DEPARTMENT OF MARKETING

BACHELOR OF MARKETING HONOURS (08HMAR)

RESEARCH PROPOSAL
THE INVESTIGATION OF THE CHALLENGES FACED BY TRAVEL AGENCIES IN
NAMIBIA

WILHELMINE V. KANDJOU
200101001

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SUPERVISOR: MS ELIZABETH NCUBE

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION AND OVERVIEW

1.1 INTRODUCTION

1.2 BACKGROUND TO THE RESEARCH PROBLEM

1.3 PROBLEM STATEMENT

1.4 RESEARCH OBJECTIVES

1.5 RESEARCH QUESTIONS

1.6 RESEARCH HYPOTHESIS

1.7 DELIMITATIONS OF THE STUDY

1.8 LIMITATIONS OF THE STUDY

1.9 REFERENCES

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TABLE OF CONTENTS
3.
Introduction......................................................................................................................1
3.2 Research Design........................................................................................................4
3.3 Population..................................................................................................................5
3.4 Sample........................................................................................................................5
3.5 Research Instruments...............................................................................................6
3.6 Data Collection and Procedure................................................................................7
3.7 Data analysis and Interpretation..............................................................................7
3.8 Validity and Reliability...............................................................................................7
3.9 Research Ethics.........................................................................................................8
3.10 Conclusion...............................................................................................................8
REFERENCES..................................................................................................................9

Table of Contents
INTRODUCTION

2.1 The travel agencies in Namibia

2.2 The role of travel agencies

2.3 The Distribution channel

2.4 The trends in the travel industry

2.5 The challenges faced by travel agencies

2.5.1 The technology impact...5

2.5.2 Airline decommissioning (commission caps and cuts) ....6
2.5.3 Changes in the Travel Business Environments.7
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2.5.4 Travel Industry Situation Under Deregulation7

2.5.5 Too Many Players...7
2.5.6 Travel Commission.8
2.5.7 Operating Cost Higher...8
2.58 Conclusion9
2.5.9 References10

INTRODUCTION AND BACKGROUND

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1.1 INTRODUCTION

This introduction presents a context for this mini-thesis proposal and helps clarify to the reader
how fulfillment of the research aims and objectives will make a contribution to management
science and practice. To do so, the discussion starts off with background and purpose of the
research project, and then it explains the research focus and gives a brief overview of the
projects approach towards a literature research. The introductory sections end with a mission
statement and an overview of the purposed research method.

1.2 BACKGROUND

The travel industry is a fast and unique sector. Travel agencies are facing many challenges in
competing against what online and major emerging travel agencies in Namibia. Despite some
rocky financial periods, the airline industry plays an essential role in maintaining a global
economy. (Stewart, 2005:15)
Travel Agencies are the primary source for travel resources for both normal individuals and
tourist service providers. Travel agencies provide their customers with information and advice,
make reservations, provide tickets, and other ancillary services. Their services include making
reservations on airlines, hotels, car rentals, cruises, tours and other events. Travel agents make
approximately 70% of all airline reservations.
The latter includes the promotions for all travel essential for both business and leisure travelers
including: hotels, airlines, car rentals, and theme parks, among other travel needs. The role of a

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travel agent is to make the process of designing a trip as stress-free as possible. They provide
clients professional, personalized service and expertise to fulfill travel requests.
Travel agencies were once one of the main ways that people went about planning a trip or
booking a flight.

The Namibian travel industry, as well as many other industries, has been at varied stages of
transition over the last decade. The travel industry specifically operates in a highly competitive
and volatile environment that is primarily shaped by challenges and external forces.
The travel and tourism industry has grown rapidly over the past 5 years. Tourism is the biggest
contributor to the economy of Namibia. Travel industry is quite unique area of business in a
sense that a product cannot be observed or manipulated through direct experience prior to
purchase. Instead, customers have to purely rely on indirect or virtual experience.
Travel agencies are the key component of the world tourism and are vital in the distribution of
tourism related products and services (Thomson 2008 pg2). The travel agencies play and
important role in the tourism development. The airline industry has always depended to a large
extent on intermediaries who sell their tickets and arrange travel packages with consumers. Much
of the innovation in the travel industry has come from intermediaries, who have discovered new
ways to package trips and new ways to market discounts. This has freed up the resources of the
airlines. The role of the traditional travel agencies has been to provide scheduling services,
manage changes, issue paper tickets and provide ancillary services such as hotel bookings and
vacation packages.

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1.3 STATEMENT OF THE PROBLEM

The recent trend in the travel industry is the impact of the new technology, it is changing every
day. The travel agencies are facing major challenges in the industry, for them to survive and
keeping updated is a very difficult in the industry by convincing the customers that they do
provide value and by providing a service that is outstanding than the online sites. Technology is
taking whereby the clients or customers are now booking online, instead if using the traditional
travel agencies.
For the travel agencies to survive in this ever changing, uncertain, dynamic and complex
environment that is not stable, they are striving hard to maintain to retain customers, despite the
challenges that they are facing.

1.4 PURPOSE OF THE STUDY

The purpose of the paper is to investigate the trends and challenges faced by travel agencies in
this ever changing environment. The study will focus on the travel agencies survival route in
order to continue with their business regardless of the internet as their big competitor and
striving to maintain the competitive advantage. The challenges towards internet (e-business)
impacts on Namibia travel agencies will be the main focus of the study.

The research is undertaken in the aim of contributing to the knowledge of tourism and travel
industry. The knowledge gained from this study will assist travel agents, airline agents and
trainees with the knowledge of how to survive in this ever changing environment.

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1.5 RESEARCH OBJECTIVES

The primary objective of this study is to investigate the trends and challenges faced by travel
agencies and their survival in this environment.
1.
2.
3.
4.

To explore the marketing ways that travel agencies are using to survive in the market
To look at the trends that are currently going on in the travel industry
To investigate the impact of the internet on the travel agencies
To make relevant recommendations

1.6 RESEARCH QUESTIONS

1. What are the impacts of technology on the travel agencies?

2. What are the survival strategies that travel agencies are using in this high
technological environment?
3. What is the relationship between travel agencies and the technology?
4. How does the technology affect the travel agencies?

1.7 RESEARCH HYPOTHESIS

The main hypothesis is that the travel agencies are facing challenges due to the internet and are
trying hard to survive
in this compatible environment.

1.8 DELIMITATION OF THE STUDY

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The research will be conducted on the Bigger Travel Agencies in Windhoek only. The research is
only conducted for the travel industry on travel agencies only and no other tourism organizations.

1.9 LIMITATION OF THE STUDY

The study will investigate the role of travel agencies in Windhoek. Due to the financial resources
and time constraints the study will only be conducted in Windhoek with the sample of size of 5
biggest travel agencies who will be participate. The most limiting factor is that is only limited to
the travel agencies although it also relates to any service company in the tourism industry.

2.1 LITERATURE REVIEW

2.1.1 Introduction

The chapter focuses on how the challenges faced by travel agencies affect the concept of travel
booking system and the performance of travel agencies in Namibia. The chapter will take you
through the theories and researchers that were done in the same field in regards to the challenges
faced by the Namibian travel agencies in the travel industry.

Brink (1996) indicated that a review of the literature is an essential part of an academic research
project. Denzin & Lincoln (2005) define literature review as a careful examination of a body of
literature pointing toward the answer to the research question. Marshall and Rossman (1998)

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indicated that literature reviewed typically includes scholarly journals, scholarly books,
authoritative databases and primary sources. Sometimes it includes newspapers, magazines,
other books, films, and audio and video tapes, and other secondary sources.

2.1.2 The travel agencies in Namibia

Lam and Cheung (2009, p. 85) define a travel agent as a person who undertakes a job for
another person, who is the principal. The principal in such a relationship not only sets the goals
of the job, such as selling tickets, but also controls the means and manner in which the job is
done. The travel agent is used for more than the purpose of handling travel and tourism; a
significant number of people have used travel agents for medical or study reasons. Travel agents
are often intermediaries between consumers and airline or hotel companies, and different types
of travel exist, such as honeymoons, family vacations and business trips. Travel can take many
forms, such as by train, steamship or aircraft.

According to Lam and Cheung (2009), when travel agents first emerged on the market, they
succeeded in meeting customers desires and aspirations. As a result, customers were likely to go
to agents in order to gain information regarding schedules or prices. Baines (1998) pointed out
that, previously, the important aspect that contributed to the success of travel agents was that
travel agencies were the only method through which travelers could obtain detailed information.
In many developing countries, tourism is widely accepted as a way to contribute to economic
development, job opportunities and foreign revenues. Due to these factors tourism worldwide has
developed rapidly in the last decades. The advantages of tourism and the live examples from

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different parts of the world encourage countries with adequate resources to find out the ways of
conducting efforts aiming sustainability in this area because sustainability can be easily
connected to almost all kinds and scales of tourism activities and environments.

2.2.3 The Role of Travel agencies

Also, the role of offline agencies has evolved greatly. And their role will continue to exist as long
as they can provide services that add value for the traveller. In addition to basic service the
literature suggested: additional services and complementary services provides additional utility,
one of the key factors that differentiate one travel agency from another.
The role of travel agencies in tourism development could be synthesized as follows:
Travel agencies have a great power to influence and direct consumer demand comparing
to other industries;
Travel agencies are not just intermediaries, they act like as an interface between supply
and different segments of demand;
Modern travel agencies have many different forms and very complex relationships.
Findings from the research conducted by Cheyne et al. (2006) indicate that travelers value the
following from travel agents: personalized service, building lasting relationships, providing
options that suit the needs of the traveler rather than the needs of a commission, having local
knowledge, and the aforementioned saving of travelers time by searching the Internet for them.
Similar to the observation made by Cheyne et al. (2006), Mason (2002) noted that management
fees for value-added services, instead of commissions, will give corporations confidence that the
agent is working in their best interest, and not merely trying to obtain the highest possible
commission. Of course, tourism distribution participants not only need to add value for
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consumers, but also to add value to other participants with whom they have relationships
(Giaglis et al., 1999). For example, suppliers would not continue to work with GDSs if the latter
no longer provided any value to the suppliers.
Agency's major role is to perform as a representative. Promoting travel goods and services on
behalf o
f a dealer. Therefore, similar to other retail industries, they don't have a stock in stores.
2.3.4 The distribution channel
Distribution is one of the most crucial factors for the competitiveness of tourism organizations. It
serves as the link between various tourism suppliers and customers, individual tourists and
organizations. In tourism, distribution system is complex and multi-faceted, as often multiply
distribution channels are used by tourism organizations. Tourism distribution channels vary
according to the type of products and countries (Buhalis& Laws 2001, 7). Most distribution
channels though share the functions of providing information to prospective customers and
making travel arrangement.
Intermediaries are traditional distribution channels in tourism. They are also called travel retail,
and they serve the function of middlemen. These organizations, known as travel agencies, link
demand and supply, and remain the key intermediary in the distribution chain. However, these
organizations are under transformation due to the trends in the distribution systems, such as
direct selling and disintermediation

2.4.5 The trends in the travel industry

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The Tourism Industry is facing a paradigm shift globally. Namibia is by no means immune to this
trend as information technology is one of the strongest drivers for competitiveness, innovation
and change. Information and Communication Technologies (ICT) is changing our lives the way
we socialize, work, shop, search for information and communicate has changed entirely.
Trends and factors are currently affecting the travel and tourism industry every day for example,
booking on the internet, teletext and phoning call centre's to book their holidays and also
growth and expansion in UK regional airports and more people travelling alone on holiday for
example, visiting relatives.

2.2 The challenges faced by travel agencies

Travel agencies are being bombarded from every angle. The challenges facing travel agencies
worldwide has forced many of them to downsize considerably or even throw in the towel and
close down because of the mentioned challenges. Travel agencies can no longer rely on a loyal
customer base, and the days where customers would use their local travel agent around the
corner are long gone. A handful of huge Online Travel Agencies (OTAs) or booking portals have
got a firm grip on customers with user-friendly booking flows and great prices. The study will
investigate the challenges and the findings and conclusions will be researched on.

2.2.1 The technology impact

Technology is a driving force of change that presents opportunities for greater efficiencies and
integration for improved guest services. Technology has become a tourism business activity in

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development of strategic resources and is considered as a tool to increase competitiveness.

Effective use of information technology can make significant operational improvements.
Advanced software and communication tools allow enlarging operational efficiency, for
example, orders may be made better, faster and cheaper. In addition, decision-making through
decision support tools, databases and modeling tools assist the managers job. Thanks to expert
systems, sophisticated expertise can be met by any manager (Romanovs, 2000).

2.2.2Airline decommissioning (commission caps and cuts)

The travel agency business has experienced a transformation over the past years as a result of a
drastic reduction in their income. The airline fare commissions have been on the decline since
1995 when the airlines imposed a cap of $50 or 10% (whichever is lower) on commissions for
round trip domestic flights. The previous rate of commission was 10% with no cap. Commission
on international flights remained unchanged at 10%. However, travel agencies took another hit in
the fall of 1998, the airlines imposed yet another cap. This one was $100 on round-trip
international flights that had not had a limit on commission in the past. The commissions
dropped to 8% for both domestic and international flights.

2.2.3Changes in the Travel Business Environments

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Travel firms are being increasingly confronted with an assortment of changes. To survive, travel
agency managers will need to develop innovative strategies and marketing programs which will
enable them to buffer their organizations from perceived environmental threats and to exploit
developing opportunities. There are various strategic options that can be employed by them.
Travel agents represent the primary intermediary of travel-related products.

2.2.4 Travel Industry Situation under Deregulation

Prior to 1985, almost all travel agencies are the sole commissioned sellers of airlines tickets.
With the deregulation of the sales of airlines tickets, airlines were given greater power to control
over the distribution of airlines tickets and to introduce greater competition in airlines marketing.
Previously, only agents accredited to airlines companies could sell tickets and earn a
commission. Later, agents need to be accredited with a professional agency, such as IATA, for
ticket and financial settlement responsibilities. However, an airline may also deal with any
nonconference retailer that adheres to the carriers standards. With the loss of exclusivity, agents
must now consider the possibility of new competition; possibly the hotels, corporate travel
offices and banks.

2.2.5 Too Many Players

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Many midsize travel retailers are flourishing in cities and towns all over Namibia. They cater
mostly for outbound travels. In northern Namibia, these travel retailers specialize in business
travel.

2.2.6 Travel Commission

Last year several major airlines announce a zero commission policy to the travel agents. In fact,
such a policy was introduced years ago in Western countries and it was a matter of time that this
development will be introduced to the local environment. Beginning this year, Malaysia Airlines
no longer provides commissions to travel agents for airlines ticketing. Airlines term the situation
as market liberalization, where rather than charging fixed fees, travel agents are advised to
charge service fees to their clients for services offered such as reservation, cancellation, service
delivery and credit arrangement. Most travel agents are now charging an average of 5% as the
service fees for airlines ticketing.

2.2.7 Operating Cost Higher

Operating costs have placed financial constraints on small and undercapitalized firms. In
response, such agencies need to secure a protected market niche or generate a larger volume,
perhaps by pooling their resources through various cooperative arrangements. Mergers and
cooperative arrangements should auger well for travel agencies wanting to operate from
positions of strength. Using the experience of deregulation from other industries, which has
indicated the need for more aggressive, nontraditional way of doing business, it is imperative that

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travel agencies pay particular attention to monitor external forces that may have affected their
organizations and thereafter to formulate appropriate strategies for managing the environment.

2.3 Conclusion

The travel agencies in Namibia are working on strategies to survive in this competitive
environment. They will not be in existence, but might have to relook into strategic ways of them
surviving in this harsh and competitive environment. The Internet appears to be playing a role in
restructuring of some traditional business sectors in which some organizations profit and some
decline. Travel agencies are being subjected to increased competition from virtual on-line travel
agencies. These agencies do not possess the traditional retail outlets but exist predominantly on
the Web. In addition, airline companies and travel wholesalers are beginning to market their
products directly to the consumer. Despite the threat of disintermediation, the Internet has
created opportunities for the travel agency as it provides a method of providing service around
the clock and of being accessible from home and workplace.

2.4 RESEACH DESIGN AND METHODOLOGY

2.4.1 INTRODUCTION

This chapter covers the research methodology and design, data collection, data analysis,
reliability and validity of the analysis, and ethical considerations in research. Research
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methodology in common parlance refers to a method used in search for knowledge. Veil (2011)
define research methodology as a careful investigation or inquiry especially through search for
new facts in any branch of knowledge.
The purpose of research is to discover answers to questions through the application of scientific
procedures. The main aim of research is to investigate the challenges that are faced by travel
agencies in Namibia and what their survival strategies are in this ever changing technological
environment.

2.4.2 Research Design

Research design can be thought of as the structure of research. It is the glue that holds all of the
elements in a research study together. Veil (2009) defines a research design as a blueprint for
conducting a study with maximum control over factors that may interfere with the validity of the
findings.

Qualitative research
Veil (2011) refers to qualitative research as a form of social enquiry that focuses on the way
people interpret and make sense of their experiences and the world in which they live.
Researchers use the qualitative approach to explore the behaviour, perspectives, experiences and
feelings of people and emphasise the understanding of these elements.

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This research is mainly a quantitative study on the challenges facing the Namibian travel
agencies and how they survive in this competitive technological environment. The research study
will focus on mainly the survival strategies that travel agencies uses to keep up with business.
The study will be based on quantitative and qualitative information mainly to explore the subject
stated above. The research study provides a good understanding of the travel agencies objectives
and its operations to customers, airlines and other suppliers and scholars who are interested in
research subject. The management of the various travel agencies in Windhoek shall get an
opportunity from this research to learn from other travel agencies on their survival kit.

2.4.3 Population

The population for a study is the total number of the Windhoek travel agencies, only the biggest
and top performing travel agencies in Namibia relevant to the research study. The reason for
choosing these populations because most of the biggest travel agencies headquarters are based in
Windhoek, with smaller branches in the smaller towns. The researcher will also try to determine
the similarities and differences in travel agencies performance in Windhoek.

2.4.4 Sample

A sample is a subset of the population that is used to represent the entire group as a whole. When
doing research, it is often impractical to survey every member of a particular population because
the sheer number of entities may be simply too large. Therefore, sampling is the process of
selecting units (e.g. people, organizations) from a population of interest so that by studying the

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sample one may fairly generalize the results back to the population from which they were
chosen. There are several different ways of choosing sample from population, from simple to
complex. The sampling techniques can be broadly divided into two groups, non probability
sampling techniques and probability sampling techniques (Fricker, 2009:201; Veal, 2011:356).
Purposive sampling method was applied for the selection of the travel agencies, and the travel
agencies were selected based on the knowledge of the population and the purpose of the study.
The travel agencies that were selected includes Trip Travel Ltd, Rennies Travel, Welwitschia
Travel and Sure Ritz Travel. These 5 biggest travel agencies are all based in the Central of
Namibia, which is n Windhoek.

2.4.5 Research Instruments

A questionnaire-based survey research technique will be used to collect the required primary
data. This method is considered to be the most commonly used in tourism and travel research.
Quantitative information will be gathered from the five (5) travel agencies survival strategies,
methods they use to keep up in this ever changing environment, marketing and selling efforts in
order to satisfy and retain their customers. Managers and consultants (employees) will be
consulted to gain accurate information or data. Secondary data from all the Travel agencies
performance will be analysed to be able to determine the trends and threats they are all facing.
The respective travel agencies information will be accessed via websites and annual reports.
The questionnaire will make use of open and close-ended questions.

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2.4.6 Data Collection and Procedure

The researcher will collect secondary data from all the five travel agencies in Windhoek All
investigation will be done for all the travel agencies. The study will make use of both secondary
and primary data.
Secondary data is existing data and will be gathered making use of various online databases,
such as Gale, Emerald and Sage, books, relevant websites and online Travel and Tourism
journals.
Primary data is information that originates from this study (new data), for the purpose of
achieving research goals. Primary data will be gathered using a questionnaire, which will be
made available both in printed and electronic format.

2.4.7 Data analysis and Interpretation

The data analysis will be done using ratio analysis on Microsoft Excel. Ratio analysis evaluates
relationships among performances of the travel agencies and all the trends and challenges faced
by them.

2.4.8 Validity and Reliability

Validity and reliability of the measurement instrument is an importantstep to be examined in the

research process. Douglass and Craig (1983) haveexplained that the examination of the validity

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and reliability of the data isparticularly important in countries or contexts where little research
has beenconducted, or with which the researcher has little prior experience.

Validity

Validity is concerned with whether the findings are really about what they appear to be dealing
with. Internal validity, in relation to questionnaires relates to the process that ensures whether the
statements used in a questionnaire are in parallel with research objectives and whether the
conclusions obtained after analyzing the data will be relevant to the purpose of the study
(Saunders et al., 2009).

Reliability

Reliability is concerned with the robustness of the data collection instruments (questionnaire or
interview guide) and, in particular, whether or not they will produce consistent findings at
different times and under different conditions, such as with different samples or, in the case of an
interview, when it is conducted by different interviewers (Saunders et al., 2009).

2.4.9 Research Ethics

Ethics in the context of research is referred to as a set of standards that guide researcher on how
the researcher interacts with research participants. The ethics guidelines of the Namibian

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University of Science and Technology will be observed by the researcher in the process of
collecting the data, data analysis and drawing conclusions.
Ethics are norms or standards of behaviour that guide moral choices about our behaviour and our
relationships with others. The goal of ethics in research is to ensure that no one is harmed or
suffers adverse consequences from research activities. Ethics, in the context of research, refer to
the appropriateness of a researchers behaviour in relation to the rights of those who become the
subject of her/his work, or are affected by it (Saunders et al., 2009).

Informed Consent

All research participants will be provided with the research information, its purpose, how it
would be carried out and their right to participate or not participate in research. The research
findings will be shared with the participants.

Anonymity:
All participants will be that their names will not be revealed in the report, and their identity will
be highly protected. All information relating to travel agencies financial statements will be kept
under strict confidentiality and none other than the researcher will allowed to have access to it.
Only publicly available information will be disclosed in this report.

Confidentiality:

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Financial records will not be shared with anyone. These will be securely stored and will be
destroyed after the research will be completed. The information in researchers computer will
definitely have a password protection. There will be no unauthorized access to the information. A
definite assurance will be given to all participants and their trust will be maintained.

2.4.10 Conclusion

Chapter three presented the research methodology that will be adopted in carrying out the study.
It covered the following aspects; research design, data collection and data analysis. It also looked
at how validity and reliability will be achieved in the study and the measures to be undertaken to
deal with ethical considerations.

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