Emerging Electronic Markets: Economic, Social, Technical, Policy and Management Issues

Large, vertically integrated outgoing tour operators dominate the foreign holidays segment of the British and German travel and tourism industry. This industrial structure has emerged and has been sustained by a number of factors, of which the adoption and diffusion of new information and communication technologies (ICTs) is one of the most significant. As a response, some small outgoing tour operators have established cooperations both among themselves and with other travel and tourism companies in an attempt to achieve a degree of parity with the large operators. However, recent developments in computer reservation systems and associated new trading patterns may bring about changes to the travel and tourism industry in general and the outgoing tour operator business in particular. The new trading forms are deriving from the establishment of electronic market systems, for example, as a result of the merging of global airline reservation systems with hotel, car rental and other booking systems. Electronic market systems may well provide new opportunities for some outgoing tour operators as well as threaten the competitive position of others, and, overall, may make it necessary for outgoing tour operators to seek new ways to 'add value' to travel and tourism products. The economic importance of the travel and tourism industry and the central role of tour operators The travel and tourism industry has become a sophisticated and complex industry, providing a wide range of products for business, leisure and many other purposes, and encompassing a diverse range of firms and other organisations. In fact, it can be seen as an 'umbrella industry' (Lundberg, 1980, p. 1), comprising a series of interrelated businesses, embracing, amongst others, travel and transportation companies, accommodation and catering enterprises, destination agencies, tour operators, travel agents, and providers of recreation and leisure facilities. Apart from being highly important in a socio-cultural and an environmental context, the travel and tourism industry is of major economic importance to most countries in the world. In 1987, according to one of the most recently published comprehensive reports on the world travel and tourism industry, the industry's contribution to the world economy amounted to nearly US$ 2 trillion in sales, equivalent to 12% of global GNP (gross national product), 5% of global sales of all goods and services and 15% of global service sector sales. The industry employed 101 million people worldwide, i.e. one in 16 workers (WTO, 1991, p. 3). The industry is also very significant to the economies of Britain and Germany. In 1989, the UK ranked fifth and Germany seventh of all OECD countries regarding international tourist receipts, with the UK receiving US$ 11.25 billion and Germany receiving US$ 8.66 billion; while Germany was the second highest spender on international tourism after the USA, with Germans spending US$ 24.13 billion abroad, and the UK was fourth highest after Japan, with UK citizens spending US$ 15.20 billion abroad (Devas, 1991, p. 3-5). These figures do not Industrial Change in the Tour Operator Buisness 27 © HSG/CCEM/23 include domestic expenditure on travel and tourism products which exceeded US$ 15 billion in each of the two countries in the same year, further underlining the importance of this industry to the economies of Britain and Germany. Tour operators provide one of the core functions for the leisure sector of the travel and tourism industry. Tour operators, in assembling holiday packages or inclusive tours from a wide range of available components, provide a link between the travel and tourism principals on the one hand and travel agents and consumers on the other. Packaged holidays have become one of the major travel and tourism products. In Germany in 1992, for example, 42% of all holiday trips were packaged (DRV, 1994), and holiday packages were of similar importance in Britain, as illustrated in figures by the Association of British Travel Agents Limited (ABTA). In 1989/90, an estimated 80% to 90% of all travel agents in the UK were members of ABTA and 72% of their average turnover came from the sale of inclusive packages (East, 1990, p. 23). Outgoing tour operators, in contrast to incoming and domestic ones, have gained particular importance in the industry, in terms of both number of trips sold and turnover. In fact, some outgoing tour operators were among the largest players according to turnover and number of customers in the travel and tourism industry in the world and especially in Europe, and of these, the twelve largest in Europe according to turnover were German, British, Swiss and French, as shown in Table 1. Due to the significance of the travel and tourism industry in Germany and Britain and due to the dominance of German and British outgoing tour operator groups and cross-ownership between some of them, as further discussed below (Table 2), only the German and the British outgoing tour operator sectors will be analysed in the following. 28 Emerging Electronic Markets © HSG/CCEM/23 1 Tour Operator Group 2 Turnover3 Customers4 1 Touristik Union International GmbH & Co. KG (TUI) D 5.05 4.45 2 NUR5 Touristic GmbH D 3.20 3.00 3 The Thomson Travel Group GB 2.81 3.30 4 Reisebüro Kuoni AG CH 2.73 0.70 5 Club Méditerranée F 2.43 2.13 6 The LTU Group D 2.29 1.73 7 Owners Abroad Group PLC6 GB 1.55 2.10 8 International Tourist Services Länderreisedienst GmbH KG