Family Travel and Tours Company Analysis

SECTION ONE

Family Travel and Tours has specialised in affordable, inclusive ‘summer and winter sun’ travel packages for nearly forty years. The two base of our travel offerings have been price and predictability. Our prices were highly competitive, although they are less so now, and our customers want to know ahead of time exactly what they can expect from their travel experience. However, changes in the tourism market have caused our sales to stagnate, and we currently have zero growth in our customer numbers and fewer repeat customers. Although according to the National Travel Survey, the number of tourists taking inclusive packages have increased significantly in the past twenty years, so has the number of outlets through which customers can purchase their holiday travel (Shaw and Williams 2004). The primary reason for our lack of growth is this increased competition.

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In price, we have been adversely affected by a sharp increase in the number of discount travel companies available to price-conscious consumers, particularly over the internet. Whereas we once had only competition from a limited number of local agencies, some of those who would have been our customer base are beginning to experiment with online bookings. This opens our market up not only to other UK competitors, but also to agencies from other countries. For example, the American company Cheap Tickets offers international flights, tours and cruises at highly competitive rates. One has only to run a simple search under “discount travel packages” to reveal literally hundreds of competitors where our customers could take their holiday spend. Many of these competitors also do not maintain brick-and-mortar branches, allowing them to offer even more competitive prices as they have lower overhead costs.

Additionally, each year as a greater percentage of the population becomes comfortable purchasing over the computer and more and more people try out online spending, FTT’s competitiveness on the basis of price is reduced. Customers are also finding they can create their own packages, as they can now research hotels, transport and activities online and make their own reservations for all of them.

More family-oriented travel destinations are also now providing inclusive packages on their own, and are able to offer these through online marketing. Whereas once our contacts with local travel companies allowed us to provide all-inclusive packages available to the consumer only through a travel agency, now there are a number of places the typical traveler can book their desired holiday. For example, Disneyland Paris has its own hotels, restaurants and transportation. As such it can market directly to the customer without need of a ‘middle-man’ travel agency. Many other popular family tourist destinations have similar offerings. Cruises are another all-inclusive alternative that can now be booked directly without use of a travel agency.

We have not reacted quickly or substantially enough changes in the market and in customers themselves, leaving us in a vulnerable position. FTT therefore needs to make changes to its products and marketing strategies quickly to retain its market position in the future.

SECTION TWO

FTT has benefited from catering to two distinct customer groups, although both on the basis of predictability and price. During the winter period, FTT’s customer base tends to be older people escaping the winter cold. The repeat business in this niche is substantial and breaks down further into two groups. The first wants to return to the same location each year, often even requesting the same room. The second group prefers packaged tours, typically taking a tour of a different location each year. Both highly value predictability; that is, they want to eat the foods they are used to and stay inside their comfort zone even when traveling, rather than experience any kind of ‘local culture’. They also want to know when booking the details of their holiday, such as daily schedules, and want to spend their winter holiday in warm, sunny locations. This customer group has shown less stagnation, as the increase in competitors from online travel brokers has not penetrated this market group substantially as of yet. It is likely that it will in the near future, however, particularly as the computer-friendly segment of the population expands and ages.

Summer customers are typically middle-class families looking for a convenient and affordable holiday experience. They also want to know ahead of time the details of their holiday, but more to ensure activities and proper accommodations are available for their children than for any deep-seeded need for sameness. Destinations with child-friendly attractions such as beaches and theme parks are foundational in sales to this group. This segment of our customer base has suffered the most from increased competition. Where we or agencies like FTT were once the only place families could go to have their entire travel needs satisfied, online travel agencies and the attractions themselves are now providing equally planned holidays at prices at or below ours.

As we examine what changes need to be made, it is helpful to consider tourist motivation from both reductionist and structuralist perspectives regarding our stagnant customer base. Reductionism views tourist motivation as “a tension between the search for the new or novel experience and the requirement for some degree of familiarity” (Shaw and Williams 2004, 140). This is true of both winter and summer customers. They wish to experience a holiday outside their current existence whilst maintaining a predictability that will allow them, whether older people or children, to be sure of a certain level of comfortability.

It is unlikely that we will be able to compete strictly on price, as was the case many times in the past. Therefore expanding the balance of novelty and predictability in our current products is likely to be our strongest marketing asset for future growth. The question then becomes how to address these customer motivations in the changing and more competitive market.

SECTION THREE

Today’s postmodern society is now consumer led, with the consumer dictating the location and activities they expect rather than simply choosing from a limited assortment of package options (Sharpley 2003). Customers can now choose not only travel options we have available, but also those provided by remote travel operators and attractions themselves. Further, customers are more and more likely to create their own travel packages, as they now have access to information on local attractions, lodging and transport for a given area. Their expectations are higher as far as flexibility and options are concerned, making it more difficult for FTT to plan or provide all-inclusive packages, particularly at any significant reduction in price.

In addition, as the divide between work and leisure has been reduced, and recreational avenues are more available throughout the year, the novelty of taking the family to the beach or theme park has diminished. Consumers are more likely to seek a holiday experience that allows them to escape from their day-to-day reality rather than simply play instead of work (Sharpley 2003). Today’s mass tourist “desires to be in a place which is both real and yet fantastic at the same time, and to encounter people who are both ‘authentically other’ yet also fun and fictional” (Coleman and Crang 2002, 157). As such, our customers are beginning to demand travel packages that go beyond simply being at the beach or a certain location, but also offer some type of fantasy or adventurous opportunity.

The immediate gratification and visually-based information preferences of the postmodern society also lend themselves strongly to the convenience of internet booking provided by our competitors (Sharpley 2003). Now customers can actually see the room where they will stay, satisfying their predictability needs, yet independently reserve it in an instant, with the simple click of a mouse. The entire transaction is charged effortlessly to their credit card, almost making it seem as though the holiday was free.

This signals a change in our customer, especially those in the summer/family group. Whilst they still have a need for predictability so they can plan for their children and the children feel comfortable, there is an increased desire for new experiences, visually-based marketing, and easy, quick booking.

SECTION FOUR

One difficulty we are currently experiencing is the change in customer’s perceptions of our services and their attributes, an event common over time in service-based sectors (Palmer 1994). Whilst they are still strongly motivated by predictability, they seek at the same time authenticity in their holiday experience. Authenticity can be viewed from the perspective of the place visited, or from the perspective of the tourist doing the visiting. According to Handler and Saxton, the meaning of the term ‘authenticity’ “refers to experiences through which tourists feel themselves to be ‘in touch with both the real world and their real selves’” (Shaw and Williams 2004). There are three kinds of authenticity in the tourist experience. Two, objective and constructive authenticity, are object-related. The third, activity-related authenticity, “refers to a state of ‘being’ that is to be activated by tourist activities” (Shaw and Williams 2004). It is that place where “one is true to oneself” (Shaw and Williams 2004). For example, beach holidays may be seen as providing a relaxed, playful environment where people can be their true selves like they were as children, without the sometimes-false pretenses maintained at work or in the community.

As our world becomes increasingly more connected, a certain homogeneity is affecting the authenticity of place. McDonald’s restaurants provide an example. Although there is some regional adaptation (one can order wine in France or get kosher sandwiches in Israel), the chain’s product mix of a hamburger, fries, and a coke is constant throughout its restaurants in over 100 countries (Vignali 2001). Every time a Tesco moves into a town, a number of the area’s local merchants are likely to go out of business, reducing the regional differences of that area as opposed to the rest of the country. Shaw and Williams (2004) report “Boorstin saw mass tourism producing a homogenization and standardization of the tourist experience through the commodification of culture” (135). The “developing global culture of tourism accepts anything or any place being produced and reproduced, moved and recontextualised in any place whatsoever… this process marks the proliferation and increased consumption of experiences” that are depthless simulations, separated from tradition and history (Coleman and Crang 2002, 156). This makes it harder for FTT to provide unique travel packages.

SECTION FIVE

FTT needs to meet these changes in society and in the level of competition head on, addressing issues related to both our products and our target markets. First, we need to stop viewing the internet as our completion and begin to view it as a means of increasing our customer base. Although we have a website, it is not as user friendly as it could be, and does not offer a wide range of holidays. We could expand our travel product available online. Instead of simply listing our set packages with prices, as our current website offers, we could experiment with creating an ‘a la carte’ method of creating packages. With the correct software, this would be possible to do completely online, and agents wanting to make a booking could even use the same online system when dealing with customers. In this scenario, a customer could access our website and choose the components of their holiday, appealing simultaneously to the postmodern desire for novelty and our established customer need for predictability. For example, one family may want to have a less expensive lodging but hire a larger car. They would be able to do this on the website, and after all their bookings would have created their own package, as inclusive as they desire. This would also provide a price incentive as customers could pay for only the level of or types of provision they really desire.

In addition to increasing the number of customers purchasing holidays from us, such flexibility and convenience in booking is also likely to increase the spend of our existing customer base. Whereas once one of our established customers might use us only for holiday travel, a convenient website might also lead to other bookings by the same customer, such as business travel, expanding our product base. We would also be able to attract more customers from outside the UK, or from areas inside the country where we do not have strong branch presence.

We also need to change the product mix of our fixed-package offerings to include more novelty and fantasy. For example, we might add ‘adventure’ activities to a beach holiday in such a way that they meet the safety needs of parents. Including water-skiing lessons as part of a beach holiday provides some adventure, but because it includes instruction and a supervised environment it retains the safety and predictability our customers value. The entire family can together enter into an activity outside their normal circumstances.

For our winter/older customer group, changing the type of tour or travel available would probably not be popular, but adding additional and more adventuresome locations where a level of comfort and predictability could be guaranteed would be advantageous. For example, as Turkey seeks entrance into the European Union, it has become a country more open to tourism, providing a wealth of new places for tours, and usually at competitive prices.

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Increased availability and reduced price of air travel also now allow us to offer tours farther abroad, and we need to look into areas of the world such as India and Mexico, which were typically too far and too costly to be considered by our customers for a holiday. We would need to work closely with local lodging, transport and other providers to ensure the level of comfort our customers require, but these locations provide an opportunity to introduce adventure and fantasy in an appealing way to our older customer group.

FTT should also expand our marketing via the internet, particularly to repeat customers and potential customers who have already initiated contact with us, such as those who stop by a branch to discuss travel options, but do not purchase right away. Email is a simple and extremely inexpensive way to contact customers with various offerings. This would also allow us to increase our target markets. For example, the UK Tourism Survey shows that an increasing number of young working-class families are taking holiday abroad. As younger people are more likely to have computer access and be knowledgeable in computer operation, it figures that this is a potential market where FTT may increase market share.

Working class families without computers could still be included in the target market, but through other means of penetration. Over forty million loyalty cards were in circulation in the UK in 1999, and that number has undoubtedly increased substantially since (Evans 1999). Most cost-conscious Brits now have several such cards, and those motivated by price are particularly keen on using them. Partnering with several major cards could not only increase our visibility and presence, but attract customers that might not consider holiday travel.

For example, we could offer a discounted package as a reward for points earned by a major loyalty card scheme, such as Tesco. Alternatively, we could join the scheme itself and offer points for a customer’s spend with us. In any case, being included in a scheme with extensive emails, newspaper inserts, and other advertising would reach cost-conscious consumers, a characteristic of our traditional customer base, who might not have considered package holidays before. We may also attract those who had purchased their packages elsewhere, at least to the point that they might inquire about our offerings, either in person or online. Some in this market will be surprised at the affordability of many packages. It is also likely that since customers attracted from this target market have never had a holiday abroad before, they would be nervous about both planning and going. As such they would find our servcies as a travel agency both convenient and comforting. Once they went once on a holiday package from us, we could make them part of our database, and provide various marketing endeavors to encourage their repeat patronage.

The marketing changes discussed above give FTT the opportunity to once again dominate the travel package sector of our industry, to attract and retain customers from a wider customer base, and to ensure future growth and profitability. Our society is changing, but if we change with it we can continue for another forty years of travel excellence.