Proposal For A Travel Service Business: Business Model, Market Analysis, And Success Factors

Business Model Concept of the Company

The travel service industry is made up of a very complex web of different relationships in between various suppliers, destination marketing organisations, tourism products, travel agents and tour operator (Phalusuk et al. 2018). It is one of the fastest developing industry in the contemporary world. The travel service providing business comprise of functions and business which help people with planning and reserving the components of the experience of the visitors. There are several travel agencies in United Kingdom that focus on the areas like travel, travel review, restaurant review, booking sites and attractions. One of such companies, although a self-made business, is Trip Go. The main aim of this business is to make it easier for its customers who are planning for tours, travels and trips for getting relevant information which would make the whole trip easier, safe and smooth to plan.

This report shall elaborate on discussing the business model concept of this company by means of a business model canvas that consist of nine categories. Furthermore, it shall assess and analyse the market along with its competitive environment in which the business would operate by means of Porter’s five forces and PESTLE tool. With the same, the paper shall also shed light on the advantages and the disadvantages of the business model that have been used for Trip Go. It will also highlight the future opportunities and the risks present for the business and would identify the key success factors for its success in the market environment (KPIs).

It is to note that TripGo would follow the B2C business model for its business operation. This is due to the fact that its customers shall be buying the services from the company for their own personal needs. The very first thing that supports and indicates this claim is that most of the website content is in relation to the topics such as guides, vacation rentals etc. However, the business model of the company has been explained below:

1. Key partners- The key partners of the company would be the ones who enable its business model- the agency business model.For the agency business model, the OTAs and the hotels which pay for the direct bookings would be used and for the restaurant business model, the food delivery platforms and the subscription partners would be important. With the same, it is also to mention that the general search engines are also important for feeding the organic traffic. The other partners include lawyers, technology partners, airports, media outlets, content creators, online Travel agencies, the travel service providers like restaurants, vacation rentals, hotels and attractions, the travel agency affiliates etc.
2. Key activities- The key activities of Trip Go wold be of:
   1. Enhancing the indirect network effects of its platforms by increasing varieties of bookable properties and fresh and candid reviews.
   2. Enhancing the customer experience as well as the value of the platform by means of technological innovation.
   3. Enhancing the value proposition
   4. Generating demand by means of personalised notifications for the subscribers
   5. Improving the mobile application and websites
   6. Observing the industry landscape
   7. Optimising Conversion rates
3. Value propositions-
   1. Customer and user friendly platforms
   2. Advertising services
   3. Brand recognition
   4. Advertising services
   5. Perpetual innovations
4. Customer relationships- The Company would focus more on increasing the level of trust and reliability of the customers towards the business. Also, it would ensure that the reviews are useful and authentic.
5. Customer segments- Trip Go would segment both sides of the platform, being travellers as well as the restaurants, hotels and attractions. The attractions, hotels and restaurants would be segment on the basis of search types, user ratings, locations, amenities etc. on the other hand, the travellers would be segment on the basis of traditional dimensions such as geo-demographic. Trip Go would follow micro-segmentation on the basis of the questions that it would be trying to answer.
6. Channels-
   1. The sales channels would include the TripGo app, the company websites and webpages and sales teams
   2. The Ad channels would include the basic search engine like Bing and Google and traditional advertising channels such as magazines, radio, televisions etc.
7. Key resources- The key resources of the company would be:
   1. Reviews
   2. Mobile apps and websites
   3. Total number of restaurants and hotels that are covered
   4. Total number of locations that are covered
   5. Skilled Staff
   6. Technology
   7. Global network
   8. Intellectual property, trade secrets, brands, domains
   9. Content
8. Cost Structure

1. Revenue Streams- The business would be characterised by 3 revenue models- the merchant model, agency model and the advertising model. However, the main streams of revenue would be from advertising, licensing, fixed subscription fees, international operations and from the local and foreign sales.

2.2.1. PESTLE Analysis

The political, Economic, Social, Technological, Legal and Environmental factors that would affect the business of TripGo in UK market are mentioned below:

2.2.2. Porter’s five forces

Porter’s five forces is one of the most efficient framework for analysing the forces that shapes the competition of a business within an industry (E. Dobbs 2014). Analysis of the five forces that are could influence the company are mentioned below:

1. Threat of Substitutes- The threats of substitutes for Trip Go is very low. There are not many comparative substitutes present for it as because of the difference that it would made in the content (Anzalota and Schneider 2018).
2. Threat of New entrants- The threat of new entrants for Trip Go is low-medium. Although there are many companies that are competing in the market but the struggle for competing because of the network influences and positive feedback of the Trip Go. Also, there is low entry cost because the websites would be very easy to create and is not so expensive to fund. Also, the Facebook and Google can leverage the power of the company to compete in the market.
3. Bargaining power of the buyers- The bargaining power of the buyers for the company is medium. This is due to the fact that the website of Trip Go is driven by content and is funded by the advertising. With the same, the website users could also aid to content elsewhere. With the same, the advisors could chose other medium as well.
4. Bargaining power of the suppliers- The bargaining power of the suppliers is very low. Positive feedback of the TripGo draws the users for their network more than that of their competitors.
5. Competitive rivalry- The competitive rivalry in the industry is also low-medium. The reason is already mentioned above- there are many companies that are competing in the market but the struggle for competing is influenced by the network and positive feedback of the Trip Go.

As it is already mentioned that the Business Model that would be used by TripGo is that of the Agency business model. However, like any other business model, the Agency Business model, too, have its own advantages and disadvantages. They are mentioned below:

Marketing Analysis

Advantages: The main advantages of using agency business model is that the owner of the business would not have to pay the salary for the workers working under the name of the company, the expenditure of cars or another offices of sales (DaSilva and Trkman 2014). With the same, by making use of agents to sell the product is very beneficial. This is because these agents are very easy to be recruited as compared to the other experienced sales executives who have specialist skills and knowledge. Furthermore, making use of agents could be cost-effective for reaching varieties of markets (Macaulay 2018). Moreover, there are some markets, including the international markets that are very difficult to be divided without any experience, knowledge and contacts of the locals.

Disadvantages: The main disadvantage of this business model is that sometimes, it could be very difficult to manage and control the activities of the agents as well as to ensure that they are working hard in behalf of the business owner (Rai and Henry 2016). There might be several agents who might not sell the products and services in the way that the business owner do not like. Also, several agents could sell the products to the customers who would undermine the product integrity. All these are some of the significant disadvantages of agency business model. This is because, here, the owner has no control over the agents and the clients. Even, these agents could be entitled to termination and compensation of the contract if they rupture or breach the agreement.

As per Kritikos, Plexousakis and Woitsch (2017), performance indicator or business metrics are very important for any company for knowing and assessing its business’s health. Trip Go would be a completely web-based company and therefore, the below mentioned metrics would be of the most importance:

1. Percentage of Return Visitors- This would indicate how the clients are finding the service of the company interesting
2. Revenue per paid user- This would help to know the number of users who are signing up for the subscription service (Tukker 2015)
3. Website support calls and e-mails- This would signify whether or not right answers could be found on the website. This in turn would decrease the costs.
4. Renewal rate- This would help in understanding the real value of the service as compared to the others.
5. Bounce rate- It would indicate how many people are clicking through to the internal web pages.
6. Sign up and Sign out options- This would indicate the number of people who are creating trial and free Trip Go accounts.

3. Conclusion

Hence from the above analysis it is to state that the Trip Go would be built on some main points such as- focusing on the booking activities, differentiating by providing prices across the mobile application and other websites and heavily spending on the advertising. It would follow the agency business model as it would help the business owner to lead the business effectively without any burden of salary payment and monitoring. However, there are several factors that are working as some operating challenges for Trip Go in United Kingdom. There are some political and legal barriers like inefficient bureaucracy and political disagreement that could influence successful operation of the business in the market. Notwithstanding this fact, Trip Go possess several strengths that could help it in gaining more competitive advantage from its competitors and they include efficient and easy to use websites and skilled agents develop the business.

References:

Anzalota, J. and Schneider, A., 2018. Computer based system for evaluating options in an eclectic array of product and service attributes in the travel services industry. U.S. Patent Application 15/417,762.

Bennett, C.J. and Raab, C.D., 2017. The governance of privacy: Policy instruments in global perspective. Routledge.

DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range planning, 47(6), pp.379-389.

Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.

Hammer, N. and Plugor, R., 2016. Near?sourcing UK apparel: value chain restructuring, productivity and the informal economy. Industrial Relations Journal, 47(5-6), pp.402-416.

Kritikos, K., Plexousakis, D. and Woitsch, R., 2017. Towards Semantic KPI Measurement. In CLOSER (pp. 63-74).

Macaulay, S., 2018. Non-contractual relations in business: A preliminary study. In The Law and Society Canon (pp. 155-167). Routledge.

Montgomerie, J. and Büdenbender, M., 2015. Round the houses: Homeownership and failures of asset-based welfare in the United Kingdom. New Political Economy, 20(3), pp.386-405.

Phalusuk, C., Blut, M., Schoefer, K. and Ness, M., 2018, July. SERVICE FAILURES WITHIN SERVICE DELIVERY NETWORKS: A QUALITATIVE STUDY IN TRAVEL AND TOURSIM INDUSTRY. In 2018 Global Marketing Conference at Tokyo (pp. 604-605).

Rai, V. and Henry, A.D., 2016. Agent-based modelling of consumer energy choices. Nature Climate Change, 6(6), p.556.

Tukker, A., 2015. Product services for a resource-efficient and circular economy–a review. Journal of cleaner production, 97, pp.76-91.

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