eTour operators vs. eTravel agencies

 

 

19-01-2016
By: Denise Berkeveld
Source: Buhalis,2003 Chapter 9 and 10 and Operation processes and Yield Management  Lecture 2

 

 

Trends in technology are creating many opportunities for the travel industry. ICT became an important aspect for travel agencies, tour operators and many other travel organisations. But in this article we will only talk about the travel agencies and tour operators. In the last years eTravel agencies or eTouroperators have emerged (those are travel agencies or tour operators that are only selling their products online). Furthermore, this article also examines the threats for disintermediation in the travel industry.

 

ICTs provide a wide range of tools for travel agencies and tour operators, information exchange and tourism distribution is much easier nowadays. Moreover, complicated travel itineraries can be made within a short time, due to ICT as well. CRSs and GDSs has also provided an effective reservation system that helps travel organisations to get information, to make reservations, etcetera. Furthermore many organisations use ICT to access tourism suppliers’ databases, to confirm reservations and to verify availability and rates (Buhalis,2003.

 

eTour operators
ICT changed the business of tour operators dramatically, and it’s still changing it. Many tour operators offer their product online and they still also via travel agencies. But other tour operators just only offer their products online, these are eTour operators, virtual or online tour operators (e.g. Eliza was here). An eTour operator is facing stiff competition from the big online travel agencies and mass-market tour operators, those can use their higher sales volumes to negotiate better deals and offer lower prices. Like I explained in the article: “What to do as a business, struggling with e-commerce?” companies which are selling online need to build customer loyalty! They need to stand out online and be able to react quick to the changing market.

 

eTravel agencies
But also for the travel agencies business have changed completely due to ICT. The traditional travel agencies saw a big decrease in visits the last years. Often people are only going to a travel agency, for booking a trip and they don’t need that much advice. Customers have sometimes even more knowledge about a trip they want to book than the staff, mostly due to the internet. There are now also travel agencies which are only selling trips online (e.g. Expedia). Those agencies are called eTravel agencies or online travel agencies.

Disintermediation in the travel industry
Internet developments illustrates two major trends:
- Tour operators aim to disintermediate travel agencies
- Tour operators are threatened with disintermediation

 

There are many arguments for and against disintermediation of tour operators or travel agencies. Some examples are explained below:

 

For disintermediation of tour operators:

-Tour operators manage information and package products in a unified and mass approach

- Tour operators often “pile products high and sell cheap”, often at the expense of quality

- Often tour operators operate in environmentally downgraded areas and contribute to the mass development of resorts

- Tour Operators often offer biased advice and direct consumers to principals who offer override commissions and higher profit margins or to in-house companies

 

Against disintermediation of tour operators:

- Tour operators offer representatives that speak the local language and can deal with the local conditions

- A large part of the market is computer illiterate

- Tour operators reduce the insecurity of travel, as they are responsible for all arrangements and can compensate consumers should products fail to reach specifications

 

For disintermediation of travel agencies:

- Travel agencies currently add little value to the tourism product, as they primarily act as booking offices

- Travel agencies are biased, in favour of principals who offer override commissions and in-house partners

- Experienced travellers are much more knowledgeable than travel agencies

- Commissions to travel agencies increase the total price of travel products ultimately

 

Against disintermediation of travel agencies:

- Travel agencies are professional travel advisers and offer valuable services and advice

- Travel agencies use expertise to save time for consumers

- Technology is difficult to use and expensive to acquire for individuals

- A large part of the market is computer illiterate and unwilling to improve its skills

- The more complex computers and the Internet become, the more people need experts to use them.

 

I think tour operators and travel agencies will still exist in a few years, but it will probably be even more online and e-commerce I think. People will still go ask a travel agencies or tour operator to let them arrange a trip, because it’s saving time for them and I think people will be more and more busy in the future with work and other things.