Effects of Internet Online Booking in Travel Agencies

Effects of Internet Online Booking in give out AgenciesCan spicy alley Travel Agencies SurviveWith Online Travel Agencies?Contents (Jump to)Chapter 2 Literature ReviewChapter 3 MethodologyChapter 4 Findings and analytic thinking4.1 UK Travel fabrication, Current Analysis4.2 Composition of TravelThe expedition industriousness re holds the classic example of firms operating as ingredients between the seller and buyers as represented by the multitude of offers that be present in the industry. The giveation for this influence was established in the pre-com put iner era that utilized institutionalize reservation systems. This mode inculcated the industry and became the accepted operational norm as air passages had an exterior sales force as represented by these independent operations, and customers had a means to wade through the difficult maze of airway flight of steps possibilities. The advent of the internet brought a new variable into the scenario whereby it provided consumers with a choice as a result of the capabilities of this medium to collect and display flight availability, schedules and pricing through search engine compiling. Transaction costs were lowered as a result of economies of scale and 24 hour availability, with the heart of the accomplish fueled by utilizing consumers to conduct the work in finding bargains.This examination will seek to equate whether the traditional go agencies known as last Street, representing brick and mortar operations in the industry parlance, depose survive the onslaught to their business as represented by online act agencies.The activate industry represents a phenomenon that we atomic upshot 18 entirely familiar with in terms of verbiage, however, the definitive meanings as represented by specific words may not be as clear as one would think. In order to provide the necessary verbal beneathpinnings for this analysis of if spirited Street Travel Agencies privy survive with online Travel Agenci es, a description of terms seems in order. Travel represents a word that emanates from travailen in Middle English, which means to toil, and has its roots in the French word travailler (Wikipedia, 2007). It, prompt, is specify as (American Heritage Dictionary, 2007) 1. being transported from one place to another as represented by either a ae identify or journey, and, 2. the process and or time entailed in moving a person from a particular location to another. Travel can be further explained as tourism, which is the visiting of family and or friends, the process of commuting as represented by dieing to either work or other functions, the act of migration in moving ones local or as a constant series of moves as illustrated by nomadic peoples, and as pilgrimages for religious reasons (Wikipedia, 2007). In the context of this examination, move around shall be defined by the transport of individuals for pleasure, tourism, business and personal reasons.A hold up agency offers it s services in the capacity of an agent and provides travel and tourism cerebrate services to the public as achieved through the agencys arrangements and agreements with airlines, sheet lines, hotels and other suppliers of travel link up services (Department of the Treasury, 2002). Travel agencies may contract instantaneously with the aforementioned companies or through what is termed a coordinating body such as the Airlines Reporting Corporation as thoroughly as other such agencies or bodies (Department of the Treasury, 2002). In addition to the aforementioned services, travel agencies may offer varied financial related services such as travelers checks and trip insurance. An important segment of the travel industry is represented by tourism, which Hermann Von Schullard, Austrian economist, stated is the sum total of operators which directly relate to the entry balk and movement of foreigners (MedLibrary.org, 2007).The introduction of internet based online travel info, arriere pensee and ticketing systems introduced a new variable into the market which allows consumers to seek ticket prices, schedules and related aspects at discounted prices as a result of the lower commissioning fees online services charge airlines for acting in their capacity as middlemen. This phenomenon caught on with the public and market sh atomic number 18 progressively shifted in favor of online travel services as lower prices, instant access and no frill airlines captured their imagination. High Street travel agencies are and then caught in a battle for survival as a result, however there are market variables that indicate the penetration rates of online travel agencies has been slowing, merely massive damage has already been done. If High Street travel agencies are to survive, they will earn to capitalize upon inherent facets of customer attitudes and preferences as well as what their service type offers that can not be duplicated by computerized access that does not offer human problem solving skills for manifold travel related problems that exist in varied circumstances.Chapter 2 Literature ReviewThe rapid pace of changes and developments in the travel industry as a result of travel packages, consumer attitudes, economic variables, engagement histories with varied forms of booking methodologies and related aspects rendered the examination of the subject matter as contemporary. The research methodology deemed best suited to this study was descriptive in that it is based upon the use of data, information, facts and associated re bugs to reveal the way things are. To this end, this examination relied heavily on Internet sources to provide the aforementioned.The definitions utilized herein to provide a tail for understanding of travel agencies as represented by the statement provided by United States Department of the Treasury was used as it represented a definition honed from a governmental classification of an industry sector which represented the culmination of intensive study to arrive at its meaning in a frequent sense that is applicable. This same approach was utilized to conduct data and survey research which entailed the collection of information from the Tourism Society of England, the International Air sustain Association, ITB Berlin and IPK International, Internet World Stats and other sources. In conducting the research on the question as to whether High Street travel agencies can survive with online travel agencies, the beginning(a) aspect that was noted is that the various travel and tourism books offered information on individually sector from a dated perspective that did not take into name new developments, m each of which appeared in 2005 through 2006 as new travel packages and the a new travel sector, cruises, emerged as an industry force.The preceding contention is support by the data uncovered by surveys conducted by Travel Weekly in the United Kingdom that asked respondents in the trav el agency sector direct questions regarding their impression and view of their industry. Such a source represents much viable research that was conducted during 2006, offers a much comprehensive base of industry information on how things actually are as it asked the experts in the field of study, travel agents themselves. Their responses on what they viewed as the emerging segment of most importance, cruises, which also represents their most viable tax income stream is data which was not found in the numerous research studies conducted by the World Trade Organization, PricewaterHouseCoopers, Accenture and World Stats. These sources were extremely valuable in providing accompaniment data on trends, patterns and other facets of the travel and tourism sector, however, information from industry insiders in the High Street sector represented the foundation for the question being examined.ITB Berlin and IPK International offered invaluable information concerning the breakdown of consu mer utilization of travel agency sectors, as did PriceWaterHouseCoopers and Internet World Stats. Accentures research gave depth to the previous information as it provided data on how and what consumers do in the process of seeking travel services. Michael Porters Five Forces Model provided the means to correlate all of the indicated data and survey information into a concise summary of High Street and online travel agency competitive points to hone in on the variables and factors that the forward sources offered.Chapter 3 MethodologyIn examining the context of whether High Street travel agencies can survive with online travel agencies it was determined that the research would have to delve into the nuances of the travel and tourism sector to determine the followingComponents of the industry from an historical perspectiveKey aspects of varied consumer attitudes, preferences, trends and viewsTravel industry product components, trends, developments and projectionsTrend of High Stree t and online travel agency market share progressionsRelationships and importance of differing travel segment components in both sectors in relationship to their inherent strengths and weaknesses as applied against each service modelVariables and factors at work, along with developing trends that might have a bearing on the examinationTo accomplish the foregoing the methodology selected entailed the utilization of secondary research of a limited historical nature to provide background information to understand the context of the industry sectors and their changing relationships. The preceding was courtly through the use of books and journals along with statistical information. Since changes in any industry occur quickly the reliance upon books and journals for contemporary developments was deemed as inappropriate and inconclusive. Therefore, to determine the present status of both sectors, the research and operative methodology centered upon the analysis of data as well as trends an d inherent characteristics. To accomplish the preceding quantitative research was determined as the methodology as it generates new information about the world by virtue of (University of North Carolina, 2007)Objectivity, whereby the potential for bias that could potentially affect and or influence the outcome is kept to a minimum through the collection of varying points of view from a number of differing sources.Rigorous, in that the researcch process utilizes data to uncover obvious as well as obsure information, with attention to accuracy and detail as underlying precepts.Systematic, in that the conduct of research seeks legitimate data and information in order to equate the true undercurrents of what is the case as opposed to what appears to be the case in the study and analysis.The subject under examination represents a puzzle that is ruled by the governing question (International Research Network, 2007). The preceding helped to determine the reseach process, the identificat ion of the sources of data as well as information, and the methodologies to be utilized. Kravitz (2006) states that there are differing types of research which can be used in a study. The one selected for this examination included descriptive along with quantitative as it entails the collection of information and trends through the review of data, surveys and examination of varied sources. Kravitz (2006) indicates that this research type is best at describing the way things are, and that the review of prior research aids in the process, along with contempory information.Chapter 4 Findings and Analysis4.1 UK Travel Industry, Current AnalysisAs of 2002 there were 3,181 travel agencies in the United Kingdom, representing a harvest-tide rate of minus 17.2% that generated $11, 659 billion in sales (International Air Transport Association, 2002). Globally, the travel industry generates in excess of one trillion USD annually and is the largest industrial sector (Vogel, 2006, pp. 50-59). The Tourism Society of England indicates that domestically this segment of the industry generates 75 billion pounds in a highly fragmented industry (Tourism Society, 2007).In canvas conducted by Travel Weekly, the British based industry travel magazine, travel agents were asked their views on a number of areas (Travel Weekly, 2007). 47% indicated that cruises would represent the biggest growth area in travel in 2007, followed by long haul trips at 32%, and domestic breaks at 21% (Travel Weekly, 2007). The implications of the preceding seemingly bode well for travel agencies in that these types of trips consumers seek the aid of professionals to aid them with arrangements, features, pricing and the varied packages that are available, which can be quite extensive. Travel agents indicated that they were worried, however regarding the state of the travel industry entering 2007, registering 61%, with 26% indicating confidence and 13% checking indifference as their response (Travel Weekl y, 2007). Travel agent responses provide a valuable insight as to how they feel concerning various aspects and as the most up to date informational source such is being utilized to provide a gauge on the prospects of High Street travel agencies and their battle for market share with online travel agencies. A significant response to the canvas tents in this regard can be found in what travel agents thought about the price wars lowering High Street fares. 36% indicated that they believed that such would end up in lower prices, bit 42% replied no, with 21% indicating probably (Travel Weekly, 2007).With respect to the dollar to pound exchange rate that has increased in favor of the pound, travel agents indicated that they felt Christmas shoppers would benefit the most, 51%, followed by New York City retailers at 23%, High Street travel agencies, 15%, and online retailers and airlines at 11% (Travel Weekly, 2007). The preceding represents an indication of travel agents attitudes toward High Street travel agencies that mirrors their responses concerning their battle for market share. This view was also confirmed by travel agent responses to if there is any time to come for independent High Street travel agents. 54% stated that they felt there would always be room for independent agents, with 27% indicating the affirmative tho as part of a larger buying group, and 19% stating that they would not be able to compete against the larger companies (Travel Weekly, 2007). When asked about the importance of cruises to their industry, travel agents responded in the following fashion. 53% indicated that this area is growing in importance, with 21% stating that it represents the one area that they make money (Travel Weekly, 2007). 17% indicated that this segment is too complex and that they do not sell cruise packages, and 9% stated that cruise business is vital to their business only if they sell these via self packaging (Travel Weekly, 2007). Given that 47% indicated that t he cruise business will enjoy the largest segment of growth in the industry in 2007, that seemingly indicates that High Street travel agencies are factorisation in this segment as an important revenue stream.The utilization of the Internet as a booking method has seen high growth in Europe, in general in flights as well as accommodations (ITB Berlin and IPK International, 2006, p. 13). The foregoing represents an approximated one/third of all outbound trips and also entails online booking for some segments of an individuals trip as represented by hotel and vehicle reservations (ITB Berlin and IPK International, 2006, p. 13). ITB Berlin and IPK International (2006, p. 13) reports that the utilization of the internet is primarily the mode used for airline ticket purchases, with accommodations second, however, vehicle reservations leads both categories as a percentage of sales of the total.Table 1- Travel Bookings in Europe, January Through August 2006(as a percentage of pre-bookings in total travel)(ITB Berlin and IPK International, 2006, p. 13)TotalInternetAccommodations78%37%Flight63%38%Travel insurance23%6%Bus/coach15%2%Rental car15%10%Ferry9%7%Train7%4%Others5%3%Interestingly, travel agents utilize the internet as a source of information and the use of tour operators in placing their rates and packages online represents a key reason for the preceding (ITB Berlin and IPK International, 2006, p. 13). Consumers utilize the Internet for a large percentage of their travel arrangements, especially in the area of airline, accommodation and auto rental, as shown by the followingTable 2 Information Sources Used by European outgoing Travelers, January through August 2006(ITB Berlin and IPK International, 2006, p. 14)Source% shareInternet45Travel agency20Friends/relatives17Travel guide8Travel tract7Newspaper3Tourist office2TV2Others5The preceding seemingly indicates that incursions by Internet based booking in the cruise travel segment is going to remain low as a r esult of the complexities encountered in making selections and wading through the complex data and choices. As the main revenue source and growth area for High Street travel agencies, consolidation of the services offered in this area represents a strong foundation to be built upon. The consumer climate in the United Kingdom exceeds the confidence of travel agencies with respect to their outlooks. Travel Weeklys (2007) poll in this segment indicated that 26% of them were confident, while ITB Berlin and IPK International (2006, p. 18) found that the United Kingdom and Spain are at the top of its consumer confidence survey as well as percentage of household consumption. Termed as a willingness to buy, said factor represents increased demand in the UK during 2007, and as the United Kingdoms transcription in this category has consistently been at the top, bodes well for the continued growth forecast in the industry.The growth in eCommerce has shifted the manner and way individuals utili ze travel services. Originating in a paper on packet switching by Leonard Kleinrock of the Massachusetts Institute of Technology in 1961, the theoretical underpinnings of Klienrocks work set the be for the ARANET which was the distant forerunning to the internet (Internet Society, 2007). That beginning has reshaped the manner of global commerce, information availabilities, and created an entirely new set of industry classifications. One such manifestation is illustrated in the travel industry. The ability to search large quantities of data easily and instantly through varied online web sites, and travel agencies without any sales or pressure tactic makes the internet a technology that is ideally suited to the travel industry. In this medium consumers can search and explore at their leisure at any time reviewing all manner of destinations, travel times, pricing and comparative offers. This used to be the exclusive domain of travel agencies, the search for fares, times, routes, seat ing, destinations and packages, through information networks that were unobtainable to the public. Consumers do not have to queue at call centers, telephone or take a trip to High Street travel agencies, they can simply click online and search easy to find categories from their Internet browser. Online travel agents are able to offer 24 hour access to information that consumers can access and compare at any time, representing a boon to locating the best prices, dates, deals, destinations and packages.The online travel industry is just a decade old, however the impress of online agencies has been tremendous (Economist, 2005). The benefit of the Internet to consumers and travel providers such as airlines, hotels, car rentals and associated sectors is that it saves administrative costs enabling them to offer lower fares and rates (Economist, 2005). There are 37,600,000 internet substance abusers in the United Kingdom estimated for 2006 against a population of 60,000,000 people repres enting a 62.5% penetration rate with user growth rising by communicate% between the period 2000 and 2006 (Internet World Stats, 2007a). The UK ranks 6th globally in the total number of Internet users (Internet World Stats, 2007b), and ranks 20th on terms of penetration rate (Internet World Stats, 2007c).Table 3 Top 20 Countries with the Highest Number of Internet Users(Internet World Stats, 2007b)RankCountryInternetUsersPopulation(2006 est.)InternetPenetration1United States209,024,921299,093,23769.9%2China123,000,0001,306,724,0679.4%3Japan86,300,000128,389,00067.2%4Germany50,616,20782,515,98861.3%5India40,000,0001,112,225,8123.6%6United Kingdom37,600,00060,139,27462.5%7Korea (South)33,900,00050,633,26567.0%Table 4 Top 20 Countries with the Highest Number of Internet Users(Internet World Stats, 2007c)RankCountryPenetration(% Population)Internet UsersLatest DataPopulation(2006 Est.)1Iceland86.8%258,000297,0722New Zealand76.3%3,200,0004,195,7293Sweden74.9%6,800,0009,076,7574Portuga l74.1%7,782,76010,501,0515Australia70.7%14,663,62220,750,0526Falkland Islands70.4%1,9002,6997Denmark69.4%3,762,5005,425,3738United States69.3%207,161,706299,093,23719Netherlands65.9%10,806,32816,386,21620United Kingdom62.5%37,600,00060,139,274The significance of these figures is that online travel agencies effectively are accessible to 62.5% of the UK population, which becomes more imposing when one considers that 16.7 million United Kingdom residents traveled outside of the earth during 2006 (National Statistics, 2007). The utilization of travel outside the UK is utilized as internal country travel represents means generally using short air trips, train, car and coach for brief trips and stays and does not factor into the type of business profile utilized to a high percentage by High Street travel agencies. The impact of the Internet has caused a dramatic decrease in the number of brick and mortar travel agency locations in the United Kingdom as a result of shifting consumer book ing patterns. During 2005, the intrusion of the Internet into the brick and mortar travel agency business caused 28 travel agency companies to fail, not to mention the numerous closing of the offices of the larger chains (m-travel.com, 2005). In 2005, the number of brick and mortar travel agencies totaled 6,124, down considerably from the 7,513 in 1989 (m-travel.com, 2005).The good news is that cruise ship travel is up substantially, and the travel / tourism industry has been experiencing solid growth. However, the cruise ship segment is the sector of the industry that has shown the most dramatic gains. Lines such as Carnival, Princess, Celebrity and Royal Caribbean have either ordered or put into service over 30 ships in a few years representing a tremendous capital investment (Prestige Travel Systems, 2007). The lure of cruise ships lies in their first class accommodations and immersing passengers into a totally contained package of luxury, gourmet meals, on ship shops, athletics , movies, entertainment, restaurants all while cruising to destinations. Carrying in the area of 4,000 passengers, with 10 to 15 decks, the veritable(prenominal) cruise ship boosts in the area of 10 restaurants, 250 waiters, and most are the same size or larger than the Queen Mary 2 (Guardian Unlimited, 2006). Industry executives in the cruise ship sector report that projections in cruise ship travel forecast it to increase in 2007 (Cruise Critic, 2006). The growth of this segment is good news to brick and mortar travel agencies as airline travel booking has been and is shifting to the online sector.The airline travel segment as a result of the Internet, and user penetration in the UK, 62.5%, has seen an increase in online bookings to the point where it now registers 53%, according to a survey conducted by Accenture (2005). The Report stated that 63% of respondents have booked hotels online, and that nearly two-thirds of those responding to the survey indicating that they expect to increase their use of low cost airlines where price is the primary consideration (Accenture, 2005). One of the key facets uncovered is that consumers are highly price sensitive and that since the 2003 survey it was noted that there has been a significant shift to online bookings from a live agent (Accenture, 2005).Table 5 chief(a) Method of Booking Business Travel(Accenture, 2005)Online53%Phone with a live agent27%In person12%Other8%Table 6 Internet Use for Flight Arrangements(Accenture, 2005)Research flight times and availability79%Purchase airline tickets66%Update and or change reservations28%Specify personal flight preferences26%Airline check in22%Access account history or receipts online19%None of the above12%Other2%Table 7 Personal Travel Preferences, Airline Type(Accenture, 2005)Major network carriers48%Low cost airlines46%Not applicable5%Other1%The foregoing indicates a high do it yourself mode in airline bookings whereby the comparisons are rather straight forward. Feat ures incorporated into online sites such as arranging your own seating has proved to be extremely popular, as has the printing of boarding passes and tickets (Economist, 2005). In fact, many online travel agencies are offering more than simply travel tickets and accommodations. Some have gifts shopping, hotel ranking sites, comments from other travelers, tickets to events and more, all in the labor to make the experience personable and get consumers to either remain on the site longer or return (Economist, 2005). As indicated under Table 6 Internet Use for Flight Arrangements, 79% of Internet users utilize online sites to research flight times and availability, while 66% actually purchase tickets. Naturally the more comfortable one