Thursday, 21 September 2006
I originally wrote this article, “Entrepreneur interview” in July 2003.
I interviewed Robin, the owner of a small travel business, in July 2003. It was an enjoyable experience and we discussed the business generally, business turning points, human resources, marketing, IT, owner skills and outside sources.
Insight Vacations (Singapore) Pvt Ltd is a small enterprise located in the Suntec City area of Singapore. It operates within the travel industry. Robin runs the business and he is a wholesaler of holiday tours. Products are supplied to Robin by TIC (The Travel Corporation) and he retails them to travel agents. The company also reaches out to other countries in Asia, through agency agreements, to enable the sale of TIC products beyond Singapore. There are twenty employees of the company and the business was established in 1987. Belat (2000) succinctly describes Robin's products by quoting an employee as saying that "Insight Vacations offers unforgettable good memories like seeing the sunset over San Marco , Venice from your gondola, mixing with locals at a late night cafe in Champs Elysee, soaring above Swiss mountains in a cable car to the summit of Mt. Pilatus".
TTC produces several branded products and Robin markets three of them, from Singapore, to travel agents in Asia. They are Busabout, Contiki Holidays and Insight Vacations.
Busabout is a flexible "hop-on / hop-off" style coach transport network for independent travellers.
Contiki Holidays are for 18 to 35 year olds. They are guided tours throughout the world, using all forms of transportation.
Insight Vacations are worldwide coach tours. They incorporate centrally located hotels, sightseeing inclusions and quality transportation.
The travel industry has undergone many changes in the last decade and will continue to do so at an ever increasing pace. Mergers and acquisitions of travel companies have created large global operators able to undercut the prices of smaller enterprises. Some of the smaller companies, having been in existence for half a century, have either ceased trading or have been acquired by larger companies. Low market entry costs have seen businesses come and go, particularly in the last five years.
The definition and roles of supplier, wholesaler, retailer and customer continue to overlap and are being re-moulded within the travel industry. Suppliers, like airlines, now selldirect to the end-user, cutting out the travel agent. Supplier commissions to travel agents have been reduced or capped. Technology has accelerated this change through the use of the internet. Customers are even now able to offer a price that they are willing to pay for a travel service, via the internet, and providers can bid for custom at auctions.
In addition to the internal changes taking place within the travel industry, external factors have impacted heavily in the last five years. Many of these external forces have been without precedence and have caused havoc within the tourism industry. Global recession, regional financial crisis, war, terrorism and disease have all created unique challenges within the last five years. These events have affected the travel sector of business more than any other industry. Monthly revenue declines of between 50% and 90% have been experienced by companies during this period.
The year 2003 has been most difficult for Robin and Insight Vacations (S) Pvt Ltd.
The International Herald Tribune (2003) quotes Lian Chia Liang at J.P. Morgan Chase in Singapore as saying that the [Singapore] economy would not grow any faster than 0.9 percent in 2003. This is consistent with the government's forecast of growth resuming in the second half of 2003 to achieve yearly growth of between 0.5 percent and 2.5 percent. This is after the GDP shrank at an annualised 11.8 percent rate from the previous second quarter due to recession, war and the outbreak of SARS. Evidence of Singapore's economy being already on the rebound is given by Aggarwal and Chiam (2003) and they state that "[Singapore] exports surged 18.7 percent last month [June 2003] from a year ago, and the country's struggling tourism industry is set to soar once more."
Recent events during the fist half of 2003 created nervousness amongst potential travellers about the security of their holidays. This was predominantly caused by many flight cancellations during this uncertain period. Hoon (2003) reports that Insight Vacations restored confidence amongst their customers by guaranteeing every departure on all available tours up to the end of July 2003.
The company reduced their operating expenses during the first half of 2003 to match a decline in revenue. This was achieved by placing staff on a four-day week. As sales picked up, staff were returned to a normal working week in June 2003. Singapore Airlines reduced their air fares towards the end of the second half of 2003 and this contributed to an increase in bookings for Robin.
Insight Vacations' Winter 2003/2004 programme was issued two months early in 2003. This gave customers a longer time to plan their end-of-year vacation and should attract customers who delayed summer holidays due to the uncertainties that existed in the early half of this year.
Robin had an innovative idea in the midst of the recent travel industry troubles, in April 2003, to cater for a very small niche market. Travel Weekly East (2003) reported that "Robin, Insight Vacations, is quick to seize an opportunity when he sees one. With most hotels and travel businesses running empty due to the SARS crisis, he is urging his travel industry colleagues to 'Take a break, Go Bohemian'. The offer is specially targeted at general managers of hotels who have asked most staff to go on leave during this period. 'I thought why not give the general manager a break too. It is depressing for them to be around here,' said Robin. He is urging them to take advantage of it's special travel trade rebate and go on it's nine-day Bohemian tour featuring three nights in Vienna, two nights in Budapest, one night in Bratislava and two nights in Prague."
Insight Vacations' market research of it's customers in 2002 created a product change. Travel Gazette Asia (2002b) quotes Robin as saying, 'We've found an increased demand for longer stays in cities and our consumer research highlights that clients want to get under the skin of the destinations they visit. As a result, we've expanded our Country Roads programme in 2003 by 33 percent to include 12 itineraries. As we move forward into 2004 and 2005, we plan to grow this popular series." The magazine also states that Insight has listened to the market and has inserted a mid-priced product between it's existing first-class tours and budget tours. It's called SuperSaver and aims to offer first class touring but on a budget.
A 'Passport to Knowledge' campaign was introduced by Insight Vacations in December 2000 and was reported by Tan (2000). The scheme encourages travel agents to sell more of Or Robin's products by introducing a rewards system. Travel agents are able to collect points every time they book a customer on an Insight Vacations tour. These points can then be redeemed to receive free places on one of InsightVacations' European or U.S. tours. The scheme is designed to be both motivational and educational. A new sales guide, 'The Art of Touring in Style' was issued to travel agents and it identifies the unique points of Insight Vacations' products. In it's report on the scheme, the TTG magazine quotes Robin, "The sales guide would provide the necessary knowledge to facilitate closing sales, while the Passport to Knowledge is aimed at assisting our colleagues in the trade to better understand the destination and our products." A 40 percent growth in business was achieved in 2000 and a 30 percent growth was expected in 2001. However, the impact of terrorism in September 2001 reduced the growth to 5 percent.
Insight Vacations (S) pvt Ltd is still in the growth stage of it's business life cycle. The Singapore island population is expected to slightly decline over the next decade, creating a smaller market. However, the potential and available markets (within the market) are expected to increase. Media, peer pressure, curiosity and a quest for adventure are factors which will increase the set of consumers who have interest, income and access to the tours offered by the company. Language Travel Magazine (2000) quotes Robin as saying, "As consumers get more discerning, getting information from a host of sources, many are looking for off-the-beaten-track destinations. "
In contrast to Singapore's declining population, the total Asian market continues to expand. The impact of technology also increases the available Asian market for Insight Vacations (Singapore) Pvt Ltd's products. The company is in a good position to serve this expanding market and already has representative offices in Brunei, China, Hong Kong, India, Indonesia-Japan, Korea, Malaysia, Pakistan, Philippines, Taiwan and Thailand.
Human resource management
Robin is passionate about the training of his staff and from 4 percent to 5 percent of the business operating costs are allocated to staff training. This is through sponsorship of his employees to attend Diploma or Degree courses related to travel and tourism.
"I personally feel strongly about training and retraining… …if everyone in the industry trains 20 percent of their staff, the level of professionalism will rise. Then, worries about one agency poaching trained staff from another agency will go away", says Robin in Travel Trade Gazette Asia (1999b).
Robin commented upon the issue of retaining quality staff in the travel business in Travel Trade Gazette Asia (2001). He expressed his opinion that career development and the industry's image are linked to compensation, which is currently S$1,200 to S$1,500 per month for those with no experience. This is comparable with other industries. Robin attributes the perceived lack of travel industry job prestige to image and human resource management. Attrition, due to job stress, is at similarly high levels in law and medicine - although salary levels are higher in these professions. He says that travel specialists must work harder to retain commission levels, instead of giving commission away to achieve a sale. The resulting retained profits could then be used to increase salary levels and retain staff. Insight Vacations (Singapore) pvt Ltd are given a day off on their birthday. This perk is very popular with Robin's staff. He also makes a special effort to nominate staff for national awards, such as Model Worker. Staff who decide to further their careers beyond Insight Vacations for better prospects are allowed to leave gracefully by Robin. Although unfortunate for the company, he says that his ex-employees are the best salesmen for the company in their future endeavours.
Competency management programmes are conducted within Robin's company and he has identified 22 skill sets required of his staff.
Through the networks mentioned later in this article, Robin is able to identify potential future employees. He comes into contact with these candidates through his work external to the company and when students attend his offices during industrial attachments for a few months. This is an ideal opportunity to judge the capabilities of a potential future member of his workforce. He doesn't need to advertise in the newspaper to attract candidates.
Robin conducts appraisals with all of his staff. The appraisals are held collectively, off-site, on a monthly basis at such locations as Sentosa Island. Management by objectives is used, where the objectives are common, as opposed to being individualistic.
The marketing strategy of Insight Vacations (Singapore) Pvt Ltd is illustrated by the components of the marketing mix. The three TIC products give variety and attract different target markets.
Geographic - Asian consumer via agent
Demographic - under 35 years, single, low income
Psychographic - culture orientated lifestyle, outdoor orientated lifestyle
Behavioural - service benefits, economy benefits
Geographic - Asian consumer via agent
Demographic - under 35 years, single, medium/high income
Psychographic - sports orientated lifestyle, outdoor orientated lifestyle
Behavioural - service benefits
Geographic - Asian consumer via agent
Demographic - above 35 years, married, high income
Psychographic - culture orientated lifestyle
Behavioural - quality benefits, service benefits
Departure guarantees and a meet and greet service offers private car transfers at Heathrow Airport for passengers booked on Insight's First Class Tours to Britain and Europe.
Insight Vacations tours are priced at US$10 more per day on average than what other tour operators are charging. However, the company includes many features that most other operators charge as optional extras.
Insight Vacations (S) pvt Ltd's products are promoted through travel agents. Travel Trade Gazette (2002a) reports upon a newly introduced commission structure from Insight Vacations (Singapore) pvt Ltd which gave travel agents up to 17 percent commission on certain tours booked in 2002. The commission would be paid in 2003. Previously, commission was 10 percent and 15 percent for high volume. There used to be no incentive to sell tours for larger passenger numbers. Now the commission is on a sliding scale from 10 to 17 percent for 15 to 91 passengers, respectively.
Information technology, and specifically the internet, has created many changes within the travel industry that the business operates. Robin attended a seminar, "Travel Agents Surviving the 21st Century" in which it was discussed that leisure travel will change, with better informed individual travellers overtaking group tours. From the seminar, Travel Trade Gazette Asia (1999a) quotes Robin as saying, "The consumer will be more informed than the travel agent because of the information which is available to them via the internet. Individual leisure travel will grow faster than group travel and because of that, agents will need to know more about events, destinations and highly-specialised tours, such as ecotourism, which are available."
When interviewed on My Angel.com's 'Hospitality & Tourism PowWow' in May 2000, Robin was asked for his opinion on travel providers being in a sunset industry because the internet allowed individuals to do their own bookings. Robin replied that, "Contrary to speculation that Travel Industry being a sunset industry, the internet is going to speed up its development. Whilst some IT Savvy travellers may attempt to plan their own itinerary etc, how many would bother to spend hours on their computer screen scrolling and search for the best combination? It may be simple for a hotel booking or a simple point to point air reservation but if one were to try planning a 15 days vacation to Europe for their family, I think engaging the service of a travel consultant is a far easier option" - My Angel.com (2000). In the same interview, he said that the internet was changing the way that Insight Vacations was carrying out it's business. The internet had enabled customers to be more knowledgeable about the products they were buying. Travel specialists had to be even more knowledgeable so that customers would pay a good fee to save time and money.
Robin had ten years of experience with Singapore Airlines before running Insight Vacations (Singapore) Pvt Ltd. His prior jobs were in technical supplies, marketing, tourism development, advertising and promotion. Transferring the skills he learned from Singapore Airlines has been of benefit to the running of Insight Vacations (Singapore) Pvt Ltd. He is also a Fellow of the Chartered Institute of Marketing, holds and MBA and DBA from Hull University.
Many outside sources have attracted Robin over the last decade. He has held many positions within NATAS (National Association of Travel Agents, Singapore), is a director of the Tourism Management Institute of Singapore and was Chairman of Singapore's Chartered Institute of Marketing in 1999. Robin has also served as external examiner and panel member for Singapore's several polytechnics and is a part-time evening lecturer for Southern Cross University.
Robin acknowledges the new ideas that new employees bring to the company, particularly in the area of computing and computer applications.
Finally, a motivational company was brought in recently to work with Insight Vacations (Singapore) Pvt Ltd. A six week programme was held to identify a temporary area of weakness within the sales function. The programme highlighted difficulties that existed and steps were taken to remedy the situation.
List of references
'Agency fees to combat technology', Language Travel Magazine, January, 2000. Retrieved from http://www.hothousemedia.com/ltmlltmbackissues/jan00web/jan00 travelnews.pdf.
Aggarwal, N. & Chiam, C., 'Singapore's economy on the rebound', The Straits Times, July 18, 2003.
Belat, K. 2000, 'Brunei: European tours by motorcoach', The Borneo Bulletin, January 27, p. 1.
'Book more, earn more', Travel Trade Gazette Asia, August 23, 2002a. Retrieved from http://ttg.com.sg/currentlarchive/2002/0823-29/ne0820022313.html.
Hoon, Y.S. 2003, 'Insight sees resurgence in US bookings but Asia "still slow"', Travel Weekly East, May 23,2003. Retrieved from http://travelweeklyeast.com/news_articlecfm?id=9035.
'Insight offers more', Travel Trade Gazette Asia, November 29, 2002b. Retrieved from http://www.ttg.com.sg/currentlarchive/2002/1129-05/pr1120022901.html.
'Insight's Yap offers "Bohemian Break" to hoteliers', Travel Weekly East, April 11, 2003. Retrieved from http://travelweeklyeast.comlnews_articlecfm?id=8664.
'IT-savvy agents to gain', Travel Trade Gazette Asia, September 24, 1999a. Retrieved from http://80-proquest.umLcom.ezproxy.scu.edu.au.
'Learning the Tourism 2-step', Hospitality & Tourism Pow Wow - My Angel.com , May 26,2000. Retrieved from http://www.myangel.comlforumlhospitality/Robin Yap - Transcript.shtml.
'Singapore economy contracts at record rate', International Herald Tribune, July 10, 2003.
Tan, W. 2000, 'Insight incentivises agents', Travel Trade Gazette Asia, December 15, 2000. Retrieved from http://80-gateway.proquest.com.ezproxy.scu.edu.au.
'Training part of bigger plan', Travel Trade Gazette Asia, April 16, 1999b. Retrieved from http://80-proquest.umi.com.ezproxy.scu.edu.au.
'Trying to make it all worthwhile', Travel Trade Gazette Asia, May 4, 2001. Retrieved from http://www.ttg.com.sg/currentlarchive/2001/0504-10/co0520010402.html.