Abstract
During the last months of 1999 and the beginning of 2000, the major players ambitiously embarked on a pan-European expansion. Fully integrated groups acquiring and / or merging with other fully integrated groups.
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Notes
In this table only the major European source markets for tourism (i.e. UK and Germany) are considered. This may give the false impression that First Choice PLC and Rewe / LTU EG have not expanded beyond their national borders
The tourism supply chain consists of five types of organisation (elements): Travel agencies (sales), tour operators (packaging), carrier (transport), destination organisations (holiday services) and hotels (accommodation)
The terms “destination” and “resort” are used interchangeably and have essentially the same meaning. The term refers to the geographical area where the holiday takes place (e.g. Majorca, Rhodes, etc.)
Absolute exclusivity cannot be ensured since it may be possible to reach the beach by boat. In addition, the majority of hotels would not, and could not, reject the request of individuals wishing to access the beach through their premises
Sander (2000), Jürs (2002)
Quandt & Krane (2003) after conducting a comparison between the end price of a self-booked holiday on the Internet and the packaged holiday (catalogue) prices, concluded that a packaged holiday tends to be better value for money. Nonetheless, this argument is increasingly being challenged [see for example: Eberle et. al (2002)]
Schütz (2002b). German tour operators invested approximately € 250 million during 2001 and despite the crisis, during the first half of 2002 alone they have invested € 134 million. This represents a 6% yearly increase
Average of 2001, based on a proj ection of historical data (from 1994 to 1999)
Scharrer(2002b:p.19)
Martin (2002) argues that vertical industries can be risky, costly and inhibit innovation. As an alternative, horizontal platforms are deemed preferable, enabled by information technology and provided they meet the challenge of standardisation. Härtung (2003a) argues that attempting to control the entire tourism chain (verucal) cannot (and has not) work due to the many competences it requires as well as due to the high coordination costs it implies
Many claim that the tourism industry has been’ spoiled’ through favourable demand conditions. Moreover, the evident crisis after the 11th September has brought the ‘taken for granted’ demand in question. See for example: Gröning (2002), DiLorenzo (ed.) (2002b), Garrahan (2002), Möser (2002), Kiani-Kress (2002:pp.49–50), Noack (2002), Scherer (2002a), Scherer (2002b), Weiß (2002) Weiß & Hildebrandt (2002), Welter (2002)
Ownership can be defined either literally (i.e. group hotel) or contractually, through an exclusivity contract (i.e. commitment to purchase all the beds / rooms in a hotel, in exchange for a lower price). The latter agreement shifts the risk from the hotelier to the tour operator, rendering a lower purchasing price acceptable
DiLorenzo (2002a), Hildebrandt (2002c:p.21), Müller (2002), Scherer (2002a), Genger (2002a)
Gröing, Stritzel & Schmicke (2002:pp.20–21), Weimer (2002)
Jegminat (2002a), Jegminat (2002b), Schneidewind (2002), Letti-Schröder (2002), Voigtmann (2002a), Scharrer (2003a), Eberle & Krummheuer (2003a), Noack (2003a)
Chandler (1977:p.315) claims that vertical, combined with horizontal integration is a key determinant of sustained profitability. Similarly, Buehler & Schmutzler’s (2003) research of the European holiday sector reveals a pattern whereby vertical integration is followed by horizontal integration
Application of industrial principles in the area of services is discussed within the research field of “Service-Engineering”. Fähnrich (1998), argues that this field of research is gaining the status of a discipline
Blohm & Schneidewind (2002:pp.16–18), Machatschke (2002:p.116)
Krane (2000:p.28), Liedtke (2002:p.53)
There is indeed a number of synergy levers applicable (e.g. benchmarking from each others best practices). Some more significant than others; some more direct than others. The ones examined here are, according to the judgement of the author the most significant ones in terms of value proposition and in relation to the topic at hand
Freyer (2001:pp.113–114 & 151), Knüpfer (ed.) (2002b)
Even though their concept is also applicable to products, assuming that products are likely to contain a service element to a certain degree
Sewell quoted in Heskett, Sasser & Schlesinger (1997:p.07). In addition, Augustyn & Ho (1998), support this view during their exploration of quality in tourism services
Höhfeld & Kremnitzmüller (1998), as well as Behrens (1998:p.61), contend that information transparency, comparability and accuracy through standardisation (or normalisation) are essential for service-related information and constitute a major part of customer satisfaction
A detailed discussion on business interactions in tourism and their complexity drivers can be found in Hultgren & Eriksson (2001)
There are a number of such examples where factors affecting the customers’ perception of quality do not stand in a court of law since they are based on subjectivity (“a matter of taste”) — [Pless (2003a), Pless (2003b)]. It is neither feasible nor pragmatic to include them in their entirety in the contractual relationship with the hotelier
See for example Schilling-Strack (2003)
See Chapter 2 of this paper (section 2.1.1)
Strictly speaking, a holiday also contains physical elements / products (e.g. tickets). However, for the purpose of this paper, elaborating on this aspect, would induce an unnecessary degree of complexity
Rule of the thumb amongst tourism professionals is that accommodation and transport account for no less than 80% of the entire holiday experience
Krane (2000:p.27)
Böttcher (2004:p.137) mentions that optimal capacity utilization is a precondition for the success of integrated tourism groups
In this section mainly hotel beds / rooms and airplane seats are mentioned since they represent the highest financial liability. Comparing this with the risk associated with empty bus seats, during a transfer or an excursion, reaffirms this focus
Airplane seats are less relevant due to differing charter flight dates between Germany and UK, and due to the fact that the large volume of tourists travel south. In that respect, having an English charter flight making a stopover in Germany and visa versa is highly impracticable and unlikely. Taking hotel beds (especially owned ones) on the other hand, which can be included in the packages of different source markets across Europe a significant synergy potential is present. Taking the example of TUI with 150.000 beds in 30 countries [Genger (2003e)], it becomes obvious that this is highly relevant for the large integrated tourism groups
Liedtke (2002:p.134) confirms that synergies are largely determined by hotel overlaps. Within this context, he cautions against ignoring source market sensitivities. Peymani (2003), goes even further, considering the risks of overlaps at the level of tour operator brands
Liedtke (2002:p.28)
Becker & Martin-Jung (2002a). Moreover a recent tourism marketing study [see Schütz (2002b)] revealed that from budgets ranging between €10,000 and €2,5 Million: 29% were spent on Print media, 18% on advertisements, 24% on trade shows, 10% on PR, 3,7% on merchandising, and 14% on free media
Krane (2002:pp. 16–17), Geipert (2002a), Geipert (2002b), Becker & Martin-Jung (2002b)
Murphy (2002)
Validation is a very important aspect of information handling in tourism. Information accuracy is more than just good practice. False information may have serious legal consequences. Those can range from legal suits for corporate manslaughter to customers demanding money back for a contractual breach [see Von Poiser (2002), Geipert (2002c) for example]
Junghänel (2001:p.32), de Vries (2004:pp.333–334)
A customer makes a reservation with TUI Schöne Ferien (i.e. TUI Germany) and not with TUI AG. The groups efforts evolve around associating the brand TUI with quality [Bremkes (2002), Schütz (2002a)]. Kubetschka (2002a) and Kubetschka (2002b) discuss the importance and investment of “Emotional branding” for the tourism sector. Accordingly, the internal structures and business relationships / responsibilities of a tourism group are not the focal point for the customer should issues arise. The tour operators represent the brands in the source markets
See for example: Eccles, Lanes & Wilson (1999:p.57), Gulati & Garino (2000:pp.110–111)
Liedtke (2002:pp.70–76), Pichler & Kloubert (2004:p.74), Steckel & Hovenbitzer (2004:p275), Buss (2004:p.282)
Scherer (2003a) — Even though the advent of the Internet may change this in the long-or medium-term allowing more hotels to access the end customers directly
Berninger(2002)
Hildebrandt (2002a)
Kumar (1996) argues that exploiting power within a vertical channel will most probably backfire. Nurturing trust on the other hand potentially offers significant benefits (e.g. reduced transaction costs, motivation for ‘the extra mile’, improved communication and sharing). Abusing bargaining power, like any other source of power, is connected to negative consequences. A similar argument appear in Wise & Morrison (2000:p.88)
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Papathanassis, A. (2004). Concept of value in tourism mergers. In: Post-Merger Integration and the Management of Information and Communication Systems. Strategie, Marketing und Informationsmanagement. Deutscher Universitätsverlag. https://doi.org/10.1007/978-3-322-81879-9_4
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