Know-How Exchange : Strategy

Sammykarij:Yes, this is a real situation many large agency groups would find themselves in. I only called it "hypothetical", because it's not my business, and it's not my client either.

I am just interested in getting some input that might help mould some critical thinking for a prospective business change project further down the line.

I think I understand your suggestions; but I am not sure whether the airlines, who do a huge amount of B2B, B2G and B2C advertising, are interested in referrer/affiliate models. The only affiliate commissions I would anticipate would be from referrals to other travel portals, like Zuji etc.

I am really looking for ways to leverage the vast infrastructure of retail shops with consultants that could sell - well - non-travel related services. Any ideas in that regard?

Eugene- good to hear from you! Our respective Prime Ministers are in dialogue right now about free trade, so it's good we are also talking!

Part of the problem is that airlines are also selling package tours - many airlines have their own holiday companies and they have invaded the travel agent's end of the value chain. But I think you are right about the advice that travel consultants can give, especially to the grey-haired market, and I suspect this is the one slim component in the mix that is keeping those customers coming back to the agencies.

Your profile tells me you have a background in financial services: What services could a travel agent offer; or, more to the point, how hard would it be to adapt a retail travel agency so it could compete with other financial institutions selling core, everyday financial services to grow themselves a new "revenue engine"? What do you think?

ChrisB

MLM for travel... Mmm, not sure, I think the current distribution model is as flat as it can be, there scarcely seems room (nor margins) for additional levels.

MLM success usually requires the manufacturer to sell only through MLM channels for them to work. With airlines, the direct channel will always out-compete them, won't it?

I think the real problem is that the travel agent only adds value for specific segments and/or transaction types.

Hence my thought they should use their distribution network, well, for something else in addition to their existing core business. Like banking, postal services, maybe financial planning... Something people need everyday that has margin potential for the franchise chains for the next 10-15 years.

ChrisB

Thanks Rob. But perhaps I'm thinking about going even further outside the box than that.

I'm recognising the need for a total transformation for the business.

Yes, major change, major learning curves, big fit-out/store redesign, huge staff recruitment and training exercise. Probably big dollars.

有机变化只是不会削减它。像challenge facing the legacy airlines in the USA, small change would be just like rearranging the deck-chairs on the Titanic. Look how the traditional response of cost cuttimng, apealing to government, and executive purgings have done for the likes of USAir, United, Delta and Continental against the upstarts of SWA and JetBlue. You can't beat a brand new and very efficient model with a smoky old 1970's clunker of a business.

问题是,将这些服务/产品e travel agancy chains through the next decade++?

Don't confuse my question with the challenges facing Mom & Pop travel agencies. They have a local or segmental niche and will either survive or fail, but they don't have the financial and other resources required for a major repositioning and cultural change project like the big franchised travel agency chains do.

It's a tough problem, and maybe one to which there are no easy answers.

I suppose the question could be asked another way:What consumer or SME need, presently unfulfilled or underserviced, could be satisfied (given, perhaps, significant investment) through a nationwide network of franchised owner-operator retail stores with high-profile mall or strip-shop locations?

Look forward to further inputs...

Steve

Some great ideas there, thanks. Special profiling is well worth integrating into an existing web channel offering.

Eugene

The MLM idea might be worth work-shopping further - I'm still ambivalent/dubious... Clothes and books - especially books - I think are good ideas.

Thanks. Still waiting for the big idea that rings all the bells...

ChrisB

Michael

I wasn't ignoring your reply, I think my previous post must have crossed with yours and today's my first day back in here!

You're right, that's an excellent approach, and one that could help re-orientate the core business or else help establish case for its transition from cash cow to dog position in a BCG matrix.

Maybe the problem is defining the segment as travel consumers. I know, it seems obvious, who else will go to a travel agent? But that's where I think the current line of thinking stalls. The travel agent's turf is being eroded by galloping airline, resort, cruise line and hotel value chains. The agent network has the choice of either fighting their forward and backward-integration by adopting a similar stance, or else looking at redeployment and redefinition of its business.

Getting out is not an option. That would leave the chains walking away from considerable intangible asset value locked up in their brands, delivery capability and retail IP.

Question is, what's the next wave, what "retail" concept could be integrated with, or even REPLACE lock, stock and barrel the present retail concept and all that goes with it?

I don't have the answers, but I do suspect the major chains will be burning much midnight oil trying to solve this equation.

ChrisB

Caryduke

That wasn't the question, but that's an interesting answer anyway. What is this travel MLM called? Any weblinks?

My question is summed up as:

If you are a multinational franchised network of hundreds, if not thousands, of travel agency stores and you are losing revenue due to backward integration by airlines, hotels, cruise operators etc who are attracting customers online, what new wave can you see that will provide revenues for the future?

The answer doesn't have to be anything to do with travel. It might mean conversion of all the travel agency stores to banks, bookstores, or something else. It might integrate the travel agency with complementary businesses, like travel goods, clothing, language education, etc.

Thanks for the input though. Perhaps the big agency groups are also losing revenues to MLM groups, it's not a factor I had contemplated.

ChrisB

Eugene

As I understand it, an exchange requires buyers and sellers of the same commodity to meet and agree on a transaction price. If the sellers are desperate the prices wuill plummet. I'm not sure how your idea works but I'm keen to understand. Can you explain more?

You are suggesting a lot of tours get cancelled. How many? Where can you get facts, auditable statistics to support this assertion? Are we talking 20-30% of the total number of tours? Or 1-2%? Would you try to build a business proposition based on a marginal volume like that?

What's the value proposition for members in this community you are suggesting?

ChrisB

Eugene

Thanks for the clarification. Does your friend who had developed a similar system in Malaysia have a URL I could check out?

I'm not sure whether this situation, i.e. tours planned then suddenly look like they might have to be cancelled because of lack of firm numbers, does exist elsewhere, although you would have to expect the Malaysian market would not be unique in that regard.

I'm keen to try to quantify it, because I'm just not sure whether this constitutes a significant business opportunity for a change program or not.

Also, what kind of agents do you think are planning tours then failing to get the numbers? Are they one-outlet, family or Mom/Pop operators? Or do the big franchised chains also have this problem? You would think the big operators probably would have the distribution network power to fill up anything on offer, unless the product itself is poorly developed and presented.

I'm going to leave this question open a few more days yet, until after the weekend, in the hope someone seeds the thread with a left-field, killer concept.

C'mon you creative thinkers out there!

ChrisB

Randall (WMMA)

Perhaps the Australian model I am seeing of the networked/franchised travel agencies and the local airlines (Qantas, Jetstar, Virgin), and the locally-represented international airlines, is different to the US domestic model.

In fact, when people here have booked direct with an airline they DO go back to the airline if the need to make a change or have some problem to resolve. The airlines are open 24/7 where the travel agents are not, although their centralized cal centre (which may not have all your booking details) might be. Thereby hangs part of the problem - the airlines have disintermediated the agencies by doing a damn fine job of dealing direct with the punters.

The insurance analogy is interesting and is probably very valid in the USA, but here we have many more insurance players than airlines so the role of an insurance broker becomes one of acting in the client's interests rather than simply as a differently-branded sales channel. Your arguments are probably very valid in the US market - one size does not necessarily fit all.

Marcus (mbarber)

I think these are excellent ideas - I mentioned banking and financial services earlier although someone said they would not want to do their banking at a travel agency - certainly it's a channel Amex has capitalized upon for years.

Starting/owning their own airline may require too large a variance from their core competencies to pass muster, plus, it would almost certainly result in the disruption of the slimmed-down business they are getting from the existing airline players who see them now as costs to be eliminated or cut down, rather than competitors to be run out of business. Death by a thousand cuts, or one quick, sharp blow...

I think they can retain their travel business as well as move into another area - or several areas - that utilize their core competencies and existing infrastructural assets. So online final mile delivery, banking, call centres are all potential prospects.

Good ideas, thanks, I'll keep this open over the weekend in case anybody has a further stroke of inspiration...

Cheers

ChrisB

I think this thread has run its race.

Thanks very much to all contributors, I'll take the concepts away and think them all through very carefully.

ChrisB