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Travel Agencies vs Online Travel Sites

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Marketing Research Project
Prepared by:
Dillon LaHaye
Hillary Minnaert
Nancy Mohamed
Thomas Obarski
Brandon Wagner
MAR 413...
P a g e | 2
Concordia University December 2014
Travel Agencies Versus Online Travel Sites
Table of Contents
Executive Summ...
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Concordia University December 2014
Travel Agencies Versus Online Travel Sites
Executive Summary
With the expan...
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Travel Agencies vs Online Travel Sites

  1. 1. Marketing Research Project Prepared by: Dillon LaHaye Hillary Minnaert Nancy Mohamed Thomas Obarski Brandon Wagner MAR 413: Marketing Research Fall 2014 Dr. Nancy L. Harrower December 14, 2014 Travel Agencies Versus Online Travel Sites
  2. 2. P a g e | 2 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Table of Contents Executive Summary .....................................................................................................................3 Background ...................................................................................................................................4 Objective........................................................................................................................................5 Population Description...............................................................................................................5 Sample Selection..........................................................................................................................5 Research and Design ...................................................................................................................6 A) Methodologies .................................................................................................................................6 B) Limitations........................................................................................................................................6 Data Analysis................................................................................................................................7 A) Survey................................................................................................................................................7 B) Interviews........................................................................................................................................43 C) Secondary Research ......................................................................................................................46 Recommendations......................................................................................................................48 Conclusion...................................................................................................................................50 References....................................................................................................................................51 Appendix .....................................................................................................................................52 A) Online Survey................................................................................................................................52 B) Interview Questions for Travel Agents.....................................................................................64 C) Real Tourism Output: U.S. Bureau of Economic Analysis....................................................65 D) Travel Leader’s Price Guide........................................................................................................66
  3. 3. P a g e | 3 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Executive Summary With the expansion of the Internet, many businesses have found it increasingly difficult to compete with online companies. This holds especially true for travel agencies across the United States. The number of travel agencies has decreased a significant amount as the number of online travel booking sites has increased. The purpose of this research project is to compare the viability of the current travel agency business model to that of online travel booking and discover how the travel agency business model can be improved to compete more effectively with online travel booking sites. In order to gain insight to the current travel agency business model, interviews were conducted at travel agencies in the Minnesota Twin Cities Area and in Moline, Illinois. A survey was also sent out to Concordia University, Saint Paul students, staff, and faculty, as well as family, friends, and acquaintances of group researchers, with the intention to survey those who have traveled within the last year. A total of 672 individuals took the survey on traveling, with 74.55% of those qualifying to take the full survey. An analysis of both surveys and interviews was conducted to evaluate client and agent responses. It was discovered that different age cohorts have different perceptions towards travel agencies. There is also a general lack of knowledge about the services and prices offered through travel agencies. Those surveyed expressed a concern with the time and convenience required to book through a travel agency, as well as a concern with relationship development between clients and agents. Recommendations were formulated based on the responses from the surveys and interviews. The following are recommendations to improve the business model of travel agencies: 1. Reposition the perception of travel agencies in the eyes of customers. 2. Research and market to each age cohort based on the unique characteristics of the generation. 3. Develop a strong relationship with clients through the implementation of technology in order to eliminate concerns with time and convenience. Through the appliance of the recommendations, which are based on extensive research, travel agencies have the potential to gain a higher percentage of customers and improve the current business model in order to more effectively compete with online travel booking sites.
  4. 4. P a g e | 4 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Background Within the last 100 years, there have been advancements in machinery and technology that have revolutionized the way that humans live. Automobiles and airplanes have become common means of transportation, and the Internet has allowed access to information through the simple click of a button. The effects of these inventions are such that businesses must adapt to ever changing and advancing technologies in order to keep up with the new desires, demands, and expectations of consumers. At one point in time, it was common to load the kids in the car, grab a map, and set out for the Grand Canyon. That tradition shifted to the utilizing of travel agencies to book the perfect family vacation. With the Internet becoming ubiquitous in the United States, travel booking sites have sprouted across the vast field of the World Wide Web, allowing travelers to book their trips online without leaving home. In light of this technological revolution, it appears that travel agencies are being choked out of existence by the ever-growing online travel booking sites. According to Rebecca Weber, travel analyst for CNN, there are only 13,000 travel retail locations currently in the U.S in comparison to 34,000 locations in the 1990s (Weber, 2013.) Another report from the Bureau of Labor Statistics found that in 2012, there were 64,680 full time travel agents whereas in 2002, there were 95,360 (Kennerly, 2014). This dramatic decrease in travel agencies and agents can be correlated to the increase of users on Internet travel sites such as Kayak and Expedia. According to website trafficking analysis site Alexa.com, Expedia.com has 25 million unique visitors each month and Kayak has 13 million unique visitors each month (Competitive Intelligence, 2014.) Unfortunately for travel agencies, the Internet and its users are not going anywhere; the problem will only grow. Social media and travel applications are expected to continue to whittle away at the remaining agency market share. Businesses must be ever adapting and evolving in order to keep up with competition and consumer demands. The moment a business becomes obsolete and archaic is the moment that business dies. For businesses that are primarily based on service, it can be especially difficult to compete when technology replaces human interaction with online services. This is particularly true for travel agencies as attempts are made to compete with the ever growing and increasing online travel booking sites. Although there are still some travel categories such as luxurious vacations or corporate trips in which utilizing a travel agent is preferred, it is still vital for travel agencies to try and regain customers from online travel sites.
  5. 5. P a g e | 5 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Objective The purpose of this study is to gain knowledge and insight of the travel industry. Specifically, this study will attempt to discover traveler preferences and explore options as to how travel agencies can gain a larger market share of the industry. To achieve this, the following question must be posed and answered: Compared to a growing trend in online travel booking, what is the viability of the current travel agency model and how can it be improved to compete with online travel booking sites? Population Description When considering the population for this study, it was concluded that there are three distinct populations that need to be surveyed and interviewed. These population groups were selected because of the influence and potential aide each contributed to the process of solving the objective. The population therefore will include those who book tickets online, those who book tickets through a travel agency, and travel agents. The desired population is as follows:  United States travelers who have traveled by flight or cruise within the last year  Travel can either be foreign or domestic  There is no bias on demographics including age, gender, income and ethnicity so that correlations can be drawn between specific cohorts and travel preferences  Travel agents who are currently involved in the travel industry Sample Selection Three sampling techniques were chosen for this study: theoretical, purposive and convenience sampling. Theoretical sampling starts from theories made based on previous published information about travel agencies. The theoretical sample will put these assumptions to the test by designing the survey questions to let the participants confirm whether the initial theories are right or wrong. Purposive sampling, which relies on the judgment of researchers to select the population of the sample, will be used to choose the survey participants. This is due to the specific traveler population needed to solve the objective. Therefore, travelers that use the Internet to book trips as well as those who use travel agencies will be surveyed. Finally, convenience sampling will be utilized to find candidates to fit the population. Convenience sampling selects participants based on the proximity and convenience of the researcher. With this in mind, the survey was issued to students, faculty and staff of Concordia University in St. Paul as well as family, friends, and acquaintances of group researchers. Also, travel agents were interviewed based on the location of the agency in relation to the researcher’s living arrangements.
  6. 6. P a g e | 6 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Research and Design A) Methodologies In order to facilitate exploratory research requirements, group research members emailed and phoned travel agents to organize interviews. One member made several phone calls and messages to four local travel agencies in the Maple Grove area with two responding with interest and one responding beyond the deadline for information collection period. Two other members telephoned the first two travel agencies listed on a Google search of “Travel agencies in Woodbury, Minnesota.” Both agencies responded with enthusiasm and support of the research assignment allowing interview dates to be set. The remaining members used personal connections for the interviews located at The Best Travel Agency in Moline, Illinois as well as CTS with Amy Mohamed. The selected travel agents ranged from 6-22 years of experience in the industry and were in various departments and positions including owners, managers, and department associates. In regards to the survey, marketing chair and Professor Dr. Harrower provided an email list of all current students, faculty, and staff. The survey was then developed through the survey construction website, Survey Monkey, which allowed the facilitation of all responses as well as in-depth view of the data collected. The survey was then sent to the provided email list on Friday, November 14th 2014 and was closed on Monday, November 24th 2014. Additional surveys were broadcasted by research members on social media sites such as Facebook and Twitter and were also sent to personal contacts via email. To entice respondents to complete the entire survey, incentives were provided in the form of a chance to win one of two Target gift cards for ten dollars. B) Limitations Although the process of the study was mainly positive, there were a few limitations experience in the course of research. The limitations faced are as follows:  No other email list was used other than the one provided by Dr. Harrower  The survey was only open for ten days with no guarantee that potential respondents would see and reply to it within that timeframe  Some surveys were incomplete with open ended questions not answered fully  25.45% of respondents did not qualify for the survey  A Travel Agency responded one week after asking for interviews, deadline to collect information was over.  One travel agent refused to be recorded
  7. 7. P a g e | 7 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Data Analysis A) Survey To learn more about the tendencies and preferences of travelers, a survey was developed and sent to Concordia St. Paul students, faculty, and staff members, as well as family, friends, and acquaintances of group researchers. With 672 respondents, the following charts reflect the given responses. Question #1 This question was used to eliminate respondents that did not meet the population requirements. If the respondent did not travel by air or by cruise within the last year, they were disqualified from the rest of the survey. The results show that most of the population traveled at least once during that period. The purpose of this question was to assess whether the information provided is based on recent information.
  8. 8. P a g e | 8 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #2 Question number two was used to separate the population into two groups, online travel site users and travel agency users. This allowed further analysis to be developed because correlations could be drawn between the responses of the user and the group they encompassed.
  9. 9. P a g e | 9 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Online Travel Site Users Question #3 In this chart, the main reasons that caused the population to choose online bookings are clarified. People want to book trips easily and rapidly without having to pay travel agent fees. Also, travelers prefer to have more control over booking choices. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% Why did you choose to book online? (check all that apply)
  10. 10. P a g e | 10 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #4 The results show that most of the survey’s population traveled for pleasure and not for business. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% Business Pleasure What was the primary purpose of your last trip?
  11. 11. P a g e | 11 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #5 This chart shows that more than half of the population traveled only once or twice during the year preceding the survey. It is interesting to note that almost 20 percent of the population did however travel over five times. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 1 2 3 4 5+ How many times within the last year did you travel by air or on a cruise?
  12. 12. P a g e | 12 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #6 This chart reveals the money spent by travelers among the population on travel services, lodging and entertainment during their trips. Most of the travelers spent less than $3,000. <$1,000 35% $1,001 – $2,000 28% $2,001 - $3,000 16% $3,001 - $4,000 9% $4,001 – $5,000 4% $5,001 - $6,000 2% $6,001 + 6% APPROXIMATELY, WHAT WAS THE TOTAL SPENT ON YOUR LAST TRIP? (INCLUDES TICKETS, LODGING, OTHER TRANSPORTATION, ENTERTAINMENT, ETC.)
  13. 13. P a g e | 13 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #7 Results demonstrated by this chart show that about 96% of the population suffered little to no stress during booking of trips. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% No Stress Some Stress Stressed Very Stressed What was your stress level while booking your last trip?
  14. 14. P a g e | 14 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #8 The results show that most of the travelers did not spend more than a couple of hours booking a trip. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Less than 1 Hour 1-2 Hours 2-3 Hours Over 3 Hours How much time did you spend booking your last trip?
  15. 15. P a g e | 15 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #9 The results have indicated that almost all the travelers were satisfied through the previous booking experiences. Yes 96% No 4% WERE YOU SATISFIED WITH THE BOOKING OF YOUR LAST TRIP?
  16. 16. P a g e | 16 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #10 Top five common responses: 1. It was easy to use 2. Able to control all aspects of trip 3. Booked trip for cheap price 4. Convenient to use online services 5. Did not take a lot of time Top five quotes from responses: 1. “Easy, cheap, convenient, comparable and efficient.” 2. “It was simple and easy to do from the convenience of my own home. I was able to keep searching until I came up with a price that I liked. We felt we got the best deal we could. We were able to explore our options as far as airlines and prices and felt in control of our trip.” 3. “I am very busy. The time that I had available to book the trip was very late at night. No travel agencies are open at that time. I could then print everything off at my convenience.” 4. “Used the same site as I have in the past. They have all my personal data store and flight preference as well as billing information. After picking out a flight that fits my time, it literally takes less than a minute to complete the required info.” 5. “We were in charge of the choices we made. We saved money compared to what was quoted at the travel agent.”
  17. 17. P a g e | 17 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #11 Top Responses 1. More flight options 2. Elimination of variable pricing between the various agencies that are booking for the same flight on the same airlines 3. No false advertising 4. Cheaper ticket prices 5. Less fees after booking 6. Show other dates/prices 7. More available dates for planning 8. Easier to use 9. More tools to compare the flight cost on different days 10. Calendar with prices for every booking site 11. Cancel and fix errors online 12. Being able to see if price was expected to go down or not 13. Have pop up videos and written steps on how to make the arrangements needed throughout the booking process 14. Accurate ticket availability display 15. More reviews 16. Send flight change updates 17. Save search history 18. Easier to speak over phone 19. Notify if price drop 20. Being able to use reward miles 21. Descriptive baggage fee prices
  18. 18. P a g e | 18 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #12 This chart shows that only about 20% of travelers intend to use a travel agency for the next booking. It also shows that about 30% of travelers are open to the idea of travel agents. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Yes No Uncertain Would you consider using a travel agency instead of booking online for your next trip?
  19. 19. P a g e | 19 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #13 Top five common responses: 1. If the price is reasonable/comparable to online sites 2. If it was very easier 3. If there was little to no service fee 4. If there was a complex trip to coordinate 5. If the destination was new to the traveler Top five quotes from responses: 1. “I might use an agency if I thought I would get better prices on flights and hotels.” 2. “I have in the past. It is very easy - tell them what you want and they book it all. Just more expensive.” 3. “It’s about the price. If they can find excellent flights and maybe have the ability to use purchasing power, I would definitely use them. I would not use them for the same price plus fees for the same flights.” 4. “For overseas travel to countries (especially those that are not commonly frequented by tourists) I think it’s good to have one person you can connect with if there are issues; otherwise, it’s not worth the cost.” 5. “If it was for pleasure, and had multiple components. For one trip this year I did and it went well. They helped with the actual on-site activities; I still booked the air online myself.”
  20. 20. P a g e | 20 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #14 The survey data reveals that most of the participants were females. Male (29.4%) Female (70.6%) WHAT IS YOUR GENDER?
  21. 21. P a g e | 21 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #15 The survey data shows that almost 60% of the survey participants are 34 years of age or younger. The largest single age group was that between 25 and 34 years old. This age group is defined as Generation Y. 25.7% 34.0% 15.3% 14.4% 10.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 18-24 25-34 35-44 45-54 55+ What is your age?
  22. 22. P a g e | 22 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #16 About 74% of the participants were either dating or married. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Single Dating Married Widowed What is your relationship status?
  23. 23. P a g e | 23 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #17 This chart helps to understand the demographics of the respondents in a stronger way. Since the vast majority of the respondents were Concordia University’s staff and students; the majority of respondents were in education positions or in training. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Agriculture Arts Communication Sales,Retail Government,PublicService Education,Training Hospitality,Tourism,FoodService Manufacturing,Architecture,Construction Student Hospital,Medical InformationTechnology BusinessProfessional HealthScience Science,Engineering,Mathematics HumanServices Law,PublicSafety What is your profession?
  24. 24. P a g e | 24 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #18 This graph illustrates the household incomes of the survey takers. Most of the survey population earns less than a $150,000 annually. The largest bracket includes participants that make less than $50,000 every year. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% What is approximately your annual household income?
  25. 25. P a g e | 25 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #19 This chart shows that 62% of the survey population does not have any children. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Not Applicable 1 2 3 4 5+ Please check the amount of children you have.
  26. 26. P a g e | 26 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Travel Agency Users Question #3 Out of the different reasons that drove some participants to use travel agents; convenience was the strongest reason with about 47% of the responses. 0.0% 5.0% 10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0% Easy to use Convenient Travel agency service provided by employer Cost effective Less time to accomplish It was recommended More control over outcome Why did you choose to book through a travel agency? (check all that apply)
  27. 27. P a g e | 27 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #4 This pie chart shows that the majority of the travel agency customers surveyed were traveling for pleasure. Business 29% Pleasure 71% WHAT WAS THE PRIMARY PURPOSE OF YOUR LAST TRIP?
  28. 28. P a g e | 28 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #5 About 94% of participants that used travel agencies are not frequent travelers. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 1 2 3 4 5+ How many times within the last year did you travel by air or on a cruise?
  29. 29. P a g e | 29 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #6 When the results in this chart are compared to the corresponding spending chart of online site bookers; the data shows that travel agency customers spend more on travel then online travel site customers. While only 37% of Internet booking participants spent more than $2,000 on their last trip; 74% of those who preferred travel agency booking exceeded that amount. <$1,000 16% $1,001 – $2,000 10% $2,001 - $3,000 33% $3,001 - $4,000 19% $4,001 – $5,000 4% $5,001 - $6,000 2% $6,001 + 16% APPROXIMATELY, WHAT WAS THE TOTAL SPENT ON YOUR LAST TRIP? (INCLUDES TICKETS, LODGING, OTHER TRANSPORTATION, ENTERTAINMENT, ETC.)
  30. 30. P a g e | 30 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #7 The results presented in this chart show that the stress levels are similar for both methods of booking. Both online site and travel agency customers do not suffer high stress levels while making travel arrangements. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% No Stress Some Stress Stressed Very Stressed What was your stress level while booking your last trip?
  31. 31. P a g e | 31 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #8 Travelers spend less time booking trips through Internet websites than those who book through travel agencies. 49% of online booking site customers spend less than an hour booking trips as compared to 33% of participants spending the same time using travel agency booking services. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Less than 1 Hour 1-2 Hours 2-3 Hours Over 3 Hours How much time did you spend booking your last trip?
  32. 32. P a g e | 32 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #9 This chart indicates that 92% of participants using travel agencies are satisfied with the booking of the last trip. That percentage was 96% for Internet booking customers. Although both results indicate high levels of satisfaction; Internet booking was slightly better. 92% 8% WERE YOU SATISFIED WITH THE BOOKING OF YOUR LAST TRIP?
  33. 33. P a g e | 33 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #10 Top five common responses: 1. Everything went as planned 2. Easy and convenient 3. Agency was very knowledgeable 4. Didn’t have to worry 5. It was booked through employer Top five quotes from responses: 1. “No surprises, everything was well explained and documented, was able to book the trip we wanted without having to do all the research and tracking of process on our own. This agency guaranteed a reduction in the price if a promotion came up from the cruise line prior to departure, and when we received a sale flyer, we contacted the and received an immediate refund of $300.” 2. “Made all the arrangements for us and had connections on finding a travel guide for us. Didn't have to worry about making any arrangements.” 3. “The travel agency never updated their apple book. So we were flying to Cozumel, Mexico and our resort went from a 5 star to a 2 star and the agency never mentioned it to us. It went under new ownership.” 4. “Transportation to and from the airport was set up, so we did not have to worry about setting it up once there.” 5. “Information provided by travel agent was excellent, accurate, and effective.”
  34. 34. P a g e | 34 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #11 Top five common responses: 1. Less waiting 2. More details about the trip 3. More personal contact 4. More services 5. Listening more to customer wants Top five quotes from responses: 1. “They should be well informed on the changes for the resorts and hotels. They should listen to what each customer wants.” 2. “Slow with communication to actually book a flight and the price went up about $500 a day later after we had wanted to book.” 3. “We had a great experience overall, more advice on when and how to get through the airport would have been helpful.” 4. “Promote companies and services. I don't know of any travel agencies that offer trips to individuals. I only know of large group travels.” 5. “Make sure wait times are low (or offer a call-back feature so you're not on hold for a long period of time).”
  35. 35. P a g e | 35 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #12 More than 55% of travel agency customers would consider using online services for their next booking. It should be noted that 10% of this population would not consider using an online site for the next trip. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Yes No Uncertain Would you consider using an online site instead of booking through a travel agent for your next trip?
  36. 36. P a g e | 36 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #13 Top five common responses: 1. If I wasn’t booking for a large group 2. If it was cheaper 3. If desired travel was in the U.S for the next trip 4. Would like to have more control 5. If it would be more convenient Top five quotes from responses: 1. “We only used a travel agency because it was our honeymoon and we wanted the least amount of stress as possible. In the past we have used online sites and been satisfied.” 2. “If it is easy to get around in the site and my questions are answered, I would have no problem online.” 3. “Personal. Yes. Business, No.” 4. “If not international, I don't need travel agent help.” 5. “Depends on the deals offered.”
  37. 37. P a g e | 37 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #14 The percentage of male to female online booking participants is very similar to that of travel agency customers. 75% of the travelers that preferred travel agencies to online booking were female. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Male Female What is your gender?
  38. 38. P a g e | 38 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #15 35% of the participants that prefer travel agencies are between 18 and 24 years old. This age group is defined as Generation Y. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 18-24 25-34 35-44 45-54 55+ What is your age?
  39. 39. P a g e | 39 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #16 This chart shows that the percentage of people dating is higher by approximately eight percent for survey respondents preferring travel agencies that it is for those who prefer online booking. On the other hand; the percentage of married people that prefer Internet booking is higher by about five percent than it is for those who prefer travel agencies. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Single Dating Married Widowed What is your relationship status?
  40. 40. P a g e | 40 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #17 The data in this chart indicates that the decisions of customers on whether to use Internet or travel agency booking were not significantly affected by the participant’s occupation. A notable difference though; is that while the percentage of people with jobs in education was 35% for travel agency bookings, that percentage was 43% for Internet bookings. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Agriculture Arts Communication Sales,Retail Government,PublicService Education,Training Hospitality,Tourism,FoodService Manufacturing,Architecture,Construction Student Hospital,Medical InformationTechnology BusinessProfessional HealthScience Science,Engineering,Mathematics HumanServices Law,PublicSafety Prefernottoanswer What is your profession?
  41. 41. P a g e | 41 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #18 This chart shows that the household incomes of travel agency customers exceed those of Internet booking customers. In the group preferring travel agencies; 35% of the households made less than $50,000 annually while that percentage was 31%. On the other hand; 27% of the travel agency households made between 75 and a 100 thousand dollars annually while that percentage was 15% for Internet booking websites. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% <$50,000 $50,001-$75,000 $75,001-$100,000 $100,001-$150,000 >$150,000 What is approximately your annual household income?
  42. 42. P a g e | 42 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Question #19 58.3% of the group that booked at travel agencies did not have children while that percentage was 61.8% for participants that preferred to book over the Internet. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Not Applicable 1 2 3 4+ Do you have any children? If so, how many?
  43. 43. P a g e | 43 Concordia University December 2014 Travel Agencies Versus Online Travel Sites B) Interviews To gain a better understanding of the travel industry, nine interviews were conducted with travel agents in Minnesota and Illinois in order to learn more about the agency clientele, the agency perspective on the current business model in comparison to the past model where online sites were not prevalent, and the agency feedback that has been received from past and current customers. The following are summaries of the results from all nine interviews. Which type of transaction is the most common service performed at your agency? Group travel, multiple city travel destinations, cruise ships with air travel etc.? Many agencies offer both business and leisure travel services with separate departments that specialize in each service. The business department of the agencies assists only business transactions and business clients. Leisure departments have a high frequency of groups and destination weddings as well as families and packages. Therefore, leisure departments have a larger variety of transactions. What are the most common types of customers you have? Business travelers, families, couples, males, females, younger, Baby Boomers? Those interviewed in the business department saw mainly business clients. Those interviewed in the leisure department saw a larger, more varied range of clients. The most common type of clients found in the leisure department are groups and couples. Couples who are planning a destination wedding tend to frequent travel agencies for booking and planning. Groups that need a lot of coordinating also tend to be common customers at travel agencies. In regards to gender, women are more commonly found at agencies as customers compared to men. Owner of The Best Travel Agency in Moline, Illinois, Connie Van Tieghem says, “Even if the woman is not signing the check, they’re the ones making all of the travel plans.” Tell me about the amounts of time and money spent here on booking. The business department has a very steady amount of business, with most planning and transactions taking place on the phone and by email. According to Connie Van Tieghem, “Travel is the third largest corporate expense for most companies.” Many leisure departments find the dollar amount spent per booking averaged $3,000-$4,000. The more elaborate the trip, the more time and money is spent at the agency. For a couple (excluding destination weddings), about an hour is spent at the agency with a few follow up phone calls and emails.
  44. 44. P a g e | 44 Concordia University December 2014 Travel Agencies Versus Online Travel Sites What is the target market for your travel agency? Why is this market a good target for your agency? Most agents feel that all travelers can find value in travel agencies, regardless of age, demographics, and income. The Best Travel Agency defined couples aged 40 or older with an annual income of $80,000-$100,000 as a good target market due to a higher disposable income and the desire to have an authentic travel experience without being too concerned with the price. What is the stress level of customers while they’re here? Stress levels vary from person to person but clients at a travel agency typically “come in stressed from booking online and stress decreases when here at the agency,” according to Nora Blum, the certified travel specialist and marketing manager at Travel Leaders Maple Grove office. Clients have the comfort of knowing that the main purpose of agents is to alleviate stress and help with frustrating booking details. Tell me about a time a customer really found value in your travel agency service. Many customers who have had problems while traveling have found value and satisfaction in the travel agency service. Corrections can immediately be made to any errors and emergencies that occur to the traveler. Customers who book online do not have access to such a support system. Conversely, do you remember a time a customer expressed dissatisfaction and why? Dissatisfaction usually occurs when customer expectations and reality are dissonant. Agents attempt to bridge that gap by having knowledge and experience, but there will always be those who cannot be fully pleased. Beth Roth, manager of the leisure department at The Best Travel Agency recalls, “One client blamed the agency because it rained.” What are your views on online booking sites? What have customers said about them to you? Have you used them? In general, agents have a favorable opinion of booking sites for very short trips and emergency situations with many agents also utilizing online booking sites for these purposes. Agents also appreciate when clients have looked at sites before coming to the agency because those customers are usually more specific with destination desires. However, agents are aware that online booking sites do not give the final price of the trip until the very end of the transaction and often neglect to mention transfers and transfer fees. Online booking sites do not offer much
  45. 45. P a g e | 45 Concordia University December 2014 Travel Agencies Versus Online Travel Sites customer support and there can be an overwhelming amount of clutter, causing confusion and stress to the customer. With travel agencies, there is more security that the client will get what was paid for and the option for more deals and discounts. Ultimately, online booking sites are viewed as a price comparison tool. How was the travel agency business model affected with the rise of online booking sites? With the rise of online booking sites, many small agencies have consolidated or shut down. Many more agents have also opted to work from home, meaning there are fewer storefronts. This does allow agents more time to work on larger and more complex groups. However, many clients have a do-it-yourself attitude and according to Sheree Powers, owner of Travel by Nelson Ltd., “Travel agencies now have to win over the customer and prove the agency can greatly assist them with their travel needs.” What are some of the challenges of competing with online booking sites? With online booking sites, travelers have the opportunity to research flights and destinations almost instantaneously. Prices and times can be browsed at the leisure of the client, no appointment necessary. Customers compare prices on online booking sites and also compare prices to travel agencies. Most clients are not aware that travel agencies offer price matching to online booking sites, which makes competing with online booking sites difficult. How can Travel Agencies improve their business model to gain more clients? Specialization was mentioned by two different agencies as a method to improve the agency business model. If agents in the leisure department specialize in a specific area, such as destination weddings or European travel, agents will be able to provide expertise and efficiency for clients. Agents also felt that finding ways to reach target markets as well as communicating agency benefits effectively will improve the business model. The younger generations seem to be difficult for agencies to reach.
  46. 46. P a g e | 46 Concordia University December 2014 Travel Agencies Versus Online Travel Sites C) Secondary Research Upon analysis of question #15 regarding the age of the respondents, it became apparent that further research must be conducted to better understand how to reach each age cohort through marketing strategies and tactics. The most predominant age groups were travelers aged 25-34. However it can be noted that there was a wide range of ages represented in the survey. With this in mind, identifying and understanding the target market is a crucial decision in advertising and promoting service generated businesses. Advertisers commonly define a target audience based on several criteria including demographics and psychographic characteristics, which includes lifestyles, attitudes and behaviors (Hawkins & Mothersbaugh, 2013). Each generation has unique expectations, experiences, generational history, lifestyles, values, demographics, and psychographics that influence purchasing behaviors. Accordingly, many companies are reaching out to each age cohort in attempts to understand and gain the attention of these diverse buyers. Multi-generational marketing is the practice of appealing to the unique needs and behaviors of individuals within more than one specific age cohort or generational group, with a generation being a group of individuals born and living at about the same time. This means that marketers for the travel agency industry would need to understand three U.S. generations: Baby Boomers, Generation X, and Generation Y. Marketing to these specific generations requires an understanding and strategy appropriate to each generation’s behaviors and characteristics, focusing primarily on how to communicate the benefits and values of using a travel agency. The following recommendations for Baby Boomers would be to focus on building value, being flexible, and producing options with the travel agency. If Baby Boomers feel they are getting superior service at a good value, price sensitivity decreases for this age group. A major concern for Baby Boomers is health due to ageing; however it is imperative to note that Baby Boomers do not like to be reminded of this fact. Marketing and interactions with this generation need to replace words including senior citizens, golden years, retirees, and age related phrases such as “Prime time of Life” with less sensitive options. Travel agents should market to Baby Boomers with travel adventure packages, music, or vineyard based travel as their focus is indicating the “Me Generation,” entitling this generation to the good life (Hawkins & Mothersbaugh, 2013). Some marketing considerations for Generation X would be to enhance the attitude and lifestyle characteristics that greatly influence this age cohort. This includes balancing a family, work, and a personal life. Generation X members work to live, not live to work, compared to the Baby Boomer friends before them. Generation X is a practical and price conscious generation that wants to know the features of a product or service and why that specific feature is necessary. Travel agencies must know that this generation responds to honesty, candor, and straightforward facts. Information overload and accessibility is needed to educate this group into buying. Generation X responds to the recommendations of peers, word of mouth reviews, and social gatherings (Hawkins & Mothersbaugh, 2013.)
  47. 47. P a g e | 47 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Marketers aiming for Generation Y need to first know that this generation is self-reliant and self-absorbed with a very strong sense of autonomy and independence (Hawkins & Mothersbaugh, 2013.) This group is wise and well grounded, and was born into an advanced technological, wireless, and electronic society. Generation Y has significant respect for ethnic and cultural diversity and a heightened social awareness. In order to succeed in marketing to Generation Y, a plan is needed to attract this group at an early stage and gain its loyalty to the travel agency industry. Generation Y is strongly attracted to the experience which makes for a perfect fit to this industry. Marketing campaigns need to focus on uniqueness, honesty, humor, and information with ethnic and cultural diversity imploring an image driven message. Generation Y responds well to e-mail, voice-mail, the Internet, multi-media, direct mail catalogs, magazines, college and high school newspapers, websites, school-based media boards, college guides, and sponsored on- and off-campus events (Hawkins & Mothersbaugh, 2013.)
  48. 48. P a g e | 48 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Recommendations The business objective identified as well as the recommendations given for travel agencies, primarily deal with multi-generational marketing techniques. However, convenience sampling and descriptive data collection identified three major generations that are currently using travel agencies, Baby Boomers, Generation X, and Generation Y. The marketing strategy for travel agencies would be to learn the different characteristics and behavior patterns of each generation. With this in mind, three recommendations were developed to improve the business model of travel agencies. 1. Reposition the perception of travel agencies in the eyes of customers. Repositioning can occur by:  Travel Agencies need to sell the experience. This is done by through the emphasis that the travel agent is working for the client, the client’s family, and working for the clients personal best interests  A Marketing Promotional Campaign can emphasize that travel agents are experienced and specialize in all facets of leisure and business travel, including air, hotel, cruise, and wedding destinations  Travel agents also specialize in the locations and destinations for personal, business and family entertainment  Travel agents can help during the transaction with travel problems and after arrival to hotel locations versus online booking  Client reviews help drive business, need to implement a plan to have customers submit reviews of trips to encourage use of travel agency versus online booking  Price match guarantee  Be transparent with all possible and additional fees 2. Research and market to each age cohort based on the unique characteristics of the generation by:  Referral based recommendations, word of mouth marketing plan to enhance business  Social media promotion, Skype promotion, ‘live chat’ computer transactions  Extended agency hours, 24-hour emergency contact for leisure travelers  Travel agency service with open computers with agents versus a closed system to customers  Target each age cohort individually 3. Develop a strong relationship with clients through the implementation of technology in order to eliminate concerns with time and convenience. This could be done by the following scenario:
  49. 49. P a g e | 49 Concordia University December 2014 Travel Agencies Versus Online Travel Sites In addition to reaching different age cohorts through different mediums, there are also programs that agencies can develop and implement in order to increase and retain the number of clients. For instance, many travelers site the reasoning for not using travel agencies due to the accessibility to information online and the preference to exercise control over price comparison and outcomes. One way to fulfill this customer desire would be to invest in a software application that allows an individual to create a travel package, similar to the way consumers are able to build a customizable vehicle through Subaru or Chevrolet. Just as a customer can select vehicle make, model, and color, the application would allow clients to have the control to explore travel options while adhering to a specific budget, destination, and time frame from the comfort of home. Limitations would arise when an option that a client desires is not available or when confusion is experienced by the client. For example, if a customer desires to travel to Panama yet that destination is not listed, the customer will immediately look elsewhere. Similarly, if a customer becomes confused with the process, it is more than likely the customer will give up or look elsewhere. In order to remedy these limitations, a live-chat option with a travel agent could be put into effect. Having a live-chat option would allow travel agents to help solve client questions and concerns as incurred. Live-chat would also help build relationships with customers without the stress of finding a time to meet at the brick and mortar agency. By properly marketing to the Baby Boomer, X, and Y Generations and utilizing software applications, travel agencies can shift customer perception and develop solid relationships with clients, which are paramount to the success of the travel agency industry.
  50. 50. P a g e | 50 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Conclusion The objective of this study was to research the viability of the current travel agency model in comparison to the growing amount of online travel booking sites and what travel agencies can improve to compete with these sites. To achieve this, a survey was developed and sent to Concordia St. Paul students, faculty and staff members, as well as extended friends and family of the researchers. Interviews were then conducted with travel agents, travel agency users and online travel site users to further learn the psychographics involved with booking a business or leisure trip. After analyzing these results, the conclusion was made that travel agencies can improve the current business model by altering the current marketing strategy. This can be accomplished by properly addressing each age cohort with specific advertisements tailored to the characteristics of each generation. Also, a stronger relationship with clientele can be achieved through the implementation of technology to make the travel planning process more convenient. Finally, the perception of travel agencies must be repositioned in the mind of the consumer to eliminate misconceptions of the available services, prices and fees. Through the aforementioned recommendations, travel agencies have the potential to expand and improve the current business model, therefore increasing business, and enhancing customer relationships.
  51. 51. P a g e | 51 Concordia University December 2014 Travel Agencies Versus Online Travel Sites References Competitive Intelligence. (2014). expedia.com Site Overview. Retrieved October 22, 2014, from http://www.alexa.com/siteinfo/expedia.com Competitive Intelligence. (2014). kayak.com Site Overview. Retrieved October 23, 2014, from http://www.alexa.com/siteinfo/kayak.com Hawkins, D., & Mothersbaugh, D. (2013). Consumer behavior: Building marketing strategy (12th ed.). New York: McGraw-Hill Irwin. Kennerly, B. (2014, January 14). Travel agents back in demand. Retrieved October 23, 2014, from http://www.usatoday.com/story/travel/2014/01/14/travel-agent-booking/4474853/ Top 15 Most Popular Travel Websites | October 2014. (n.d.). Top 15 Most Popular Travel Websites | October 2014. Retrieved October 23, 2014, from http://www.ebizmba.com/articles/travel-websites Travel Agents. (2014, April 1). Retrieved November 6, 2014, from http://www.bls.gov/oes/current/oes413041.htm Travel Agents. (2010, July 1). Retrieved November 9, 2014, from http://www.bls.gov/spotlight/2010/travel/ Travel Agents: Occupational Outlook. (2014, January 8). Retrieved November 3, 2014, from http://www.bls.gov/ooh/sales/travel-agents.htm Weber, R. (1970, January 1). The travel agent is dying, but it's not yet dead. CNN. Retrieved October 21, 2014, from http://www.cnn.com/2013/10/03/travel/travel-agent-survival/
  52. 52. P a g e | 52 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Appendix Appendix A) Online Survey
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  64. 64. P a g e | 64 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Appendix B) Interview Questions for Travel Agents 1. Which type of transaction is the most common service performed at your agency? eg. Group travel, multiple city travel destinations, cruise ships with air travel etc.? 2. What are the most common types of customers you have? Business travelers, families, couples, males, females, younger, Baby Boomers? 3. Tell me about the amounts of time and money spent here on booking. 4. What is the target market for your travel agency? Why is this market a good target for your agency? 5. What is the stress level of customers while they’re here? 6. Tell me about a time a customer really found value in your travel agency service. 7. Conversely, do you remember a time a customer expressed dissatisfaction and why? 8. What are your views on online booking sites? What have customers said about them to you? Have you used them? 9. How was the travel agency business model affected with the rise of online booking sites? 10. What are some of the challenges of competing with online booking sites? 11. How can Travel Agencies improve their business model to gain more clients?
  65. 65. P a g e | 65 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Appendix C) Real Tourism Output: U.S. Bureau of Economic Analysis
  66. 66. P a g e | 66 Concordia University December 2014 Travel Agencies Versus Online Travel Sites Appendix D) Travel Leader’s Price Guide All professional fees are listed per person unless otherwise noted. Please ask your travel consultant about specific fees for your upcoming trip. Airline Tickets Domestic $30.00 International $50.00 Void/Refund/Exchange $30.00 Frequent Flyer/Points/Rewards Starting from $40.00 Vacation Packages Airfare/Hotel or Airfare/Car rental $20.00 Touring or Guided (per room) $50.00 Cruise vacation (per stateroom) $50.00 Independent Travel (per booking) Hotel reservations $20.00 Rail reservations $20.00 Sightseeing or activities reservations $20.00 Car rental or transfers reservations $20.00 Domestic Multi destination trips Starting from $100.00 International Multi-destination trips Depending on the number of destinations or length and complexity of trip Starting from $150.00 Other Services Travel Insurance $20.00 Accounting Record Research $30.00 Fed Ex Overnight Delivery Starting from $20.00 Visa services Not including consular entry fees or visa processing fees. Will depend on countries visited and urgency of request. Starting from $50.00

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