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IMPACT OF TRAVEL AGENCIES IN THE DEVELOPMENT OF TOURISM IN NIGERIA. A CASE STUDY OF AKURE METROPOLIS

IMPACT OF  TRAVEL AGENCIES IN   THE DEVELOPMENT OF TOURISM IN NIGERIA. A CASE STUDY OF AKURE METROPOLIS

 

CHAPTER ONE

INTRODUCTION

1.1       Background of Study

Tourism is not limited only to activities in the accommodation and hospitality sector, transportation sector and entertainment sector with visitor attractions, such as, theme parks, amusement parks, sports facilities, museums etc., but tourism and its management are closely connected to all major functions, processes and procedures that are practiced in various areas related to tourism as a system. Also, tourism industry involves the functions of planning, organizing, coordinating, training, monitoring and evaluating at all levels (international, national, regional, local). Therefore, tourism integrated into the functional unit of the economy (Simoni & Mihai, 2012). Travel agency is one of the most important organizations in the tourism private sector that plays a significant and crucial role in the entire process of developing and promoting tourism in the country or at the destination. It is a travel agency which packages and processes all the attractions, accesses, amenities and ancillary services of a country and presents them to the tourists. That’s why travel agencies are known as image builder of a country (Goeldner, & Ritchie, 2010). A prospective travel agency is one that makes arrangement of travel tickets (air, rail, road and sea); travel documents (passport, visa and other documents for travel), accommodation, entertainment and other travel related services from the principal suppliers. It may also secure travel insurance, foreign currency for the traveling people (Roday et. al, 2009).

Travel agencies are a familiar topic in tourism economics, yet the regular and consistent attention they receive attests to their continuing importance. Efficiency is commonly found among the most important issues analyzed in this field. Efficiency of hotels is a common topic in this context, but the efficiency of travel agencies is a rarer issue (Bell and Morey, 1995; Anderson et al., 1999)

Travel agency sales clerks take bookings on behalf of tour operators, sell tickets for travel, make hotel bookings, take payments from the public and give advice, on types of holidays, methods of travel, passports, visas, travelers cheques, foreign currency etc., They need to have a good knowledge of the products and destinations offered by the tour operating and travel companies (Roday et. al, 2009).

Over the years, there has been a gradual decline in the number of travel agency business around the world which can be attributed to some very tangible factors. The first was shrinking airline commissions beginning in 1995 and continuing until 2002, when they were eliminated. So, after decades of offering travel agents a standard commission of 10 percent or more, with no cap, many of the larger carriers stopped paying base commissions to travel agents. These changes in the commission system driven by the airlines altered the distribution system fundamentally. Agents were no longer paid to process transactions (Holloway, 2002).

To offset the loss of commissions, agents had to develop new sources of income. The most readily available source was service fees. In addition to charging fees, agents have also turned to selling more cruises and tour packages and shifted to an emphasis on leisure travel. Service fees put agents at a price disadvantage because when airlines sell directly to passengers online, they do not add a separate fee to cover their own distribution costs. Therefore, an airline-direct fare for the same seat for the same journey is lower than a comparable ticket offered by an agent charging a fee. That provides an incentive for the customer to deal directly with the airline and reduces the agent’s share of the distribution pie.

A second major factor is the Internet, which has impacted travel purchase behavior. Negi (2005) explained that the Internet has changed the way commerce is conducted. Many businesses use the Internet as a way to bypass product and service intermediaries and deal directly with consumers. The airlines have been a leader in aggressively using e-commerce. The major carriers built powerful websites where passengers could make reservations, review frequent flyer accounts, and check on the status of flights (Chand, 2002). As a result, airline online bookings increased, as did the depth of information airlines were able to collect on customers. Such information gave the airlines a marketing advantage in creating direct relationships with consumers. The relatively low cost of e-mail marketing enabled the airlines to contact customers more frequently and less expensively than through the mail (Roday et. al. 2009).

In parallel with airline website development, online travel agencies invested large sums to improve their sites and presence. Since 1995, a number of online booking and fare search sites have appeared (and disappeared), disseminating almost unlimited information on any possible destination and thus creating more interest in travel. Consumers searched for information and booked online to make travel the most successful commercial sector on the Internet (Chand, 2002).

Another important factor is that airlines now attempt to bypass travel agents. As more people have Internet access and are willing to purchase over the web, airlines have adapted the strategy of selling direct, diverting business away from travel agents and dealing directly with the passenger. This has two advantages:

(1) Reduced distribution costs and

(2) Increased control over passenger information.

The Internet has become the distribution channel of choice for the airlines, and they are aggressively pushing sales on their own sites. Traditional travel agents will continue to compete for sales with airline seats and online agencies. While the above explains some major reasons why there has been a decrease in the number of travel agents, they are still on the major distribution channel for travel. They will maintain that position as long as they continue to deliver valuable service and save clients time and money.

This paper set to assess the various travel agencies in Akure and their impact in the promotion of tourism.

1.2       Statement of Problem

The reduction or removal of airline commission continues to challenge travel agencies’ profitability. It is crucial to understand what trends travel agencies need to be aware of to ensure that they stay ahead of the game and one step ahead of their competitors. For more than 20 years, travel agencies had a monopoly on two aspects of air travel: information and ticketing. Now they have lost these monopolies: information is plentiful and tickets are more and more irrelevant. By cutting agents’ commission, airlines decrease their dependence on travel agencies as a distribution channel.

As a matter of fact most travel agencies has diverted from the business of ticketing and visa packaging into another business ranging from student international admission processing to sales of tourism travels. This paper will point out the major roles of travel agencies which have been neglected, the reason for the neglecting on recommend some possible ways of maintaining the major role of travel agent.

 

 

1.3       Objectives of Study

The main aim of this study is to assess the travel agencies in Akure and their impact in the development of tourism

Specific objectives

The specific objectives of the study are to;

  • Access the efficiency of travel agencies in Akure
  • Access the proportion of individual who are still using travel agencies

1.4       Justification

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 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. On the other hand, tourism in developing countries is also considered as a growing environmental concern because of its effect on seasonality, lack of suitable infrastructures and planning.

The travel agencies are defined as a firm qualified to arrange for travel-related services on behalf of various tourism industries principals (Goldblatt, Nelson, 2001)

Travel agencies are a familiar topic in tourism economics, yet the regular and consistent attention they receive attests to their continuing importance. Efficiency is commonly found among the most important issues analyzed in this field. Efficiency of hotels is a common topic in this context, but the efficiency of travel agencies is a rarer issue (Bell and Morey, 1995; Anderson et al., 1999). Measuring the efficiency of travel agencies in Nigeria will help know their impact in tourism development. This paper will help us to analyze the various travel agencies in Akure and also measure their impact in tourism development

1.5       Hypothesis

The hypotheses of the study are;

  • Null Hypothesis (H0): There is reduction in the number of travel agencies over the last ten years
  • Null Hypothesis (H1): There is no significant relationship between travel agencies in Akure and tourism development
  • Null Hypothesis (H0): There is no reduction in the proportion of people who are still using travel agencies.

1.6       STUDY AREA

The study area is Akure, the administrative capital of Ondo State. Akure became the state capital of Ondo State in 1976. The town is located within 70 15′ North of the Equator and Longitude 50 05′ East of the Greenwich Meridian. The area towards Ado- Ekiti and Idanre are hilly and studded with large granite formation, rising to 410 metres and 496 metres above sea level respectively. These granitic formations are said to be of volcanic origin, underlained by basement complex rocks, which are mostly impermeable gneisses and granites.

In 2006, the provisional population for Akure was put at 588,000 (2006 census). The increased relative political influence of Akure as a State capital since 1976, when Ondo State was created has been partly responsible for its rapid development. This is because, the decentralization exercise, which accompanied the policy that led to the creation of the State led to the creation of jobs, which attracted many people. Improvements in transport facilities were given prominence in Akure shortly after 1976 when the city became the seat of Government. The multifarious activities, performed by Akure, influence the desire to construct new roads and rehabilitate the old ones to take care of the envisaged new roles and status of the city. Thus, houses were demolished along the major road, which hitherto was a single carriageway, to accommodate dual carriage road. Other important transport facilities that were developed include pedestrian walkways, overhead bridges, zebra crossings, bus stops, parking facilities, tarring of some feeder roads, erection of streetlights and traffic lights.

Furthermore, now Akure is a relatively modern town, with various facilities that will make your stay extremely comfortable. The town in really endowed with local culture, customs and traditions. The Deji of Akure Palace, which is one of the most spectacular constructions in the area. The palace is an excellent opportunity for visitors to find out more about this country’s traditions in a pleasurable manner and admire many historical monuments. In addition, the local Egungun Festival, which is a very popular event among the Yoruba people and is basically held in the memory of this tribe’s ancestors. It involves a lot of fun and is held in several cities and villages. It is a lively, colourful festival which make tourist to surely have a great time. The Ebomi Lake is at about 115 km away from Akure, but it is worth spending all that time on the road, because the lake is absolutely splendid. Likewise, it has a fascinating history and wonderful sightings that you will never forget. On the last note, the Igbokoda Waterfront is one of the biggest territorial waters in the country, having about 142 km lengths and is a true hot spot for tourists. It is also a great fishing place and an ideal picnic venue for vacationers looking for a bit of tranquillity.

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