How are Asia Pacific travel agents'coping up with price wars with other agencies
Abacus International has shared that a large number of travel agencies in the Asia Pacific region are considering moving further into corporate travel to reduce the possibility of price wars with other agencies and to increase revenue. (1/10/2007)
The findings from the travel facilitator are based on an extensive annual survey of travel agents, involving an in-depth telephone survey of 1,533 travel agents in 12 markets between May and September 2006.
Don Birch, president and chief executive officer, Abacus International said: “Thirty-five percent of all the travel agents surveyed across all the markets identified the price war among travel agencies as the most critical business issue. This concern was more prevalent among travel agents in the China, Indonesia, Philippines and Taiwan compared to the rest of the markets.”
The second most critical business issue, nominated by 26 percent of the respondents, predominantly those from India, Malaysia, Taiwan and Thailand, was the emergence of low cost carriers and airlines selling tickets directly to the travelling public. Small travel agencies seem to be particularly affected, as this threat was pinpointed more often compared to middle sized and large agents.
According to Abacus, the need to increase revenue for the agency was the third most critical issue, nominated by 24 percent of the respondents especially in Hong Kong, Korea, Philippines, Singapore, Sri Lanka, and Vietnam, while the need to reduce operating costs was rated the most critical issue by just 12 percent of the respondents.
The survey found that this need to increase revenue varied according to specialisation. Whereas wholesalers were most focused on increasing their revenue, leisure and corporate travel agents are more concerned about price competition.
In response to these issues, the markets seem to differ considerably on their choice of strategy.
Birch said that many agencies saw a move into corporate travel as a way to avoid the consequences of possible price wars with fellow agents in mainstream markets. “About 21 percent of the 461 travel agencies indicated they would focus on the high margin, low volume customers such as corporate markets and segments at the specialised level, when probed on their plans to manage the competition.”
But while agencies in China, Hong Kong, India, Singapore, Sri Lanka and Taiwan are more likely to take this direction, Vietnam did not find this strategy applicable to its market.
“The next most popular strategies were the development of loyalty programs to retain customers (18 percent) and to explore partnerships with other agencies to expand the product offering (14 percent),” Birch said.
The loyalty programme approach is more favourably received by China, Hong Kong, Philippines, Singapore, Sri Lanka, Taiwan and Thailand, while the agency partnership approach was more popular with China, Indonesia, Korea, Taiwan, Thailand and Vietnam.