The Decline in the Need for Travel Agencies

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Essentially travel agencies are middlemen between airlines, cruise lines, hotels, car rental, and customers. Becoming a travel agent is relatively inexpensive with startup cost starting at $15000 to $60000. (Taylor) In the past Travel Agency used to be subsidiaries until about 1997 travel agencies started to become private and publicly trading companies. Travel agents use airline, hotel, and rental car company and package together deals for customer. This package created by the travel agencies includes information about the area based on the customer’s reason for travel.
Travel Agencies are facing new and various old threats that may push them into extinction. Internet search engines have made information more access able to people searching for travel. This information would usually be given to the potential customer from the travel agent. Another threat to travel agencies is the regulations and commission caps developed by Airlines. In 1995 Delta Airlines caped commission on fares over $500.00 to a maximum $50 per round trip ticket, then in 1997 United Airlines reduced commission from 10% to 8%. (Taylor) Travel Agencies face threats due to amounts of information available; airline regulations, seasonal traveling, and the Internet are threating the industry.
In 2010 Thomas Cook decided to merge with Co-operative Travel illustrating the expectations of joining two star companies and creating a larger company. Commission and small profit margins area are large reasons why the market for travel agencies is so competitive. To eliminate the competition travel agencies have been merging and acquiring smaller companies to demand a share of the market place. Agreeing to maintain each other’s branding Thomas Cook and Co-operative Tra...

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...fectively generate self planned trips. Buyers have plenty of strength in the Travel Industry because of how elastic the market is for Travel agencies. Opportunities from the Internet and the large amount of agencies leave bargaining and more opportunities for the customer to find the price they would be willing to accept.
For the Auto repair industry to be attractive the sector of focus would have to fall in between the specialized vehicle repair. Furthermore I don’t believe the Travel Agency industry will be a better alternative due to the seasonality and advancement of technology from the Internet and information that will sway travelers from using agencies. This case gave insight of the challenges the travel agencies faced in the 1990’s; whether to continue traditional style, or whether to merger to cut cost, and how to implement the website into your business.
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