Travel Sector Analysis

Topics: Travel agency, Computer reservations system, Orbitz Pages: 14 (3876 words) Published: April 18, 2008

Hundreds of millions of people make billions of trips each year, making travel one of the world's largest industries. This industry includes a broad range of businesses such as airlines, hotels, cruise lines, rail lines, car rentals but also travel agencies, tour operators and other travel suppliers that are part of a chain supply of products and services. Initially, travel supply chain was linear, involving travel providers who supplied Tour Operators who turned to Travel Agents who sold to travelers. With the emergence of new technologies, all the players of the supply chain now have direct access to travelers. With direct access to thousands of travel suppliers, the travelers can now compare different sources, and check prices and availability for their trip at anytime without the help of a travel agent. While they are getting used to booking basic travel (air+hotel+car) online, travel web sites are now offering more and more complex products such as cruises, vacation packages, travel insurances, passes, excursions and other local activities. In this paper, online travel sector is analyzed by considering business models that is used for this sector in the online environment, evaluating some major businesses in the sector and also by discussing the past, current and future state of the online travel industry. Additionally, a new business idea is created for the sector and it is described in detail with its business scope, target market, customer segment, business model, short and long term objectives, market analysis and marketing strategies.



The Brokerage Model, which brings buyers and sellers together and facilitate transactions. Usually a broker charges a fee or commission for each transaction it enables. Brokerage models include:

Marketplace Exchange: offers a full range of services covering the transaction process, from market assessment to negotiation and fulfillment. Exchange operates independently or is backed by an industry consortium. Expedia, Travelocity, Orbitz are included in this category. They are major businesses in travel sector offering variety of trips, vacation packages, flight tickets, cruises and car rentals to travelers.

Demand Collection System (Reverse Auction): the patented “name-your-price” model pioneered by prospective buyer makes a final (bidding) bid for a specified good or service, and the broker arranges fulfillment. Priceline collects the price offers from customers and from travel companies separately. It tries the found the best match of the customer offer among alternative company offers. Priceline lets customers name the amount they are willing to pay but reveal the details of their itinerary only after they have punched in their credit card number.

Auction Broker: conducts auctions for sellers. Broker charges the seller a listing fee and commission scaled with the value of transaction. Hotwire is an example of auction broker in online travel market. Hotwire's partners allow this web site access to their unsold inventory - empty seats on flights, empty hotel rooms, and unrented cars - at big savings. Customers make deals to be able to purchase these products and services. They can see the travel partner name after they book; but they can get travel deals that are significantly below published prices. Hotwire aims to offer unbeatable low prices on airline tickets, hotel reservations, car rentals, vacation packages and cruises.

Search Agent: a software agent or "robot" used to search-out the price and availability for a good or service specified by the buyer, or to locate hard to find information. FareChase, CheapFlights, Kayak, Mobissimo, Sidestep etc. These travel search engines search hundreds of travel sites from all over the world to provide the information to the customers and provide options that suit...
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