The UK and European Package Holiday Markets - Essay Example

The UK and European Package Holiday Markets has changed significantly in the last 5 years Section Opportunities Enhancement of Communication In today’s world, E-Commerce has a material and significant impact on business and the tourism industry to a very large extent, depends on the interaction between the customer and the service-provider. According to recent studies, 44 % of the holiday tourists utilize the internet to undertake research for holidays, and 32% use it for planning their holiday getaways. But, significantly, only 33% actually used it for booking their holiday trips. According to a 2004 Survey conducted by MORI, although the Internet’s search Engines was used for gathering data about Travels and holidays, comparatively fewer people actually used Internet facilities for booking their holiday trips online. “However, 53% said that they were likely to use the Internet to book a Holiday in next 2 years” (ABTA Travel Statistics and Trends 2005) www.abtamembers.org/research/abtastatstrends2005.pdf Php 1.1.Online branding what needs to be emphasized is that e-commerce serves only to offer connectivity between the service-provider and the customer. The use of the Internet, by itself, does not guarantee package holiday bookings or ticket sales. Only by creating and sustaining a strong online branding can the travel agencies hope to compete sauccessfully in this market Effective marketing strategies along with knowledge base ,combined with the use of effective use of technology would be a winning cocktail.for success. Personalized websites hoisted by the various travel agents and tour operators would ensure steady business prospects and future growth of this industry. 1.2 Personnel Segmentation it is very necessary that Tour Sales Agency Companies and Tour Operators are able to keep their prices competitive and also provide the best services available in order that the customer places repeat orders in future also. Also the client’s travel needs to be taken care of since Package Tours markets needs to address to customers’ tailor made requirements and hence the need for client segregation becomes necessary.. As a result of the fact that the travel and tourism industry has been the single largest beneficiary of products and services sold over the Internet, more and more companies plan to expand their Internet sales strategic goals and objectives by harnessing the use of internet for online booking of Hotel reservations, Conducted tours, Visa formalities and other matters connected with international tourism to cater to the online travel market and reap the advantages of online connectivity.” The Percentage of Travel Research done online before a purchase is now over 74%” (Internet Tourism Marketing) http://www.adventurebizsuccess.com/internet-tourism-marketing.php This becomes all the more relevant, when we consider, that by the year 2020, there would be around 1.60 Billion International Tourists every year, and the total amounts expended towards travel would be to the tune of US $ 2 Trillion. As of now, the use of the Internet is restricted. Of the total respondents in a survey conducted 71 % of the respondents used Registered Travel Agencies for bookings of Packages Tours, another 24% booked through tour operators and around 2% only used the Net for bookings. However, in the future, with broad band connectivity and greater internet access facilities, the internet would become a decision making tool with regard to Package Holiday destinations, and “High-speed Internet access will increasingly become a standard traveler demand, not an option.” (Pacific Asia Travel Association : 2004 http://www.pata.org/patasite/index.php?id=1341) 1.3 Online Brand building Potential holiday seekers often base their decisions based on the following: 1. Destinations included in the packages and alternatives, as compared with destinations offered by competitive firms 2. Total costs involved in each package and most cost-benefit package and comparisons with the competitors. 3. Whether low cost airlines would offer cheaper destination travel costs with independent package option: comparisons of prices of different low cost airlines and their differential prices 4. Which travel package offers the optimum benefits and compared with its price structures and whether any special options are to be added to the package and it so, what are the costs involved, and how it compares with competitors prices. So it is necessary that a strong brand building exercise is implemented that could take care of the different options and tour requirements of different types of customers. Section 2 Challenges posed to the package holiday markets The UK package holiday markets are undergoing changes due to rival competition and the effects of globalization seen in the context of this aspect of travel and tourism. The main competition that UK Package Holidays markets face today, are from low cost airlines. By using inexpensive airlines, travelers can make their own independent decisions regarding their holiday arrangements at lower rates than package tours. and can also use the savings in differential costs for a longer and comfortable stay “Thomas Cook reported that demand for package holidays in the UK fell 8% in 2006,in large part because of growing interest among travelers in building their own package.” (Domestic market helps sustain tourism growth: International overview – Europe: http://www.corporate.canada.travel/docs/research_and_statistics/trends_and_outlook/tib/2007/TIB_Jan_2007_summary_EN.pdf . Pricing is a very important constraint in the package holiday market since the basic idea behind package holiday market is “achieving high sales volume and reducing unit costs” (tutor 2U) Case study: Pricing in the Package Holiday Marketshttp://www.tutor2u.net/business/marketing/casestudy_pricing_packageholidays.a asp. Even a small difference in price would compel the customer to approach the competitors. “Packaged holidays are a very price sensitive commodity”(Flook, Alan 2001) The Changing Structure of International trade in tourism service, The tour operator perspective http://www.wto.org/English/tratop_e/serv_e/ifto.doc. This aspect is important since the Internet today provides enormous opportunities for potential customers to glean necessary information at a click of a mouse. The package tour industry has also witnessed a faster growth rate in newer sectors of the market during the last 5 years. There has been a paradigm shift to newer holiday destinations compared to conventional destinations like France, Spain, Italy, and Greece etc. However the European Union countries have retained their stronghold and the long haul trips to beaches of Florida, Theme parks and Mountain bike tours to distant Himalayas in the Indian sub-continent continue to flourish. A significant mode of package holidays was by air and the rest undertaken through Sea travel and through the English Channel Tunnel route. However, the length of stay in UK package holiday has declined over the 5 years from over 11 days in 1993, to just over 10 days in the year 1999. The most popular season Package Tours undertaken in UK was during the Northern Hemisphere Summer, that is July to September every year. Of the total Package tours undertaken during this period, 40% were to countries of European Union, 47% to other destinations in Europe. It is also interesting to note that during this period – July to September, 33 % of Package tours were to North American destinations and 23 % to other parts of the world. The major tour operators Wallace Arnold and Shearing offer a large range of holiday package trips to Europe and The Mediterranean region up to Turkey. They also provide surface transport facilities for travel through Coaches, for people who have a morbid dread of flying. The current fad in packaged holiday is to prefer non-traditional destinations. Many people now seek new types of holidays with newer destinations in mind. The social changes brought about during the 21st Century are witnessing a new crop of travelers who prefer hyperactive holidays in new destinations. Therefore it has become imperative for the Travel and Tourism Trade to introduce innovative marketing concepts into this area, like newer and flexible travel products, a large variety of tourist and vacation destinations and non-traditional cuisine. It is also also necessary to know about the 4 big players in the Tourism industry. They are Thomson with a market share of 27%, Air Tours with 19%, Thomas Cook with 17% and First Choice with 15%. (Research and Market : UK Overseas Package Holiday Market Assessment ) http://www.researchandmarkets.com/reports/3934 The latest merger that has been announced is between My T ravels Plc and Thomas Cook AG. It is hoped that the merger will increase the pre tax cost benefit of ₤ 75 Million Per annum. Since Thomas Cook is a familiar name in the travel and tourism industry, “the joining of the two groups will create an even stronger force in the highly competitive market.” (Holidayhpermarket.co.uk ) ( http://www.holidayhypermarket.co.uk/News ) Section 3 : The utility of Internet over the next 5 Years The main results of the use of internet technology would be to reduce staff costs. And also to curtail administrative expenses and effect efficiency in client servicing. Research has shown that the UK economy is poised for further growth in the years to come. The economy is expected to gain from strength to strength and the years ahead would witness lower inflationary pressures, lower unemployment levels and a reasonable growth rate of tourist traffic, expected to be around 4% per year. In the next 10 years, there would be 3.5 Million more people over +40age group, who are at the peak of their careers, and would have larger income levels, especially for package holidays. The next decade would also witness rise in household incomes, with couples having 2 incomes of both husband and spouse. In such situations, there would be more disposable incomes in hand, even to take several holidays in a year, should other factors be favorable for it. “Business enterprises are increasingly using information and communication technologies to link their business processes: internally, with their suppliers, customers and for cooperation with business partners” (e-business watch: Enterprise and Individuals) http://www.ebusiness-watch.org/ It is believed that the on-line travel market in Uk would rise from ₤2.2Billion in the year 2002 to ₤7.3 Billion in the year 2007 (Innovation & Technology transfer (May 2005) http://cordis.europa.eu/itt/itt-en/05-1/dossier03.htm. This is because of a high growth rate in this market and also due to the shift from traditional destinations to newer and unexplored destinations preferred by the younger generations seeking adventure and high profile sporting activities. Moreover, large hotel and car rental establishments are now resorting to yield management systems to organize and manage sales. They have policies of varying their sales prices according to current demand using internet technology and would also use it extensively for customer billings and transaction analysis. The services of Internet could also be used for realigning with customers worldwide for prioritizing locations and other related areas. During the next five years, it is expected that , with the high price of gasoline and oils, the use of surface transport for vacations would be reduced substantially and holidaymakers would make use of the services of low cost airlines bookings (through internet ) and greater use of internet technology to make multiple choice decisions and base decisions on fair and unbiased premises. Conclusion The package holiday market industry has come a long way from the time since it was the privilege of the elite and affluent classes of society. In today’s world, with a larger section of the population having high disposable incomes, and the end and means to travel, it has developed into the largest service industry spawning a number of large and small countries. It is believed that in the years to come, with the advent of advanced mass communication systems, high speed connectivity and a host of other user-friendly technological advancements, this means of recreation would usher in a dramatic revolution in the tourism industry and provide unregulated leisure to all classes of people who seek their services. Works Cited Domestic market helps sustain tourism growth: 2007.Tourism Intelligence Bulletin. International overview – Europe: http://www.corporate.canada.travel/docs/research_and_statistics/trends_and_outlook/tib/2007/TIB_Jan_2007_summary_EN.pdf (accessed May 2, 2007). The Latest Holiday Package and Travel Industry News. 2007. Holidayhpermarket.co.uk http://www.holidayhypermarket.co.uk/News (accessed May 2, 2007). ABTA Travel Statistics and Trends 2005. Introduction. ABTA. www.abtamembers.org/research/abtastatstrends2005.pdf (accessed May 2, 2007). Pacific Asia Travel Association. 2004. http://www.pata.org/patasite/index.php?id=1341 (accessed May 2, 2007). Flook, Alan. 2001. The Changing Structure of International trade in tourism service the tour operator perspective. http://www.wto.org/English/tratop_e/serv_e/ifto.doc. (accessed May 2, 2007). Innovation & Technology transfer. May 2005. http://cordis.europa.eu/itt/itt-en/05-1/dossier03.htm (accessed May 2, 2007). A Sectoral e-Business Observatory. e-business watch: Enterprise and Individuals http://www.ebusiness-watch.org (accessed May 2, 2007). UK Overseas Package Holiday Market Market Assessment. 1999. Research and Market. http://www.researchandmarkets.com/reports/3934 (accessed May 2, 2007). Internet Tourism Marketing. 1994. Adventure Business Consultants. http://www.adventurebizsuccess.com/internet-tourism-marketing.php (accessed May 2, 2007). Case study: Pricing in the Package Holiday Markets. Tutor2u. http://www.tutor2u.net/business/marketing/casestudy_pricing_packageholidays.asp. (accessed May 2, 2007). Read More