Disintermediation and Reintermediation of the Travel Agents

Topics: Travel agency, Disintermediation, Travel Pages: 9 (3164 words) Published: May 22, 2011
TABLE OF CONTENTS
Page

1. Introduction2
2. Disintermediation and re-intermediation of the travel agents3 3. Travel agencies responses to a challenging market6 4. Conclusion8
5. References9

1. INTRODUCTION

Nowadays, the travel distribution channel is very complex and characterized by the presence of many different kind of intermediaries which operate in a very competitive market. Since the beginning of the travel industry, intermediaries have always played an important role for the development of tourism products and services. Indeed, intermediaries have the ability to organize and aggregate a large amount of data into one price. Moreover, they have a fundamental role for counseling and delivering a personalized service according to the specific need of customers (Kracht and Wang, 2009). Before the advent and further development of communication technology, the market was dominated by the large suppliers such as airlines, hotel chains and resorts. Travel agents were the conventional intermediaries which were independent from each other and represented a portion of the dominant players in a non-competitive market (Gharavi and Sor, 2005). Later on, with the high spread of ICT and the need of cutting costs the position of the travel agents has been threatened. New kind of middlemen emerged adding additional layers of intermediation, disintermediating certain players by bypassing the traditional intermediaries (Buhalis and Law, 2008). Technology has also allowed suppliers to directly communicate with consumers who have seen their choices enormously increased. This has increased the competition and the complexity of the market and has raised an important issue for the presence in the market of traditional travel agents. The aim of this paper is to investigate how disintermediation and re-intermediation have affected the way travel agents operate and whether there is still a place and a prospective of growth for travel agents in the market.

2. DISINTERMEDIATION AND RE-INTERMEDIATION OF THE TRAVEL AGENTS

In the last twenty years several changes occurred in the tourism distributional channel. Every component of the chain value has been affected and particularly travel agents. Traditional travel agencies are being threatened not only by integrated tour operators, which control their own distribution channels, but also by the expansion of alternative distribution channels such as the Internet, Teletext, call centers, and even travel TV channels. This process is called disintermediation (Kracht and Wang, 2009). According to Bennett and Buhalis (2003) disintermediation is the process of eliminating intermediaries within the distribution channel driven by electronic means that enable consumers to access and transact directly with suppliers and destinations”. Before 1993, the traditional tourism system consisted of consumers, traditional retail travel agents, corporate travel agents, tour operators, GDS’s and suppliers. The 1993 was the year of the first commercial usage of internet. After that year many changes occurred and many more players enter into the market thanks to the reduction of barrier entry costs. However, the starting point of disintermediation was in the 1960s, when the American airline lunch the first GDS allowing consumers to buy tickets directly from the airline company (Kracht and Wang, 2009). Travel agents’ main source of revenue at the time was commissions paid to them by the airlines on tickets sold by them on the airlines’ behalf. Pressures to reduce costs in an increasingly competitive industry caused airline companies to look for ways to reduce their payments to travel agents. Initially, airline companies progressively reduced the amount of commission paid to travel agents while, at the same time, they opened up new channels and expanded existing channels to reach travelers directly. Airline companies encouraged travelers to...

References: The success of internet in this respect, is perhaps due to the nature of the tourism product, which is a little more than an information product, easy to convey through the web (UNCTAD, 2000; cited by Anckar, 2003).
Anckar, B. (2003) “Consumer Intentions in Terms of Electronic Travel Distribution”. E-service Journal, Vol. 2, No. 2, pp. 68-86
Anckar, B
Bennet, M. and Kevin Lai C. W. (2005) The impact of the internet on travel agencies in Taiwan. Tourism and Hospitality Research, Vol. 6, No. 1, 2005, pp. 8-23.
Buhalis, D. and Licata, M. C. (2001) The future eTourism intermediaries. Tourism Management, (2002) 207–220. Available at: www.elsevier.com
Cheung, R
Chircu, A. M. and Robert Kauffman, J. (1998) Strategies for internet middlemen in the intermediation / disintermediation / reintemediation cycle. The International Journal of Electronic Commerce and Business Media, 9, 2, 1999, pp. 109-117
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eMarketer Inc (2005) “Travel Agencies Online Report”. http://www.emarketer.com
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Harris, L. and Duckworth, K. (2005) Travel agents future. Published online in Wiley InterScience. Available at: www.interscience.wiley.com
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Huang, H. H. et al. (2006) Exploring Customer Satisfaction, Trust and Destination Loyalty in Tourism. The Journal of American Academy of Business, Cambridge, Vol. 10
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Law, L. and Lau, W. (2004) A Study of the Perceptions of Hong Kong Hotel Managers on the Potential Disintermediation of Travel Agencies. The Haworth Press. Available at: http://www.haworthpress.com/web/JTTM
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