How Do Customers Choose Between Online Travel Agency And Traditional Travel Agency?
Online vs Traditional Travel Agencies 2
so can talk about the background of online travel agency, advantage, disadvantage, impact to travel
world and the customer preference regard hotel, flight ticket, transport and why customers will choose
online travel agency rather than traditional travel agency…etc
ABSTRACT
This search project aims at determining how customers choose between online and traditional
travel agencies. It is established that consumer choice is determined various factors including
the availability and ability to use technology, past experiences, product value, accessibility
and incentives, as well as a comparison of the strengths and shortcomings of each type of
agency. Online travelling agencies are preferred because of the convenience associated with
them and the increased internet use witnessed across the globe. However, traditional
travelling agencies remain relevant and are mostly used by people with no access to
technology or technical knowhow required, those who prefer direct contact with customer
service and those who are more concerned about the reliability of online agencies. This report
establishes that the choice to use online traveling agencies is determined by the reliability of
information and service and ease of website use. The information collected in this report
would be particularly useful to businesses that want to target online users.
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INTRODUCTION
E-commerce has grown tremendously with increased access to technology and internet
connectivity, rendering online business a highly preferred transactional platform. Traditional
travel agencies are gradually losing popularity, as customers’ preference shifts to online
travel agencies; due to the convenience associated with online business. Online travel
agencies are considered more convenient because customers can make their bookings from
any location, and save time and money. This is unlike traditional travel agencies where one
must be available physically to transact. However, it is notable that a considerable number of
customers still prefer to use traditional travel agents as opposed to online ones due to various
reasons including reliability, security and less complexity (Zhang et al, 2015; Cho & Agrusa,
2006). Research indicates that the decision to choose between an online and a traditional
travel agency is influenced by various factors depending on the customer preferences. This
paper is a discussion of how customers choose between online and traditional travel agencies.
BODY
A research by Henry Fund in 2016 showed that 53% of all travel in the richest economies is
done online. These statistics indicate considerable growth in e-commerce across the world, a
trend influenced by increased access to the internet (Patel, 2016). In China, Chinese
Outbound Tourism Research Insitute (COTRI) established that online travel agencies are
gaining popularity. In 2015, 20% of outbound travelers in China used online travel agencies
to book for transport, a 7% increase from 2014 (Skift, 2016). However, it is notable that a
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considerable number of customers in China still prefer the traditional travel agencies. This is
presented by the figure below.
A number of researchers have embarked on determining the factors influencing an
individuals’ decision to choose either an online or traditional travel agency. A majority of
these researches base their findings on the advantages and disadvantages of each type of
agency. Online travel agencies have the advantage of convenience, such that customers can
make bookings from the convenience of their homes, offices or anywhere as long as they
have internet connection. The client on the other hand must go out of his way to access
services in a traditional agency. Online traveling agencies offer time and cost savings to
users. In essence, customers do not need to travel to a physical office and this saves them
time. In addition, consumers can transact from their convenient location and thus do not have
to incur travelling expenses to traditional agents (Pantelidis, 2014). In traditional agencies,
customers incur more in terms of costs and time because they need to travel to the agency
location. Queues at traditional agencies are also time consuming. Besides transacting
anywhere, customers using online travel agencies can make bookings at any time, including
non-official hours. Traditional travel agents limit their services to working hours, such that
individuals cannot access services when they are closed (Pantelidis, 2014). In online
business, customers have a wider choice of vendors. Internet offers customers a variety to
choose from by providing various packages from competitors, such that they can benefit from
cheaper and more competitive services. The customer has no choice but to take what the
agency is offering, unlike in online agencies where the customer can compare different
packages.
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Traditional travel agencies have their own advantages which also illuminate the
disadvantages of online travel agencies. Customers have direct contact with customer service,
such that they receive any services required directly, including having their queries addressed
immediately. This is unlike online agencies, where some sites do not offer direct customer
service and the user may face challenges in case of any mishap when making a booking.
Users of traditional agencies do not face technological challenges such as website downtimes,
poor internet connectivity and power issues may affect access to services. Technical errors
may also bring forth misleading information. Furthermore, there is no need for technical
knowledge such as the ability to operate gadgets and surf the internet. This is because they
can access services directly from customer service. It is also argued that information accuracy
and reliability is higher in traditional agents because it is free from technical errors and can be
verified physically. Bookings made physically are also more accurate.
The purchase decision making process is a complex undertaking and customers’ choice of a
product is determined by a variety of factors. Below is a discussion of some of the factors
influencing the decision to use online compared to traditional travel agencies.
Availability of infrastructure and ability to use
The most important aspect in considering online booking lies in the availability of technology
and internet connectivity. This insinuates that an individual is more likely to use online
booking if they have easy access to an internet device and more likely to use the traditional
booking if they do not have internet access. As the world advances in terms of information
technology, there is a rapid increase in the number of online users, which directly impacts
online business. This is more so with the development if internet gadgets such as
smartphones and tablets, which enable users to access online services from any location.
Despite the availability of technology, the customer can only operate the online systems if
they have the technical knowhow.
Product value
The value derived from a product or service plays an important role in influencing a
customer’s purchasing decision. Scholl-Grissemann & Schnurr (2016) discuss how
consumers booking intentions are affected by travel agency choices and establish that the
increased utilitarian value derived from convenience is adequate to influence decision to
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purchase. In the case of OTAs, conducting the business online ensures that is convenient for
the customer, given that they can make bookings at their own comfort. Customers also derive
time value from faster service and cost savings in terms of time and money needed to visit a
traditional travel agency.
Experience
According to Scholl-Grissemann & Schnurr (2016), the value of a product is only felt when it
is used. Accordingly, the experience derived from the use of online and traditional travel
agencies will influence whether a customer would utilize the service in future. Such
experience would mostly emanate from the value derived from the service. Cho & Agrusa
(2006) study user satisfaction in relation to online travel agencies note that customer
satisfaction varies from traditional businesses because there is no opportunity for physical
customer service to address customer needs. Accordingly, online travel agencies must appeal
to customers through an attractive and easy to use website, adequate information and
available and reliable services to ensure that online services are reliable. Scholl-Grissemann
& Schnurr (2016) note that the consumer’s web experience may influence their choice of
online booking in future.
Accessibility
Customers make decisions based on convenience, which implies that a customer is more
likely to utilize what is easily available or convenient to them. A person who lives far from a
traditional travel agency is likely to seek an online alternative because it would be more
convenient. On the other hand, a person who does not have access to the internet or is not
familiar with the online process or who has easy access to a traditional agency will most
likely utilize it.
Incentives
Incentives to a great extent influence the customer’s choice between OTAs and traditional
agencies. Guo, et al (2013) note that OTAs offer cash back incentives to travelers who book
through their website, thus attracting new customers and retaining existing ones. This may be
in the form of reduced room rates, which encourage customers to use online agencies. Zhang
(2015) also note that incentives have led to increased growth in internet bookings, due to the
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low cost packages including accommodation, airline costs and car rentals, which customers
can benefit from when they book online.
SUMMARY AND CONCLUSIONS
The discussion above establishes that a customer’s choice between an online and
traditional travel agency is based on a variety of factors, which can be explained by the
features of each business platform. Based on the advantages and disadvantages of each, it can
be established that the increased availability of internet and the convenience of online
business have led to increased use of online traveling agencies. On the other hand, lower
affinity to technology and the desire for reliability has played a great role in maintaining the
market share of traditional travel agencies. This report has implications on marketing in that
it provides the determining factors of customer decisions when it comes to online and
traditional travel agencies. Companies that desire to excel in online travel agency can rely on
this report to determine how best to increase customer satisfaction and promote online sales.
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References
Cho, YC & Agrusa, J 2006, Assessing Use Acceptance and Satisfaction toward Online Travel
Agencies, Information Technology & Tourism, 179–195.
Guo, X, Zheng, X, Ling, L, & Yang, C 2014, Online coopetition between hotels and online
travel agencies: From the perspective of cash back after stay, Tourism Management
Perspectives, 12, 104-112.
Pantelidis, LS 2014, The Routledge Handbook of Hospitality Management Routledge,
London, Routledge.
Patel, N 2016, Online Travel Agencies, The Henry Fund Research,
