Will the physical travel agencies eventually disappear?
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.