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Case Study of the Successful Strategic Transformation of a “Bricks-and-

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Case Study of the Successful Strategic Transformation of a
“Bricks-and-Mortar” Travel Agency into a “Clicks-and-
Mortar” Business —Lessons Learned from a Small,
Independent Travel Agency in Canada

François Bédard

School of Business Administration / École des sciences de la gestion

Université du Québec à Montréal, Canada
Bedard.francois@uqam.ca

Abstract
Information and communication technologies (ICT) have changed the competitive environment
for intermediaries in the travel business. Long-established companies find it very difficult to
fundamentally restructure their business practices to meet the changing demands. Yet, some of
these travel agencies have been able to accomplish this restructuring. The purpose of this paper
is to present the case study of the successful strategic transformation of a small, independent
“Bricks-and-Mortar” travel agency into a “Clicks-and-Mortar” business.

Keywords: travel agencies; e-commerce; Internet; technology; strategy

1 Introduction

At the current critical juncture in the evolution of Internet technology, established

companies face numerous challenges. For one, companies are increasingly compelled
to fully integrate the Internet into their core business rather than utilizing the Web on
a stand-alone basis. The ability to offer both traditional and Internet-based services
gives agencies an added value. Though a challenge, the adaptation to new
technologies is feasible for established companies. In fact, it is easier for established
companies to adopt Internet methods than for dotcoms to try and develop more
traditional modes of operation. However, simply grafting the Internet on top of the
conventional "bricks-and-mortar" modes of competition will not lead to the desired
results. Instead, Internet technology must be used to reconfigure traditional activities.
(Porter, 2001).

The longer a company has been established, the more difficult it is to fundamentally
restructure its business practices. Yet, one of the largest travel agencies, Rosenbluth
International, was able to accomplish this restructuring. Threatened with
disintermediation during the period of drastic restructuring of the travel brokerage
business, Rosenbluth strategically revised its value proposition. It divested itself of its
leisure travel segment and began offering a range of customer services on a fee basis,
rather than relying on commissions from travel service suppliers as it had done
previously. That strategic change was made possible by highly innovative information
systems which Rosenbluth had already used in prior business initiatives. (Clemons &
Hann, 1999).

The purpose of this paper is to demonstrate how travel agencies much smaller than
Rosenbluth International can achieve the strategic transformation of their company
through the intelligent use of technology. The case study presented is based on a
small, independent travel agency in Canada.

2 Background, theory and issues

Information and communication technology has changed the competitive environment
for intermediaries in the travel market. The ability of airlines and other principals to
market directly to consumers has increased the pressure on travel agents to retain their
traditional role as intermediaries. (Garkavenko, et al., 2003). The challenge of
electronic distribution for travel agencies is not "whether or not" but rather "how and
when" (Sigala & Buhalis, 2003). Travel agencies wishing to remain successful in the
future will need to identify themselves primarily as travel managers and advisors.
Thus relinquishing their role as a booking office, they will need to focus on adding
value to the travel experience (Buhalis, 2003).

To exist and thrive in an information-intensive industry, travel intermediaries must

learn about and embrace all aspects of information technology. Most travel
intermediaries have come to rely on computerized reservation terminals. They must
now learn to fully utilize other hardware and software applications. This requires
careful analysis of when and how information technology (IT) can provide the
opportunity for travel intermediaries to offer value-added services to their clients. The
development and marketing of those services will redefine the future role of the travel
intermediary. The major challenge for most intermediaries is to use the growing data
communication networks to their advantage. Specialization, increased professionalism
and improved travel counselling skills are among the competencies travel agents will
need in order to survive in the increasingly competitive environment. When used
appropriately, information technology will assist in developing those competencies.
(Sheldon, 1999). With the prospect of an increase in direct sales due to technological
innovation, intermediaries need to adjust their marketing strategies and harness the
new technologies. To ensure long term survival, it is vital that travel agents focus on
the services they provide to consumers. As long as consumers feel they are receiving
good advice, they will continue to consult travel agents. New technologies are an ally,
not an enemy. They must be placed at the service of the client, adding value to the
service provided. Nevertheless, focusing on technological transformation runs the risk
of paying less attention to human interaction—a crucial factor in consumer purchase
behaviour. Transformation may lead to a temporary neglect of customer orientation.
This must be monitored closely when restructuring the business plan. A balance must
be found between the improvements that technology can bring and the increased
investment in marketing. Commercial benefits can be obtained by catering to the total
needs of the travel consumer, by introducing marketing ideas such as market
segmentation, and by making the selling experience more professional and
pleasurable. Travel agencies have a position that allows them to forge close
relationships with clients. Competitiveness for the new millennium will be improved
by investing in and by developing a strong relationship marketing strategy.
Relationship marketing consists in attracting, maintaining and intensifying client
relationships (Bigné & Andreu, 1999).

Travel agents need to reposition themselves from transaction processors, information

providers and simple resellers to consultants, information brokers or ‘infomediaries’,
and developers of personalized packages. As mentioned in the Economist (2002)
travel agents “need to become more like professional service firms, rather than
second-hand car dealers [...] based on helping customers to buy what they want, not
on helping suppliers to flog what they've got.” (Garkavenko, et al., 2003). To
minimize the risk of disintermediation and to improve business performance, travel
agents should assume functions and services that cannot be provided by technology.
In addition, they should make maximum use of technology in the other niches to
enhance their core competencies and added value. They need to reduce their
dependence on income from transactions and increase their income from intelligent,
knowledge-based activities such as counselling, information brokering, and package
personalization. (O’Brien, 1999).
adding value to tourism products. The ICT revolution has introduced a wide range of
opportunities and challenges for travel agencies. Concurrently, the Internet revolution
is gradually changing the role of the travel agency as information provider and
booking office to travel advisor. Travel agencies therefore need to employ ICT
dynamically and re-engineer their processes and functions in order to add value in the
distribution channel. This will safeguard their position in the future (Buhalis, 2003).

3 Methodology

The case study presented in this paper is based on a two-year observation of the
strategic transformation of a small, independent travel agency in Canada from a
“bricks-and-mortar” business into a “clicks-and-mortar” business. Observation
consisted of numerous face-to-face meetings and phone discussions with the two
travel agency owners. The first meeting was held in November 2002 and the most
recent one in August 2004. At the first meeting, the travel agency owners and the
research director agreed on the research protocol, which consisted of analysing each
stage of the strategic transformation process. The travel agency owners agreed to
participate in the research project and to have the findings published. In return for
their time spent in meetings and discussions, they asked for free-of-charge guidance
by the research project director throughout the transformation process. As part of the
case study, individual interviews were also conducted with seven Voyages Bergeron
travel agents in May 2004.

Fig. 1 Pyramid of Adaptation to New Technologies (Bédard, 2001)

To structure and present the data collection and the findings for this case study,
Bédard’s Pyramid of Adaptation to New Technologies was used as a theoretical
model (see Fig. 1). A summary of this model is presented below.
The pyramid represents the three basic features necessary for an adaptation to new
service technologies: training, acquisition and use. The “Training in New
Technologies” feature is at the top of the pyramid in order to highlight its strategic
importance in a knowledge-based society. The “Acquisition of or Access to New
Technologies” and the “Use of New Technologies” features are at the base of the
pyramid. The arrows linking the different aspects illustrate how their relationships
are organized. The pyramid is framed by four synonyms—partnership, alliance,
group, consortium―illustrating the different types of associative structures that are
formed and joined by an increasing number of companies in the era of e-commerce
and e-business.

Training—The term “training” is used here in a broad sense and includes the
awareness, monitoring and dissemination of knowledge related to new technologies.
In a world that is continually changed by new technologies, knowledge acquisition
and manpower training occupy a central role in companies wanting to remain
competitive. Companies owe it to themselves to integrate new employees who have
been trained and educated in the new technologies and to offer new technologies
training programs for employees already hired. Training and the related strategic
anchors of a knowledge-based society (e.g. sensitization, dissemination, technology
watch) must be part of a company’s regular activities.

Acquisition of New Technologies—Another important facet of the adaptation

pyramid involves the acquisition of new technologies. Several questions can be asked:
How much of the budget must a company devote to the acquisition of new
technologies? Among all the technologies, which will really meet the company’s
needs? Which supplier offers the best price/quality ratio for technological products
and solutions? How often must computer equipment be updated or replaced? Should
the purchased technological products be generic or custom-made? What are the
advantages of being part of a group or network that provides technological solutions?
These questions raise some of the main issues involved in acquiring new
technologies.

Use of New Technologies—The “use” aspect relates to the uses that companies make
of new technologies. Technologies are generally applied to either internal or external
uses. Internal operations include back-office operations such as management and
control; external operations include marketing and front-office activities (e.g.
distribution, promotion, advertising, building customer loyalty). Internet-related
technologies are currently considered as the most strategic in the new economy of the
21st century. It should be pointed out that tourism and travel products now rank first
in consumer purchases over the Internet.

Framework of the Pyramid of Adaptation to New Technologies—The Pyramid of

Adaptation to New Technologies is framed by four words—partnership, group,
alliance, consortium—each expressing a type of associative structure. This frame
illustrates the current trend for companies to join forces so that they can better face
the challenges of the new economy.

4 Results
The first part of this section briefly describes the travel agency Voyages Bergeron, the
subject of this case study. Following thereafter will be a description of the entire
transformation process as it took place from summer 2001 to summer 2004. This
process comprised seven stages; the last of these stages is the most extensive and will
comprise seven subsections.
4.1 Profile of the travel agency
The travel agency Voyages Bergeron has been in operation since 1949. The agency
was originally specialized in group travel. In 1967, it was bought by Charles Marcel
Rose, who turned it into a general travel agency. Two of his children work in the
family business: his daughter Lyne since 1976, and his son Éric since 1985.
The agency has a good financial situation. With a turnover of 6 million Canadian
dollars in 2003, it is situated in the upper category of small, independent travel
agencies in Canada, whose yearly sales figures average between 1.5 and 2 million
Canadian dollars. Voyages Bergeron operates two branches and employs 12 travel
agents including the two owners.
According to the agency’s business partners, Voyages Bergeron enjoys a good
reputation in the travel industry. Despite offers from the big consolidated and
integrated travel agencies to join them during the past ten past years, Voyages
Bergeron decided to remain independent. Nevertheless, Voyages Bergeron belongs to
GIANTS (also known as Ensemble Travel), a New York-based association that
consolidates 1500 independent travel agencies throughout the USA and Canada.
Voyages Bergeron was among the founding members of the Quebec chapter of that
association.
4.2 Description of the company’s seven stages of transformation
The observation period allowed to identify the seven main stages of the
transformation of Voyages Bergeron from a “Bricks-and-Mortar” into a “Clicks-and-
Mortar” agency. The components of the Adaptation to New Technologies model (see
Fig. 1) served as a guideline for describing each of these stages.
Stage 1: Deciding whether to go ahead with the strategic transformation of the
agency (Summer 2001-April 2003)—In summer 2001, the owners of Voyages
Bergeron read a book about the travel agent in the era of e-commerce—this was the
pivotal turning point that led to their decision to transform their travel agency. They
immediately began to investigate possibilities for the transformation. However, the
September 11 terrorist attacks and their repercussions on the travel industry obliged
them to put the project on hold. Toward the end of 2002 and early 2003, despite the
upcoming war in Iraq, they once again took up the project. They estimated that the
conflict in Iraq would most likely be of a short duration and that its negative impacts
on the travel industry would be limited. In April 2003, they finally decided to go
ahead with the strategic transformation of the agency.
Stage 2: Designing and developing the transactional website (April-July 2003)—
Between April and July 2003, the two owners spent many hours carrying out a
detailed comparative analysis of transactional websites of travel agencies in North
America and Europe as well as those of the big online players such as Expedia and
Travelocity. To assist them in their endeavour, they hired the services of a company
specialized in designing and developing websites. The owners actively participated in
that process, taking part in the decision-making of every detail of the website design
and development. They emphasized that their involvement was essential, explaining
that it is imperative to remain in touch with the expectations and needs of clients and
employees and that this responsibility that could not be delegated to persons outside
of the company. (www.voyagesbergeron.com/en/)
Stage 3: Involving travel agency staff (September 24, 2003)—The Voyages
Bergeron owners were very aware of the importance of involving their travel agents
in the transformation process. In September 2003, they held a staff meeting in which
they explained their motivation for the change and during which they presented a
demo of the new transactional website. The meeting—an extensive evening-
consuming event—also included a conference presented by the author of the book
that had initially triggered the owners to transform the company into a ”Clicks-and-
Mortar” travel agency. That activity was well-received by all staff members.
Stage 4: Implementing the online reservation system (November-December
2003)—The owners were particularly selective in choosing a technology provider
who was to implement the transactional website; that decision was thus viewed as
strategically important. The provider had to be an active B2B company that supply
the research and reservation tools used by the majority of wholesalers with whom
Voyages Bergeron does business. Moreover, it had to be in the position to enter the
B2C market in association with Voyages Bergeron. After studying the different
options, they chose a company with whom they had already been dealing with for
over a decade and who enjoyed an excellent reputation as a technology provider in the
Canadian travel industry.
Stage 5: Testing the new website (December 2003)—The new website was tested
throughout the month of December 2003. Thanks to the positive collaboration
between the owners, the agency staff and the technology provider, the testing stage
was able to be successfully completed within one month.
Stage 6: Launching the new website (January 2004)—The official launch of the
transactional website took place in January 2004. With a big promotional campaign, it
was publicized in the four Montreal dailies as well as a trade journal, thus reaching
Voyages Bergeron’s existing and potential clientele. Voyages Bergeron also produced
and distributed a flyer that had the shape of a flight ticket envelope and the colours of
the new website. These promotions invited the public to visit the new website and
participate in an online contest. The campaign was a great success, with some 6 000
people participating within the space of only a few weeks. On the whole, the
promotion allowed Voyages Bergeron to build a considerable bank of potential
clients.
Stage 7: After the first eight months of operation, assessing the success of the
transformation (January-August 2004)
Financial data — Table 1 compares Voyages Bergeron financial data for January to
August 2003 and 2004.
Table 1 Financial data: comparison between 2003 and 2004

January-August 2003 2004 Increase

Sales $3,532,736 $5,636,516 $2,103,780 60%

Gross revenue $456,116 13% $617,117 11% $161,001 35%
Number of 3,068 4,006 938 31%
customers
Number of 5,405 1.8 6,673 1.7 1,268 23%
transactions

Sales increased by 60% without hiring new staff or opening new branches. Gross
revenue increased by 35% even though the average commission percentage per
transaction decreased by 2% from 2004 to 2003. The number of clients served per
agency increased by 31% and the number of transactions by 23%. According to the
agency owners, such increases cannot be explained merely by the overall resurgence
in the travel industry in 2004. According to them, almost 50% of sales increases are
attributable to new clients whom the agency has attracted since the launch of its
transactional website. Their estimate is based on sales analyses carried out since the
launch of the site last January (see Table 2).

Table 2 Total sales analysis January-August 2004

Total sales $5,636,516 100%

Total non-web sales $4,638,075 82%
Total web sales $998,441 18%

Table 3 Website sales analysis January-August 2004

Total web sales $998,441 100%

Web sales with agent contact $888,613 89%
Web sales without agent contact $109,829 11%

The sales realised through the website reached $998,441, representing 18% of total
sales. That amount represents 47% of the sales increase between 2004 and 2003
($998,441 / $2,103,780).
Clientele profile—In building its Web presence, Voyages Bergeron aimed for two
objectives: (1) better service for its current clientele; and (2) finding new clients. The
agency’s existing clientele is composed of 20% business travellers and 80% leisure
travellers. The latter are passionate travellers who seek enriching and educating
experiences. Among these are the group travellers who seek pre-trip planning advice
as well as services during the trip. The majority of the leisure clientele is between 45
and 55 years old and has an above-average family income.
During the first eight months after the launch of the new site, 18% of the clientele
used the site to make a purchase. Among those, 89% concluded the web-based
purchase transaction in conjunction with having phoned or met with an agent; 11%
made the transaction solely web-based, without intervention of a travel agent (see
Table 3).
The new Web clients are younger than the average client and use the Internet to
inform themselves about tourism products and destinations. They lead very active
lives and prefer modes of buying that save time. They are avid consumers of travel
packages and get-away vacations and are on the look-out for last-minute deals. Some
Web clients e-mail their travel agent a feedback about their travel experience soon
after returning from their trip. Such information is precious for travel agents as it
allows them to improve their knowledge of the products sold by the agency and better
inform their future clients.
Competition—Voyages Bergeron’s competitors did not take long to follow suit and
launched their own website. Among them is a group of retail agencies who built a
website that, visually and structurally, very much resembles Voyages Bergeron’s
website. Such a reaction from the competition is an indicator of the leading position
that Voyages Bergeron now occupies in the market.
A rivalry regarding the innovative use of the Web has developed among the small
travel agencies and is expected to intensify in the coming years. The existing price
war in the travel agency industry has come to threaten the profitability of those
businesses. The winners of that competition will be those who nevertheless manage to
remain profitable and retain a financial leeway allowing them to continue investing in
technological development.
Suppliers of travel products (tour operator, airlines, cruises, etc.)—Voyages
Bergeron’s suppliers have reacted positively to the launch of the transactional
website. In addition to strengthening the partnerships with these regular suppliers, the
initiative has even allowed to attract new suppliers from Canada and abroad. The Web
has made for a greater price transparency of products from tour operators, yielding
more negotiation leverage to travel agencies.
Technology suppliers—Voyages Bergeron has dealt with two Web designers and one
provider of online reservation systems. Upon the special request of Voyages
Bergeron, the provider of the online reservation system developed new software
functionalities—functionalities the provider can now profit from by offering an
improved product to other clients. The maintenance of the website has been ensured
since the beginning of January 2004 by the technology supplier and also, to a lesser
degree, by one of the owners, who has acquired technical know-how as a self-learner.
In order to decrease technology costs and to reduce delays in resolving system
problems, Voyages Bergeron plans to soon hire a webmaster.
Yield management—the real-time adjustment of prices to market conditions―is
commonly applied by airlines and hotel chains. Since the implementation of the
transactional website, the Voyages Bergeron owners devote a considerable part of
their time to yield management. This new pricing practice did not gain ground
without causing concern among the travel agents, who were accustomed to greater
price stability. As a portion of their income comes from commissions, the more
dynamic pricing structure seemed to complicate the estimate of their annual revenue.
The travel agents interviewed have the feeling that they need to work harder than
before in order to obtain the same level of remuneration.
Personnel—Voyages Bergeron has a staff of experienced personnel. Of the seven
travel agents with whom we conducted individual interviews in May 2004, one had
30 years of experience, four between 10 and 25 years, and two had been in the field
for three years. Two of the staff had a background in computer science and another
had recently received specialized Internet training offered in the framework of a travel
agent course. All agreed that the level of competence in their field is proportional to
the number of years of experience.
After a short training period on the functioning of the new website, offered by the
agency owners, the great majority of agents were in the position to use the site
effectively. The navigation of the site is sufficiently simple, such that special
technical competencies are not required in order to make a reservation.
The travel agents did not all have the same ability in using search engines. The agents
less familiar with those tools did not hesitate to ask their more experienced colleagues
to carry out searches for them. Despite the vast amount of travel information that is
freely and easily available on the Internet, the travel agents felt that agencies will
always be in need of staff that is specialized in products and destinations.
The agents invested a lot of time to familiarize interested clients in effectively using
the agency website, an effort which meant extra work. Nevertheless, they believe that
the investment will be profitable in the long run because these regular clients, now
familiar with the site, will soon carry out searches and online transactions without
requiring assistance.
The travel agents greatly appreciated the type of client relationships that evolve
during agency visits and telephone conversations. These one-on-one exchanges allow
them to learn more about their clients’ needs and expectations. However, with the
arrival of the transactional site, they see their role as consultant, friend, psychologist
and “dream seller” changed to the more functional role of a salesman or information
agent for privileged information that is not available on the Web. They estimate that
Web transactions, quickly wrapped up and confirmed by telephone, leave less time
for the agent to get to know the habits, preferences and interests of clients. They see
themselves spending more time in front of the screen than in direct contact with
clients. On the other hand, they expressed satisfaction when a reservation was carried
out on the agency website without any intervention on their part. The interviewed
agents also noted a source of frustration. The site currently does not oblige clients to
indicate the name of the agent with whom they dealt with before completing the web
transaction. This has the consequence that some transactions are not credited to agents
where they should be. Nevertheless, that flaw could be easily corrected by
programming the software such as to oblige clients to check off the name of their
travel agent before confirming the transaction.
At the end of each of our interviews with a travel agent, we asked them to what
extent, on the whole, they thought the new transactional site had made for
improvements in their every day practice. Most agents said that they were generally
satisfied, all the while pointing out that there is room for improvement.

5 Conclusions and further work

A gradual disappearance of travel intermediaries due to the substitution of their
services by the new information technologies is not expected to take place as these
intermediaries can implement and profit from those same technologies. The intensive
use of information technologies increasingly belongs to the arsenal used by travel
agents to redefine their position in the industry and provide their clientele with value-
added services.
In order to sustain in the service industry, it is imperative to have good knowledge of
the current and future markets and to be in the position to apply that knowledge. The
astute travel agent will adapt to the needs and preferences of the baby-boomer
generation, all the while preparing to respond to tomorrow’s “Internet generation”.
Travel agent in the era of e-commerce—a profession threatened by extinction? Not at
all! The current-day travel agent is, rather, a profession that is in the process of
reinventing itself, as the case study of Voyages Bergeron has shown.
Case studies are often carried out for exploratory or descriptive research. The lessons
learned in this case study feed into the development of management strategies for
adapting to new technologies. This case study can also serve to develop a
questionnaire for a survey to be conducted with a representative sample of travel
agencies in order to (1) reach a deeper understanding of the transformation process of
their traditional “Bricks-and-Mortar” agency into a hybrid “Clicks-and-Mortar”
enterprise, and (2) develop a typology of potential scenarios of transformation.

Acknowledgement
The author wishes to thank Francine Charest, doctoral candidate in communications
at the Université du Québec à Montréal, for her invaluable contribution to this article.
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