Title of Paper

The Future Business Model of Ten Leading Travel Agencies/OTAs:A Cross-Strait Approach Mainland China and Taiwan

Presenter Bios

Yu-Lien Chang*

Assistant Professor, Department of Tourism & Leisure,

Lunghwa University of Science and Technology

300, Section 1, Wanshou Road, Gui Shan, Taoyuan, Taiwan

Tel: +886282093211

Fax: +886282096862

Email:idachang@mail.lhu.edu.tw

Abstract

In 2016 the number of outbound travelers reached 1,235 billion, 122 million of which are from China. This is a 4.3% increase from 2015. The Chinese outbound tourist market spent more than 10.98 billion US dollars (about 760 billion RMB) with an average of 900 US dollars spent per tourist. China has become the largest outbound tourist generating region with the highest spending. With online travel platforms growing, Online Travel Agent (OTA) has been developing rapidly. In 2016, the money transferred via online platform reached 50 billion RMB, an 70% increase as compared to 2015. In the Chinese market. Online transaction for tourism business reached 590.4 billion RMB and the market is valued at 50 billion RMB. For Chinese outbound travelers, the online platform carries great significance.

Business model attracted lots of attention from business leaders and scholars in the 1990s. Businesses not only need technology and innovation but also the ability to build innovative business models. With the development of technology and the intervention of online giants such as Alibaba, Baidu, and Tencent, the competition between online travel agencies becomes fierce. As a result, the online business model for Chinese travel agencies transformed from B2B to B2C, and to O2O. The business model of O2O marrying travel businesses with the Internet has become an emerging topic for research.

In the early years, some travel agencies in Taiwan joined travel agencies in Mainland China using joint business names. This approach blurred the organizational boundaries. With the political relationship between Taiwan and Mainland China stabilizing, the Co-Opetition between travel agencies has been growing. The change of policies brought in opportunities and more than 100 million Chinese tourists to Taiwan. However, it becomes more difficult to form cooperation with travel agencies in Mainland China. The reason is due to the large number of e-commerce businesses in China. The fierce competition also resulted in changes in scale and structure of businesses. Mainland China is considered more as a tourist generating region, while travel agencies in Taiwan are trying to develop e-commerce businesses for destinations. There are possibilities for collaboration between travel agencies in Taiwan and China.

Innovation in business model is the key to growth as supported by academic research. Scholars from Taiwan and Mainland China have investigated this topic from different perspectives. However, there is a lack of understanding on competition and cooperation, and most previous studies focus on competitive advantage. However, under the current business e-commerce mode, competition and cooperation remains an issue for travel agencies in Taiwan and in Mainland China, which identifies a theoretical gap in business model.

This study had research aims as following: 1) to analyze the e-commerce model of travel agencies and their business models, 2) To explore how to develop the business model based on the theory to build the questionnaire. This study investigated elements of business model and proposed 9 elements of business model; Customer Segments, Value Proposition, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, Cost Structure. 3) In-depth interviews with CEOs of Ten Leading Travel Agencies/OTAs in Taiwan and in Mainland China were conducted. Finally, academic literature, interview transcripts, online reviews, reviews on magazines and industry report were also analyzed.

Some of the preliminary conclusions of this research through rigorous content analysis include: Algorithms, robotics, big traffic, etc. in allocating resources globally. Finally, we believe this research contributes as follows: 1). In the academic field, the first Cross-Strait Leading Travel Agencies / OTAs future competitive business model analysis can generate new knowledge for the theoretical development of business model through the content analysis value, but also for the follow-up of quantitative research to open a new direction; 2), in practice to allow the tourism industry in this future Co-Opetition in the large market, for the development of its business model to find a clear and feasible mode of development.

Keywords】:Internet, Travel, Business Model, Cross-Strait, Co-Opetition

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The Future Business Model of Ten Leading Travel Agencies/OTAs:A Cross-Strait Approach Mainland China and Taiwan

In 2016 the number of outbound travelers reached 1,235 billion, 122 million of which are from China. This is a 4.3% increase from 2015. The Chinese outbound tourist market spent more than 10.98 billion US dollars (about 760 billion RMB) with an average of 900 US dollars spent per tourist. China has become the largest outbound tourist generating region with the highest spending. With online travel platforms growing, Online Travel Agent (OTA) has been developing rapidly. In 2016, the money transferred via online platform reached 50 billion RMB, an 70% increase as compared to 2015. In the Chinese market. Online transaction for tourism business reached 590.4 billion RMB and the market is valued at 50 billion RMB. For Chinese outbound travelers, the online platform carries great significance.

Business model attracted lots of attention from business leaders and scholars in the 1990s. Businesses not only need technology and innovation but also the ability to build innovative business models. With the development of technology and the intervention of online giants such as Alibaba, Baidu, and Tencent, the competition between online travel agencies becomes fierce. As a result, the online business model for Chinese travel agencies transformed from B2B to B2C, and to O2O. The business model of O2O marrying travel businesses with the Internet has become an emerging topic for research.

In the early years, some travel agencies in Taiwan joined travel agencies in Mainland China using joint business names. This approach blurred the organizational boundaries. With the political relationship between Taiwan and Mainland China stabilizing, the Co-Opetition between travel agencies has been growing. The change of policies brought in opportunities and more than 100 million Chinese tourists to Taiwan. However, it becomes more difficult to form cooperation with travel agencies in Mainland China. The reason is due to the large number of e-commerce businesses in China. The fierce competition also resulted in changes in scale and structure of businesses. Mainland China is considered more as a tourist generating region, while travel agencies in Taiwan are trying to develop e-commerce businesses for destinations. There are possibilities for collaboration between travel agencies in Taiwan and China.

Innovation in business model is the key to growth as supported by academic research. Scholars from Taiwan and Mainland China have investigated this topic from different perspectives. However, there is a lack of understanding on competition and cooperation, and most previous studies focus on competitive advantage. However, under the current business e-commerce mode, competition and cooperation remains an issue for travel agencies in Taiwan and in Mainland China, which identifies a theoretical gap in business model.

This study had research aims as following: 1) to analyze the e-commerce model of travel agencies and their business models, 2) To explore how to develop the business model based on the theory to build the questionnaire. This study investigated elements of business model and proposed 9 elements of business model; Customer Segments, Value Proposition, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, Cost Structure. 3) In-depth interviews with CEOs of Ten Leading Travel Agencies/OTAs in Taiwan and in Mainland China were conducted. Finally, academic literature, interview transcripts, online reviews, reviews on magazines and industry report were also analyzed.

Some of the preliminary conclusions of this research through rigorous content analysis include: Algorithms, robotics, big traffic, etc. in allocating resources globally. Finally, we believe this research contributes as follows: 1). In the academic field, the first Cross-Strait Leading Travel Agencies / OTAs future competitive business model analysis can generate new knowledge for the theoretical development of business model through the content analysis value, but also for the follow-up of quantitative research to open a new direction; 2), in practice to allow the tourism industry in this future Co-Opetition in the large market, for the development of its business model to find a clear and feasible mode of development.

Keywords】:Internet, Travel, Business Model, Cross-Strait, Co-Opetition