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Case Study

Business to business (B2B) transactions allow companies to work together efficiently to produce and distribute tourism products. Travel agents purchase services from hotels, airlines, and other providers to assemble tour packages, which are then sold to consumers. B2B interactions facilitate deep integration between manufacturers and distributors in the tourism industry supply chain. Online travel agencies like Makemytrip.com have adopted a B2B model, allowing airlines, hotels, and small travel agents to collaborate effectively. However, the profitability of online travel companies has not met expectations, suggesting challenges remain in streamlining tourism supply chains and transactions through digital platforms.

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Husen Ali
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268 views2 pages

Case Study

Business to business (B2B) transactions allow companies to work together efficiently to produce and distribute tourism products. Travel agents purchase services from hotels, airlines, and other providers to assemble tour packages, which are then sold to consumers. B2B interactions facilitate deep integration between manufacturers and distributors in the tourism industry supply chain. Online travel agencies like Makemytrip.com have adopted a B2B model, allowing airlines, hotels, and small travel agents to collaborate effectively. However, the profitability of online travel companies has not met expectations, suggesting challenges remain in streamlining tourism supply chains and transactions through digital platforms.

Uploaded by

Husen Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CASE STUDY

Business to Business (B2B)

Customers, people and business organizations have taken advantages of


communication technology with the help of internet and intranet. People leisurely and
easily communicate with sellers and search about the products (goods, services) on the
internet. Further, the process of buying travel and hospitality products start with the
evaluation of the several alternative sources that are available on the internet. It is now
helping customers to make a comparison between prices of the products.
They finally reach at the stage of taking buying decisions. Even though, customers
have found the direct communication with sellers very cumbersome for which a typical
supply chain have emerged with multiple business to business transactions in travel,
hospitality and tourism business. As travel agents or tour operating companies
purchase components varied services from the principal service providers to assemble
them into an appealing or attractive tour packages. As such raw materials are procured
for use in its manufacturing processes and the finished products are then sold to
individuals via business to consumer transactions.
Business to business is the process by which businesses employ a multi-layered
strategy consisting of web communications, email, media campaigns and relationship
management for the purpose of converting targeted business prospects into customers.
B2B refers to business that takes place between companies, rather than between a
company and individual consumers. This business format allows deeper integration
between the manufacturers and distributors or wholesalers involved in tourism
production and distribution processes. While the B2C makes the tourism product more
easily available to direct customers. As the desires of the customers vary from
individual to individual, and there have been several changes over time. This kind of
business requires high flexibility along with fast customer responses. The travel
companies as distributors or wholesalers can act in a faster and more efficient way. It
becomes faster mainly when there is a high level of integration allowing close
interaction with other companies (suppliers or customers) involved in production and
supply chain process. It results in the benefits for the whole chain of suppliers
converging to the consumers. The business to business concept in package tour
operation of Thomas Cook explains that there exists a perennial business linkage
between Thomas Cook as an agent, operation and consolidator with the principal
service providers like hotels, airlines, coach and car 60 rental companies, catering
services, theme parks, etc. At the same time, Makemytrip.com has become a leader in
online travel agency business with much importance on B2B format of running and
maximizing the revenue. Big companies like airlines, hotel chains and small companies
(even a one-person travel agent) can work together with more efficiency. Irrespective of
the locations geographically, integration can be possible through web technology.
Several managerial processes are involved for processes compatibility, information
channels and trust for ensuring a high degree of standardization. It has become possible
to operate as a single virtual enterprise. The tourism marketplaces are filled with a large
number of tourism service suppliers targeting it reach a multiplicity of tourist markets.
They usually target the tourists directly and develop positive messages about their
products through promotion channels.
They finally work with intermediary distribution channels to sell a range of services
tailored to the customers’ needs. Analysis, Strategy and marketing mix are the key tools
in producing, promoting and distributing tourism products at several geographical
locations to diverse customers. Inevitably, there are many travel organizations involved
in commercialization of business strategies. The concept of Business to Consumer (B2C)
explains that tourism service suppliers can use a range of direct marketing channels
such as database and internet marketing to attract customers directly by removing
other complex channels. The advantage is having a greater control over the message
sent and the type of tourist attracted. The disadvantages include a greater financial risk
and it has high start-up costs. It is however found that the trend of business turnover of
online travel companies including the online segments of traditional travel companies is
not so encouraging as it is seen from the outside. In the B2B, the main focus is laid on
the suppliers to transact through intermediaries for selling individual services or
packaging them or doing the marketing and booking. Tourism suppliers benefit from
outsourcing the cost and risk of marketing. The advantages are diversification of
markets that can reduce risk, increase a potentially secure level of business and ensure
the fixed commissions.
All these can make the travel companies to consolidate the financial planning and
management. However, the challenges are less control over marketing messages,
markets and income streams. Most often, tourism suppliers combine the (B2C) and via
distributors (B2B). In the latter case, intermediaries are used to provide a baseline level
of business to ensure minimum occupancy rates or load factors. It provides a
contribution towards fixed costs of capital repayment and salaries. At same time, in the
B2B or B2C format, direct marketing is also preferred to stay connected with the repeat
visitors by relying on particular market segments and for specific promotions. Finally,
travel companies can only be successful in the online business with the sound
knowledge of management of funds and the interest of intermediaries in the supply
chain. The crucial question is that online travel companies have streamlines the supply
chain network and supplier of tourism companies have almost resorted to the online
transactions i.e. B2B and B2C.
Online format shall take loner time to resolve the issues and challenges related to
supply chain and retailing of travel products.

Questions
1. What is online supply chain? And how it is networked in case of tour operating and
travel agency business?
2. What are the advantages that online travel companies accrue from this mushrooming
of online transaction of B2C.
3. Has B2B business become an acceptable business format in tour operation and travel
agency business?
4. What Makemytrip.com has not been making more profitability despite heavy
investment and robust supply chain?

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