ASSESSMENT

Strategic Management Assessment

Abstract

With the advent of electronic commerce, business models have changed dramatically. In particular, numerous studies have concluded that electronic businesses have been responsible for the emergence of new business models. Travelocity.com LP operates as a leading online travel Web site where travelers can take control of their bookings and reservations and research information about potential destinations. The company shifted more of its business to a merchant model and in 2004 launched a marketing campaign based around a traveling garden gnome mascot. The following paper recommends the two models that can be adopted by the company and their significance, out of which, the model of low-cost is recommended to the company for implementing it since it is more effective than the other model.

Table of contents

Abstractii

Intro Current4

Aim of the report5

Recommendations6

Market development Strategy8

Market Penetration12

Implementation methods14

Travelocity puts his hand on Last-minute14

Implementation issues15

Strategy16

Acquire customers16

Operating leverage17

Capitalize on company strength17

Conclusion17

Strategic Management Assessment

Intro Current

Travelocity LP operates a leading online travel Web site where travelers can take control of their bookings; and reservations and research information about potential destinations. The site provides reservation information for hundreds of airlines, more than 17,000 hotels, and dozens of car rental companies. It also offers vacation packages as well as tour and cruise departures. Internationally, Travelocity operates Web sites for customers in Canada in both French and English, as well as in the United Kingdom and Germany. In 2001, it launched Travelocity Europe in partnership with Otto, a German direct-marketing firm. In that year, the company logged more than $3.1 billion in gross travel bookings and posted revenue of $301.8 million (Johnson, 2002: 239-242).

The industry-wide slowdown after the September 11, 2001, terrorist attacks on the United States forced the company to innovate. The company shifted more of its business to a merchant model and in 2004 launched a marketing campaign based around a traveling garden gnome mascot. In 2002, Sabre Holdings Corp., the computer reservation service, bought out the remaining shares in Travelocity it did not already own. Sabre became a private company in 2007. By that time, Travelocity had total bookings in excess of $10 billion and annual revenues of $1 billion (Gilbert & Bennett, 2001: 302-315).

The model that has been adopted by Travelocity in 2004 is a very simple model that is easy to understand. The "merchant model" is a simple wholesale arrangement that involves net rates and room allotments with cut-off dates. The concept is nothing new and exists long before Hotels.com and Expedia, in the form of the FIT wholesale model fashioned with tour operators. Companies like Travelocity have operated in this space for decades. The only difference is that in the past hoteliers did not allow wholesalers and tour operators to publish discounted/wholesale hotel rates (net + markup) if not bundled with other travel services (Barbot 2006: 39).

Aim of the report

The aim of the report is to make suitable recommendations to Travelocity.ca existing business practices with the use of various strategic models. To recommend ways through which Travelocity can enhance and improve its operations in the ...