History of Travel Industry

Name RollKhadiza Noor 55Aaqib Md. Shatil 87Cynthia Islam 101Zakia Shabnam Maria 27Poly Talukder 47

Group “Liberty”

Travel industry is one of the leading sector of world economy but there is still widespread ignorance about its size, complexity and money generating ability.

Survey shows that, 50% tourist entries account for business trips.

With huge money at stake, there is keen competition among suppliers and distributors.

Travel industry is pioneered by, adventures, heroes and dream driven inventors.

Travel industry is vulnerable to tragedies of human error, stop-gap and hysterical competition.

Early entrepreneurs with limited financial resources saw the development of the industry till it needed support by either government, consortia or astronomical levels.

Introduction

Travel industry is succeeded by stark reality of stock flotation's, loans, budgets and bankruptcies.

Travel industry, however is swamped in a morass of ill conceived strategies poorly adapted to the needs of the organization and the consumer is in danger of loosing direction.

New technological advancement has made more comfortable and speedier links with wider markets.

No one could predicted the public demand for mass travel; the phenomenon emerged from the industrialized world’s desire to seek new experiences and the increased violability of disposable income.

Introduction

Railway brought dramatic changes in the styles of travelling; railway facilitated sense of social, business activities and grim mechanics of war.

Armies were able to adopt new strategies by moving not only themselves but also heavy artillery.

Although railway gave people freedom of movement, early critics cynically compared rail travel form passengers to the dehumanized process of transporting.

Various ancillary services such as hotels, sleeping and restaurant made railway a sophisticated travel system.

Thomas Cook was quoted saying his planned tour added much to “the advancement of human progress”

The Railways

Countries like, India and USA with vast land masses and complex communications, train travel offered a better communication and opportunity to create communities.

Russia is also one such example where travel was prevented where climate, terrain and vastness affected and prevented travel but birth of railway helped the country to modern age.

Trains paved the way for mass tourism which the jet age would bring subsequent fierce competition.

Freight business in USA and parts of Europe which once was done by train has been lost to trucker and is unlikely to return.

Train is lagging behind because of capital starvation, outdated technology and fierce competition.

The Railways

Laws of free enterprise can’t be applied simplistically to the railways; railway requires consistent strategy developed jointly by management, staff and governments plus a structured deployment of capital and asset.

Rail travel which was once liberating and novel, has become over crowded and uncomfortable form of mass transportation, major obstacle is thus to overcome when trying to create a new image.

Railway senior management is wrestling with pressing problem such as, “will the government continue to pay high subsidies”

Even though, railway has been a part of major political debate but with imagination and leadership they could again play a vital role in opening up new opportunity.

Railways Reborn

Travel took a tremendous step forward as a social, economic and political influence as Europeans are able to travel from east to west without crossing channel.

The link, tunnel built by channel tunnel group and France Manche bores two 7.3 meter rail tunnels.

Initial demand for this service was expected to be about 1000 vehicles.

32 international banks pledges 4.3 billion in development loan. The return on equity around 1 billion is put at 19% and the bank loans will be refinanced through revenue bonds or within 15 years.

Railways Reborn

Like railways, aviation also had the primary characteristics of entrepreneurial spirit and risk taking.

The instinct to gamble however, recently has been curbed due to increased competition, deregulation and major recessions.

Running an airlines is a risky business as investments are high, sophisticated technology, lead times are long and aggressive rivals determined to dominate.

In USA and Europe the forces of market have weeded out the weak and unlucky and if various govt. had not intervened natural market forces might well have reduced the number of airlines in some countries to resounding zero.

Companies that have survived market whims have taken on their distinctive personalities.

The Airlines and their Strategies

The world airlines in 1984 made an operating profits of 3.7 billion dollar and it was estimated that operating profit will be $17.7 billion and $14.5 billion in 1987 and 1989 respectively.

Air travel operating cost is forecasted based on two variables are GNP growth and changes in ticket pricing.

Airlines order new air crafts when their existing aircrafts are flying full; that’s why airlines must build into their purchasing strategy.

The strategy must focus on comfort rather than capacity. Strong internal and competitive pressures surround the

making of every decision.

The Airlines and their Strategies

Since 1920, railway has expressed several changes in objectives; from reaching to destination and establishing new routes to selling seats and minimizing operating cost.

The strategy for airlines must be based on entrepreneurial use of resources and market information.

A high degree of sensitivity and an ability to utilize market and competitor knowledge are vital.

Airlines industry is both labor and capital intensive. According to IATA’s calculations, an operating profit, before

interest, equal to 7.5% of revenue is required to replace international airlines and accommodate the projected growth in traffic.

Should this be impossible, financing should be imaginative and number of airlines will be smaller.

What Price The Destination

In USA, airlines have been public and since 1981 record sums have been raised. In 1981 is was $4003 and in 1983 it was $2.4 billion.

Constant rivalry occurs because of fierce competition; competitors either feel the pressure or see the opportunity to improve position.

Price competition is fierce in USA and is now spreading in Europe. Weaker European airlines should probably consider the strategy

of ‘Pan Am’ and ‘Eastern’. Both of these companies have staved off bankruptcy by giving

their unions company shares and seats on the board in return for wage cuts and freezes.

Setting up a airline company is comparatively easy but surviving is a different ballgame altogether.

What Price The Destination

Over half of all hotel guests are businessmen or participants; this segment produces up to 80% of hotel income; that is why hotel chains pay close attention to the needs of business travelers.

USA has led the way in the development of modern hotels, American style has dominated product development and marketing.

Hotels having established once must be filled and therein lies the strategic dilemmas.

Major hotel chains, who control more than half of all hotels have persuaded a marketing strategy based on the airlines’ approach.

The main objective is to repeat business. In America, reward system for treasured clients was introduced

in early 1980’s but due to fiscal controls it was discouraged in Europe.

Hotels

Hotel has always been built for different groups form upscale to different levels. The range runs from luxury to limited budget luxury.

Even though the focus is on profit but the key focus is on “customer”.

Greater efforts are required to harness the potential within the workforce to provide customers what they appreciates and wants.

Travel industry has two masters, whom it serves. These two are: 1. Shareholder 2. Customers

Selling the space

For both airlines and hotels, tour operator and travel agents are two key figures. Both of these figures have played increasingly important part in the manufacturing and distribution chain of travel industry.

Leading travel agents both UK and USA based are faced with the necessary task of marketing their own services, creating clients awareness and providing a care-oriented service.

For achieving these objectives both tour operators and travel agents, huge outlays on advertising PR systems and worldwide representation.

Most leisure travel abroad is controlled by operator and agents because majority of people lack experience, time and knowledge.

Importance of Travel Agents and Tour Operators

Two key terms related to travel agents and operators. The are:

1. High Advice Product: Business trip to abroad2. Low Advice Product: Simple ticket transactions, timing and pricings.

Low advice can be supplied via technology. But it is also said that it dehumanizes the travelling process.

The larger agencies will continue to account for increasingly larger shares of the business and we will see particularly on the tour operating side, other sectors of the industry encroaching more and more on their activities.

With operator and agencies taking aggressive tactics the whole process is in danger of becoming so painstakingly planned, costly and rationalized.

Importance of Travel Agents and Tour Operators

The battle between small and large travel agents for business account is always under way; small travel agents can’t seek to compete small agents can’t match discounts offered by large scale companies.

Small companies can’t obtain capital required to obtain business and maintain.

The solution is in the grouping of independents rather like the approach adopted by small hotels.

Technology provides these groups with easy access to data bases and efficient distribution and communication systems.

This type of approach could be exploited effectively in Europe because it brings major benefits in the form of low priced more sophisticated marketing techniques, greater sensitivity to the market place and wider sales opportunity.

How to compete

In the fight for market share, tour operators and travel agents seek to use technology more effectively.

Information systems offering search procedures, data bases, integrated text and image will become more widely used and office systems will become even more acceptable to employees and will help streamline communications, records, office management and billing procedures.

The cost of computer logic and memory is continually declining due to technological advancement; the competitive nature of the business benefits from it as lower cost of communication helps businesses to lower their operating cost.

Technology- the answer

Tour operators have divided into those dealing with the masses and small very specialized companies. Companies are not just there to provide packages and services but also to cater for the needs of the customers. the role of the future tour operator will be to encourage the understanding of people by avoiding nationality-dominated hotels and centers. 1) the tour operator will have to pay considerably more attention to its brochures. 2) tour operators will survive and prosper not by taking part in price wars but by developing a more effective marketing management strategy oriented towards clearly defined objectives.

 

What role should the tour operator play

Insurance for both businessman and holiday-maker is essential as it offers protection against both minor and dramatic events.

Minor and dramatic event varies among travelers; a loss of suitcase in case of a traveler is a minor even but if a businessman looses his suitcase containing documents and samples can be termed as dramatic events.

Company travel policies insurance companies discount the premium when large numbers are insured. Flexible cover is expensive and unfortunately too many companies offer outdated policies.

3,343 million people travel worldwide each year and if only half buy insurance companies and intermediaries is colossal

 

Price Insurance

How will we get there: the future will be existing but the going will be rough. Many will fall by wayside their names disappearing by the 1990s .we must force ourselves to look to future and the way ahead should be clear:

-Buy wisely use to advantage.- Be cost efficient- Share developments share cost. - Indentify and exploit across markets - Understand your organization and its needs.

The Future