Agencies: Survival Tips For The Electronic Era

<H1> Agencies: Survival Tips For The Electronic Era</H1><B>Y</B>ou've learned about the recent partnership between Microsoft and American Express to create a digital travel agency on the World Wide Web. This alliance between such powerhouses is just one example of the flurry of activities going on to

transform the market of travel distribution through new technologies, especially the Internet. You're probably worried about what this means for your business, so I want to suggest a few ways you can react to such competitive pressure.

The first companies to launch online ventures were focused on disintermediation-the idea that customers would go directly to suppliers if they had an easy way to reach them. Now the market is progressively realizing that, just as in the physical world, not all consumers want to deal with the hassle of contacting multiple suppliers to compare and shop. Some, if not most, will want the level of service that comes from dealing with an intermediary, who will offer them advice and save them time and money. This is the way you're probably doing business today, and most of your colleagues believe it will be sufficient to prosper in the next century.

I beg to differ; I believe technology will profoundly reshape the way travel products are distributed. Today, a travel agency has three basic business functions: It transfers information from suppliers to consumers, processes transactions (for example, printing tickets and exchanging money) and offers added-value advice. Technology soon will make the first two obsolete and irrelevant. With information increasingly available on everybody's PC or interactive television, and with ticketless travel, credit cards and digital money, there will be no need to go to a travel agent to get basic information or process common transactions.

Travel agents should therefore refocus and leverage their strength: knowledge about their consumers, the travel market and suppliers' offerings. Depending on the markets you serve today and your degree of familiarity with technology, you can choose between four different strategies in the virtual world.

<B>1. The communicator:</B>
Enhance your communications capabilities by adding various ways for your customers to reach you: through e-mail, online services, the Web. That's an added communication channel for them, and a way for you to be known outside your present customer circle. Niche players will have the most opportunity to let the whole world know about their knowledge of a specific destination or type of holiday (e.g., heli-skiing in Canada). Customization will be key here-for instance, maintaining a link of information by regularly sending out information on your special offers.

<B>2. The navigator: </B>There is lots of content on the Internet today, and assisting customers in navigating that world is worth a premium. Imagine a customer requesting information for a specific trip, and you offering in return a guided tour of the Internet focusing only on information relevant to his trip.

<B>3. The aggregator:</B> This level requires the most investment and a lot of technology knowledge. The aggregator is able to build its own Website which pulls in content directly from providers to offer a one-stop-shopping virtual experience, combining real-time information from CRS, multimedia clips describing properties and destinations, travel advice and electronic commerce. Travelocity, the Internet Travel Network and Epicurious Travel (formerley Conde Nast Traveler) are three examples of aggregators. It requires deep pockets, lots of technical expertise and massive advertising-and the market probably won't support more than four or five of these mega travel distribution networks.

<B>4.</B> <B>The adviser.</B> If today you're mostly dealing with corporate customers who will move to travel automation of their own, your knowledge of the intricacies of the market will allow you to be the adviser and help them select the best travel automation platforms, configure it to suit their needs and establish the required support and exception-handling procedures. Of course, some knowledge about how to redesign travel management process and accounting procedures will be an added value.

But the game won't be all played in a virtual world. Lessons can be learned from innovators in other retail industries, such as IKEA, Barnes & Noble and Home Depot. These firms have succeeded in transforming the shopping experience: They make it efficient, fun, comprehensive (one-stop shopping) and allow you to get as much customer service as you need. There are lots of opportunities to create mini shopping malls focused on travel, with multimedia displays, specialized personnel and partnerships with sellers of complementary products (clothes, photo equipment, foreign currency, sporting gear). Of course, it will require resources and economies of scale, but this might well be the future.

<I>Michael Bloch is a visiting scholar in the information systems department at New York University's Stern School of Business.