The Impact of the Internet on Travel Agencies in Taiwan

Abstract

Travel and tourism-related products and services are highly compatible with the internet with the result that travel and tourism is one of the highest revenue-generating sectors of the internet. The rapid growth of the internet is having an impact on the distribution of travel services and has heightened speculation about the potential for disintermediation of the travel agent. This research investigates the impact of the internet on the distribution of travel services and the extent to which it has influenced travel agencies by focusing on Taiwan, a technologically advanced country and one which has witnessed rapid growth of the internet. Employing a combination of a quantitative questionnaire administered to 438 travel agencies and personal in-depth interviews, the research found that travel agencies in Taiwan generally regard the internet as an effective tool for their business. Most agencies have adopted the internet in their daily operations and some have provided e-commerce services on the internet. Although travel agencies are affected by e-commerce services, the effect is not found to be significant. Equally, no significant difference was apparent between company size and classification in terms of the effect of ecommerce travel services on travel agents. Travel agencies agreed that commission cutting by suppliers was a threat but disagreed that disintermediation would occur, although booking offices were seen to be at risk. The research identified two principal future roles for travel agents: first, the need for them to reposition themselves as travel consultants and secondly, the need for them to become more technologically orientated. Finally, seven key strategies were suggested for Taiwan's travel agencies to ensure survival.

Information Technology Applications in Hospitality and Tourism: A Review of Publications From 2005 to 2007

“…As more people began to buy holiday packages from the Internet, researchers started to look at the disintermediation of travel agents. Bennett and Lai (2005) identified two principal ways for travel agents to overcome disintermediation; namely, repositioning themselves as travel consultants and becoming more technologically oriented. Some travel agencies have formed strategic alliances to strengthen their competitive advantage in the era of Internet (Huang, 2006).…”

The Adoption of Web-Based Marketing in the Travel and Tourism Industry: An Empirical Investigation in Egypt

“…According to Cai et al, (2004) and Chen and Yen, (2004) the main factors that need to be focused on in order to build the confidence of travel agencies in using the web as an effective marketing tool are security issues and the required technology. Bennett and Lai (2005) based on a quantitative study on the impact of the web on travel agencies in Taiwan found that the main obstacles faced by travel agencies were the high capital costs required in contrast to the small number of bookings online and the difficulty of recruiting skilled labour with IT and marketing knowledge. Costs and inadequate knowledge were also found by cited as critical barriers to web use for business purposes by Ghanaian hotels (Ayeh, 2006).…”

“…Re-intermediation or cybermediation has been defined as the "utilization of ICT and web tools for the development of either new intermediaries or new methods for existing intermediaries that enable them to re-engineer the tourism distribution channel" (Bennett and Buhalis, 2003). According to Bennett and Lai (2005) the web is presenting opportunities for new electronic intermediaries. Based on the premise that intermediaries exist because they provide value-added services, these then have the potential to pass economies of scale directly to consumers, offering reduced fares as well as convenience of making reservations on a 24/7 basis.…”

Disintermediation in the Tourism Industry: Theory vs. Practice

“…The huge number of online travelers also encourages hotels as well as other suppliers, such as airlines, to reconsider the adoptions of the e-business technologies not as an extra cost but as a strategic investment (Buhalis and Licata, 2002). Consequently, as the searching and buying transactions are made easier, and travelers become more computer literate, it may well be that the travel agencies' power on the distribution channels will be diminished gradually unless they can offer value added advice, such as travel advice which satisfies the customer needs (Lewis, Semeijn, and Talalayevsky, 1998; Bennett and Lai, 2005). Such a situation is also discerned in the survey of European online travel market, conducted by Eyefortravel in 2007 that revenue generated by online travel agents is eroded by the more online-aggressive suppliers.…”

“…Through the consideration of the tourism stakeholders and the tourism value chain, this paper underlines that disintermediation is not an issue between suppliers and intermediaries only. Rather, it is essentially about customers too since they are the most powerful component of the tourism supply chain, especially in this Internet-enabled era (Bennett and Lai, 2005;Buhalis and Law, 2008). The three case studies reflect interrelation among the three main components of the tourism supply chain, while other prior studies focused more on the relationship between travel agents and suppliers and ignored the importance of customers.…”