WOULD THE INTERNET REDUCE TRAVEL AGENCIES BUSINESS ?
Introduction
The rise of e-commerce and e-business has left most travel agents worrying about their future. Some believe in apocalyptic scenarios, where the Internet would reduce their business to merely serving a small (even micro) niche of traditional customers who resist online transactions.
Others remain more passive, as they view the Internet as a marvellous tool to search for their client’s information, but expect that ecommerce will remain a small activity that will not go beyond the offline business volume.
Finally, we find the general opinion shared by an increasing number of travel agents, where e-business is viewed merely as a further extension of the systems and applications they had been using so far, and that will become pervasive but will still require a high degree of interaction with travel agents.
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Despite the diversity of opinions, it remains that adapting to new information technology is a top priority on the agenda for the travel agency industry. The importance of the Internet in the tourism industry cannot be ignored anymore.
Consumers are turning to the Internet in ever-increasing numbers, both to obtain travel information and to buy travel products. According to the Travel Industry Association (TIA), more than 59 million Americans used the Internet in 2000 to get information on destinations or to check prices and schedules, growing almost 400 per cent over the previous three years. Of that group, TIA said 25 million actually purchased travel products or services in 2000, representing a 382 per cent jump over the figure for 1997
As the business of travel agents moves online, they must decide whether they want to be part of this movement and how to invest in new technologies that will allow them to compete on the Internet. However, before a travel agency decides to commit to e-business, it should ensure its strategy is well targeted on the key trends driving the industry.
Targeting your e-business strategy
As the head of a small travel agency, there are at least three important strategic decisions that will determine greatly the type, scope, and performance of any ebusiness initiative.
First, you must demystify Internet booking and its impact on travel agencies, which will lead you to decide whether to commit to e-commerce, and if so what direction to take.
Second, you must shield your business from the inevitable changes occuring in the industry, mainly by adopting an alternative revenue structure, and by charging service fees in order to be less dependent on commissions paid by airlines or sell alternative travel products.
Third, you must move beyond the ticketing business, which is rapidly becoming a “commodity service” readily available through the Internet, and get into new value-added services that will ensure your differenciation and long term growth.
Getting realistic about e-commerce and e-business
Too many travel agents view e-commerce as a very complex activity, requiring technologies that are not accessible to the common agency. As well, many look at the overall offering of E-Travel agents and portals as a service that will become, with time, unbeatable in diversity, price, quality, flexibility, etc. These perceptions fail to recognise two realities:
- E-Commerce and e-business technologies are becoming more affordable and therefore more accessible to all SMEs in the tourism business, including travel agencies.
- Internet booking is not the panacea for all the tourism industry, and a lot of improvements remain to be introduced, which could be done by offline travel agencies.
Myth Reality
The cheapest airline fares can be found on the Internet.
No single Internet supplier offers the cheapest fares. And with fares changing constantly, comparison-shopping is essential. Because they have the complete fare picture, travel agents can find the best fares and can suggest cost-saving options such as alternative airports or Saturday stay-over.
Shopping for travel on the Internet gives you instant information.
Yes, but the information may be incomplete. Also, many sites – notably those of some airline-ticket consolidators – are not much more than billboards: “Call us for current prices” is the best you get. Also consider the time it takes to find and access the sites that interest you. It’s all too easy to begin a small investigation and suddenly realise you’ve been online for two or more hours.
The Internet allows you to inquire without disclosing any personal information.
Often you can. But some sites require that you give your name, address and E-mail address before you can access any information. And beware of any site that requires your credit card number before you book your tickets.
The Internet can do anything a conventional travel agency can do.
There’s no question the Internet can sell you just about anything these days – including travel. But selling is only a part of a travel agent’s job. The rest is personal service. If you buy a ticket over the Internet, whom do you call to make last minute changes in travel plans? To re-book or make a change in your hotel reservation?
The Internet is driving travel agents out of business. In fact, several travel agencies operate on the Internet. It’s simply another tool that your full-service travel agencies use to serve their customers in this e-commerce age
As a travel agency discovers the feasibility of entering into e-commerce, it must also learn the important steps to follow in order to become an efficient and reliable ebusiness. Indeed, whether your objective is to build a more agile back office with little or no electronic relationship with clients, or to complement an existing offline agency with an online offering, or even to develop an entirely new E-Travel portal, all these options require the creation of a solid e-business architecture. As we will explore further, the IT infrastructure of travel agencies is evolving rapidly, and is affecting both offline and online agencies.
However, the window of opportunity for building an e-business strategy may be rather short. As a small travel agency, you must be very careful not to plan your Internet initiative as a long shot, to avoid getting caught in the middle of the road by other trends.
In order to build a coherent and realistic strategy, you should make sure to:
- Challenge the misconceptions of the Internet around you and create a true debate
- Commit to an e-business initiative and lead the whole firm to get onboard altogether
- Analyse how the Internet may offer innovative functionalities for your existing operations
- Re-conceive your services by complementing your offline capability with online delivery
- Make online booking as a driver of other services, so as to diversify your Internet offering
- Learn from online interactions and gather the right data to discover client behaviour
- Ensure the human touch of your services can effectively be reproduced online
- Benchmark your innovativeness and renovate your booking applications regularly.