Disintermediation and Reintermediation of the Travel Agents Essay

1. INTRODUCTION nary(prenominal)adays, the croak distribution channel is truly complex and characterized by the presence of some(prenominal) different good-hearted of intermediaries which operate in a very private-enterprise(a) mart. Since the send-off of the move industry, intermediaries book al expressive styles played an important shargon for the development of turnistry products and services. Indeed, intermediaries relieve oneself the ability to organize and aggregate a largish amount of data into one price. More everyplace, they have a fundamental map for charge and delivering a personalise service according to the particular(prenominal) need of customers (Kracht and Wang, 2009). Before the advent and further development of communication engineering science, the mart was dominated by the large suppliers such as air lanes, hotel chains and resorts. start doers were the conventional intermediaries which were independent from each other and re testifyed a d istribute of the prevailing players in a non-competitive market (Gharavi and Sor, 2005).Later on, with the high feast of ICT and the need of cutting costs the position of the pop off agents has been threatened. New kind of middlemen e integrated adding additional layers of intermediation, disintermediating certain(a) players by bypassing the tralatitious intermediaries (Buhalis and Law, 2008). Technology has as well imparted suppliers to now take with consumers who have seen their choices enormously appendd. This has increased the competition and the complexity of the market and has raised an important issue for the presence in the market of traditionalistic get off agents. The aim of this paper is to investigate how disintermediation and re-intermediation have affected the way drop dead agents operate and whether there is still a place and a prospective of growth for sound agents in the market.2. DISINTERMEDIATION AND RE-INTERMEDIATION OF THE TRAVEL AGENTSIn the trav el twenty twelvemonths several changes occurred in the tourism distributional channel. either component of the chain value has been affected and particularly travel agents. conventional travel agencies are being threatened not that by integrated tour operators, which control their own distribution impart, but also by the expansion of alternative distribution channels such as the Internet, Teletext, call centers, and even travel TV channels. This care for is called disintermediation (Kracht and Wang, 2009). check to Bennett and Buhalis (2003) disintermediation is the process of eliminating intermediaries within the distribution channel driven by electronic meaning that modify 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, GDSs and suppliers. The 1993 was the year of the first commercial usage of lucre. sub sequently that year many an(prenominal) changes occurred and many to a greater extent players enter into the market thanks to the decrease of barrier entry costs. However, the starting point of disintermediation was in the 1960s, when the Ameri stool airline lunch the first GDS allowing consumers to buy tickets directly from the airline company (Kracht and Wang, 2009). transit 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 centralise costs in an increasingly competitive industry ca social occasiond 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 mod channels and expanded real channels to carry emerge travelers directly. Airline companies encouraged travelers to loudness direct channel by variant means with a very booming results. For instance, easyJet, a successful British low-cost carrier, in 2002 was already merchandising 90% of its seats through its own site (The Economist, 2002). After the public debut of the clear, suppliers began establishing web sites to connect directly with customers, thereby beginning the disintermediation of traditional retail travel agents(McCubbrey, 1999 cited by Kracht and Wang, 2009).For example, Hotelsalso created their own websites to reach their customer. Establishing a direct relationship with clients allows suppliers to put in place various price polices and loyalty schemes. Suppliers believe they no longer need an intermediator to sell their products. They discover the net to be a agentful and nickel-and-dime(prenominal) distribution channel, and not just an online brochure (The Economist, 2002). Indeed, using info technology to develop supply chain relationships can reduce costs and institute higher quality of travel products into the marke t. Internet, peradventure, has been the nearly federal agencyful means of disintermediation and it has radically changed the travel industry, adding more(prenominal)(prenominal) layers of intermediation and more players (Kracht, 2009) The travel industry, in fact, is doubtlessly one of the most interesting sector in terms of the possibilities fliped by the net profit. Internet travel reservations have increased dramatically in the withstand years with more and more users confident with the technology, and it represents the fastest growing plane section of electronic commerce (Bernstein and Awe,1999 cited by Anckar, 2003).The success of internet in this respect, is perhaps due to the nature of the tourism product, which is a little more than an inorganization product, easy to convey through the web (UNCTAD, 2000 cited by Anckar, 2003). However, as give tongue to by Palmer and McCole (1999 cited by Bennett and Lai, 2005) the internet does not change the principal role of int ermediaries who exist to simplify buyers choice processes. Indeed, even though internet allowed suppliers and consumers to communicate directly bypassing the travel agents, there were some important issues related to the internet. According to Bloch et al. (1996, cited by Wynne 2000), when potential tourists try to book directly with suppliers on the internet, they submit a wide range of problems. For example, they require to know in which website to look. It takes at lot of time considering different options and prices. Often, it is not possible to book online. Thereby, the exigency of one stop-shopping, aggregation of information and comparison of price led to the formation of in the raw e-mediaries or cybermediaries.Disintermediation indeed, push endorse to re-intermediation with new players coming into the markets and existing ones which re-intermediate themselves by reinventing their rail line. Re-intermediation has been defined by Bennet and Buhahs (2003) as the utilizati on of ICT and internet tools for the development of either new intermediaries or new methods for existing intermediaries thaten fitted them to re-engineer the tourism distribution channel. Re-intermediation is evident through the development of new electronic intermediaries such as Expedia, Yahoo start, lastminute.com and Travelocity which are based only online. Based on the premise that intermediaries exist because they provide value added services, these e-mediaries have the potential to pass economies of scale directly to the consumer, offering reduced fares as well as the convenience of making reservations 24/7 (Lai, 2005).As a result of both disintermediation and re-intermediation travel agents have been reduced in numbers and have to face a very competitive market. In fact, from one side they are threaten by the disintermediation put in place by the suppliers, and from one other by online reservation and therefore, by the e-mediaries or cybermediaries. The latter, in particul ar, with no established high-street presence, threaten established retailers by changing the distribution channel for consumer products. Reservations made online are probably the most important danger that traditional intermediaries like travel agents have to face. Figures found an increase of online bookings over the years both in Europe and join States but also in other markets (http//www.emarketer.com). According to Cheung and Lam (2009), to secure their position in the marketplace, and avoid disintermediation, travel agents must be able to arrive at the new technology and be able to compete into the new channels as electronic-able intermediaries, without losing their advantage in the conventional market. To minimize the adventure of disintermediation, travel agents need to reduce their dependence into simple transaction and increase revenues by focusing on more complex activities, like counseling and personalization of the service.3. TRAVEL AGENCIES RESPONSES TO A CHALLENGI NG MARKETDespite the severe competition, and the supposition for booking online, many customers still prefer to purchase from travel agents. TTI chairman, Tony Allen say that there would always be people who didnt trust the internet and wanted face-to-face advice (Taylor, The Guardian, 2003). Indeed, travel agents have still many cards to play and can benefit from several advantages in the marketplace * They are situated wherecustomers come, in shopping centers and in high streets * Aggregation of the offer from various suppliers into one package * They can offer a personalized service* Human relationship* Travel agents can offer an informatory service, and assist the customers in making a decision before bear on with transactions * Less time spent by the customers to buy a travel product. It can also be argued, that not all the do of the disintermediation and re-intermediation have had a negative effect on travel agents. Gharavi and Sor (2005) have suggested, in fact, that be cause of internet and other forms of disintermediation, the bonds between the small travel agents and the dominant large suppliers like the airline companies, hotel chains and resorts owners, was finally broken. As a result of that, many independent travel agents, which continue to based their business on conventional methods such as commissions from suppliers, were pushed out of the market. However, many others entrepreneurs were aflame to reinvent their business. Travel agents were allowed to deal with a variety of suppliers and organize into cooperative. Moreover, others entrepreneurs highly-developed franchises or merged, in pose to have more bargaining power against competitors. Therefore they fight back the disintermediation and re-intermediate themselves.Organizing into franchising or into other forms of collaboration has allow several advantages to travel agents. First of all, it atomic number 82s to gain more bargaining power which make more convenient for travel agents to dealing with suppliers. Second of all, it helps travel agents to focus only on the front office activities, while the nub office is in charge of the administrative procedures and of the marketing activities, such as brand building and advertising. Another reason, why this kind of collaborations are successful is that they can allow a better training of human resources and lead to better prospects for income. A great example of travel agency organise into franchising is definitely Harvey World Travel with over 170 stores in Australia and more than 70 in the UK which offer to its branches a very sophisticate bundle to create a very personalized package for customers (Harris and Duckworth, 2005). In order to fight disintermediation many travel agents differentiate themselves and/or focus on niche markets.They try to offer something different that clients could not find online. EuroTravel is a great and successful example of how a small independent travel agent can compete in the market. This company was able to leverage technology effectively in order to specialize and fight back against disintermediation. It specializes in sales to only the European destination, but has utilize the internet as its primary communication channel in order to acquire customers from a broader geographic area. This strategy seems to have paid off. In fact, in 2004, sales were 6.5 m and in 2008 they reached more the 8.5 m (Haris and Duckworth, 2005). Similarly, doubting Thomas hedge is another successful experience. By being the first travel agent in the UK, Thomas Cook can count on a very long history and tradition. Over the years it has experienced many changes in order to adapt to a competitive market. In 2007, it merged with the competitor MyTravel, and nowadays Thomas Cook is the UKs largest retail travel network. It aims to dominate both, conventional and innovative channel (Williamson A., 2001). Thomas Cook has indeed, a very strong position online and continues to open new branches every year. Therefore, Thomas Cook demonstrates not only how a travel agent can fight disintermediation, but also how to grow and prosper in the marketplace. final resultUpon the introduction of Internet technology, travel industry has been strongly affected by electronic commerce that contributed the most to the disintermediation of the channel. This is true in particular for travel agents. It is clear that disintermediation and re-intermediation exist in the travel sector. In the intermediate phase, traditional travel agencies dominate the market. However, as new EC-only travel agencies emerge in the market and build up their competitive abilities, traditional travel agencies alienated over 50% market shares (Cheung and Lam, 2009). As a result of that many travel agencies merged or organized themselves into some form of collaboration such as franchising. In order to survive in this competitive travel market, agents need to reposition themselves as travel consultants , but also must be more technologically oriented. They must focus on consulting and niche markets. As suggested by the Economist (2002), travelagents future exit be based on helping customers to buy what they want, rather than selling what is left unsold by suppliers.They now must look out for consumers silk hat interest by using IT resources to help them find the best product. Indeed, it is necessary an integration of conventional business with the new opportunities offered by the web, in order to add value for the client. That is probably one of the most backbreaking challenge that travel agents have to face. ICT must seen as an opportunity more than as a threat which allows travel agent to reach more customers, get more information and therefore, adding more value for the latter. The ability to use new technology will also make possible for travel agents to compete with the e-mediaries. Porter (1999, cited by Anckar, 2003) claimed that the internet is going to be the terminal of a lot of intermediaries. However, if this prevision may be true for certain intermediaries, at the moment and perhaps in the long run, it appears not to be valid for travel agents.REFERENCESAnckar, B. (2003) Consumer Intentions in Terms of Electronic Travel dispersal. E-service daybook, Vol. 2, no 2, pp. 68-86 Anckar, B. (2006) Reassessment of the Efficacy of Self-booking in Travel. 39th Hawaii supranational Conference on System Sciences. for sale at http//www.virtual-community.org/images/e/ef/250760132b.pdf Bennet, M. and Kevin Lai C. W. (2005) The encounter of the internet on travel agencies in Taiwan. 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