Assessment 1| Managing Performance & Participation| | Sergei Romanenko| 10/24/2012| Contents Introduction1 Aim1 Objectives1 Methodology1 Background to Travel Agencies1 Definition1 Context – The background of Travel Agents1 Types of travel agents2 Data collection2 Literature review2 Analysis of the data collection3 Strengths3 Weaknesses4 Opportunities5 Threats5 Suggestions/Recommendations7 Conclusion8 References10 Introduction Aim This report hopes to examine the impact of online booking websites on traditional High Street travel agencies.
It was decided to research this subject due to the increasing importance of these websites and that the traditional travel agency may suffer as a result. Objectives This report will achieve: * Describe online booking websites and their infrastructure * Describe travel agencies and their background * Analyze material about different aspects of travel agencies * Carry out a Strength-Weakness-Opportunity-Threat (SWOT) analysis Methodology
After conducting previous primary and secondary research on online booking, it was decided to examine travel agencies in greater detail. The research carried out was secondary data and included journals, books and websites. This was then analyzed and scrutinized. This was done as journals and websites can provide relatively recent and relevant information for the study. Where possible, recently published books were used whilst others contained information on the main concepts. Background to Travel Agencies
Definition A travel agent can be defined as: “A professional who evaluates the travelers needs and then proposes, organizes and sells one or more elements for the person’s trip”. (Mancini, 2005) Context – The background of Travel Agents The history of travel agents can be traced back to the 1880s when Thomas Cook was set up and sold holidays (Segreto, Manera, & Pohl, 2009). During the WW2, many Britons who did not travel abroad previous were able to do so, for example, through deployment overseas.
Prior to this, package holidays would have included train and ferry travel to reach faraway destinations which took a lengthy amount of time and having to meet locals speaking in a different language and from a different culture. In post-war Britain, however, these packages were bundled with air flights – which brought the idea of a package holiday to many more people (Segreto et al. , 2009). In recent years, travel agents have started a decline for a variety of reasons. Despite being a major contributor towards profits for airlines, the ntroduction of a reduction in commission for airline ticket sales starting in 1995 has meant that many travel agents have lost a major source of income (Lawton & Weaver, 2009; Siebenaler & Groves, 2002). However, this industry is now under threat from travelers booking their holidays online (Goodley, 2011). Types of travel agents 1. Conventional travel agencies These agencies are dedicated to sell all kind of travel services for all type of trips, like: cruises, tours, car rentals, train passes, lodging, air services, etc.
In general, they tend to sell more to local people. These travel agencies can be divided at the same time by: * Travel agencies that are owned by a big agency chain – for example American Express. * Travel agencies can be franchises. They may be owned by families or individuals but must be associated with a brand. * Travel agencies can be associated with a consortium. They are a group of agencies that work together to get and generate marketing tools, training programs, etc. These agencies retain their local identities. * Travel agencies can be totally independent.
These are the traditional mom and pop agencies. (Groves & Siebenaler, 2002). 2. Online Agencies These agencies work absolutely through websites. The great advantage of these agencies is that they can sell to people from all over the world. These agencies are the ones that are having a very big successful now a days. Some examples of these online agencies are: Expedia, Travelocity, etc. 3. Specialized agencies These agencies center in a particular segment of the market. Some examples of these agencies can be: golf, corporate, honeymoon, etc. Mancini, 2005) 1. 1. Relevance of theme (We think that less people use Travel Agencies so we wanted to learn more about them to see if this was true) Data collection Literature review Based on previous research conducted regarding online booking websites and their reviews, it was found that online booking is not only quite different from traditional travel agencies, but also a potential threat to them as well. Therefore, it was decided to research information about travel agencies to understand their current situation.
In order to explain the travel agents’ strengths, weaknesses, opportunities, and threats travel agents face, books were used as they detail the core concepts for the main topic of research (travel agents, consumer behaviors, changing trends and habits). Journals such as those published by the International Journal of Hospitality & Tourism Administration were used due to their in depth studies of travel agencies and the changing. In addition, websites were used as the information is up to date, but it is worth remembering that these are not necessarily academic, so could be biased.
Websites such as SmarterTravel. com and U. S. News Money, eHow. com, Tnooz, and USA Today were used. From the study and analysis a picture can be built up of the situation of a travel agency. Analysis of the data collection To analyze the collected data it was decided to use the SWOT analysis technique as this strategy planning tool can reveal the full picture from different perspectives and consider the positive and negative aspects of the industry as well as possible opportunities and threats that could affect the industry.
Strengths * Face-to-face contact (Patricia, 2008) Unlike online booking, one of the main strengths of traditional travel agency is the opportunity for their clients to have personal contact, so travelers can feel more comfortable, have a more personalized service and can judge the competency and professionalism of an agent as well as base the level of their trust to the agency. * Solving possible problems Travel agencies can offer advice on different issues but also able to offer help in case problems arise (Perkins, 2011).
These are professionals who can provide solutions and deal with a wide range of problems, such as accidents during trips, flight adjustments, falling ill, etc. This is due in part to strong relationships with preferred suppliers (Mancini, 2005). In comparison with online booking, travel agencies are ready to answer queries and take certain responsibilities to ensure the travelers’ satisfaction. Additionally travel agencies can help ensure all paperwork and formalities are there but also help with booking adjustments/cancellations which is not so easy to do online (Haller, 2006). Saving time By communicating the requirements with the client, travel agencies can save time searching for options (Bortz, 2012; Perkins, 2011). Travel agents can do this as they know destination and formalities better (Mancini, 2005). * Experience and knowledge Travel agencies possess a high level of experience and knowledge. This expertise is a valuable reason why many customers pay extra when purchasing tourism services and products. This expertise can also means they can build complex custom trips and the best travel solutions (Fulton, n. . ). Everything a client might require can be arranged – such as flights, hotels, travel arrangements, car hire, tour packages, tour guides, etc. In addition to this, travel agents can offer options that cannot be found online (Perkins, 2011) and have access to a large list of contacts with whom they have strong relationships with (Bortz, 2012). * Value for money Because travel agencies have strong relationships with many suppliers, they have purchasing/negotiating power (Bortz, 2012) which can be used to offer clients better value rates.
Although a travel agent may use certain preferred suppliers due to commission reasons, they are however often chose as they offer good value, in terms of “demonstrating a high degree of reliability, value, service, and overall excellence” (Mancini, 2005; p. 97). Weaknesses * Fees Travel agencies may charge a fee for service could be quite expensive, and clients should be aware of the pricing policy of the agency beforehand as clients may view it as a prohibitive reason even if no trip is eventually booked (Perkins, 2011).
However, this fee is charged for their service/research in case the information is used by the traveler to book online instead (Haller, 2006). Although travel agents can provide value for money, especially in complicated and personalized trips, travel agents are of the opinion that the internet can be effective for simple bookings (Lawton & Weaver, 2009) * Preference for commission instead of clients’ interest Sometimes travel agencies choose the products for their clients with high commission from supplier in their mind, not the clients interest (Mancini, 2005).
Moreover clients may also worry about certain products/services being pushed too hard (Haller, 2006) or include a certain destination in a tour where the traveler is pressured to spend their money. * Working hours A travel agency is not necessarily open 24 hours a day. Thus, they may not be able to be flexible with time differences and opening hours – so there may be no one to answer a client in an emergency. * Additional Effort Usually booking through the travel agency means that clients have to go out, dress up, prepare themselves and arrange to see an agent, whilst online booking can be done at any time and at any place.
Opportunities * Public outreach One of the main opportunities that travel agencies can take an advantage of is to create the positive image for the industry by showing the general public how useful they could be in dealing with this dynamic and complex business (Lawton & Weaver, 2009). * Inherent nature of travel The industry is growing naturally due to more and more people having an opportunity and desire to travel, so there are more potential clients (Lawton & Weaver, 2009). Essentially, this means that all travel agencies need to do is to harness this need. Become a cyber-mediary Though online booking is a major disintermediation threat to travel agencies nowadays, many travel agencies have adopted a “brick-and-click” business model where they have expanded into e-commerce as a firm facilitating the sales of trip-booking – i. e. a cyber-mediary (Mancini, 2005). Thus, by offering an online facility it is possible to adapt to the changing ways of doing business. * Working with non-local consumers This opportunity comes from the growing usage of the Internet.
Travel agents can use internet to extend products and it is possible to market to non-local consumers who wish to travel to those agents’ own vicinity (Patricia, 2008). * Niche Markets and Products Specialization could be the key to the success. Travel agencies could concentrate their efforts on providing unique hybrid products such as special cultural tourism, sport tourism, ecotourism, religious tourism, wine tourism or other special events and activities tourism. This kind of trip requires specialized knowledge and connections with local suppliers, thus they are hard to organize independently. Threats Disintermediation Internet development has impacted the business structure of the industry (Siebenaler & Groves, 2002). Disintermediation is the removal of intermediaries – i. e. middlemen. For travel agencies, this is a threat that comes in the form of online booking websites, as well as companies marketing their products and services directly to the customer – for example, tour operators. As their products are now no longer only marketed through a travel agency, they can market more directly to the consumer through other channels and mediums (Patricia 2008) – one of these is, of course, the internet.
In contrast, a travel agency would have been the main channel which to market such products. It could be said that this is reflected in the airline decommissioning from 1995 onwards (Segreto et al. , 2009) where airlines felt they no longer had a need to pay travel agencies commission. The priority for travel agencies is to reach potential travelers as directly as possible. Their competition is the internet and other companies who seek to eliminate the intermediary which can means less commission paid and thus, more profits.
A Global Distribution Systems (GDS) is the system which is used to carry out bookings and it is these systems which are used by travel agents as well as online booking websites when interfacing with their suppliers (Patricia, 2008; Collins & Cobanoglu, 2008). * Failure to attract the young Many young adults, guests and employees are no longer interested in the travel agency business (Lawton & Weaver, 2009). The lack of young professionals in the business leads to inability to meet Gen Y needs and expectations.
Moreover this generation is considered as internet dependent and tech-savvy so they prefer to book online rather than visit a travel agency. This is a cycle where an increased use and familiarity of such sites will mean more knowledge and skills in organizing trips. When this happens, there are fewer reasons as to why they should use travel agencies. * Risk of Travel Agencies encountering financial difficulties The potential for a Travel Agency to declare bankruptcy is a very real threat that may impact the general customer image of a travel agency – especially when package holidays are purchased.
In mid-2012, “Lanta-Tur Voyage” of Russia and “Sky Tour” of Poland both declared bankruptcy (Feklyumin, 2012; Polskie Radio, 2012) whilst in 2011 many agencies folded in the UK including “Holidays 4 UK” and “Dream Holidays” (Goodley, 2011) – Goodley also noted that people were more reluctant to spend as much due to the economic situation, lower incomes and rising unemployment and were increasingly confident in booking their holidays online (Goodley, 2012).
Consequently the levy charged for all package holidays booked in the UK in case of travel agents’ bankruptcy may potentially be increased in order to resolve the deficit to ensure there are adequate financial means to cover the costs for the travelers (Goodley, 2011). As a result, this will mean less travelers booking their holidays with these agencies and turning to alternative methods to lower costs. * Negative perceptions
According to Lawton ;amp; Weaver study the negative perception is one of the most common threat that travel agencies aware of. While most of the studies have shown that using travel agencies are more efficient then booking online, the common perception is the opposite – travelers state that there is no value in using their services (Lawton ;amp; Weaver, 2009). Lawton ;amp; Weaver also carried out a survey and found that the greatest challenge is to overcome the perception that there was no value and that the internet is cheaper.
Whilst the latter is not necessarily untrue, the general opinion was that the agencies feel that the opposite is true in terms of value and that they could often beat online prices (Lawton ;amp; Weaver, 2009). * Unqualified travel agents Clients who experience unqualified staff in this industry are not likely to come back to travel agencies in general, and this is one of the initiators of negative perception that can affect the industry as a whole(Lawton ;amp; Weaver, 2009). Suggestions/Recommendations
Travel agencies today have to adapt themselves to the changing market. Here are a list of several suggestions and recommendations that could help travel agencies to avoid/slow down the loss their market share in the near future. 4. Using the Internet for new purposes The Internet should not only be seen as a competitor to business, but a tool as well. Encouraging people to read and research online and then helping with the booking is a positive way to build a customer base whilst not shunning the importance of this medium.
Building an online shop-front can also help flourish in this medium. It should be possible to have an access from the travel agency website to search through online booking websites, check out the rates, view other guest’s reviews and communicate online with their personal travel agent, who will be able to provide professional and competent consultation. Consider merging traditional communication methods with innovative solutions on a GDS could help travel agencies to benefit both from new technologies and traditional travel agency values. . Attracting Young Adults through niche markets Additionally travel agencies should concentrate on the niche markets, not only to serve the needs of such permanent customers as business/corporate clients and honey-moons and weddings, but they should specialize in unique events and destinations which are most popular among the young adults whilst providing outstanding services and unforgettable experiences, that will help travel agencies to regain and keep this important sector of clientele.
To achieve this goal travel agencies have to satisfy their clients and it is only possible by hiring young professionals who are aware of the needs of the generation Y, as well as the specific characteristics and features of a niche market they are going to work with. As a result satisfied Generation Y clients will use the electronic world of mouth to share their experience which would help to overcome negative public perceptions but also show the value of the travel agency to others. 6. Overcoming the negative perception of value + cheap price Travel Agencies should focus on promoting more their services to all type of public.
They have to incentivize people to buy their services and the best way of doing it if by also offering some kind of benefits that future travelers can have if they buy services or packages from the travel agencies. They can also demonstrate their usefulness by showing people they can have a personalized service and that they would not fail if they contract them to provide any service. Conclusion In this report, it has been shown that there are a wide range of strengths about travel agencies and also many weaknesses and threats, some of which may now be a burden to or incorrectly viewed by the general public.
Our objectives were set out as below: Describe online booking websites and their infrastructure – It was found that the general popularity of these websites lies in their convenience (including the convenience of not having to get ready to visit a travel agent). One of the false perceptions held by many people was that the internet was cheaper. Describe travel agencies and their background – Travel agencies have a long history and were often the main destination for everyone wishing to travel. With the advent of internet technology, users are turning to this and it threatens the existence of these travel agencies for a variety of reasons.
There are three types of travel agencies as listed by Mancini (2005): Conventional travel agencies, online agencies and specialized agencies. Conventional agencies are those which have a physical presence in our towns and neighborhoods whilst online agencies include booking websites, something that the conventional travel agencies are often competing against. Carry out a Strength-Weakness-Opportunity-Threat (SWOT) analysis and Analyze material about different aspects of travel agencies – By reviewing literature, travel agencies were found to be very different in the way they handle trip booking in comparison with online booking.
Although online booking clearly does have advantages and in the case of simple bookings it is even regarded by travel agencies to be useful, there are a wide variety of advantages travel agencies can offer clients. Some of these include providing assistance when problems arise, saving time, knowledge and experience with someone to speak to, and general all-round value for money. They are not perfect and a fee is still charged in case of a client pursuing a purchase elsewhere which may dissuade some.
Some clients also hold less trust for travel agencies, assuming that they may push certain products, or certain companies, and of course, there is a need to dress up and leave the house when visiting them. Although consumer reluctance for various reasons contributes to a loss of business, the overall threat is the disintermediation of sales as businesses are increasingly marketing directly to consumers more. Some of this is in the form of online booking websites, and some of these users are young adults, who may see little value in their use.
Risk of travel agency and unqualified agents were two other threats to the industry. Although it is difficult in this industry, there are a number of opportunities – creating a positive image for this industry will no doubt help, and travel agencies can cash in on the desire to travel – the demand already is there, but these travel agencies need to claw back some of the market share. Adopting a “brick-and-click” business model is one way to adapt – one that some of the bigger companies were quick to adopt. Finally, suggestions were made for assisting travel agents based on the research conducted.
Although the internet can be viewed as a competitor, it should also be harnessed for the many advantages it can bring not only in terms of finding information, but also adopting a “brick-and-click” business model and offering an online channel for customers to read more and purchasing products. This could be merged with traditional communication channels thus ensuring a there is personalized help if needed. Young adults should also be encouraged to join the industry and a positive image of the industry should be built from this.
If young people join the industry, this will encourage others to visit the business as young people know the wants and needs of their circles. Finally, a positive image that is not based around negative perceptions of value should be encouraged. Although this industry has its difficulties and threats, it is not a lost cause. Travel agencies can take a proactive approach and embrace what they do best and encourage that – Due to new technologies, many clients have largely forgotten about the once helpful and useful travel agency in the town or city they reside in.
References Siebenaler, T. C. , ;amp; Groves, D. L. (2002). Travel Agents and Their Survival. Journal Of Human Resources In Hospitality ;amp; Tourism, 1(1), 1. Lawton, L. , ;amp; Weaver, D. (2009). Travel Agency Threats and Opportunities: The Perspective of Successful Owners. International Journal Of Hospitality ;amp; Tourism Administration,10(1), 68-92. doi:10. 1080/15256480802557283 Goodley, S. (2011). More than 40 travel agencies crashed in 2011 thanks to downturn and disasters / Buisness / The Guardian. Retrieved September 6, 2012 from http://http://www. guardian. co. uk/business/2011/dec/30/travel-agencts-bankruptcies-thomas-cook-holidays? fb=optOut Bortz, D. (2012). Why It Pays to Book With a Travel Agent – US News and World Report. Retrieved September 5, 2012 from http://http://money. usnews. com/money/personal-finance/articles/2012/04/30/why-it-pays-to-book-with-a-travel-agent Fulton, J. (n. d. ). Travel Agent vs. Booking Online / eHow. com. Retrieved September 6, 2012 from http://http://www. ehow. com/facts_5746146_travel-agent-vs_-booking-online. html Perkins, E. (2011). Travel Agencies vs. Online Bookings – SmarterTravaler. com. Retrieved September 5, 2012 from http://www. smartertravel. com/travel-advice/travel-agencies-vs-online-bookings