Offline travel agents join forces

Battered by booming online travel agencies' irrational price cuts, traditional travel agents have decided to join forces and bring down costs to survive the cutthroat competition.

More than 70 local medium and small travel agencies have joined the newly-established Taiwan Travel Group (台灣旅遊集團), which expects to recruit a total of 100 members from every city and county before starting operations in January next year, said the group's general manager, Lin Jui-ping (林瑞平), who is also president of Kaohsiung-based Asia Travel Service Co (亞洲旅行社).

"As online agencies are destroying the market's pricing mechanism, we know we must integrate our resources for mass procurement to stay competitive," Lin said.

Lin said that if 100 travel agents, which represent 5 percent of the total number of agencies in Taiwan, band together, they can bring down the costs of hotel rooms, plane tickets and admission to theme parks by up to 9 percent.

In addition to the personal service provided by its extensive brick-and-mortar network, which even reaches to Kinmen and Penghu, the group will set up a Web site in March next year to facilitate business-to-business (B2B) and business-to-customer (B2C) transactions.

"This can help us retrieve our customers, as a growing number of people are getting used to making purchases online," he said.

The rising online rivals -- such as the nation's top three operators Eztravel.com (易遊網), ezfly.com (易飛網) and Star Travel Corp (燦星旅遊網) -- have severely squeezed traditional agencies' room for survival since the SARS epidemic last year, especially when group travel packages are also offered online.

According to statistics from the Institute for the Information Industry (資策會), the value of transactions in the nation's online travel business is expected to jump to NT$15 billion this year from last year's NT$10.6 billion, an annual growth rate of 40 percent.

Online travel companies have shown astonishing revenue growth this year, registering an average growth rate of 50 percent to 80 percent compared with last year, the institute said.

Lin said that agencies in the north, where Internet usage is more widespread, have been the worst hit, with revenues dropping by as much as 40 percent.

A survey by online market research firm InsightXplorer (創市際) also found that the traffic to online travel Web sites has quickly climbed since last December, reaching nearly 4 million hits in February.

Travel channels and Eastern Home Shopping Network (東森得易購) also joined the battle to scramble for market share, prompting the conventional service providers to shift their marketing strategies.