The above graph shows the extent of travelling by individuals for their different purposes including family, community, business, education, leisure, weekend holidays, long vacations, excursions, extended working holidays, seasonal travel, and migration, etc. these indicators give a clear idea to a new travel company and it also provides them an opportunity to tap into these basic travel requirements of individuals and families. Understanding the travel requirements of individuals is an art and a great asset if managed to convert it into business. Thus the requirements of basic set up of a travel company may not be so complex, but understanding the consistent and changing nature of the demand cycle is more complex to stay optimistic and keep running the business.
In order to consider the internal and external environment it is very important to conduct a Porters five forces analysis of the company before it is being launched.
Andriotis (2004) conducted a similar analysis for the travel and tourism industry. Here are some aspects of the analysis:
Bargaining power of suppliers: This is important for the company to evaluate, as the services which come from indirect sales network will have their own charges through various suppliers. It will need to consider the pros and cons of the supplier relationship before it starts to engage in talks with them.
Threat of substitute products: This is a major threat when the company is new, as it will take time to build a brand image in the market. Thus, the company may have to build some credibility by offering smart deals for initial customers to capture the market attention and then direct the growth towards a service based approach. This will happen by forming differentiated products which offers a change from the normal.
Risk of entry by potential competitors: This is a an uncontrollable risk which the company can only avoid or minimise its effects by offering exceptional service which is second to none in the market and create benchmark in service standard and product offerings which will be difficult to duplicate.