The Travel Agent Delivering More Value by Becoming an Operational by yououghtaknowme

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									 The Travel Agent : Delivering More Value by
   Becoming an Operational Risk Manager

                                    Debély Joëlle
                                   Dubosson Magali
                                 Fragnière Emmanuel

                                   La Londe Les Maures
                                 30-31 Mai, 1-2 June 2006



The 9th International Research            1
Seminar in Service Management                               http://www.hesge.ch/heg
                                 Outline
1.       Loss commission of Travel agencies
2.       Redefinition of the Business model
3.       Perceived Risk: a literature review
4.       Our Research Questions
5.       Traveler Service Chain
6.       Cost-based Methods from environmental sciences
7.       Replacement cost, Substitution cost and Damage cost
         avoided Methods
8.       Contingent Valuation Methods
9.       Conclusion


The 9th International Research      2
Seminar in Service Management                    http://www.hesge.ch/heg
 1. Loss commission of Travel agencies

• Commission IATA suppressed (International Air
     Transportation Association)


• Adopted pricing scheme inadequate
• Internet more and more competitive
• Only 1/3 of the voyages is still booked
  through travel agencies (Sept. 2005, www.srv.ch)



The 9th International Research     3
Seminar in Service Management                http://www.hesge.ch/heg
    2. Redefinition of the Business model
• Change or not the nature of service delivered to
  the customer ?
• Look for more value added services when
  consulting a travel agent
• Manage risk/annoyances


• Knowledge based service: are client ready to
  pay for it ?

The 9th International Research   4
Seminar in Service Management            http://www.hesge.ch/heg
                    Traditional service                                       Internet
      • Acting on the behalf of the customer                • Creating on their own their travel experience
      • Assistance if a problem occurs                      • Finding easily information on the Internet
      • Consulting services                                 • Same job done by a travel agent
      • Expertise of the travel agent                       • Rapidity
      • Partners’choice on place, regular contacts          • Facility
+     • Customer’follow-up during customer’stay             • No moving
      • Customized offer                                    • Broad offer
      • Reliable information                                • Price
      • Designing complex travel arrangements
      • Expert insigh


      • Costly                                              • Making unintentional mistakes
      • Unfair price (fees)                                 • Limited recourse for correcting errors
      • Selling the highest-margin products                 • No easily available information about visa,
      • Not being well understood by the travel agent       vaccine
-     • Not taking enough time                              • Unfair information
      • Incompetence                                        • Misleading advertising




    The 9th International Research                      5
    Seminar in Service Management                                                         http://www.hesge.ch/heg
3. Perceived Risk: a literature review
•    The IHIP Paradigm (Intangibility, Heterogeneity, Instantaneity,
     Perishability) (Zeithaml et al., 1985)
•    Risk perception = occurrence of risk + seriousness of loss (Bauer, 1967)
•    Consumers perceive services as riskier than products (Guseman, 1981;
     Mitchell and Greatorex, 1993; Murray and Schlacter, 1990)
•    Intangibility is positively correlated with perceived risk (Finn, 1985; Zeithaml
     and Bitner, 2000)
•    The properties of services may lower consumer confidence and
     increase perceived risk, mainly by augmenting the degree of
     uncertainty in the decision (Mitchell, 1999)
•    Impact of intangibility on perceived risk and the roles of involvement
     and knowledge (Laroche et al., 2003, 2004)
•    To reduce the perceived risk, consumers are likely to shop around to
     compare alternatives and ask friends and relatives for advice (Boze,
     1987)




The 9th International Research                           6
Seminar in Service Management                                         http://www.hesge.ch/heg
          4. Our Research Questions
• May the customer be able to deal with «
  annoyances »?
• What if the travel agent could be helpful?
• How much valuable would it be?
• Would the customer be willing to pay for it?




The 9th International Research   7
Seminar in Service Management            http://www.hesge.ch/heg
              5. Traveler Service Chain

                                                                                  Car rental


        Public                                                              Local Restau-
      transpor-
                     Departure
                                 Airline   Arrival       Shuttle   Hotel   (corres- rants
                      airport              airport                         pondent)
        tation
                                                                            guide Theater
                                                                                      …



           Parties involved in the delivery of a travel arrangement




The 9th International Research                       8
Seminar in Service Management                                                 http://www.hesge.ch/heg
  Activities involving customers when taking a flight
                                             Parking places?              Intrusive questions?                     By bus?
                   Cannot travel
                                               Far away?                   Taking off shoes?                         Hear
                     Refund?
                                             Carry luggage?                  Messing bags?                      announcement?
                  Schedule change
                                           Find the right desk?                  Strike?                           On time?
                                                 On time?                       Queuing?                       Room for luggage?




                                                                                    Going
                                     Going to     Going to the     Check-in        through    Waiting for
                                    the airport    check-in          (incl.      security and the flight             Boarding          Flight
                                                     desk          luggage)        customs




                                Far away?                   Automated machine?                   Seating places?                 Good seat?
                             Parking fares?                  Excess luggage?                      Restaurants?                  Turbulences?
                                Any public                       Passport?                           Delays?                    Temperature?
                             transportation?                      Ticket?                          Cancelled?                      Noise?
                               Taxi fares?                     Overbooking?                          Shops?                   Steward /hostess?
                               Traffic jam?                                                       Information?                     Meal?




                                            Uncertainty that lies in the travel activities
The 9th International Research                                             9
Seminar in Service Management                                                                                                      http://www.hesge.ch/heg
                  6. Cost-based Methods from
                     environmental sciences
• Methods to value the damages done to
  ecosystems
• 3 main families:
       – Implied market decisions
       – Experimental market techniques
       – Surrogate market methods




The 9th International Research   10
Seminar in Service Management             http://www.hesge.ch/heg
7. Replacement cost, Substitution cost and
     Damage cost avoided Methods
 • Inventorying risks that might arise along the
   travel service chain
 • Identifying alternatives for replacement or
   subtitution
 • Calculating the cost of the alternatives
 • Verifying that the client would pay for the
   replacements or substitutes


 The 9th International Research   11
 Seminar in Service Management             http://www.hesge.ch/heg
                                                           Business as usual
  Initial time schedule

                                       Luton                                   Edinburgh
   Geneva                 6.15 pm     7.05 pm             8.45 pm               10.00 pm


   Alternative
                                                           Surrogate solutions
                                        Luton

       Geneva               9.55 pm   10.35 pm


                  150£
                                                      Gatwick                  Edinburgh
                 Replacement option
                                                                     6.45 am     8.15 am

                 Substitute option
126£                                                                           Edinburgh
                                                                      Early in the morning

  The 9th International Research                 12
  Seminar in Service Management                                      http://www.hesge.ch/heg
                                 CVM Findings
   • Findings from studies (68 students at HEG
     + 270 low cost passengers)
   • Themes: travel agents, tour operators, car
     rental, hotel chain, airlines company,
     luggage at the airport, trip via Internet, ski
     resort
   • Designing the travel value chain
   • Using the Contingent Valuation Method to
     price some services offered to customers
The 9th International Research        13
Seminar in Service Management                   http://www.hesge.ch/heg
                                 CVM Findings

• Gap collected WTP – actual WTP ?
• Few dispersion when pricing services
• Cluster ?




The 9th International Research        14
Seminar in Service Management                   http://www.hesge.ch/heg
                                 8. Conclusion
• Observation: loss commission, Internet, customer not
  willing to pay, annoyances, perceived risk
• Application of dollar-based valuation methods to manage
  the risks encountered along the traveler service chain
• Experience gathered from environmental sciences
• This risk framework service enables the travel agent to
  provide sound risk management for his clients
• Customers more willing to pay for added value delivered
  via risk management
• Definition of new metrics to calculate shadow prices


The 9th International Research         15
Seminar in Service Management                    http://www.hesge.ch/heg

								
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