A Tale of Two Eras: How A Traditional Travel Agency Can Compete With Booking.com and Other Digital Travel Aggregators?

In the realm of businesses continuously innovating to stay afloat amidst disruptive forces, this case study brings forth an inspiring example of a company (let’s refer to it as a “Traditional Travel Agency” or “TTA”) and its journey of transformation. This company, a traditional travel agency, found itself at odds with burgeoning online travel platforms that dominated the market by aggregating deals for travellers.

The Unseen Digital Threat

TTA’s value proposition was overshadowed by these digital giants, the likes of booking.com, who commoditised travel elements such as flights and hotels, transforming them into easily accessible cheap deals. Consequently, this posed a threat to TTA’s business model, which was considered the aggregator in the traditional industry settings. The digital aggregators held the power to offer enticing cheap deals, driving the competition into a “red ocean” scenario and attracting lower- to middle-end customers away from TTA. As a result, TTA experienced significant customer attrition.

However, commoditising the travel PRODUCT led to a fragmentation and inconsistency of SERVICE, resulting in either no cushion or point of contact to mitigate issues during travel or ending up with so many providers to chase who’s responsible for the disappointment. In an industry driven by customer experience, this problem presented a unique opportunity for a traditional travel agency like TTA.

Travel Digital Aggregators have Disrupted the Travel Industry

But hold on, what is travel really about? Is it about the Price or the Value of Experience?

The experience is so precious and long-lasting, that most people express a lack of good life experience and human interaction even before they die. Not surprisingly, a few had complained about not being able to pay for cheap deals. (sorry, bad joke, I know…) A large segment of customers isn’t just chasing cheap deals; they demand unforgettable experiences and enjoyable service with human interaction. This is something the online aggregators cannot offer! Recognising that trust in service providers, particularly through the service professionals, and a seamless travel experience were paramount to such customers, TTA decided to innovate their business model to look after them in a better way. Instead of battling in a price war with aggregators, TTA refreshed its value proposition to centralise the customers’ trust and the delivery of personalised, memorable travel experiences into the frontline service personnel – tour leaders/guides.

Travel is mainly about the Value of the Experience not only the Price

This has led to a new influencer-driven business model, where their tour guides became the influencers: leading the conversation in the industry, recruiting, and maintaining their own “fan base” (direct customers). They interact with customers before, during, and after trips, becoming the focal point of the travel experience. TTA shifted from being the agent for customers to becoming the agent for the empowered tour guide, similar to an agent to a footballer or celebrity. TTA began organising the backend resources for the tour guides, building their capacities to manage their fan base, and tying up loose ends to empower the tour guides to focus on customer engagement and service delivery without worrying about the backend resources.

The empowerment transferred the “ownership” of customers from the company to the tour guides. As owners, the tour guides now have the incentive to provide a wide range of activities for customer care, both in the short term and long term. In return, the guides earned continuous trust from their fans and became leaders in taking their own fans to various global destinations. TTA remained in the back office, orchestrating enterprise resources and providing support to their guides whenever needed.

The Revolution in Travel: Influencer Supremacy

This transformation led to the tour guides becoming the channel and owning the customer relationship through the lens of business modelling. They utilised their in-depth market knowledge and intimate understanding of the customers’ preferences to curate tailored travel experiences accordingly. The result was a more personalised, satisfactory, and immersive travel experience that surpassed what digital platforms could offer.

An influencer-based Business Model was new reality for TTA

This strategy resulted in a significant increase in customer retention, engagement, and repeat business, particularly from more profitable segments. Interestingly, TTA not only defended its previous market shares but also gained more ground in competition with digital aggregators by offering a Unique Selling Point: a superior travel experience rather than the cheapest deals.

The tour guides, acting as micro-influencers, catered to specific customer groups, similar to popular models seen on platforms like TikTok. However, the parent company TTA served as the safety net, mitigating the risks associated with travel and providing necessary support and resources to the tour guides.

To sum up: The Old gangs comeback to face up to the new kids on the block

This transformation of TTA from a traditional travel agency to an influencer-driven travel service provider is a great example of value co-creation – through the power of understanding customers’ needs and the importance of delivering an unmatched travel experience. Today, TTA thrives in the market, competing head-to-head with digital platforms, proving that in an industry driven by service and customer experiences, the personal touch still holds significant value.

The story of TTA stands as a testament to the fact that traditional businesses can successfully pivot and compete with digital platforms by leveraging their unique strengths and reinventing their value proposition. Through a combination of customer insight, employee empowerment, and business model innovation, they were able to create a fresh, highly personalised approach to travel that resonates with their customers and keeps them coming back for more.

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The Centre for Business and Industry Transformation (CBIT) embodies an integrated research approach, creating a synergistic blend of industry transformation research, disruptive business practices, and education. The aim is to fuel a continuous learning, innovation, and evolution cycle.

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