before. Let's take a closer look at those intermediaries, and understand the value and benefit of each.

Travel Advisors

(Also known as Travel Agents or Travel Consultants)

The travel advisor is a curator of a personalized experience for a consumer. The travel advisor’s unique role is to understand the needs of their clients and to know the depths of the travel market so they can craft a travel solution that delivers on those needs. Consumers who value not having to spend hours looking for the perfect accommodation, consider how to get from point A to B to C, decide what destinations have the best option for their current activity requests, or research which options are more sustainable, gain great value and benefits from working with a travel advisor.

A travel advisor often charges a small fee to the consumer for their expertise, and they often receive commissions from businesses. For a tour operator, an advantage of working with travel advisors is that a curated traveler is brought to them; if the traveler has a good experience, the advisor or agent is likely to return with future clients. Often, travel advisors remain involved and handle client questions and support. 

One of the greatest values of a travel advisor to a consumer is that in addition to hotels and transportation options, they are knowledgeable about and sell a wide variety of packaged trips from different tour operators, and therefore can provide a diverse range of options. International travel, in particular, can involve more unknowns and uncertainty, making travel advisors' expertise and experience particularly valuable.

Outbound Tour Operator

The outbound tour operator will craft ideal itineraries and sell those itineraries to individuals or groups as a packaged product. The tour operator's value is in knowing current market demand and travel trends and matching those with destinations to keep innovating new products. These are often multi-day itineraries–from three days to three weeks, depending on the destination and experience. 

Tour operators are often specialized and cater to a niche market with specific needs, so travelers who book with them tend to be more loyal. This is especially true in adventure travel, where many operators specialize in activities such as trekking or cycling. Tour operators usually work with DMCs in a destination who help them identify the best local suppliers for their tour needs. A consumer who wants to go on a tour through an operator will sometimes also use a travel advisor because the travel advisor can identify the right tour operator for their needs and also add additional experiences before or after the tour. 

It is also important to note that tour operators usually hold a legal responsibility or bond to safeguard the consumer, depending on the country in which they operate. This adds an extra layer of protection by requiring transparency, information sharing, cancellation rights, and assistance to travelers.

Destination Management Company (DMC)

(Also known as Wholesalers, Ground Handlers, Inbound Tour Operators)

A DMC is a company that sells and packages solutions within their destination. They have deep knowledge of and connections with accommodations, local transportation, and local suppliers who offer logistics and activity options. DMCs get rates from their suppliers for products which they then package and sell to operators, advisors, or even directly to the consumer. In each case, DMCs can be thought of as wholesalers or ground handlers in their destination.

DMCs work with outbound tour operators or cruise companies (specifically expedition cruise companies within adventure travel) to provide options that meet the tour needs. Travel advisors can also work directly with DMCs to provide a menu of activity options and on-the-ground support for clients if issues arise. However, it is important to note that not all travel advisors can work with DMCs due to variations in laws and business practices across different countries.

Local Suppliers

In the growing and ever-changing world of travel there are many businesses that offer services on the ground for travel experiences. These include varying levels and styles of accommodation, transportation, and activities such as kayaking, climbing, food tours, cultural experiences, and more. Local communities are an important part of the travel experience and DMCs’ relationships with and connections to these communities is important. Understanding the sustainability efforts of local suppliers is key as market trends show that 90% of consumers are asking for sustainable travel options.

Online Travel Agencies (OTAs) / Web-Based Marketplace

OTAs are best known for selling flights, hotels, and cars. However, many also sell packages, such as outbound tour itineraries or packaged tours from DMCs.

OTAs curate products from the DMC and directly connect the DMC with the consumer. The DMC is the one crafting the product and selling it to the consumer, while the OTA takes a commission for bringing the consumer to them. In this case the DMC must be able to sell directly to the consumer to be featured in the OTA’s platform. This is particularly true of tailor-made holidays which require a strong local expertise. The resulting supply chain in this example looks like this:

To further complicate matters, OTA can also stand for Online Tours & Activities (such as Viator, Get your Guide, Klook). These are web-based marketplaces that directly curate activities or experiences from the local activity providers and sell them to individual travelers.

Adventure Travel Terminology

At the Adventure Travel Trade Association (ATTA), we often use the term “supplier” when referring to DMCs and local suppliers and the term “buyer” for outbound tour operators and travel advisors.

“Buyers” are the ones directly connected with the consumer and who influence travelers’ destination and activity decisions. They 'buy' or source products and services from local DMCs in the destination.

“Suppliers” or DMCs in general are 'supplying' services from the ground and destination to the outbound market. Online Travel Agencies (OTA) and online wholesalers are also important players in the market.

Example of Global Differences and a Changing Marketplace

The global travel supply chain is a complex puzzle which is constantly changing in a disruptive world and varies depending in which country the company is based. For instance, in the United Kingdom, there is a clearly defined line between tour operators and travel agencies. Outbound tour operators contract directly with local DMCs, while travel agencies sell products from tour operators or UK-based businesses with a UK tourism license. In contrast, in France, travel agencies work directly with local DMCs as well as with outbound tour operators.

In Asia, travel advisors and outbound tour operators are often one and the same business, calling themselves a travel agent, but taking the role of packaging the trip themselves.

Increasingly more popular in the travel industry is the role of the marketing representative or ‘Sales Rep’ who is in charge of promoting and connecting DMCs with outbound tour operators (and possibly travel advisors). They are based in the targeted market destination and very well-connected. They can work on commission or retainer fees, depending on a country’s practices and agreement between the two parties.

An additional disruption in the market are media influencers who sell their own curated tours to their followers where they often lead the group. Since they have already built trust with their audience, their loyal followers are interested in traveling with them to destinations and experiencing travel through their lens and brand.

Special interest groups are another growing niche market, for example avid cyclists might organize an annual trip overseas for their group, where they might work directly with an outbound tour operator, DMC, or even the local suppliers themselves.

Building Relationships

Developing relationships across the complicated global travel supply chain is more important than ever, especially as destinations and businesses recover from the pandemicNew entrants to the market should ask clear questions when establishing their business relationships to ensure both parties understand their individual roles and expectations and maintain open communication throughout their partnership.