Will the physical travel agencies eventually disappear?


 

vliegtuig

Will the physical travel agencies eventually disappear?
Subject: Ecommerce

Who doesn’t know them, the enticing windows of the travel shops. Containing pictures of exotic destinations and exciting vacation packages promoted in the window. Anyone who passes these shops, is taking a quick view in the window, to see whether there are any nice offers.

But these shops are disappearing and many more people are booking their holidays and planning their vacation trough the internet. People book their planetickets at cheaptickets.nl and separately book their hotel at booking.com. That’s the common way how many people book their holidays nowadays. Is this shift in travel booking the end of the physical shops of the travel agencies?

A travel agency is in fact an intermediary between suppliers of travel services and costumers. The travel agent provides information from the supplier to the costumer. But nowadays the travel agency itself is bypassed many times, because the information can go directly from the supplier to the costumer trough the internet.

Cheung and Lam (2009) claim in their article that it is all about the intermediation, disintermediation and reintermediation (IDR) cycle. As is well known, the travel industry is strongly affected by electronic commerce. During the intermediate phase, the traditional and physical travel agencies were dominating the market. After the Internet bubble, the electronic commerce-able intermediaries (EC’s) popped up. Also the EC-only travel agencies gain their market share, this made the traditional travel agencies losing over 50% of their market share during this disintermediation phase. Cheung and Lam state in their article that during the reintermediating phase, the traditional travel agencies have to adapt to the electronic commerce technologies to battle against the EC-able intermediaries. They can acquire electronic commerce technologies by making alliances with technology providers, portfolio partnering or even developing the technologies themselves.

They argue that the traditional travel agencies need to go to the EC direction to remain competitive in their business. But this can only be achieved by setting good and realistic goals and planning a pathway to eventual intended result.

But by doing so, will the traditional shops disappear? The article states that additional investments must be made to remain competitive, but doesn’t tell that the shops will disappear. The head of TUI (large Dutch travel agency) Van Nieuwenhuizen states that the travel agencies themselves are not the real revenue model, but they serve nowadays as a service and support point for their online bookers.

So the future of the traditional shops will still be very uncertain. The current trend is that the amount of physical shops is remediating very fast. The question is whether up to which point the costumers want the travel agencies as a physical support desk, or that this will also become an online addition of the travel agencies.

 

(2014) ‘Aantal reisburreaus binnen twee jaar gehalveerd’ http://www.sprout.nl/artikel/reisbranche/aantal-reisbureaus-binnen-twee-jaar-gehalveerd, 21 September 2014

Cheung, R., Lam, P. (2009) How Travel Agency Survive in e-Business World?, Communications of the IBIMA, IBIMA: Volume 10, pp. 85-92.

 

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4 responses to “Will the physical travel agencies eventually disappear?”

  1. nutsaboutpeanuts says :

    Hi, Interesting topic. 🙂 Personally I believe that on the (very) long run physical travel agencies will truly disappear. Right now older generations still have a reasonable amount of trouble finding and booking their trips. However, as more and more young customers flock in the need for these agencies becomes less urgent. Holiday information is readily available allowing younger customers to find information and book online. They might for instance use a comparison website to find information, than use the original suppliers to book, cutting out their intermediate and lowering prices. As this becomes easier more people flock to these types of methods. And as citizens of the digital world we feel much more comfortable using these methods than going to a physical store and talking it through with the lady behind the service desk. Unfortunately that means that all those lovely traveling brochures disappear as well. 😉

  2. Roy van Bokkem says :

    Fellow student,

    quite an interesting post/subject because the disappearance of physical shops is not something that only affects the travel agencies. I can imagine that other industries such as banking (as discussed in class today) will, within a couple of years, find themselves asking the same question. So the question ‘will physical shops eventually disappear?’ is one that intrigues many people, including myself. Therefore I want to elaborate, as a ‘comment’ on this post, on the subject as well. Before doing so I was wondering what it is that you mean in your concluding paragraph.

    The post states: The question is whether up to which point the costumers want the travel agencies as a physical support desk, or that this will also become an online addition of the travel agencies.

    Does this question assume that physical travel agencies do no longer exist and that the current physical shops are no more than support offices for online agencies? Or is that an incorrect interpretation?

    Hope you can shed some light on my question.

    Greetings, Roy (374633rb)

  3. 363112ws says :

    Hi both, I’m very sorry for my late response.
    First of all, thanks for responding to my blog! I’ve already found this an interesting topic for quite sometime so I really liked writing a blog about this.

    I don’t totally agree with nutsaboutpeanuts because, as I told in the last paragraph of my blog, I still believe that the physical stores will become more service oriented stores and that they will become more like supporting offices for online agencies. So you’re interpretation is a good one Roy. As you might know, the helpdesks of various shops and agencies aren’t that helpful or available as you would like. By having the physical shops, people can walk in when it suits them and will walk out only when their problem is solved. And by still having the physical shops, the travel agencies will provide an extra service to the people who don’t like doing transactions or communication through the internet. I think that it is important for the agencies to consider that, in this way, many different layers of the population are served. Elderly people need to be served in different ways than young people have to be served.

    I really do think that, of course, the traditional stores are disappearing very fast. You can see it when you’re walking through the streets. But I believe that they won’t disappear totally. There will always be people that don’t want to search on the internet to book a vacation but simply want to go to a physical store, book their flight and hotel without doing the hassle themselves. Like I’ve told in the paragraph above, when you’re 80 years old you just want to go on vacation without having the hassle of finding the right hotel that fits with your flight ticket.

  4. kwilmink says :

    Hi, very interesting topic indeed. I agree with the author, and believe that physical travel agencies will remain to exist, although in a lesser form and in combination with services offered through technologies.

    As mentioned in Lecture 3, the travel industry is highly information intensive. This demand for large amounts of information can indeed be eased by the internet. However, travelling is also highly personalized activity. Consumers spend considerable amounts of money on a holiday, particularly for long or special-cause holidays, which are often an once-in-a-lifetime undertaking too.
    Therefore, this experience should be excellent from beginning to end, and exactly as a consumer demands. For many people, a large part of this experience is, in my opinion, affected by knowing and being ensured beforehand that the holiday will be what is expected.

    I believe that this assurance can only be achieved by face-to-face and personal contact. Tailored advice can be given, and consumers will have the travel agent to fall back on when having questions or problems before or during their holiday. Therefore, physical travel agencies will always be wanted by consumers – not for the standard Dutch 4-week camping holidays in France, but for the honeymoons, world trips or 50-year wedding anniversaries.

    However, I believe that the disintermediation mentioned can happen in forms other than only the physical travel agencies. Several forms were shown in Lecture 4 last week. For example, virtual in-store shopping can be deployed by travel agencies. This reduces the need for physical agencies, but still allows travel agents to interact real-time with customers, provide advice and ensure them of a fantastic holiday.

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