Future of Travel Agencies

Only available on StudyMode
  • Download(s): 196
  • Published: November 17, 2008
Read full document
Text Preview
Can agents see Life after the Web?
This essay is to discuss what the future is for travel agents in today’s world, when internet services are so popular and easily accessible. It will give a brief view on the travel retail industry and developments within the traditional channels of distribution. This essay will also include the present issues that have had an influence on the industry. Travel retail industry plays very important role in tourism. Travel agents are like a “communication bridge” between the suppliers and the customers. They work on a behalf of the tour operators providing travel services such as airline tickets, hotel rooms and train tickets. The financial risk of the travel agent is very low due to lack of stock. They do not buy products form the provider. There are other services offered by the travel agents for example insurance or car rental. For providing these products agents earn a commission. Usually it is about 10% but they often loose 1-2% on the plane tickets, hotel rooms or train tickets. The commission they get selling insurance can come up to 30% of the whole amount. Other services such as car hire can also bring more than standard 10%. Another way for travel agents to earn money is to accomplish ‘overrides’- particular sales aims set by the supplier. That often can allow the agent to gain about 2.5% of the selling price. Travel agents work to make sure that the most demanding product is available in the right place and at the right time. (Cooper. 2005) People travel for various reasons therefore there are different kinds of travel agents. They can be divided into two main types – leisure travel agencies and business travel agencies. Each of them adjusts the services provided to the needs of the potential customers. First one is basically aiming to tourists which travel is generally not connected with work. The other one is strictly focused on organising any kind of business trips, often offering high standard services. The example of this type of agency is Wayte Travel Management. It is one of the best known business travel agencies in the UK which has been specialising in arranging business trips for nearly thirty years and offers a wide range of special deals. (http://www.waytetravel.co.uk/, 2008) One of the main functions for tourism is information, which is provided to the customer via distribution channels. In tourism their role is much stronger then in the other industries. Because the control the demand of the customers, they also have a power to suggest the prices of the product. (Buhalis, 2001.) Development of tourism distribution channels is changing tourism industry. Vertical and horizontal integration within the distribution channels have a big influence on the travel retail agencies. In case of horizontal integration, when tour operator become a travel agent and starts selling products directly to the customers, travel agent might lose profit because of competitive prices.(Buhalis, 2001.) In recent years the way of distribution has been changing. These days tour operators more and more tend to sell their packages straight to the customers. Doing so, they lower the prices by using their own outlets or web sites. The process of cutting commissions started in the middle of 90s in US and then reached Europe. (Leidner, 2004) Lately popularity of the internet has been growing very fast. People more often are using on line services in many aspects of their lives because it is faster and simpler. Tourism industry has also been affected by these tendencies. Travel retail agents are rapidly losing their place in the market. Estimations presented by ABTA for year 2006 showed that British travellers booked from 5% to 10% of their trips via internet. It has been very difficult for the high street agencies to keep up in the competition with the online travel agents. People can easily search through the web and find the most suitable deals. Other factors causing decrease of attractiveness of...
tracking img