Introduction This essay will consider the travel industry, and will focus on the market for sales

of holiday packages. The work will include an assessment of the current market position of travel agents, selling package holidays. Considering the position of competitors, and evaluating how these actors relate to each other in the markets for the sale of package holidays my individual work will focus on the case of lastminute.com as a specific example of an existing player in the travel sector. Concluding, recommendations will be made as to how service marketing principles may assist in securing the market position of this actor.

Definition of package holidays Package holidays are holidays that include accommodation, and travel, as distinct from holidays that may be booked separately by the customer. Package holidays have always been a popular choice for the consumer of tourism services, having the advantage of simplicity, one easy transaction and the option of buying a number of add-on services, such as entertainment, cars, tours all in one simple booking for the customer (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21).

Definition of the chosen sector: The travel agent The sector that will be focused on is the travel agent, selling packages holidays. Travel agents typically have an established outlet for holidays, advertising holidays in their windows, through brochures and

online. These outlets are staffed, and customers may book their holidays by attending the travel agent in person. The traditional travel agent can organize bookings of holidays in person, by telephone, over the internet and via brochures available in their stores. Examples of established travel agents include Thomas Cook, Cox and Kings and Thompson (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21). In light of the growing popularity of the internet package holidays may increasingly be sold by a number of actors, all competing within the same global markets for the sale of holiday packages as travel agents are. Businesses such as lastminute.com have also established themselves in the market for the sale of package holidays. Lastminute.com is a business that sells package holidays. It is not a generic travel agent, and has no physical outlet. It sales are all conducted over the internet, and its website is its main means of communication with its client base.

Many competitors now exist, using this direct booking approach. Examples include HYPERLINK "http://www.onthebeach.com" www.onthebeach.com, and Holidays Direct. Additionally, airlines have moved into this market, advertising accommodation on their websites, so as to attract the type of customer who may choose to book their holiday directly, using the internet, without the requirement of having a travel agent as a middleman (Moutinho, L. (2000) p. 217; Hill, C. and Jones, G. (2008) p. 42-47).

Assessment of the opportunities and threats facing this sector The travel agent sector is faced with a major threat as a result of the growing dearth of competitors that currently exist, having grown up in recent years, as a result of the popularity of the use of the internet and the emergence of low cost airline operators. Some traditional travel agencies have established

partnerships with internet operators to reduce this risk: FastBooking hotels will be displayed and bookable via Thomas Cook-owned Hotels4U.com and sister site Medhotels.com. The distribution partnership expands Paris-based FastBookings existing traffic-building activities by giving its hotel clients direct visibility to the more than 8,000 travel agencies internationally working with Hotels4U. The agreement also takes advantage of FastBooking clients strong presence in top metropolitan destinations to augment Hotels4U and Medhotels offerings in city destinations. The partnership is expected to be online by the second quarter of the year. FastBooking covers 6,000 independent and luxury hotels in more than 90 countries, with a particular focus in Europe and Asia. Hotels4U.com head of new product development Doug Turner said: The FastBooking portfolio is complementary to our offer.(Anonymous (2011 pp. 1).

Another major threat arises in the costs that are required to manage an established travel agency as opposed to operating an internet site (Moutinho, L. (2000) p. 218; O Guinn, T. et al (2009) p. 37-40; Shanklin, W. and Ryans, J. (1987) p. 23-26). Increased costs that are faced by travel agents include the cost of maintaining stores, which require to be staffed, and require physical premises to be acquired, resulting in rental or mortgage costs for the travel agent. Other costs include the cost of traditional communication equipment such as phone lines, and phone calls. Brochures may be an additional cost, requiring printing and design costs. All of these costs may not faced by competitors such as lastminute.com, who sell package holidays simply through a website, with no additional requirements for physical premises, or traditional means of communication such as phone lines (Armstrong, G et al (2009) p. 28-31; Grunig, R. and Kuhn, R. (2008) p. 16-19).

Further threats faced by the travel agent is emergence of the customization model of package holiday sales, where consumers can take advantage of build your own services available with most online operators (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21). This is heightened by the fact that the package holiday may be seen as an intangible product, that is perishable and cannot be kept, and reused. This increases the pressure on travel agents to sell their package holidays quickly, and to make sales in the first place. Specific threats have forced some actors to restrict booking facilities: American Airlines wants travel agents and consumers to buy tickets directly from its website rather than online travel agencies such as Orbitz, Expedia or Travelocity, which offer a broad choice of airlines, ticket prices and flight times. As anyone whos bought tickets online knows, those travel agencies offer discounts, plus a convenient means of choosing which flights, and which airlines to fly. We use these sites to make purchases based on price. American wants you to buy based on services..(Waters 2011 pp. 1)

This has led to criticism regarding an alleged lack of transparency: American is forcing a situation where you almost have to roll back the clock [to] where it makes it more difficult for the consumer to access comprehensive fare and schedule information, said Mike McCormick, executive director of the National Business Travel Association. In other words, the transparency and the ability to pick and choose an airline based on price and schedule two benefits of booking travel online to which weve grown accustomed could go the way of the horse and buggy. If youre a price shopper, you will have to go from one site to the next to the next to compare fares. It will be even more chaotic for major corporations that rely on these sites for travel management...(Waters 2011 pp. 1).

Drawing on service marketing theory, it may be argued that there is increasing pressure on actors in the travel industry to turn so-called passive waits into active waits (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21). The distinction between passive waits, and active waits may be drawn from the rationale that consumers are increasingly participating in the process of providing the service (i.e simultaneity). Thus, consumers with access to the internet may tailor their own packages, thus experiencing an active wait as their booking is processed and communicated to them (Moutinho, L. (2000) p. 217; Hill, C. and Jones, G. (2008) p. 42-47). A passive wait, within the same context may be where the customer for example telephones an answer phone, leaves a message and waits for the operator to contact them with booking information, and answers to queries. Travel agents, and other service operators in the same industry are faced with increasing pressure to turn passive waits into more active ones. In the case of the generic travel agent, this may be achieved by designing a website, with interactive tools so that a customer has the choice of tailoring their own package, and ordering their own holiday, tailored to their own specifications (Harris, N. (2001) p. 14-17; Hill, C. and Jones, G. (2008) p. 51-54).

Opportunities enjoyed by travel agents are that they are an established and trusted means of booking holidays. Some customers prefer booking through traditional means, such as through consultation or by speaking to a nominated person over the phone (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21). Both of these alternatives may be offered by the travel agent. Additionally travel agents have been able to set- up their own websites, and these in many ways perform the same functions as the sites that offer singular booking options, such as lastminute.com. This may be seen as

an opportunity because travel agents may attract custom from across a wide range of customers, as opposed to internet operators such as lastminute.com which require a booking over the internet. Additionally, the physical premises facilitates better advertising, and brand presence, with potential customers passing the premises on a frequent basis, as opposed to the online operator, whose website may not have as much, or as frequent exposure to as wide a range of potential consumers (Kurtz, D. et al (2009) p. 23-27; Lamb, C. et al (2002) p. 43-37).

A summary of the commonalities and differences between the current service marketing strategies of your chosen sectors major players Major players in the travel industry selling package holidays include travel agents, online operators such as lastminute.com, low-cost operators selling additional holiday services. All of these actors face stringent competition for the sale of package holidays. Costs incurred by these stakeholders include advertising and marketing costs (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21). There are also obvious differences including the fact that travel agents are required to maintain a physical premises, and meet associated costs such as staffing and utility bills, whereas these are not factors that online operators have to take account of. On the other hand however, the physical premises represents a good advertising tool for travel agents, who may take advantage of this alongside internet marketing strategies.

Select one major player lastminute.com Lastminute.com may be seen as being faced with a number of strategic service marketing issues in the next five years including intangibility and perishability of package holidays. Perhaps the biggest issue

affecting lastminute.com is the singularity of the mechanism through which sales of the package holiday may be made as opposed to the situation of the travel agent. There is an increased threat to the lastminute.com business from corruption of their website or technical problems, causing interruptions in their service, creating the potential for devastating failures in communication with their customer base, and the same may not be said of more well-established travel agents (Moutinho, L. (2000) p. 216219; Armstrong, G et al (2009) p. 16-21). Thus perishability of the services offered through lastminute.com may be increased by external risk factors.

Another factor that may affect lastminute.com is the increasing number of competitors that are creating a presence on the internet. Presently, lastminute.com is returned in the first page of search results on google, yet with more and more players entering the market, offering the same service as lastminute.com, the market leader position, and the brand that underpins lastminute.com may be seen as exposed to a certain level of threats, not experienced by travel agents, operating in more predicable markets.

Demonstrate the relationship of any issue and relevant principles of service marketing The importance of strategic positioning as a major principle of service marketing may be considered in terms of the technological issues facing lastminute.com. Increased risks associated with technical failures are more acutely relevant to lastminute.com, whose entire business model is contingent on a secure, and permanent internet presence, unlike that of travel agents for example whose means of communication with their client base may be seen as more diverse. Applying principles of strategic

positioning, it may be argued that the first step that is required is that lastminute.com identify this dependence on the internet as a major possible weakness, and ensure that they have an adequate contingency plan to ensure that they can cope with internet based threats to their business (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21).

These threats may be surmised in the following terms: threats from competitors with the potential to occupy more advertising space on the internet; threats from technical failures of their websites; threats from negative publicity associated with technological failure of the internet. Contingency planning regarding events relating to technological failures of the internet are hard to predict for obvious reasons. However, in the event of a potential failure in the website, lastminute.com could ensure that they have access to IT expertise who can assess and remedy the problem as quickly as possible. Thus, inhouse IT staff may be a good option for lastminute.com, in order to secure the operational capacity of their website. Thus, for example, were a technical fault to occur over the weekend, on a major public holiday such as Christmas Day or Christmas Eve, or at night, lastminute.com may have a better prospect of ensuring that this can be identified and remedied, since external actors may be difficult to access during these times. This protects the position of lastminute.com a little better given their dependence on the internet (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21).

In terms of addressing issues relating to competitors, and the increasing prevalence of competitors adopting the internet model for the sale of package holidays, the employment of in-house IT experts

may ensure that lastminute.com are able to adequately compete with their competitors, through monitoring of the website, and the position of lastminute.com in search results in major search engines such as google. In house IT experts may be instructed to monitor internet presence issues, and thereby ensure an adequate and timely response to them, reflecting the importance of the internet to their business model (Moutinho, L. (2000) p. 217; Hill, C. and Jones, G. (2008) p. 42-47).

Conclusion This essay has focused on the travel industry, and the sale of package holidays. The position of the traditional travel agent has been assessed, as has the position of other actors within the same service sector i.e. lastminute.com, and other actors who are selling package holidays. The essay has argued that the sale of package holidays contains many different stakeholders, each facing distinct risks to their market position depending on their business model. Two major business models exist; the traditional one that involves a travel agent with a physical presence, and the actor whose marketing, sales and communication strategy are all internet based (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21).

The essay has looked at the challenges that appear to the faced by both divisions in this service sector. One of the main ones identified was the emergence of the customization model, which allows consumers to build their own holidays, through the internet. This increases the threats that are manifested in the fact that package holidays are both intangible, and perishable, and as such the

pressure on business actors to maintain steady sales is increased (Moutinho, L. (2000) p. 217; Hill, C. and Jones, G. (2008) p. 42-47).

Each actor may be seen as being faced with individual challenges. Travel agents face increased costs associated with having, and maintaining physical premises. There are housing costs, utility bills, and the costs of staff and communications equipment (Hitt, M. et al (2009) p. 23-27; Kagermann, H. et al (2010) p. 33-35). This, in many cases is in addition to the costs associated with establishing and maintaining a website, and the cost of advertising. Travel agents are also faced with costs associated with the creation of brochures, and instore advertising literature. On the other hand, advantages enjoyed by this particular business model include the fact that the physical store is a good method of advertising, and may draw in a lot of passing trade, where consumers call into the store to book an unplanned holiday, for example. Travel agents may also benefit from the fact that they have a diversity of communication means open to consumers, wishing to book holidays through them. This lessens specific technological threats to their business, such as through technological failure, for example. Some consumers may see the physical act of booking with a trusted, and designated person as a more secure means of booking a holiday, and therefore if a travel agent can establish an internet website, in addition to this the end result is that they have a broad appeal, due to offering a number of alternative means of booking (Moutinho, L. (2000) p. 216-219; Armstrong, G et al (2009) p. 16-21).

On the other hand internet operators are also faced with specific service marketing challenges. While these operators enjoy relatively low costs, the fact that the internet is a basic tool of their trade may represent a distinct service marketing disadvantage (Lehman, C. (2008) p. 42-45; Mercer, D. (1996) p.

22-26). The situation of these operators has been highlighted through the discussion of the case of lastminute.com. It has been argued that lastminute.com may benefit from employing an inhouse range of technical experts. This would serve two main purposes. Firstly, it would enable speedy identification and remedying of any technical issue with the website. In addition to this in-house IT expertise would enable lastminute.com to monitor their presence on the internet, and ensure the efficacy of web optimization of their search results (Moutinho, L. (2000) p. 217; Hill, C. and Jones, G. (2008) p. 42-47).

Thus, in terms of service marketing travel agents face a number of challenges relevant to cost, and the presence of competitors in the market for the sale of package holidays.

Recommendations The essay has made some recommendations relevant to the case of lastminute.com. Drawing on principles of service marketing, it may be argued that package holidays should be understood in terms of their perishability, and in terms of intangibility. This allow for more perspective to be gained as to the means of communication that takes place between the consumer, and the seller of package holidays.

It has been recommended that lastminute.com identify that their business model has a substantial weakness, given its dependence on the internet. This dependence on the internet is much more acute than that of travel agents, for example, who can communicate with their customer base in many different ways. This may be addressed through the adoption of a contingency plan, involving the employment of inhouse IT expertise, enabling fast identification of communication faults, or technical

failures on the internet.

References Anonymous (2011) Hotels4U Ties up Deal with Fast Booking available at:

http://www.travelweekly.co.uk/Articles/2011/01/10/35712/hotels4u-ties-up-deal-with-fastbooking.html Armstrong, G et al (2009) Marketing: An Introduction. Pearson. UK Grunig, R. and Kuhn, R. (2008) Process Based Strategic Planning. Springer. USA.

Harris, N. (2001) Business Economics: Theory and Application. Butterworth. UK. Hill, C. and Jones, G. (2008) Essentials of Strategic Management. Cengage. USA. Hitt, M. et al (2009) Strategic Management: Competitiveness and Globalization. Cengage. USA. Kagermann, H. et al (2010) IT Driven Business Models. Wiley. USA. Kurtz, D. et al (2009) Contemporary Marketing. Cengage. USA. Lamb, C. et al (2002) Marketing. South-Western. USA Lehman, C. (2008) Business Communication. Cengage. USA. Mercer, D. (1996) Marketing. Wiley. UK. Moutinho, L. (2000) Strategic Management in Tourism. CABI. USA. O Guinn, T. et al (2009) Advertising and Integrated Brand Promotion. Cengage. USA. Shanklin, W. and Ryans, J. (1987) Essentials of Marketing High Technology. Lexington. USA. Waters, J. (2011) American Airlines Feud: Bad News for Consumers. Available at:

http://www.marketwatch.com/story/american-airlines-feud-is-bad-news-for-consumers-2011-01-10? reflink=MW_news_stmp