ONLINE TRAVEL AGENCIES’ (OTA) PRODUCTS AND SERVICES: COMPLAINTS, BAD REVIEWS AND THE SURVIVAL OF THE TRADITIONAL TRAVEL AGENT AND TOUR OPERATOR. HAVE THE OTAs FORGOTTEN BASIC TOURISM MARKETING PRINCIPLES?

 

 

Ourania Vitouladiti

Department of Business Administration-Tourism and Hospitality Management, Technological Educational Institute of Athens (TEI)

 

 

Abstract

This article focuses on the current situation of the travel market and the changes that have occurred due to the onset of technology. It takes into consideration secondary data, specifically the opinions of tourists regarding the offering of online travel services. The result is the almost self-evident conclusion that internet is simply an instrument facilitating the service and not the service itself. The basic principles of tourism marketing remain the focal point for a successful and effective business that ensures the fulfilment of customer needs.

Key words: online travel agents, tour operators, tourism marketing, products and services, reviews

 

Introduction

The complex and competitive nature of the travel market always required of travel entrepreneurs to apply good management and marketing and offer good service. Over the last few years another element, technology and the internet, emerged as a means to connect with business and retail buyers and as a selling point further complicating this volatile sector. E-commerce rose to prominence based on a combination of factors such as access to information, the ability to easily compare products and prices and the convenience of not physically needing to go out to a shop to purchase an item (Kau et al., 2003).

With technology constantly advancing, this situation is irreversible and most travellers are bound to use online instead of traditional travel outlets (Law and Wong, 2003, Law et al, 2004, Pearce and Schott, 2005, Law, 2009). Statistics though clearly indicate that the vast majority of online sales concern simple services like air-tickets and other type of tickets (Euromonitor, 2014, Lefranc, 2014, Abta, 2013) probably due to the simplicity of the service.

It appears that several online entrepreneurs have mistaken the means of achieving a purpose, namely technology, with the purpose of their business that is the provision of reliable travel service. This results to several problems for them that allowed the revival of traditional travel market professionals.

This article attempts to analyse and demonstrate that the purpose of tourism marketing remains unchanged despite the technological advances used to serve it. Specifically, it is a business function that identifies the current unfulfilled needs and wants of a market, defines and measures their magnitude, determines which target the organization can best serve and programs to serve these markets, while the market itself can be a physical or virtual space (Kotler et al., 2003). This means that any interaction in the virtual market is governed by the same tourism marketing rules as those in the physical markets.

 

The online travel market era

It is a given that the online travel market is the fastest growing sector of the constantly growing online market of goods and services (Lefranc, 2014, Hanne, 2014, Google, 2014, Euromonitor International, 2014). The market share of online bookings increases geometrically every year, an increase that also includes the online outlets of traditional tour operators and travel agents (Lefranc, 2014, Hanne, 2014).

Statistics indicate that 25% of the total travel sector sales globally for 2013 were via online outlets (Euromonitor, 2014), a percentage that is considerably higher in Europe and North America. As an example, online sales in the travel market of France accounted for 42% of total sales for 2013 (Lefranc, 2014).

Of course, online travel sales are spearheaded  by the air ticket sales that make for the bulk of online travel sales, followed by hotels and various other ticket sales like train and ferry tickets (Euromonitor, 2014, Hanne, 2014, Lefranc, 2014) while more complicated products like holiday packages are still relatively low in the preferences for online bookings (Lefranc, 2014, Card et al, 2003), due to their complex nature that requires organization and planning by tourism professionals familiar with the travel market and tourism marketing.

It is a common consensus by most industry researchers that a much larger percentage of internet users searches extensively online even though they still choose a more traditional outlet for the actual booking (Lefranc, 2014, Euromonitor, 2014). Online industry research (Google, 2014, Euromonitor International, 2014) clearly indicates that prospective travelers spend extensive time on a variety of websites before each purchase decision while their research is split in 3 contexts: while choosing a destination, while choosing the services for the desired destination and while actually at the destination.

 

Travel agencies’ role in the travel market

A lot of speculation has taken place over the past 20 years regarding the demise of the traditional travel agency in favor of the direct booking outlets of the various service providers. However, against the initial estimates that internet would allow the individual service providers (airlines, hotels etc.) to access directly the clients, reality has shown that the majority of online travel sales are actually made via OTAs (Online Travel Agencies) and not from the providers’ sites.

Travel agencies traditionally serve as a one stop shop providing all travel related services in a single outlet. OTAs’ websites serve as a one-stop portal web site that provides extensive useful information about travel products, usually at discounted rates, attracting customers to visit and purchase the products on their web sites instead of those of principal providers (Morosan and Jeong, 2008). Research shows that despite some qualitative differences on the consumer behavior between business and leisure travelers, it is clear that websites benefit by being user friendly and stable (Google, 2014, Euromonitor International, 2014). The same researches indicate that the majority of online travelers opt for the best deal, show little brand loyalty and they seldom distinguish brands and their value points.

Whether physical or virtual the travel agent provides a valuable service that a customer needs and demands. Specifically, the variety of options and prices that a single provider bound from his product cannot offer (Lee, Guillet and Law, 2013). As a result travel agents in one form or another have enjoyed a special place in the travel industry as intermediaries between the service provider and the actual customer (Lee, Guillet and Law, 2013).

The travel market today is more complex than ever (Kracht and Wang, 2009) with consumers visiting, on average, nearly two dozen websites through various outlets (computers, tablets and smartphones) before making their final purchase decision (Thakran and Verma, 2013).

 

Do OTAs offer a better value to the customers and themselves?

However, the majority of research (Zhang et al, 2015, Morosan and Jeong, 2008, Law and Huang, 2006) and industry statistics (Google, 2014, Euromonitor International, 2014) on OTAs and other travel market websites focus on the efficiency of those websites, their friendliness to the user and the increase of their market share.  It is interesting that there is little information and research on the subject of the actual quality of the tourism service they offer.

Very limited academic research appears to have been conducted regarding the overall satisfaction of the travelers from the actual services they receive. Another issue is that no real attempt is made to disseminate the quality of services rendered from enterprises that are solely OTAs (Online Travel Agencies) from those of traditional “brick and mortar” tour operators and travel agencies that have adjusted in the new online era by building their own online outlets. However, both types of tourism enterprises enjoy increase in their sales online (Deloitte, 2015).

Considering that these two types of travel enterprises cohabitate in the internet but come from two different entrepreneurial backgrounds it would be of interest to see how they fair in terms of actual service provided. A simple way to assess the actual service provided could be through the volume and nature of customer complaints and the way these are handled from an OTA and a traditional travel agent or tour operator with internet presence.

This qualitative difference apparently interests mostly the travel industry members and specifically the traditional travel agents and tour operators that attempt to solidify their position as experts offering superior value to their clients against the onslaught of the OTAs.

Respected travel agent associations like ASTA (American Society of Travel Agents) and ABTA (Association of British Travel Agents) that engage in extensive industry research promote the fact that traditional travel agents and tour operators offer superior value to customers due to their expertise that allows them to offer the best deals, save time and most important offer security to their clientele.

This opinion is shared by several authors who believe that traditional travel agencies can provide a better service in terms of human touch, professional counselling and risk reduction (Law, 2009) and that there is a need from the consumers to have "face to face encounters" with their service provider (Dall Olmo Riley et al, 2009). As a result several travel agent and tour operator associations claim to have witnessed a positive reversal in their business volume over the last few years (ASTA, 2014, ABTA, 2014).

State services attempt to regulate the complex online travel system with the interest and safety of consumers as their priority. The EU via the Directorate General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) has done extensive efforts to monitor the complaints and issues that arise in the service sector.  In an extensive study concerning the French market they came to the startling result that complaints concerning OTAs are 5 times more compared to those of traditional travel agencies (Hanne, 2014, Lefranc, 2014).

The DGCCRF research on travel websites in 2013 indicated that out of 552 sites operating in the 28 EU states that were monitored 382 did not comply with the European consumer legislation on a variety of levels.

Statistics indicate that the percentage of the all around number of complaints for online travel increases annually exponentially (DGCCRF, 2014). Specifically, the increase of complaints between 2011 and 2012 was 25%. However, between 2012 and 2013 the increase was 47%. The complaints expressed by consumers varied and covered an extensive range of issues. The major issue, 35,5% of total complaints for 2013, was the lack of consumer information regarding the services offered and the unfair clauses incorporated in them. It mostly concerns the issue of the fine print details that are not explicitly displayed on websites. Comparatively, the complaints regarding the actual service offered are less than half (17,7%). Other issues like payment problems (9,8%), lack of remedy in case of service failure (6,1%) and reimbursement concerning disputes (5,4%) have a varying share in the complaints listed that is significantly lower than the major complaint issues (Hanne, 2014, Lefranc, 2014).

It is important to note that the percentages fluctuate through the years as more data are incorporated. However, the undeniable fact remains that the rate of increase of complaints on the online travel sector is significantly greater than the increase of its share in the travel market.

These findings correspond with the opinions voiced by industry news outlets (http://www.travelmarketreport.com, 2015) and general media (Forbes.com, 2016) that indicate the alarming number of complaints from the users of OTAs’ services for the same reasons indicated in the DGCCRF statistics.

At a time when internet, via social media, various forums and review sites, gives a direct outlet to the frustration and complaints of customers, the increase of negative reviews and complaints appears as the real threat for OTAs and could very well prove disastrous for those that fail to respond effectively.

Online traveler reviews are often perceived as more up-to-date, reliable, and trustworthy information than the content offered by travel service suppliers (Gretzel and Yoo 2008) and prospective travelers consider the recommendations and opinions stated on online reviews (Ring, Tkaczynski, and Dolnicar 2016). A study on the state of social media (Nielsen.com, 2013), showed that 70% of the interviewed consumers indicated they trust online consumer reviews.

 

Where the problem lies

The 90’s and 00’s saw the majority of authors, entrepreneurs and media claiming that internet and the way it would simplify the travel market through disintermediation. Authors claimed that the traditional travel agency was a thing of the past forced to either change with the times or fade (Card, 2003, Dolnicar and Laesser, 2007, Law, 2009). However, after almost 20 years the travel agent is still here.

The reasons for this resilience are many. Specifically:

-           The excessive flow of information, products and services available online, can be a cause of confusion for consumers (Matzler and Waiguny, 2005).

-           Despite the multitude of information available to them many consumers find it difficult to make the most suitable travel choices, mostly due to lack of time, confidence, desire or, most importantly, knowledge (Kauffman and Wood 2007). The average online consumer is asked to understand price options, clauses, regulations, insurance options and effectively take responsibility for his own booking with, often, disappointing results (Forbes.com, 2016).

-           Online businesses have operational costs just like traditional ones and especially high startup costs. As a result the competitive market is not as competitive or as promising as it appears (Earl and Mandeville, 2009).

-           The competitive nature of online business gives access to the direct client to those that manage to get themselves in prime position at the first page on the web searches of customers (Haglund and Olsson, 2008; Jansen, et al., 2008; Griffiths and Brophy, 2005). This means that the market is dominated by few and large companies that manage to pay dearly for their online promotion and offer discount rates even though this can mean marginal or even no profits (Earl and Mandeville, 2009).

-           OTAs seem to face serious issues when they are faced with special requirements and most importantly emergencies or mishaps that lead to deviation from the scheduled services like flight cancellations, delays etc. In those cases the customer is basically left on his own to find a solution (Forbes.com, 2016).

-           Traditional travel agencies and tour operators are programmed to provide immediate assistance if a problem occurs during a trip. By comparison, OTAs are found lacking on this area (Forbes.com, 2016). This appears to be their most valuable service to most clients electing to use their services (Forbes.com, 2016, ABTA, 2013, ASTA, 2014).

-           Traditional travel agencies have significant assets such as their expertise, reputation, customer base and relationships with suppliers etc. OTAs that are not linked with a traditional travel agency or tour operator would need a long period of time to acquire these assets as they require time to build up. Most OTAs have limited expertise in the travel industry and rely mostly on electronic commerce innovation that cannot be a source of sustained competitive advantage as it is easily to be imitated (Cheung and Lam, 2009).

-           In several cases OTAs seek collaborations with traditional travel agents and tour operators offering their online expertise while offsetting their lack of expertise in the travel sector (Cheung and Lam, 2009).

-           Many traditional travel agencies and tour operators have embraced the new technologies to contact their clients, be accessible 24/7 for emergencies and have exchanged costly prime location office space for more low cost options (ABTA, 2013, ASTA, 2014, Forbes.com, 2016)

 

Conclusions

As Hoffman and Bateson (2006) suggest, the unique characteristics that distinguish services from goods make failures in service encounters practically unavoidable. It is the way that companies respond to these failures and recover that makes the difference.

It is on the issue of recovery but also fail safe against possible failures where traditional travel agents and tour operators are more experienced, with well-established trade support mechanisms (ABTA, 2013, ASTA, 2013, Forbes.com, 2016).

After the initial shock that led to a steep decrease of travel agents in the early 2000s statistics show a steady increase of travel agents and their revenue in the 2010s (ASTA, 2013). For this surprising revival they have adopted the technological advancements of the online era to communicate with clients and providers alike (ASTA, 2013).  Several companies employ social media as a tool for advertising their organization and allow for the creation of the sense of belonging to customers who are offered the opportunity to actively engage with a company’s website, blog or forum (Kavoura, 2014). Naturally, the enterprises that fail to take innovative action and meet the needs of their clients find themselves lagging behind and will likely not survive (Papageorgiou and Lytras 2015).

Traditionally, the most important part of business for travel agents is the formation and sustenance of intimate customer relationships (Berne, Garcia-Gonzalez and Mugica, 2011). Customer relationships facilitate trust and lead to repeat purchases which are basic goals of tourism marketing. Apparently the core of the business remains the same even if the means have evolved.

 

 

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