An evaluation of the New zealand travel agency environment.
The key points that have been established include firstly the buyer power of the industry; it is high as a result of having a large number of suppliers with a concentrated number of buyers, giving the buyers high control. On top of this, supplier power is also high in the industry as the travel agencies are heavily reliant on the commissions of airline tickets. In fact, their income and profitability is contingent to the selling price of the goods and services from the suppliers. Threat of substitutes from such services as internet providers is high and increasing as modern technology becomes more prominent, it is a driving force resulting in the disintermediation of traditional travel agency businesses. This consequently means that threat of new entrants is high, as anyone can now set up their own travel agency business online. Thereby the possibility of new entrants is greater now as opposed to in the 1990’s when the internet was not as prominent in the travel agency sector. Finally, rivalry amongst competition is high. This all concludes to the disintermediation of travel agencies. The requirement for traditional travel agencies is becoming less desired as you pay a premium for the service whilst you have the ability to access the information necessary by your own means.
“Travel agencies are retail intermediaries that represent a wide range of leisure and journey services; the role of the travel agent is to provide travelers with information, travel documents, administration and advices.” (Alexander & Lewis, 2010). At a surface level the travel agency market should be flourishing due to a recorded steady rise in Gross Domestic Product and therefore economic well-being over the past four years. (“Country Intelligence: report,” 2012) However, is this the case?
This business report will canvas the current external business and industry environment of travel agency...