Impact of ICT on the bricks and mortar travel agents and changes in the supply chain positioning

Tourism is a substantial industry that serves many people in many different industries. Bricks and Mortar (B&M) travel agencies are physically established traditional travel agencies providing travel services to customers from premises accessible to the public. B&M travel establishments occupied a prime position in the market before the 1980s. Such B&M travel agencies are refered to as intermediaries. They were the standard access point for anyone intending to go on holiday or book a business trip. They were profitable, mostly working in isolation from each other and representing a limited number of airlines or hotels. Although there had been some introductions of technology in the travel industry as early as the 1950s, it was not until the 1990s when Information and Communication Technologies (ICT) entered the marketplace that changes in business practices began to have a noticeable impact. The introduction of the Internet brought about a change in the fortunes of B&M travel agents. While some customers found the access to extensive information via the Internet beneficial other customers were left bewildered and perplexed in the supply chain positioning of travel products. The direct competition from Internet booking services operated by third party intermediaries and major suppliers of services such as international hotel companies intensified and made changes in the traditional travel distribution supply chain and thus increased financial pressure on travel agencies. In Australia, this pressure has resulted in a reduction in the number of businesses in the travel agent sector (disintermediation) over the past decade by some 17 %. However, some B&M travel agents, although forced into disentermediation, were able to re-invent themselves and through reintermediation survive and prosper. This scenario raised the questions: What services and strategies do customers and B&M travel agents believe have helped B&M travel agents in Australia to compete with Internet Only travel agencies? How do customers and traditional B&M travel agencies envisage the future of B&M travel agencies in the context of the industry and which should they concentrate on in the future? Why do some customers prefer to use the services of B&M travel agencies? To address these questions, a research study was instigated to analyze and report on the status of the Australian B&M travel agencies now and in the future. The research study adopted a multi-method approach using extensive literature reviews, email questionnaires, and interviews with the principal stakeholders – owner/managers of the B&M travel agents and travellers. A theoretical framework for analyzing the findings from the studies was based on Porter five forces of competition. The findings from the study suggest that B&M travel agencies are fighting back by becoming part of big establish travel houses, introducing new packages, better customer centric relationships, adding more value-generating services and are building on their core competencies while also implementing ICT to not just survive but to grow. The interviews with travellers confirmed that there is a need for a balance between human interaction and internet, better CRM, and after sales support, etc., and also contradicted the findings of the B&M travel agents as younger generation has a perception that online tickets are cheaper, human interaction is not very important, etc., but assisted in identifying areas that the B&M travel agents had not recognized as vital for future growth that includes; robust web support with a recommender system, customer after travel feedback. From the responses to the questionnaires and in-depth interviews with the principal stakeholders a recipe for success was identified, which highlighted the strategies B&M travel agencies should adopt to succeed. Personal services that cannot be replicated by Internet-only travel agents were a vital factor in the success, as was the embracing of ICT and particularly the Internet. However, these factors had to be implemented in unison; the sum was greater than the individual parts. While the future looked promising due to re-intermediation, there was one area that could face significant change in the next decade. In terms of the clientele of B&M travel agents, it was the older generation who favored them. The older traveller was more likely to use B&M travel agents. The research found this was because they were less likely to be familiar with technology, exhibited higher levels of technophobia, and preferred to pay in person rather than online.