Business model dynamics in the tourism industry

Abstract

The tourism industry is subject to constant change, especially since the emergence of the internet and new ICTs challenge prevailing business models and stimulate the development of new organizations. Throughout the years, the increasing online growth gave rise to a new business model of online travel agencies which threaten traditional tour operators nowadays. Tourism companies are exposed to a variety of external and internal factors, which stimulate a continuous need for business model innovations. The most important forces can be identified as social and technological. The former describes the change in customer behavior in regard to ever more demanding traveler in terms of destinations, value for money and the overall experience. On the other hand, the consistent development of technologies and respective online trend requires companies to invest in business model experimentations, if they want to stay competitive in the fierce travel sector. Based on two case studies, this paper explores how incumbent and entrepreneurial firms are affected by external pressures. The business model evolution of the analysed firms demonstrate that over time there seems to be a convergence between online and traditional travel agencies, which in the long run can lead to a dominant business model in the future.

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