Business Models and Electronic Commerce in the Travel Industry

The Internet is often attributed with shaping new business models and making a substantial impact on existing business models. This paper examines the issues surrounding e-Business and its impact on business models. Most studies on the topic look at one dimensional views of the business, typically either from a marketing or organisational structure perspective. However, business modles are made up of the complex interaction of a large number of functional components. These issues are discussed with reference to the travel agency sector. There is sufficient evidence to suggest that the Internet is making a significant impact on the travel industry. Travel agencies in particular are perceived as being under threat of disintermediation front airlines and travel wholesalers marketing directly to consumers via the Web. We suggest that single outlet travel agencies, particularly those without a specialist niche, in reality have little to gain from an on-line presence beyond a basic advertisement model. Virtual tra vel agencies have an advantage that all components of the business model have been designed with the on-line channel in mind. Travel agency groups and franchise models are in a difficult situation. Their size and business position puts pressure on them to develop effective complex e-Business operations without affecting their off line core business.