Revenue Management in Tour and Travel Agencies - A Chapter PDF

CHAPTER 9: REVENUE MANAGEMENT IN TOUR AND TRAVEL AGENCY BUSINESS **Introduction** Financial sustainability is one of the most vital factors for the long-term sunil of any organization. It is the capability to remain committed to providing service and absorb economic pressures without external financial assistance. Bowi (2011) stated that companies generate revenues accruing from a demand, guaranteeing financial sustainability performance. For every institution, either for-profit or not-for-profit, achieving financial sustainability is a crucial vision. Accomplishing economic sustainability would! helpful in every institution, especially among travel agencies. A travel agency of must determine how to manage the enterprise\'s available resources judicious manager needs to utilize different approaches to generate income to keep company from a financial crisis. He/She must be excellent in executing reals' internal control and client relationship. **Conceptual Definitions in Revenue Management** Revenue management refers to selling the right product at the right time and price while simultaneously engaging with the right customer. It considers choosing the most appropriate channel through which the product is distributed (Hospa, 2013). Tour operators work with service providers such as hotels and airlines to offer and secure their customers an assortment of different packages (Anderson & Marcus, 2015). In essence, allotments refer to the procurement contracts between two parties that indicate the extent of capacity with its rates (Tourism Export Council,). The arrangements can be guaranteed and non-guaranteed. In the latter case, aspects such as release dates or stop sales periods need to be considered. Besides that, some factors influence the contracts\' rates and conditions, such as the relationship between the parties involved or the procurement date (Anderson & Marcus, 2015). Companies make only a restricted number of changes after signing the procurement contract due to the fixed allocation of capacities (De Vries, 2011). Allotments with tourism suppliers refer to the inventories of tour operators. Therefore, any unsold allowances are consequently losses for the tour operator due to the services (Bresin, 2018). The operational attributes of travel agencies necessitate revenue management, similar to other tourism industry firms. Airlines usually can forecast, oversell, manage seat inventories and pricing, and adapt dynamic pricing strategy, which has direct implications with hospitality organizations. Similarly, restaurants and spas may employ the use of revenue management. Kimes et al. (1989) emphasized the importance of revenue management given the conditions of: - capacity is fixed; - products are perishable; - product can be priced differently; - demand evolves; - product can be sold in advance; and - markets can be segmented. There is high potential to generate more profits through analytical and organized information on customer base, market attributes, and capacity using revenue management systems. The company effectively achieves its potential by analyzing the internal and external functional parameters within which the service industry operates. START - DATA COLLECTION - FORECASTING - PRICING - INVENTORY MANAGEMENT - DISTRIBUTION - COMMUNICATION- END **Importance of Revenue Management in the Travel Agency Business** Keeping afloat in a volatile environment necessitates travel agencies to utilize various revenue management approaches appropriate to them. Kimes (2000) revealed that companies in the service industry like hotels, car rentals, and restaurants practice revenue management to manage their customer flow and capacity in the right place and at the right time. Given the business environment\'s threats, travel agencies hurdle two significant challenges: the disintegration of retail travel agencies by primary tourism suppliers and the entry of virtual intermediaries (Barnett & Standing, 2000). In Hongkong, travel agencies\' profit margins are suffering from lowering industry price trends, increasing operating costs, minimal supplier commissions, and global economic difficulties (Law & Wong, 2003). The fast growth of online reservations has similarly led to a decline in traditional indirect tourism intermediary channels (Law & Wai, 2001; Law & Wong, 2003; Pak & Piersma, 2002; Wardell,1998). Next to perishability, the other characteristics of service require effective revenue management strategies. Other attributes of fluctuating demand are seasonality or different customer segments with distinctive price elasticities and booking behaviors (Peelen & Beltman, 2013). Through the use of revenue management, tour operators can contract their allotments with lower risks as they can predict the demand for their products for each customer segment to a certain extent (Bresin, 2018). Traditionally, tour packages renew fixed standardized prices daily, leaving minimal variations (Latva, 2014). Nowadays, tour operators can offer customized and variable prices for each customer segment through revenue management a great tool to increase customer engagement. Small and low-capital firms usually suffer the burden of higher operating costs, causing more significant challenges for small independent agencies to improve their operations (Minimum Wage Commission, 2012). As reported by the Travel Agent Registry (2013), travel agencies closed down due to unfavorable business climate and ineffective business strategies. Under such conditions, these small and medium enterprises (SMEs) face a severe financial problem (Hongkong Tourism Commission, 2012) resulting from the unpredictable economic situation and the dissolution of the middleman role with their suppliers. Traditional travel agencies usually serve as a broker of suppliers with the end consumers (Barnet & Standing, 2000). However, when the suppliers sell directly to the customers, travel agencies must cope with relevant revenue management to sustain the business operation. Technically, travel agents bear minimum financial risk considering that their stocks come from various suppliers. They only provide administrative functions like reservations and fare quotes to represent suppliers like airlines, making the sales contract between the principal supplier and the customers. Given this condition, travel agencies lose their significance in the process. Their revenues come from commissions from closed sale transactions as agents which suppliers can reduce and control in the process. The operation of SME travel agencies is relatively weak due to the uncertainties of their operating business environments. They depend on the mercy of suppliers for market share and profit levels. The economic crisis resulting in limited demand and low prices add to their business unprofitability, thus compelling them to add service value instead of cutting costs. In Hongkong, travel agencies employ advanced revenue management approaches to sustain their business (Anderson & Xie, 2009; Anderson & Marcus, 2007; Lubbe, 2005; Dacko, 2004). Philips (2005) identified revenue management approaches such as market segmentation, demand forecasting, pricing strategies, and satisfying critical travelers\' demand. Philips further added that the revenue management application in the travel agency business requires consistent and strategic decision-making, as airlines, hotels, OTA, and car rental industries also employ the same approaches. There are two types of room contracts that tour operators have to manage and control. One is a guaranteed contract where the tour operator blocks a specific number of rooms in a particular period and carries a risk if they are not sold. The other one has no financial burden considering that the contracted rooms are only obtained few days before arrival. Resultantly, tour operators simultaneously manage inventories (Schetzer et al., 2010) and offer various flights with airlines. According to Hoseason and Johns (1998), mass-market tour operators may intentionally weaken the product and profitability when they manipulate capacity to match demand, requiring good forecasting and management by objectives. They use predatory pricing and market tactics to get market demand but overlook product productivity. Consumers expect that tour operators will utilize tactical pricing such as discounts to encourage early sales or late exchanges and apparent left capacity. Gallego and Phillips (2004) emphasize a flexible product concept for revenue management that requires a set of two or more alternative products offered by the supplier operating in the same market. Tours operators use this model to promote packages and sell indefinite accommodation as an inclusion package (Gallego & Phillips, 2004). Using this model, the tour operator ensures service to the consumer who demands services such as a resort area and accommodation type. The tour operator uses these revenue management models to maximize profitability by allotting a specific property to the consumer. **Revenue Sources for Travel Agencies** Tour operators and travel agents typically rely on other providers\' services, which constitute their product offerings to customers. Suppliers like hotels, airlines, restaurants, recreation and amusement, cruises, tourist transports, insurance companies, and other tourism-related establishments offer a special rate to travel companies as middlemen of their products and services. Technically, the tour operators and travel agents have no particular product or service to sell without these suppliers. A great deal of the travel companies\' revenue comes from commissions and service charges. However, back in the 1990s, airlines stopped paying high commissions, and travel agents had to rely on add-on services such as hotels, ground transports, tours, insurances, and shopping for commissions. Unfortunately, with Airbnb and Uber becoming readily available in most major cities, commissions from these are also most likely going to shrink in the future. Travel agents mainly cater to corporate business travelers and individual or group holiday market segments. A sizeable number of corporate business travelers still depend on designated partner agencies for their travel needs. The holiday individual or group markets are heavily influenced by do-it-yourself travel packages, thus causing a drop in commissions. Not only these market trends affect the business operation of travel agencies. The emergence of startup OTAs that offer similar products and services are strong competitors to traditional travel companies, thus reducing their market share, be it corporate or holiday travelers. Today\'s travel agencies are in consolidation mode, with more prominent players constantly procuring smaller and niche travel agencies to expand their market share. The outlook of the travel agent relies on innovation. In the last three decades, travel agents embraced a business model of identifying and focusing on non-technology channels. They initially moved to taxi and hotel booking, then moved to package tours, but not for long. Travel agencies survive by reinventing and adding value to their service to meet the travelers\' complex demands of finding the best airline deal, hotel, Internet connection in the destinations, currency exchange, meal arrangements, sightseeing, and other travel-related requirements. A typical travel agent brings together all these in one offer with value-added services that may retain customers and grow their business. One way to expand the offer is by including exotic and nontraditional destinations. The challenge, however, is the developing competition in the same business offer, which prompts travel agents to innovate continuously. Travel agents have access to data that a typical traveler is not aware of, and that provides them with a unique standpoint on traveling. The travel agents\' ability to mine flight and travel-related data can lure travelers into availing their services. Travel agents generate revenue through paid consultations to travelers that help them decide destination choice, hotels to stay, and even security matters. Travel agencies can incorporate revenue management practices into their operations but cannot simply adopt the revenue management strategies used by airlines and hotels. The unique business characteristics of travel agencies, such as lack of ownership, inventory control flexibility, and excellent pricing structure, prompt revenue management\'s application. **Revenue Management Strategies for Travel Agencies** 1\. Identify a market segment and tailor make a tour product for them. 2\. Set a minimum group size and compute the overall expenditure of the group. 3\. Optimize pricing levels for each market segment considering corporate rates, wholesale rates, and package cost. 4\. Put a corresponding mark up from the supplier\'s negotiated price. 5\. Consider the season and occasion for selling tour products. 6\. Choose the appropriate marketing channels for product distribution to yield more sales and most minor commissions to resellers. 7\. Analyze statistical data such as historical data and booking patterns to establish trends and frequency. 8\. Consider local city tourism, competitor volumes, and industry updates. 9\. Anticipate potential demand and sales to prepare the appropriate modifications. 10\. Employ dynamic pricing where prices vary according to market. 11\. Offer attractive group incentive packages for volume bookings (loyalty schemes and corporate rates). Tour managers utilize revenue management to rationalize beyond discounts and use approaches to offer options such as different room categories (harbor view, suites), airport transfers, or optional tours with supplementary items offered through suggestive selling. The goal is to generate revenue optimization and increase customers\' spending. The travel agency can reduce the number of risk rooms or seats (prepaid rooms or airline seats) offered by the principal suppliers on sold seats. They can extend the service capacity provided by the suppliers to increase profits. **Identify High- and Low-RevPATP Periods** Travel agencies can develop strategies for managing high- and low-RevPATP periods if they understand its pattern. Tour managers can increase their revenues through suggestive selling during the standard-RevPATP intervals by recommending room upgrades, the extension of stay, or additional tours. While during the high. RevPATP breaks, they can offer limited discounts or charge higher-yield tourism products. They also impose policies like non-refund or full payment to prevent no- shows or any possible last-minute cancellations. **Revenue Management of Tour and Activity Operators** **Dynamic Pricing** Product pricing strategy directly affects inventory, sales, and profitability. Customers might decide to buy your competitors\' products if a business sets prices too high. However, low prices may result in other consequences, including less revenue. With a dynamic pricing strategy, characterized as price discrimination, the seller attempts to realize the ideal price point at any time. The consumers\' perception and willingness to pay at a specific time for an item, competitor\'s pricing, and other variables serve as the basis of price changes. Customers know that prices vary, but they dislike it when they are prospected by a dynamic pricing strategy because they feel overcharged. If customers discover that others paid less, they become further dissatisfied, causing customer distancing and influencing customer loyalty. However, companies often use this to increase the business\'s margins. **Direct Booking Incentives** Tourism suppliers obtain three favorable benefits when customers book directly to their properties. It helps them save on commissions, enhances their online marketing profitability, and allows them to manage communication with customers. Customers are enticed to make a direct booking with incentives and outstanding value offer. Customers find value with offers like access to exclusive amenities, room upgrades, and even late check-outs. **Distribution Based on Demand** This strategy entails looking into the peak and lean periods of travel. It is also called customer-based pricing, where the supplier modifies a product\'s price (usually in real-time) based on current customer demand and the product\'s outstanding value. Specifically, the supplier endeavors to quote the highest standard price for its products that customers are willing to pay. For airlines, the strategy enables them to change the price according to demand. As the flight date approaches, they increase the fares of passengers availing tickets close to departure dates. **Pricing Models of Revenue Management** **Mark Up Pricing Strategy** Mark up pricing is a pricing scheme where the end price is obtained by computing the supplier\'s product quote plus a mark up percentage. The selling price corresponds to an inevitable increase in cost (cost of product/service + mark up = selling price) which provides the company a particular profit ceiling. **Mark Down Pricing Strategy** Pricing is the most common strategy to guarantee sales and remain competitive. Mark down differs from discounts. There is a price reduction to sell a product that fails to sell at its original price with a mark down. With a deal, a price reduction is employed for specific reasons. Discounts Paare short-lived, while mark downs are permanent price bargains. **Packages** They are a bundle of goods and services sold as one that comprises several tourism services like airfares, transfers, tours, sightseeing, meals, and tour guides. Travelers will not distinguish each component\'s price but instead find it relatively cheaper to purchase it as one. Niche markets usually avail of tour packages, and the package costs can range from a wide selection of offers vis-à-vis the customers\' preferences. **The Rack Rate** Rack rates are published, and official rates are made known to customers without any discounts. Tourism suppliers may vary their rack rates daily considering their capacity. They appear artificially high to make the given deals look generous when quoted. **Seasonal Pricing** These are prices set by suppliers to compensate for the peak and lean periods. By implementing this, businesses capitalize on profits according to demand. **Last-minute Pricing** This pricing strategy meets the last-minute gap between supply and demand. Considering the high perishability of tourism products, offering last-minute discounts can be better off than leaving hotel rooms, airline seats, and restaurant meals left unsold. **Types of Pricing** Per pax/person pricing typically applies to tourism activity in destinations, transport operators, and accommodations. Prices are classified into adult, child, and senior citizens. Unit pricing involves price per room, per night, and usually, prices may be suitable for two persons or a child rate applies. A single occupancy rate applies for solo occupant/tourist in a hotel room, and it is the actual price of the tour. It can be the traveler\'s personal decision to stay alone in the room, but the burden of paying rests on him/ her alone. On the other hand, a double occupancy rate is not times two of the single occupancy rate. It is relatively cheaper to acquire a double occupancy room. **Factors Affecting Revenue Management in Travel Agencies** Tourism products and services are typically highly perishable inventory which requires demand forecasting, pricing structures, and market segmentation to determine room availability (Chan & Guillet, 2015). The objective is to limit unsold capacity. Revenue management is affected by factors of service capacity, duration of service use, and physical constraints. **Service Capacity** Suppliers like airlines and hotels work on fixed capacity, and they cannot sell more than what they can offer. However, overbooking is the legitimate practice to anticipate no-shows and last-minute cancellations to minimize wasted spaces, thus contributing to revenue perishability. A travel agency that guarantees a 30-room capacity should ensure to sell these rooms as they will have to pay for them whether or not they are sold. Anderson and Xie (2009) emphasized the goal of selling all blocked rooms to minimize spoilage. Travel agencies then need to sell all full-risk rooms; however, they can acquire them on a non-risk basis with other suppliers\' contractual agreements. Customers prefer the non-risk rooms to minimize the cost of paying when not availed. Big travel companies simultaneously adapt risk and non-risk room strategies to guarantee sales during the entire season. **Duration of Service Use** Traditional revenue management industries have limited booking periods and physical constraints. In contrast, travel agencies limit only the booking periods during holidays such as Christmas, Easter, or Chinese New Year. Therefore, travel agencies require total payments for confirmed reservations to protect their revenues. The duration of service used in the travel industry is more likely to be fixed during particular holidays. Customers typically limit their purchases of holiday packages, making it essential for travel agencies A to use different holidays to design products that will entice high-spending customers. Theme parks, tourism attractions, restaurants, and golf clubs as nontraditional revenue management industries have service durations that can be purchased anytime. Nontraditional revenue management industries have more flexibility in service use duration and thus have great potential to integrate revenue management. **Physical Constraints** Compared with traditional revenue management industries, travel agencies have features similar to theme parks or tourist attractions, which offer flexible capacity. Airlines and hotels cannot add more seats or rooms during peak demand because they have limited ability. However, seasonality causes physical constraints to travel agencies. Travel agencies encounter limitations because they do not own their end products or the availability of products or offers from the service suppliers. During high seasons, travel agencies mirror traditional revenue management industries in that the offerings significantly constrain their capacity of hotels and airlines. In contrast, during the low seasons, there is less demand and thus fewer capacity constraints. Physical constraints limit restaurants, golf clubs, and similar establishments, and their pricing is considered elastic. Travel agencies sell various tourism products according to contracted rates with different suppliers, allowing them to extend their relatively flexible service capacity because they can accept more reservations, leading to higher profits. **Revenue Implications of Mobile Channel Visits in the Online Travel Agency Industry** Customers change their way of interacting with firms with the rapid penetration of mobile devices, thus becoming their preferred mode for accessing the Internet (Lella & Lipsman, 2015; Ofcom, 2018). In particular, adults spend almost three hours per day on their mobile devices (eMarketer, 2017). They use these devices to make online purchases, resulting in at least half of e-commerce traffic and one- third of idil website (Bakopoulos et al., 2017) as mobile visits represent 54% of large retail websites\' traffic as of the second quarter of 2017, up from 33% the previous year (Risley, 2017). Retailers need to add a mobile channel alongside their traditional channel. In the U.S., 91% of online retailers have a mobile strategy in place or under development, and 48% of retailers have a mobile website (Bang et al., 2013), leading to a projection of approximately 50% of total retail sales will be mobile commerce sales by 2020 (Federation, 2015). Convenience is the mobile channel\'s most outstanding characteristic (Holmes et al., 2014). Users can bring them anywhere and they perfectly fit into a purse or pocket with ease, making them more portable than desktops. Unlike a desktop, the typical mobile device is not tethered or connected by wires (Shankar & Balasubramanian, 2009), but they generally provide an instant connection to the Internet, enabling customers to access the Internet anywhere and anytime (Chae & Kim, 2004; Lee & Benbasat, 2003). Payment methods have been available through various and convenient mobile phone accounts (e.g., Square, Google Wallet, and Apple Pay), payment applications (e.g., Alipay and WeChat), and digital wallets (Yang & Forney, 2013). Mobile technology can enable targeting by location and time (Hui et al., 2013; Luo et al., 2014) with its location-based services. They have GPS capabilities to locate their physical areas, enabling marketers the opportunity to prospect mobile device users and offer users location-sensitive promotional offers (Shankar & Balasubramanian, 2009). Furthermore, marketers make it possible to communicate with the customers (Hui et al., 2013) to promptly make people feel more relevant in their surroundings (Ghose et al., 2013). The introduction of mobile devices with smaller screens and input restrictions increases the customers\' search costs (Ghose et al., 2013). Narrow view causes breaking information, and consumers miss the global viewpoint of the task, resulting in a high rational load (Nunamaker et al., 1988). When compared, desktop searches have higher flexibility, enabling consumers to surf from several websites and find lists of alternative products with a larger screen (Ghose et al., 2013). This adds to the inherent input restrictions of mobile channels (Sweeney & Crestani, 2006), and leads to more significant efforts in processing information. On the contrary, a mouse and keyboard perform as interaction devices with a desktop. Some studies indicate higher search costs with mobile channels (e.g., Ghose et al., 2013; Kleijnen et al., 2007), which makes the relative attractiveness of the first search result over succeeding one greater (Ghose et al., 2013). Swant (2016) revealed that approximately 26% of respondents state that mobile devices are not user-friendly for entering personal data, and 56% of mobile shoppers indicate that it is easier to view all the available products on a desktop. Finally, over time, the tendency to forget can reduce the effectiveness of the information (Song et al., 2018), and the expensive search costs of the mobile channel worsen the forgetting issue. Users need to recall a viewed web page\'s content and context when using mobile devices, thus maximizing a users\' thinking load (Adipat et al., 2011). Input restrictions, likewise, need the consumers to place more effort in searching for desired information (Ghose et al., 2013). The unavailability of cognitive resources causes a higher chance of forgetting previous marketing information in the mobile channel, suggesting that communication with low processing levels produces unstable and less enduring influences (MacInnis & Jaworski, 1989). Eisend and Tarrahi (2016) reveal that less extensive processing minimizes information\'s long-term convincing impact. Companies can also promote on other websites to reach the right customers. For instance, based on consumers\' behavior records on social media (e.g., previous search and browsing, UGC, and SNS profile), companies can gain insight into consumers\' interests or habits and identify specific groups (Johnston et al., 2018; Knoll, 2016). Moreover, referral traffic usually involves more knowledge about the product because cooperative websites, such as social media, can inform and educate target groups (Waters & Jones, 2011). These primary segments of consumers from search engines and cooperative websites are much more likely to react clearly to a promotional offer (Bakopoulos et al., 2017). On the contrary, for straight visits, firms cannot successfully characterize diverse consumers based on their online behavior. In effect, firms find it challenging to convince consumers who lack the need or are attracted to other competitors. Also, firms can accurately deliver relevant content and recommendations to customers (Grewal et al., 2016) who perceive a significantly lower search cost, leading to an increased urge to purchase. They can target consumers using tailored ad copies and landing pages according to the entered keywords and search or clickstream data from search engines or origin cooperative websites. By clicking on the links on topics tailored to their interests, customers get to the pages they want and expect (Luo et al., 2014). Research has already indicated low search cost through search engines. Weber and Zheng (2007) suggest that, compared with directly inspecting products at retailers, consumers following referrals (or links) provided by a search engine often have smaller search costs. Moreover, consumers with a high opportunity cost usually limit their search to a search engines\' first few hits. Zhao et al. (2019) highlight that retailers can significantly influence search engine traffic if they consider the mobile channel as the most remarkable product demonstration and business channel. With product varieties, customers do. not necessitate a rigorous product knowledge search when purchasing low- involvement products. Considering convenience and targeting characteristics, retailers can stress these types of products in the mobile channel. Equally, for high involvement products, mobile channels are maybe not the best choice. Therefore, by encouraging or discouraging traffic from private sources and concentrating on exact products, retailers can expand the mobile channel\'s maximum potential. **COVID-19\'s Effects on Travel Agencies and Tour Operators** The COVID-19 pandemic brought more than 4.3 million confirmed cases, more than 290,000 deaths worldwide, and fears of an impending economic crisis and recession. All sectors of the economy went into social distancing and self-isolation. Travel restrictions that reduced the workforce in most sectors of the economy led to the loss of many jobs (Nicola et al., 2020; Tsindeliani, 2019) due to flight, event, and hotel cancellations because of quarantine (Siddiquei & Khan, 2020). The imposition of travel bans in March 2020 prevented more than 90% of the global population from traveling (Gössling et al., 2020). However, there is a lack of statistical data on the level of economic decline (Stock, 2020). As Covey (2020) puts it, travel agencies and tour operators suffered from the impact of COVID-19 in a survey of more than 900 worldwide tour operators and travel company owners on May 11-25, 2020 by MMGY Myriad in partnership with Travel Consul. The following are the significant findings of the survey: 1\. Approximately 40% of clients are still pursuing their original travel itineraries. 2\. 46% have a wait-and-see attitude before pushing through with their travel plans. 3\. 51% are still planning the same itinerary, but 37% are hesitant. 4\. Two-thirds intend to continue their operations in about six months, even without government support, but 28% of the respondent travel agencies express that they can sustain their businesses from four to six months without government support. The other 33% affirm their inability to sustain the company without permission for one to three months. 15\. 41% are creating new travel products and modifying their business model. 6\. DMO can extend issuing health and safety certificates to travel advisors to warrant the safety of travelers. 7\. The most utilized promotional tools are social media and digital and cooperative marketing. 8\. 69% secured COVID-19 updates from tour operators and travel agency associations, DMO, trade media, national government, and industry associations. 9\. 70% affirm the need for amendments in cancellation policies. 10\. There was 73% business reduction in the third quarter of 2020 and 60% in the last quarter. Business Survival Strategies of Tour and Travel Companies During COVID-19 Amid a pandemic such as COVID-19, tour and travel businesses face the uncertainties of cash flow, make difficult decisions to sustain their operations, and consider that this survival period\'s duration varies among countries and their respective local government units\' response to the virus. The World Travel and Tourism Council (WTTC) (2019) emphasizes the tourism industry\'s extraordinary ability to face damages as indicated by the number of months it took to recover from an average of 26 to 10 months during the periods 2001-2018. On the other hand, Skare et al. (2021) confirm that the impact of COVID-19 is strange, which can cause a more extended recovery period for the tourism industry. The bouncing effect occurs in areas with no pandemic cases, and the tourism industry restarts (Mao et al., 2010). United Nations World Tourism Organization (UNWTO) (2020a) reported the revival of the tourism sector in some Northern Hemisphere areas. However, travel restrictions are still in place for most global destinations where tourism continues to be one of the most badly hit. Cooperation rather than competition is essential in the recovery of the tourism industry to mitigate the impact of COVID-19 (Mandel & Veetil, 2020). Relocation of economic activities across the various sectors is a suitable mitigation strategy without apparent government intervention (Krueger et al., 2020). In due time, policymakers realized the need for broader measures to aid unemployed employees (Emerson & Johnson, 2020; Mckee & Stuckler, 2020). Skare et al. (2021) add the need for private and public coordination to aid the tourism sector toward capacity and operational sustainability during 2020-2021. The Organization for Economic Co-operation and Development (OECD) (2020) outlines the following measures that tour and travel companies can refer to in anticipation of the bouncing back of the tourism economy post-COVID-19. 1\. Domestic tourism, comprising 75% of the tourism economy, can aid in healing as it offers the opportunity to expedite the recovery in terms of jobs and businesses. 2\. The industry is highly dependent on other companies; thus, synchronizing tourism services keeps each sector operational. 3\. The crisis drives the required organizational makeover toward the sustainability and resistance of the tourism economy. **Recovery Activities in the Tour and Travel Business** 1\. Itinerary Planning Design innovative itineraries with a prospective market in mind. Prioritize domestic tourism programs. Do market needs analysis and strengthen your market research. 2\. Suppliers\' Network - Collaborate with suppliers and negotiate for better deals. It may even involve putting a deposit down on a non-date-specific holiday. There is a vast opportunity to explore with other providers for ways to revive business operations. 3\. Administrative Works Reduce operational costs and organize administrative files and records. Continue cost-saving measures. Hold off on hiring new staff but retain productive ones. During this phase, implement tour operator software to balance the need to scale up the business operations and keep costs down. 4\. Customer Database - Examine customer database and start to get people thinking about planning their trip with the company. Get innovative. This includes asking them to start working with you to plan their canceled trips. Guarantee and continue to engage with your customers and take steps to grow your brand presence. 5\. Sales and Marketing - Plan digital marketing and promotional collateral to navigate change in a cost-effective way. **Key Concepts:** 1\. Revenue Management This signifies the calculated circulation and pricing campaigns used to sell a property\'s perishable stocks to the appropriate customers at the exact time to enhance revenue growth. 2\. Demand Forecasting - This is the process of estimating future customer demand over a defined period, using historical data and other information. 3\. Digitalization - This refers to \"the utilization of digital technologies to improve a business model and offer new proceeds and value-generating opportunities; it is the process of transforming to a digital business.\" Chapter 10: RETHINKING SUSTAINABILITY IN THE TOUR OPERATING INDUSTRY **CHAPTER 10** **RETHINKING SUSTAINABILITY IN THE TOUR OPERATING** **INDUSTRY** **Introduction** The tourism industry stakeholders have to be involved in sustainable tourism (UNWTO & UNEP, 2005). Budeanu (2005), Schwarts et al. (2008), and Sigala (2008) identify that the tour operators representing the tourism businesses are in charge of sustainable tourism. They serve as a crucial mediator between the travelers and the destination, enabling them to influence sustainability (Fredericks et al., 2008). Tour operators observe the relationships among tourists, destinations, suppliers, and communities.Park (2009) reveals that the tourism industry\'s sustainability relies on tourism environmental conservation and protection. The business of tour operation encompasses all forms of tourism, whether traditional or alternative, to sustainable tourism (Liu, 2003). It does not only include tourism companies operating in an ecotourism sector as a niche market, but it also applies to all tourism sectors utilizing environment-friendly practices (Le, 2005). Exercises such as ecotourism, corporate social responsibility, supply chain management, and green tourism depict the tour operators\' sustainable tourism arrangements (Hamid & Isa, 2016). WTO attims the tourism industrys enormous growth from 19850-2015, win international tourist arrivals ranging from 25M to 1. 18M in recent years. Next to fuel and chemicals, tourism ranks third, ahead of food and automotive product, in the worldwide export category (UNWTO, 2016).Expansion of tourism has been much entrusted to giant multinational tour operators. Alegre et al. (2013) confirm that destinations succeed when foreign tour operators integrate them. On the other hand, Budeanu (2005) emphasizes mass tourism as a global and leading tourism activity that provides a multiplier effect and generates high proceeds but causes the most adverse impact. Many destinations worldwide have recently put into place sustainable measures to become more competitive (Cucculelli & Goth,2016). However, Dwyer (2005) indicates that sustainability measures are more on the destination than on the firm. Budeanu (2005) highlights the tour operators\' critical role as an intermediary for nature and community protection aside from influencing consumer preference, suppliers\' action, and government interventions (Bastakis et al., 2004). **Application of Corporate Sustainability in the Tour Operating Industry** In recent years, companies have demonstrated their environmental and socio-ethical commitments through the concepts of corporate social responsibility, sustainable development, green practices, triple bottom line approach, and corporate citizenship. However, these concepts stemmed from uncertain meanings and versions (Mebratu, 1998). Similarly, Lozano (2008) noted the complexity of sustainable practices, resulting in Butter (1999) recommending an extensive scale of definitions in tourism literature. Liu (2003) asserted that the similarity between sustainable tourism and sustainable development are often interchanged. The different concepts lead to a widespread agenda (Kolk, 2016) and ideas that relate to common pillars (Mihalic, 2016). Sustainability is prevalent in destinations and governmental institutions, while business organizations commonly adhere to corporate social responsibility. Corporate social responsibility is one of the initiatives toward sustainability (Lozano, 2015). It is regarded as a social, philanthropic concept. The concept of corporate sustainability appeared in business readings, altering Brundtland\'S. definition (WCED, 1987) of stakeholders. Authors Dyllick and Hockerts (2002) described corporate sustainability as accomplishing the goals of the current direct and indirect stakeholders without bargaining the forthcoming ones\' needs. Furthermore, Lozano (2015) related the economic, environmental, and social dimensions in the concept of corporate sustainability. The three components are appropriate for the tour operating industry to redesign its conventional practices toward sustainability. 1\. Tour operators should consider economic sustainability to ensure profit to shareholders. 2\. Tour operators should advocate responsible consumption of natural resources to sustain the natural environment as the backdrop of the destinations that they market. 3\. They can integrate social responsibility by integrating values of the communities into the destination. There are three essential components (economic, ecological, and social) of packaging tourism products (Dyllick & Hockerts, 2002), which are interrelated and part of the triple bottom line theory (Elkington, 1997), which Lozano (2008) emphasized in his dual sustainability concept. The tour operating industry did not acknowledge the influence of these three dimensions that complicate the destinations\' environmental and social issues (Schwartz et al., 2008). Only when they received the tourists\' disapproval of unsustainable tourism development did big tour companies implement environmental initiatives (Cavlek, 2002; Sigala, 2008), which are relatively weak and without the genuine integration of economic, social, and ecological approaches (Budeanu, 2005). They incorporated the short-term and long-term elements. Considering that the spirit of sustainability suffers from the obsession with short-term profits, they were required to meet the needs of their stakeholders in the future and today (Dyllick and hockerts, 2002, p. 132). Most tour operators are after short-term benefites rather than long. Term one fueld by the stakeholders pressures. They are not favor of mitigating their adverse impact unless there are economic returns (Tepalus 2005) they ride into the trend of environment practices without a sincere and continuing obligation towards ecological protection (Holden & Kealy, 1996). Tour operators do not recognize the company\'s survival through appropriate supervision of their natural and solcial capital, leading to economic profitability (Stead & Stead, 2009). **Answer Business Survival Resources** Natural capital refers to preserved natural resources. - Social capital refers to the empowerment of the stakeholders and local communities. - Economic prosperity refers to achieving profit for the tour operators shareholders. The tour operating industry should move around its sustainability strategies by clinging to the three cited critical elements of the corporate sustainability concept. Tourists seldom openly request \'green products,\' but they will not repeat visits to unsustainable destinations (Miller, 2001). As a result, natural and social capital management becomes relevant for economic wealth and its accomplishment. **Sustainability in the Supply Chain Between the Tour Operator and Ground Agent** Sustainability entails producing and marketing sustainable tourism products and services. In the current tourism development, the market demands prospects of sustainable tourism, including unique and remarkable local involvements (CBI, 2014), comprising of products that meet the tourists\' demands and deliver viable impact. However, Goodwin (2016) reported that the present supply of tourism products lacks sustainability. It is not enough to sell sustainability as a product benefit (Chartered Institute of Marketing, 2006), as companies fail to transform unmet demand into sustainable tourism experiences. Today\'s businesses have to stay relevant through more shared approaches with partners (Piboonrungroj, 2012). The management of supply chain partners, through trade-offs, can result in better business performance and sustainable operation (Allen et al., 2012; Closs et al., 2011; Fawcett et al., 2012). Realistically, achieving a win-win situation is challenging. Different trade-offs comprise conflicting viewpoints that must be balanced to attain cooperative and collective commitments (Beckmann et al., 2014). Companies need to position sustainability measures at the center of their corporate culture and daily operations (Barker et al., 2014; Galpin et al., 2015; Gregory et al., 2009). The collective beliets, values, and expectations comprise the corporate culture, causing its members to act accordingly. Schein (2010) reported that people in an organization make decisions and behave according to their corporate culture. Doppelt (2009) and Galpin et al. (2015) confirmed that behavioral change is the initial step toward sustainability. Organizations have to manifest in their sustainability efforts appropriate leadership, core values, reassuring management, desired training, and employee incentive packages. Xu and Gursoy (2015c) indicated that tour operators have inadequate activities to realize sustainable supply chain management. Managers have inappropriate knowledge, absence of company-wide values about sustainability, financial constraints, supply chain management issues, lack of skilled staff, and plan limitations. Lin et al. (2018) concluded that the integrated outlook of tour operator managers about the beneficial outcome of sustainability to their company and the community is a crucial indicator of actions to minimize greenhouse gas production. This finding resulted from a correlational study of 200 tour operators\' knowledge and engagement (Goffi et al., 2018). **Business Sustainability of OTAs** OTAs like Expedia.com, Orbitz.com, and Travelocity.com developed in the United States in the 1990s (Buhalis & Law, 2008; Buhalis & Licata, 2002; Leung et al., 2018), then quickly obtained a market share through consistency in their IT and business offers. E-commerce primarily changed the customers\' behavior toward searching and acquiring travel information (Dutta & Das, 2017; Schuckert et al., 2015) with just a click of the mouse to access the various suppliers\' products, rates, and availability around the world 24/7. OTAs\' competitive pricing information exposes hotels\' pricing and distribution strategy (Masiero & Law, 2016). Major OTAs like Priceline and Expedia generate revenues as online middlemen causing hotels to lose track of their pricing approaches (Haynes & Egan, 2015). OTAs have to extend their operation with other suppliers to become a one-stop tourism product supplier to remain competitive. They have to intensify knowledge exchange among other OTAs to promote the business. Masiero and Law (2016) revealed that conventional travel agencies assume robust business competition With OTAs. However, the presence of other virtual competitors like metasearch companies similarly threatens OTAs. **Sustainability of SME Travel Agencies** Travel agency management must undergo service innovation consisting or cooperative channel integration, vibrant customer relationships, and effective marketing (Capriello & Riboldazzi, 2019). As reported by Aamir and Atsan (2020), both travel agencies and GDS face the risks of disintermediation due to technological developments, communication and networking channels, global accessibility of stakeholder groups via the Internet and the direct link of consumers to suppliers. The successful launch, deployment. and adoption of multi sided platforms (MSPs) in the travel industry\'s ecosystem triggered the deteriorating role of travel agencies and GDSs. An SME attributes of being small in size and structure, being a new entran, limited management experience, and market patronage challenge sustainability. Qiu Zhang and Morrison (2007) affirmed their existence in a developing competitive situation, leading to lower market demand and decreasing profit shares. Hollebeek and Rather (2019) considered service innovations through customer co-creation, satisfaction, promotion, and behavioral patronage. Chan and Denizi Guillet (2016) proposed implementing consumable inventories, predictable demands, market segmentation, advanced booking, limited capacity, reasonable costing and pricing, and maximizing revenues. Effective revenue management can promote a sustainable position and profit generation with managers advocating the practice to every person in the organization. **The Global Value Chain in the Tourism Context** Distribution is the first phase in the travel operation instead of being one of the last stages, as in production-based value chains. Tourists initially decide how they will access tourism products or their desired trip element. Travel agents and tour operators serve as the leading distribution intermediaries. Travel agents provide the outlet for tourism products (transportation, lodging, and excursions), and tour operators as the merchants who block seats in airlines, hotels, and excursion activities. They package them as all-inclusive tour arrangements, then sell via travel agent or directly. Nowadays, tourists ignore travel intermediaries and book their trips directly from suppliers. Regarding international transport, airline companies provide the standard global transport mode. However, cruises are also prevalent travel options. In Europe and Asia, rail transports are typical, but not for the long-haul method. International circulation and transportation develop from outbound countries, while local movements occur in inbound countries. Inbound country suppliers typically work with their outbound distribution counterparts, such as a national tour operator conducting an international tour package in the destination as arranged by its foreign partner. The national tour operator initially meets the tourists from the airport and handles all land arrangements. Tourists participate in various activities in the destination country, such as transportation (land, water, air), accommodation, and tours. Services may vary in terms of luxury and range. Tours, as the usual events, represent the tourism product inclusive of the natural attractions. In the destination, activities range from beach tourism to cultural events. Tour operators manage these activities with an added service of a local professional guide from the destination. The tour culminates with shopping in local souvenir stores or modern shopping centers and malls. Diverse organizational forms, ownership, and operational business structures are the typical attributes of tourism supply chains. The big ones usually collaborate with SMEs and other and micro-enterprises. Complex collaboration and marketing programs characterize international tourism demands. Companies that employ excellent matching capabilities and marketing expertise are the most recognized. Usually, companies that operate foreign branding with international affiliations fall into this distinction. **Travel Agencies\' Strategic Measures Toward Competitiveness** **Actions Focused on Marketing** - Educate every market segment about the pros and cons of dealing with the travel agency. Agencies can employ a more comprehensive marker, strategy and public relations to promote their value to various travel groups. - Foster brand familiarity in customers to help them recognize the value and efforts of travel agencies. This will require meticulous practices of product and service standard quality. - Highlight the company\'s independence from other third parties to enable travelers to recognize their professional counseling service attributes. - Integrate the customers\' behavioral disposition toward consumption of local products and services, redirecting the customers\' interest to local suppliers such as regional airlines and other land arrangement suppliers. - Independent travel agencies need to keep abreast of new technologies to simplify the processes, leading to improved customer and supplier information management. - Employing technology should complement human interaction and promote greater trust. Enhance the communication process through frequent, prompt, and accurate approaches with customers and supplier support team through enhancement of customer relationship management (revenue management) via the Internet or provisions of newsletters, blogs, and other communication collateral. - Perform more active social relations in the community by networking with residents, civic associations, and other trade organizations to source suppliers and potential customers. - Offer special recreational holiday packages to existing company clientele. - Create non-price sales strategies comprising of innovative and creative approaches to highlight the customers\' demand over their expected value, services, and experiences in exchange for their money. - Provide reasonable and transparent service fees per transaction in exchange for information, consultation, and other travel services. - Explore other profitable revenue sources by offering cruise packages, travel insurances, optional tours, and other side trips. - Ensure good service delivery, particularly during peak travel months like Christmas, Easter, summer, and long weekends. - Create office structural layouts to simplify the processes between the agent and the customers. Use furnishings and facilities to facilitate ease of movement and sharing of information with customers during the presentation. - Acquire complete knowledge of the company\'s products and services to promote the image of a travel specialist and consultant instead of typically providing what the customers ask. Consultants should provide accurate information and show genuine interest in their customers\' demands. - Provide employees with the latest training regarding customer handling, sales and reservation procedures, and telephone inquiry management. Human resources are still the most precious assets of the travel agency. - During high customer involvement, boost customer relations and interaction with differentiated links to structure the service (accessibility, efficiency, accuracy, and reliability) of brand products. However, automation can be best utilized to offer fast and standard service to avoid unnecessary charges for low-involvement customers. - Create specialty products and services such as cruise packages and other niche-market tour programs designed for specific market segments (businessmen, senior citizens, family, honeymooners, and incentive groups). The travel agency must have a specialist personnel or unit to cater to distinctive clients or high-yield markets, ensuring profitability and repeat patronage. **Actions Centered on the Organizational and Management Structure** - Explore upgrading through expansion, takeover, merging, franchising, and other vertical business developments. Transformations can result in more sales, better image, enhanced employee training, and improved logistics. - Minimize expenses and enhance cost accounting. The use of electronic payment can be considered to replace credit card charges. - Empower employees toward more productive engagements to generate sales and revenue and customer interaction instead of essential administrative functions. - Enhance internal processes to manage products and services that can result in distinct company brands and profitable margins. - Focus on more gainful business partnerships that offer more significan rebates and discounts for volume transactions. Agencies demonstrate priority product endorsements to support high-yield suppliers who similary provide mutual support in advertising, ordering, and other commercial backing. - Suppliers and other destination management companies may be made to pay fixed promotional fees for having their marketing materials on display at the agency\'s shop window area, which will serve as additional permanent revenue for the company. - Make a deal with small industry service providers and other tour intermediaries that cannot explore business partnerships with huge travel companies. **Online Travel Agencies (OTAs) Maintaining Sustainability in the Online Travel World** Providing the best service and consistently being current with the latest technological innovations is crucial for any OTA. The customers\' strategy toward booking their trip has significantly changed in the last decade, compared to their previous reliance on travel agents. The development of the digital world and the proliferation of OTAs influenced this development. Customers get access to many travel companies online, causing stiff competition globally, making it more essential to stay competitive. The following measures can contribute to the sustainability of OTAs: 1\. Homepage Boost 2\. Excellent Hotel Mapping 3\. Personalization 4.Big Data analysis 5\. Customer Value 6\. Customer Support Tour operators can partake in the sustainable development of tourism in protected areas in various ways, such as: - incorporating protected areas in their itineraries and providing customers information about the natural and cultural attributes of visited sites and their responsibilities in preserving local ecosystems; - controlling the size of tour groups or distributing big groups into smaller groups when traveling to protected areas; - advising protected area managers of visits in advance and collaborating on ways to reduce visitor impact; - including sustainability policy into the selection indicators and service arrangements of their suppliers and patronizing locally owned and operated suppliers; - giving financial contributions to conservation and development projects, - offering customers a chance to uphold protected areas proactively; and - supplying customers with instructions on how to avoid adverse impacts while enjoying protected areas like observing wildlife at suitable distances, walking on trails to minimize stepping on plants or causing erosion, and minimizing water and energy use to avoid related impacts on the environment. **Managing Relationship in the tourism supply chain to overcome pandemic outbreaks** The COVID-19 pandemic has been affecting the OSCM to a vast extent (Lin et al., 2020). Fortune (2020) published a report on February 21, 2020 that specified that 94% of the Fortune 1,000 list companies experienced supply chain disruptions due to the COVID-19. The past outbreaks provide meaningful experiences concerning supply chains. The World Economic Forum (WEF) (2020) stressed the need for firms and organizations to reengineer and acclimatize supply chains to their future trade challenges. For example, the short-term priority may be \"transport and production\" and \"worker movement.\" Simultaneously, in the long term, capabilities and strategies related to \"digital readiness and data sharing\" would be established and implemented for supply chains (WEF, 2020). The economic disruption ensuing from the COVID-19 pandemic outbreak is triggering insecurity in tourism markets. Since uncertainty about future demand is a significant feature of the tourism sector, this is not new (Williams & Baláz, 2015). Yet, border closings and required mass quarantines have resulted in a remarkable setting that has never been experienced before. Companies have to deal with costs incurred due to closing down premises, sustaining the disinfection of working environments, employees\' vacation to prevent any possible spread of the virus, and the termination of reservations, among others. Besides, some companies have created infrastructure and even subsidies to suppor the government in tackling the pandemic (Ataguba, 2020). Tourism products offer value-added chains of various service components resulting from complex interactions among numerous stakeholders (Guo & He, 2012). Zhang et al. (2009, p. 347) refer to this network as a tourism supply chain: \"a network of tourism organizations involved in different activities covering the supply of varied sectors of tourism products/services such as airline flights and hotel accommodation to the distribution and marketing of the ultimate tourism product at tourism destination, and involves a wide range of participants in both the private and public sectors.\" Considering the objectives of the various organizations, effective upstream and downstream relationship management and coordination within the supply chain are crucial in achieving and maintaining competitiveness for the entire supply chain and its agents (Monczka et al., 1998; Chen et al., 2001; Tapper & Font, 2004; Christopher, 2011). It implies two-party relationships among heterogeneous and homogeneous tourism agents. Heterogeneous players are those whose capabilities do not overlap represent vertical relationships such as hotels and tour operators. Horizontal cooperation, also called coopetition, implies establishing collaboration relations among firms at the same production level such as the cooperation between hotels and travel agencies (Chathoth & Olsen, 2003). Relationships within the supply chain can take multiple forms: arm\'s length, strategic alliance, vertical integration, cooperation, and competition. Early research has emphasized arm\'s length as the traditional way of relating. Under this approach, both parties act in their self-interest and make their own decisions without considering the impacts on the other party\'s findings (Hoyt & Huq, 2000; Zhang et al., 2009). However, efficiently managing the operations of the tourism supply chain and achieving individual business goals require a move away from arm\'s length relationships toward coordination and cooperation between organizations through a tourism supply chain (Zhang et al., 2009). Relationships based on coordination and a win-win philosophy can improve firm performance (Handfield & Nichols, 1999). Also, when the environment is uncertain, agreements based on trust are positively related to robust performance, as these arrangements are more flexible and can be modified efficiently (Goldhar & Lei, 1991; Hoyt & Huq, 2000) Coordination requires that each agent in a supply chain operates while considering the impact of its actions on the other players. Complete vertical integration characterizes the most effective way to achieve coordination. However, this strategy is often related to increasing fixed costs and reducing flexibility to cope with market changes. Moreover, tourism supply chain actors are often independent firms that have conflicting objectives (Gomez & Sinclair, 1991; Lafferty & van Fossen, 2001). This way focuses on understanding coordination as a decision-making strategy of tourism supply chain participants through diverse arrangements. Many large tourism firms have already adopted supply chain coordination strategies, especially between service providers such as hotels and airlines, tour operators, and travel agencies (Buhalis & Laws, 2001; Guo & He, 2012). Among the primary benefits of businesses are improved brand value, reputation, image, and status. In the current circumstances, emphasis must be given to benefits like reduced costs and operational efficiency, making firms more competitive to assess and respond to risks and opportunities in the market and stay ahead of legislative requirements (Tapper & Font, 2004). A typical tourism value chain comprises suppliers, tour operators, competitors, partners, governments, and other firms carrying out complementary activities (Kaukal et al., 2000; Zhang et al., 2009). Besides following the work of Zhang et al. (2009), according to in-depth interviews, the crucial three-party relationships to be managed by hospitality firms in the context of economic disruptions are the government, tour operators, and competitors. Aside from coordination between two-party relationships, other vital issues to be managed in a tourism supply chain to overcome disruption risks caused by disasters include finance, labor demand, supply, and regulation (Gonzales et al., 2020). **Adaptation Strategies of Tour and Travel Companies During COVID-19** - Get to know more of your current and potential suppliers and estable. more connections with them. - Propose some enterprising and creative bouncing back ideas and explos possible partnerships. Check your travel website, ensuring that the website security is up to date. Strategize your social media presence by, posting travel opportunities once the global pandemic subsides. - Create new and exciting local and international itineraries with strict guidelines on security and hygiene. Create exceptional business proposals with solid customer relationships as the top concern. Showcase these new product offerings on your company website. - As a business owner, this is the right time to catch up with your administrative files. Get ahold of the latest industry benchmarking statistics as the basis of your action plans. - At this downtime, take advantage of retooling your employees with other relevant competencies of the trade, which they will apply in the workplace.A highly talented pool of employees contributes to business sustainability. - Keep communicating with your existing customers while building new connections with prospects. Share some positive outlooks with them and encourage them to travel soon. It is the best time to make more marketing efforts to revive the tour and travel business after the pandemic. - While there are still travel restrictions and warnings, review company policies on cancellations and refunds. Similarly, help your clients obtain their refunds with suppliers. - Look forward to more collaborative engagements with local organizations, local government units, and other associations. - Consider destinations that are not severely hit and with limited travel restrictions to design alternative tourism programs tailored to the demands of covid 19 sensitive travels With reports that COVID-19 vaccination will be made available to the greater public, it is reasonable to prepare your action plans toward bouncing back. **Strategic Collaboration Among Travel Agencies** Running a tour and travel agency business entalls developing partnerships and collaboration to build more partner networks, increase sales, and promote tours and activities. Partnering and collaborating allow for opportunities to meet and work with experienced people in the tourism industry or even in the same niche that the knowledge. company operates to learn something new and exchange ideas, experience, and In that phase of business startups, or even at the development and maturity stages, it is crucial to network with other tour companies, travel agencies, tour guides, local associations, and companies. Such efforts can build trust and gather references for best practices. **Partnership Ideas for Tour and Travel Entrepreneurs** 1.Get in touch with various accommodation facilities and include their facilities in the package. Consider the hotel standards and the demands of the clients when assembling a packaged tour. Arrange with the hotel reception to offer your tour services and activities to their guest, making the hotel a reseller of tour programs. 2.Explore various levels of collaboration from resource sharing to distribution channels. Submit professional business plans that will mutually benefit the organizations. Nurture partnerships through equal business growth opportunities and market expansion. 3\. Explore working with travel bloggers whose popularity involves excellent writing skills and significant audience share. It can be another strategy to boost your marketing efforts. **Key Concepts:** 1.Sustainability -Sustainability focuses on meeting the presents needs without compromising the future generations\' ability to meet theirs. The concept sustainability comprises three pillars; economic , environments, and social- also known informally as profits, planet, and people. 2.Supply Chain- This is the organization\'s activities to deliver goods of services to the consumer. 3\. Corporate Social Responsibility - This is the organization\'s commitment to addressing the social, environmental, and economic consequences of its processes responsibly and in line with public outlook. 4.Competitiveness - This is the firm\'s performance and ability to sell and supply goods and services in a given market versus other firms\' capacity and performance Chapter 11 **Introduction** In the risk management process, companies recognize, calculate, and acquire approaches for impending threats (Young & Tippins, 2001). As survival is the chief aim of businesses, threats serve as the pressures that companies face. Harland et al. (2003) described three classifications of corporate risks (operational, strategic, and financial). Sadgrove (2005) emphasized that a company experiences operational risks in its failure toward service and product performance comprising of limitations caused by personnel and infrastructure (Harland et al., 2003). Strategic risk occurs when the company faces its business strategies (Slywotsky & Drzik, 2005). Finally, financial risk develops when there is an adverse impact on the cash flow (Nordin et al., 2011). The operation of travel agencies is wide-ranging compared to other industries, encompassing a broader supply chain. As travel intermediaries, they deal with demanding suppliers, timely payments on vendor invoices, plus other natural hazards, Aside from unfavorable service characteristics (perishability, tangibility, seasonality, fixed capacity, simultaneous consumption, and production), they are also affected by the variation of expertise, conflict with supply and demand, service reliability, service ambiguity, and stiff industry competition (Connell & Page, 2008). Lacking measures to manage the risks and nature of the travel agency business can lead to devastating outcomes for the company. Resultantly, this requires them to recognize the cause of operational risks to mitigate its consequences while in a volatile business environment, struggling for a share of the territory it operates. **Types of Business Risks** Tour and travel companies face various risks that can affect their business operation. Operating a business takes work and troubles. However, the intensity of risks may vary from one to another. Though success is the business owner\'s ultimate goal, these risks may hinder achieving those goals. These risks must be identified and anticipated to mitigate their impact on the company. 1\. Economic Risk - The fluctuating market is driven by economic changes. There is the positive impact of booming purchases yet negative events can slow down revenues, prompting companies to immediately identity adverse trends and plan ahead. Maintaining fixed cash flow helps mitigate financial risk in an economic downturn. Judicious budget allocation and spending with minimum overhead should be considered in financial planning. 2\. Compliance Risk - Business owners confront an array of laws and regulations to be able to perform. Recent data protection and payment processing compliance may affect certain aspects of business operation. Staying well versed in applicable laws from the government agencies regarding permits, licenses, taxations, insurances, and other similar national and local can help minimize compliance risks. Non-compliance may cause some significant fines and penalties. Remain aware of tracing compliance, participating in an industry organization, frequently from specialists or consultants. assessing government agency communication, and getting assistance 3\. Security and Fraud Risk - As more customers use online and mobile channels to share personal data, there are also more significant hacking opportunities. Recent stories about data breaches, identity theft, and payment fraud connote how this risk is growing for businesses. This risk impacts trust and reputation, but a company is also financially responsible for any data breaches or fraud. To derive effective enterprise risk management, focus on security solutions, fraud detection tools, and employee and customer education to detect any potential issues 4\. Financial Risk - This business risk involves credit beyond customers or your own company\'s debt load. Interest level fluctuations can also cause harm. Creating modifications to your business plan avoids harming cash flow or creating an unforeseen loss. Keep debt to a minimum and make a plan to minimize that debt load as soon as possible. If the income depends on one or two clients, your financial risk could be relevant if they are not interested enough to use your services. Start diversification marketing your services to diversify your base so that losing one won\'t devastate your bottom line. 5\. Reputation Risks - There has always been a risk of unhappy customers\' complaints either through social media or word of mouth. However, social media has magnified the rate and extent of reputation risk. Consequently, an unhappy customer, product failure, negative press, or lawsuit can negatively impact a company\'s brand character. To anticipate this risk, leverage reputation management strategies to regularly monitor what others say about the company online and offline. Be quick to respond to those comments and address any concerns immediately. Maintain quality top of mind to avoid lawsuits and product failures that can damage your company\'s reputation. 6\. Operational Risk - This business risk can occur internally, externally, or include factors that could unexpectedly cause business continuity loss. An unforeseen event could be a natural disaster or fire that destroys the physical business. It might be a server failure brought by technical problems, people, or power interruptions. Most operational risks are people-related such as an employee making mistakes that entail time and money. It is a people or process failure, and these operational risks can adversely affect the business with regards to money, time, and reputation. Thus, potential operational risks must be addressed through training and a business continuity plan. Both strategies offer a means to rationalize what could go wrong and implemet at etecup system a proactive measures to guarantee operations aren\'t affected. 7\. Competition (or Comfort) Fisk - A business manager is highly a vane that competition exists in the industry. It is convenient to miss out on what other businesses offer that may entice customers. Some company leaders feel so assured in their achievements that they don\'t explone continual improvements in such a context. Developing competition, added with a lacking desire to change, may lead to a loss of customers. Enterprise risk management implies a company must continualy reassess its performance, refine its strategy, and maintain healthy, interactive relationships with its audience and customers. Additionally, i is essential to keep an eye on the competition by regularly researching how they use online and social media channels. **Risks Indicators in the Tour and Travel Agency Business** Gerald and Lyngstad (2015) explored risks from the perspective of Madagascar\'s travel industry suppliers. Perl and Israeli (2011) and Nasr (2017) explored external environment risk factors that affect travel agencies\' operations. As can be seen, most global quantitative studies on travel agency risk management focused on the external environment. They do not give attention to the travel agencies\' structural problems and neglected Internet competition that arose from rapid technological development. Therefore, the availability of an established travel agency operating risk indicator system is essential. Risks have always been a priority issue for travel agencies, mainly external risks and internal risks. External risks for the tourism industry include natural disasters such as floods, tornadoes, and droughts (Park & Reisinger, 2010), fires and tsunamis (Park & Reisinger, 2010), climate change (Amelung et al., 2007), health issues and infectious diseases (Hall, 2011), the impact of social-environmental risks such as crimes (Schönteich, 2000), terrorist activities (Pizam & Smith, 2000), international exchange rates (Durbarry & Sinclair, 2003), economic recession (Ritchie et al., 2010), and aging market and family structure (State 2008) Travel agencies need to confront external uncertainties and internal business rKS. Peri and Israeli (2011) found that human resource risk, marketing channe risk, infrastructure risk, and government support risk are sources of crisis for Israeli travel agencies. Oroian and Gheres (2012) constructed a Romanian travel agency risk management model for single tourism with risk factors appropriate to travel agencies. The study revealed nine risk factors-organizational risk, inherent risk, competitive risk, economic risk, political risk, infrastructure risk, environmental risk, business capability risk, and financial risks. On the other hand, this model is appropriate only for specially designed tourism activity, and it does not emphasize today\'s developing technology of competitive Internet environment. Nasr (2017) randomly surveyed Egyptian travel agency managers to identify risk factors affecting the operation of Egypt\'s travel agencies, including operational risk, government risk, competitive risk, economic risk, political risk, infrastructure risk, environmental risk, business capability risk, and national image risk. Travel agencies must analyze the opportunities and advantages in their internal and external environment and set long-term business strategies to enable sustainable operation. Rogers (1977) believes that strategy is an action plan for allocating limited resources, gaining competitive advantage, and achieving goals. Caves and Porter (1977) delineated two types of company resources: tangible assets and intangible assets. Grant (1991) divided resources into six main types: financial aid, physical help, human resource, technical resource, reputation, and organizational resource. Travel agencies compete against existing enterprises with the same status and in the same industry for the same scarcities. Symbiotic interdependence refers to the interdependence between organizations that are not similar. It usually occurs among vertically related enterprises. Using a resource-based perspective, Saffu et al. (2008) explored the impact of entrepreneurial human capital and corporate resources on small- and medium-sized tourism enterprises in Ghana, a western African country. Lynch et al. (2010) used the resource-based theory to explore how small tourism companies manage and redistribute resources and address environmental change through their innovative capabilities. Wang and Fesenmaier (2007) used the resource dependence theory to study tourist destinations in Elkhart County, Indiana. Very few studies used resource theory to explore travel agency management, thus rendering this helpful research unique. Indicators such as operating cost risk, operator philosophy, lack of excellent business talent, lack of product innovation, information security risk, horizontal competition threat, replacement by OTA, competition from new tourism platform, airline supply capacity, and service quality of domestic tour operators showed a high degree of consensus and importance. These are essential sources of operational risk for travel agencies. It indicates not only to confront competitive threat brought about by rapid Internet development but also take advantage of technology to create product and service innovation, reduce financial and human resource risks, and improve coordination and cooperation with suppliers. In the critical improvement zone, indicators such as accounts receivable risk, capital turnover risk, lack of product value, lack of product uniqueness, and impact of intelligent tourism showed a relatively low degree of consensus but high importance. It was indicating that travel agencies do not widely recognize the risk items in this zone. However, these items are essential sources of risk for travel agencies and should be improved and brought to travel agencies\' attention. Travel agencies can redistribute resources to other areas to optimize operational management. In the resource waste zone, the risk indicators showed a high degree of consensus but a low degree of importance, indicating that travel agencies are overly investing their resources, resulting in waste, and should, therefore, stop and pay attention. Travel agencies should move resources invested in the third and fourth quadrants to the risk areas in the first and second quadrants and strengthen their operating strategies and management model. **Improving Risk-management Strategies** In terms of financial risk, travel agencies should improve their accounts receivable management through contracts and insurance to facilitate their physical assets\' capital turnover and stabilize their financial management. In terms of human resources risk, travel agencies should change their traditional concept of Taiwan\'s travel industry and actively seek excellent business talents and cultivate employee enthusiasm and retention skills. In terms of product risk, travel agencies should confront their company\'s core resources and develop unique market products to stabilize consumer loyalty. In terms of a competitive threat, rapid Internet development has resulted in diversified tourism patterns that cater to consumer demand changes. Therefore, besides preserving the advantage of traditional service, travel agencies should actively consider the benefits of online tourism and seek the best online and offline integration. Active cooperation between existing travel agencies and OTAs is also a new business model for the future travel industry. In terms of supply chain risk, regardless of the intermediary role of traditional travel agencies or the re-intermediary part of OTAs, coordination between travel agencies and suppliers is significant. In particular, airline reservations and domestic tour service capabilities affect whether travel agencies can obtain better prices and resources and, subsequently, capture the market. Chang et al. (2019) showed that Taiwan\'s travel agency\'s operational risks include financial risks, competitive risks, supply chain risks, product risks, human resources risks, environmental risks, and technology risks. The operating risks comprise internal and external factors (Hawkins et al., 1992). This study also compensated for Oroian and Gheres\' (2012) and Nasr\'s (2017) assignments, which lack consideration for competitive internet environment risks brought about by the rapid development of current technology. The top five travel agency risk-management indicators emphasized by the industry were account receivable risk, operating cost risk, lack of product/ uniqueness products, lack of product value, and competitive threats from new tourism platforms. The top five travel agency risk-management indicators emphasized by the academic community were operating cost risk, competitive threats from new tourism platforms, account receivable risk, replacement by OTAs, and operator philosophy. As can be seen, the financial risk remained a priority factor for industrial, government, and academic experts. However, travel agencies were more focused on financial management and product design. **New Service Development Through Co-competition, Learning, and** **Business Strategy** The travel agency industry confronts an unstable environment where certain significant transformations occur, including changes in its business models. Developing a suitable business strategy is vital to forming a long-term competitive advantage (Caro & García, 2008). Therefore, travel agencies must learn, think, and act strategically. To attract customers, travel agencies have traditionally differentiated themselves from other competitors by their service attributes. Service offerings include deeds, processes, and performance (Zeithaml & Bitner, 1996). Services are different from goods, which are intangible and perishable; they are occurrences or processes created and used synchronously (Das & Joshi, 2007). Providing superior service is one way to differentiate a firm from its rivals (Li & Zhou, 2010). The tourism industry is no exception, as service continuously transforms travelers\' requirements and behavior in addition to business models. With the traditional product markets quickly becoming saturated, moving into service offerings makes it possible for travel agencies to extend their market share (Kindström, 2010). Therefore, travel agencies must pay more attention to new service development (NSD), enabling innovation. Innovation is vital for services, especially in the tourism industry (Aldebert et al., 2011). Seeking both market and growth opportunities for value creation in the face of falling revenues, increasing customer demands (Kindström, 2010), and competitive markets, travel agencies are now developing new service offerings to complement their capabilities. Creating new services is a likely associated with service development. Furthermore, travel agencies vary in their operation tendencies and NSD to attract customer consumption, maintaining good relationships with competitors, suppliers, and customers. There are three distinctions of travel agency business in the tourism industry according to the operation and service activities they perform: - consolidated travel agency (e.g., a service provider focusing on the internal and overseas tourism markets); - Class A travel agency (e.., a customer service provider focusing on the foreign tourism market, including the introduction of cultural and regional traditions); and - Class B travel agency (e.g., a customer service provider that focuses on the domestic tourism market). The peculiarity of travel companies\' activities is the presence of different risk factors that directly impact the tourists\' and travel companies\' actions. Its financial condition determines the features of the management of a travel company and its economic security. The characteristics of tourist products and tourist services include the following: 1\. Various suppliers deliver the assembled travel products and services 2\. Inability to feel the product or service before consumption 3\. Continuity of production and consumption in tourist services, since production occurs in parallel with the consumption 4\. Dependence on the time and place of receiving the tourist product or service 5\. Impossibility of preservation 6\. High elasticity of demand for a tourist product by income and price 7\. Seasonal fluctuations in demand for tourist services 8\. Subjectivity of assessing the quality of tourist services 9\. Variability of service brought by human service delivery and emotional labor 10\. Efforts of many companies to create a tourist product 11\. Other internal and external forces (PESTEL) that can affect travel products and services Website and email become essential digital marketing tools (Taiminen & Karjaluoto, 2015) not only to disseminate information but also to create trust with customers (Kim et al., 2011) as an initial representation of the product (Christodoulides, 2009). Facebook, WhatsApp, and Instagram are prominent social media tools. SMS and travel blogging, unlike Twitter (microblogging), are the least popular among travel agencies. Travel blogs enhance word-of-mouth communication (Garcia, 2006), thereby making it a relevant approach to gain a strategic advantage over competitors. However, small travel agencies have not. been fully utilizing them. Small travel agencies have realized that digital marketing is beneficial as they experienced its convenient (ease) means to introduce and promote their offerings to potential consumers (Parise et al., 2016). It also permits them to tailor their offerings based on feedback and reviews of first-time and repeat clients (Ashley & Tuten, 2015) in a cost-effective manner (Karjaluoto et al., 2015). Methods of digital marketing are more economical in terms of reach and costs than traditional marketing per most travel agencies\' experience. **Risks and Opportunities of Digital Transformation in Tourism** Several of the highly advanced and high-value digital businesses perform in the tourism sector. However, most have counted themselves as tech start-ups, not tourism businesses (Airbb, Uber, Booking.com, HomeAway, etc.). These digital giants are tech-driven, possess global in sMs, nie project investment, and significanty differ from traditional tourism SMEs regarding growth trajectory. They perform together with a \"long tai\" of prevailing tourism businesses with complex tasks in their digitalization fight (OECD, 2019; PATA, 2018), resulting in diverse degrees of improvements and good advantage. An example can be accommodation-sharing platforms using technologies to resourcefully balance at minimal cost and acquire a market advantage to immediately become leading players in the accommodation sector. Exposing the possibility of digital technologies and digitalization in tourism necessitates a distinct attempt to meet the unique issues in the various parts of the tourism sector and diverse kinds of tourism ventures. Tourism businesses differently confront the challenges they face in their digitalization journey depending on: - the type, size, and nature of the tourism business. The subsectors they quality for include transport, accommodation, and personal services (Calvino et al., 2018; OECD, 2019); - their access to technologies, data, skill, instruction, mentoring, and other resources and assistance (European Commission, 2017); - their management and strategy-making competencies which influence the extent to which business owners identify opportunities, distinguish risk, and are motivated to capture opportunities (Rachinger et al., 2018); and - the business setting, the societal and economic background, and the access and convenience of digital technologies (Dredge et al., 2018). **Application of technologies**: Constraint to the application includes access to digital infrastructures, such as high-speed internet and Wi-Fi networks, which are essential to access more sophisticated technologies such as cloud computing and data analytics. Internet rate influences booking services, marketing, and other business procedures. Among other countries, Austria, Chile, France, Greece, Spain, and Sweden, among other countries, note that SMEs and micro-enterprises tend to have inferior applications, which upsets business image and status. The on-site delivery of visitor experiences may necessitate high-speed mobile broadband. Novel walking tours, for example, might depend on Wi-Fi access to cloud services, geotagging identifying location), and augmented reality to bring to life visitor encounters and replications such as those curated by the Heritage in Motion initiative. Local governments are gradually offering Wi-Fi in public areas to back up the delivery of smooth visitor experiences, evidenced in Korea. **Access to resources**: Deficient access to finance, information, knowledge networks, skills, and time can hinder digital transformation (OECD, 2019d). Tourism SMEs may have a shortage in capital reserves, struggle to obtain traditional loans or credit, or recognize the investment as too uncertain. It affects SMEs\' willingness to partake in digital technologies as they become worried about return on investment. To manage these obstacles, programs such as Scotland\'s Digital Development Loan or Spain\'s Digital Agenda provide funding support to motivate investment. Other prevailing issues pertain to skill gaps and lack of access to initial and ongoing training and business support. Besides, limited time, awareness, and knowledge among SMEs may influence such schemes weak involvement. For example, Norway provides a one-day training conference for tourism professionals to advance their digital skills at beginner and expert proficiencies (Digital Competence 2.0). The condensed setup is an excellent way to urge upskilling despite the limited time and resources of tourism SMEs. **Information exchange, learning, and research**: Specific types of frontline jobs led to a dislocation of usual employment relationships by more precarious self-governing contractor engagements. The direct information, communication, booking, and check-in channels have reduced the need for human resources, for example, transport and accommodation. It has also created demands for new skill sets and new types of professions. United Nations World Tourism Organization (2019a) anticipates the most required competencies by businesses in the tourism sector across the next five years as digital/IT, customer focus, data analytics, operations, commercial, leadership/ management, and administration/finance. However, tourism businesses may not be equipped with the financial or management capacity to hire tech professionals or capitalize on workforce training. Instead, they may depend on obtaining services that can be expensive and tailor-made, and higher education institutions are often not funded to engage in small practical capacity-building projects. The Austrian government has tackled this gap by creating the Research Expertise for the Economic program in partnership with the Austrian Research Promotion Agency to encourage the economy\'s digitalization, including tourism businesses. **Business innovation**: The different business models, practices, cultures, and strategies of tourism SMEs influence their confidence and enthusiasm to undertake digital transformation. With the support of new technologies, the typical cost of doing business has significantly lessened, providing some companies to expand at an unprecedented pace (UNWTO, 2019b). Most lifestyles and micro-enterprises in the sector are directed to business sustainability, are risk reluctant, and have minimal interest in innovation. in contrast, more prominent firms have the abilty, financial and otherwise, to start a significant venture. The differences between the essential kind of some tourism business subsectors such as accommodation, transport, and reseller industries critically persuade their capacity and pace to adjust to the digital ecosystem. These trends have added to an efficiency gap between traditional tourism SMEs and their digitally empowered counterparts. There is a need to improve openness to innovation and knowledge exchange through incubators, accelerators, and labs that promote partnerships between tech and tourism companies. However, these prevailing supports often emphasize the startup tech dimensions, such as business model innovation, enticing venture capital investment. They do not meet the challenges faced by tourism businesses in going digital. These supports have initiated high-value companies in ride-sharing and accommodation-sharing; existing accommodation SMEs, for example, may have challenges in allocating value from these kinds of programs. The purposes of such incubators, labs, and accelerators should be carefully communicated to reveal the needs upfront. **Perceptions of risk and benefits**: Deficiency of resources, unreliable services, and the unknown\'s anxiety serve as barriers to tourism businesses embracing advanced, costly, or novel digital technologies, such as cloud computing services. Altering privacy requirements on data protection across the globe can worsen data collection, analytics, and storage. At the same time, private decision-makers confront opposing urgencies between capital investment in technology and operational methods. However, data-driven companies can arrive at better judgments (Brynjolfsson et al., 2011). **Management of Risks in Tourism** The tourism industry must be involved in risk management and disaster risk management processes, namely: identify, analyze, evaluate, treat, monitor, and review risks in the destinations. Primarily, it is essential to manage risks to increase the company value, guaranteeing fluidity and wealth. Strategies include risk mitigation strategies, risk prevention and transfer, and risk reduction. Basis of risk mitigation are rules, regulations, education, and safety measures, further divided into avoidance and resistance. Avoidance minimizes the hazardous impact and forbids the development of at-risk areas (e.g., no development or construction in certain zones). On the contrary, resistance is managed by safety measures in risk areas (e.g., minimum strength and reinforcernent standards for particular buildings). As to risk prevention and transfer, typical strategies are insurance, catastrophe bonds, derivatives, and hedging. A tourism company exposed to the risk of loss from catastrophic risk can acquire a hedge that provides payment if a natural disaster occurs and creates damage at the tourism facility. The risk reduction strategy is further divided into withdrawal and diversification. Withdrawal prompts partial or complete leaving of a business, activity, or location that causes a particular risk exposure. Examples are establishments located in active fault line areas that have to close and transfer to another site. In diversification, cross-sectoral integration focuses on partnership risk and conflict mitigation to ensure efficiency and internal collaboration between partners. **SWOT Analysis** Performing a SWOT analysis of the tourism business is a valuable business tool. The acronym refers to STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS. This step relates to establishing the policies, systems, procedures, and relationships with stakeholders pertinent to the organization. It requires a solid understanding of your own business in crucial business activities, economic constraints, and organizational strengths, weaknesses, opportunities, and threats (SWOT). The standard SWOT considers the Strengths and Weaknesses of the travel agency (internal factors). It examines the relationship between the Opportunities and Threats (external factors) as an ideal pre-requisite in preparing a marketing plan and developing the appropriate goals for your travel practice. Planning is an essential aspect of SWOT analysis, enabling the company to acquire a good vantage view of the company\'s positioning in the market. Each component of the SWOT analysis is interdependent so that the strengths prompt opportunities to exploit. Thus, the identified strengths reveal practices to better manage the threats in compensating for weaknesses. **Strengths** The travel agency\'s strengths are the business attributes that cause a distinct market advantage which the company can capitalize on in its marketing plan. They are the internal qualities of the company practices **Weaknesses** The identified weaknesses of any travel agency require an extraordinary level of honesty and humility from an insider\'s perspective. However, the comments and constructive criticism of outsiders like customers, associates and suppliers can also be helpful. Insiders like employees and associates are reliabl

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