Development of Online Travel Agents and Its Impact to Old Traditional Travel Agents Term Paper

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Online Travel Agents and Its Impact on Old & Traditional Travel Agents

This thesis looks at the development of online tourist agents, and its impact on traditional, high street travel agents, with a focus on European consumers. Online bookings for travel and tourism are increasing at a staggering rate, worldwide, and noticeably so in Europe, and particularly Britain.

This thesis considers this development in its social and cultural context, by investigating this growth pattern, according to the analysis, and subsequent results of, a survey undertaken on the main players in the travel and tourism industry, who were interviewed at the World Travel Mart, held in London in November 2003.

The main hypotheses to be considered in this thesis, with regards to the development of online tourist agents, of which there are three main hypotheses, are that:

The characteristics of online agents are quicker, meaning that it is quicker, and often easier, for people to book their own travel through online agents, than through using traditional ('high street') travel agents

The prices offered by online travel agents is the main factor that drives the growth in online travel and tourism agents, and Consumers really do genuinely believe online agents to be a better option than high street ('traditional') travel agents.

The thesis first looks at the rise in online travel and tourism booking, and then goes on to present a literature review of the three main hypotheses to be tested during the course of the investigation. The Methodology to be used for each of the three main hypotheses will then each be discussed in turn, and finally, a Finding and Analysis section will include the main findings of the investigation carried out in the course of this research.

The thesis is based on the answers given to a questionnaire that was distributed (in November 2003, to the delegates of World Travel Mart held in London) to people running 'traditional' high street travel agents; people running online travel and tourism agencies; people using travel agencies; people using online travel and tourism agencies; and, the people responsible for promoting travel and tourism within the UK (journalists, PR people etc.). The survey instrument i.e., the questionnaire, is given in the Appendix; as discussed, the findings and main conclusions arising from the answers given to this questionnaire are discussed in detail in later sections of the thesis.

Literature Review: Overview

The high street travel agent has been steadily declining over recent years: according to brochure distributors, BP Travel Services, the number of UK travel agents has slipped from 9,097 to 8,863 between 1999 and 2002 - representing a 9.7% drop (http://www.acca.co.uk/publications/corpsecrev/45/956215).

Many cite the internet as the reason for this decline in high street travel agents, as advances in technology and people's familiarity, and comfort with using, the internet has reached the point where many people prefer to use the internet to make their travel bookings.

Highlighting the new stepped-up demand for interactive travel, American Express in 2001 recorded a 500% increase in reservations made via corporate online booking tools, compared to the year earlier (http://home3.americanexpress.com/corp/latestnews/it-growth.asp).

Interactive travel bookings now represent over 6% of all American Express corporate travel reservations made in the U.S. (http://home3.americanexpress.com/corp/latestnews/it-growth.asp).Many firms today are spurring growth of online travel bookings by providing system training and usage help to business travellers, administrative assistants and other employees who use corporate online booking tools (http://home3.americanexpress.com/corp/latestnews/it-growth.asp).

Thus, there are threats to the high street travel agents within Europe, as people begin to realize that it is often cheaper, and easier, to arrange, make, and pay for, their own travel arrangements via the internet: both private individuals, and companies.

The rest of this section will look at the reasons behind the increase in online travel bookings, through a discussion of several pertinent questions.

Question 1: Do traditional travel agents see online travel agents as a threat?

A recent report from the ABTA, which covers around 6,600 agencies, believes that agents must get their act together if they are to survive (http://www.acca.co.uk/publications/corpsecrev/45/956215).

Head of Consumer Affairs at ABTA, Keith Richards, says agents must prove their worth in the eyes of customers: "The fact is that there is less demand for traditional travel agents, who may find themselves in for a shock if they don't adapt to the changing nature of travel," he says, continuing, "Agents must begin to focus on the kind of things which reflect extra value to the consumer" (http://www.acca.co.uk/publications/corpsecrev/45/956215).

In October 2002, a MORI survey reported that 60% of respondents booked through a travel agent, compared with 78% in 1990 (http://www.acca.co.uk/publications/corpsecrev/45/956215).Direct bookings had increased during that time from 19% to 36% (http://www.acca.co.uk/publications/corpsecrev/45/956215).

In addition, a survey conducted by PhoCusWright supports predictions of increased web bookings, expecting traditional travel agencies to represent just 18% of hotel sales in 2005 -- down from 21% in 2001 -- as hotel sales move online: the firm forecasts a 49% increase in online hotel sales in 2002, reaching $6.3 billion (http://cyberatlas.internet.com/markets/travel/article/0,6071_1567141,00.html).

Question 2: Do consumers really consider online agents a better option than high street travel agents?

The most recent strike against agents hit at the heart of its business, the package holiday, of which around 20.6m were sold last year according to the Central Statistical Office (http://www.acca.co.uk/publications/corpsecrev/45/956215).A Goldman Sachs report, well documented in the national press, warned it was significantly cheaper for consumers to package their own holidays by booking flights and hotels separately (http://www.acca.co.uk/publications/corpsecrev/45/956215).Around 70% of holidays reviewed were cheaper booked separately and by an average of 26% (http://www.acca.co.uk/publications/corpsecrev/45/956215).With the onslaught of online booking engines, price and the "hassle" factor alone are no longer the saving grace of agents (http://www.acca.co.uk/publications/corpsecrev/45/956215).

Hundreds of thousands of people are turning to the internet to book their holidays, as they realize it is cheaper, and easier. Anyone who has stood in a high street travel agent in the UK, and waited in turn to talk to someone about booking a holiday anywhere vaguely off the package tourist trail welcomed the internet with open arms, especially as prices on the internet are far lower than those offered by high street travel agents, and because the whole experience of booking your holiday is far nicer at home in front of your computer, than stuck on an uncomfortable chair, in a hot, stuffy room, trying to explain to the person behind the counter where Palermo is.

The internet, and the revolution in travel booking it precipitated, is a godsend to those individual travellers who want to direct their own travel; in the UK, it is seen by many as an extension of the 'teletext holiday' service, which is run through the television, and which provides cheap airfares and holiday packages. The transition from booking via teletext to booking via the internet was not a difficult one for many people to make, and so the internet travel agents found a ready, and eager, market. The internet is also useful for the many thousands of families who prefer 'villa' holidays to package holidays, and these many thousand people are converts to self-directed internet bookings.

Question 3: What are the main advantages and disadvantages of using online agents and high street travel agents?

The main advantages of using the internet to make travel arrangements are that you need not enter the high street travel agents, which seem to be designed to give the worst 'experience' when booking your holiday, with useless agents, and inflated prices. Another advantage is that you can direct and plan your itinerary yourself, picking and choosing flights, accommodation and other extras, to build your own dream holiday: the very action of arranging all of this is seen by many as an accomplishment, that is to be proud of: for many, this is a great advantage. Another great advantage is that through the internet, you can shop when you want to shop: it can be prohibitively restrictive, working all week and then realizing that the only time you can go to book your holiday is on Saturday morning, in a town centre travel agent, where thousands of other people are trying to do the same thing. With the internet, booking can be done at any time, in the comfort of your own home, and not when you are forced to do it, through the unaccommodating opening hours of the high street travel agents.

Advantages of using the internet that were quoted at a TIA conference include: "What travelers consider most important when it comes to using travel Web sites is being able to compare prices, obtaining up-to-date information, receiving easy-to-find details about destinations and being offered a wide range of choices" (quoted at (http://www.findarticles.com/cf_dls/m0VOU/9_304/76940598/p1/article.jhtml).

The main disadvantages are that there can be problems with ticketing, especially if flights are booked close to the date of travel. This problem will, however, soon be solved with the development of electronic ticketing, as is being pioneered by British Airways in the UK.

Another disadvantage is that there can often be too much choice available for shoppers via the internet, and that some people may be…[continue]

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