J. Service Science & Management, 2010, 3, 272-280
doi:10.4236/jssm.2010.32033 Published Online June 2010 (http://www.SciRP.org/journal/jssm)
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A
Theatre-Based Experimental Study
Giuseppe Catenazzo1, Emmanuel Fragnière2
1Haute École De Gestion De Genève, Carouge Ge, Switzerland; 2Cia, The University Of Bath, Haute École De Gestion De Genève,
Carouge Ge, Switzerland.
Email: {giuseppe.catenazzo, emmanuel.fragniere}@hesge.ch
Received January 1st, 2010; revised February 16th, 2010; accepted March 22nd, 2010.
Airline commissions’ cuts and the use of Internet for bookings have severely affected traditional (physical) travel agen-
cies. To survive, travel agents are redesigning their job as to become travel consultants. However, customers seem not
to be willing to pay for the service provided and current fees are not representative of its perceived value. We have de-
signed a theatre-based experiment to discover the Willingness-To-Pay for a travel agency service experience. Results
show that individuals are not willing to pay anything for an unpleasant experience. By contrast, only 1/3 of the sample
would pay enough for an outstanding service experience to make such a business sustainable.
Keywords: Experimental Study, Theatre, Service Design, Travel Agent, Human Simulation, Service Pricing
1. Introduction
Travel agencies are retail intermediaries that represent a
wide range of leisure and journey services [1]; the role of
the travel agent is to provide travellers with information,
travel documents administration and advices [2]. This
type of business is remunerated through commissions
collected on the wholesales [1].
In the last decade, the overall travel demand has in-
creased (on average +4.1% per year since 1995, source:
World Tourism Organisation, http://www.unwto.org), but
not the traditional travel agencies income: the industry
has been hit by changes that heavily affected their busi-
First of all, traditional commission schemes to travel
agencies have totally changed. Up to 1997, about one
fourth of traditional travel agencies revenue was raised
through airline tickets sales commissions, 67% through
other sources such as vacation and other packages sales
[3]; in the following years this takings model experi-
enced a complete transformation. This is due to the at-
tempt of disintermediation by many travel providers and
travel agencies’ operational costs growth over time [2].
More precisely, airline ticket sales commissions aboli-
tion has put in danger the survival of traditional travel
agencies. This policy started in the late 90s with the in-
troduction of commissions’ cuts and the introduction of
flat fares to agents [4], few years later, in 2002, most
world leading carriers have introduced a 0% commis-
sion’s policy towards their agents. This happened first in
the US in March 2002 at 8 major American airlines, fol-
lowed by Air Canada on April 23rd 2002, and then by all
other international airlines around the world [5,6].
Worldwide, this revenue change in the traditional travel
agencies business lead traditional travel agencies either
to close or consolidate [2]. For example, in the USA,
2,707 traditional travel agencies close between 1995 and
2002 [7].
To fill up such missed income, traditional travel agen-
cies have been diversifying their activities to alternative
more profitable travel products such as cruises and tours
[2,7]. Also, they transferred the commissions’ revenue
straight to their customers by introducing a booking or
service fee [2,8,9]. However, to save such charge, most
travellers have quickly turned to the Internet and to
phone booking centres [2] where they can make reserva-
tions at their convenience using their own debit or credit
In addition to fees’ schemes altering, the traditional
travel agency industry has suffered because of a fast
growing use of information communication (ICT) de-
vices in the industry. The shape of the whole travel in-
dustry rapidly changed since ICT allowed tourism ser-
vice providers a more easily disintermediation. Also,
Internet-based agencies have entered the market and
tighten competition in an industry characterised by sev-
eral small independent retailers, low entry barriers, and
low return businesses. Since use of the Internet for users
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study273
has spread and become more comfortable to people, tra-
ditional agencies have been facing a more challenging
competitor [10].
To survive, travel agencies need to redesign their job:
at present time, they are slowly transforming themselves
into travel consulting bureaus rather than booking centres
[7,11]. This can happen since in the travel industry, in-
formation and knowledge play a strategic role [12], espe-
cially when devising composite organising and intricate
travel packages [7]. Thus, according to Bennett and Lai
[11], traditional travel agencies strategies need to focus
on personal service to provide the customers’ profes-
sional advice and added-value services. Also, they should
treat Internet and other ICS as an opportunity, not as a
The travel agent’s job then becomes a knowledge-
based service of high added value [2]. A knowledge-
based service can be described as a service delivered by
highly trained providers that offer a high quality service
designed to meet the customers’ needs [13]. This defini-
tion seems to fit well to the job of the traditional travel
agent work that deals with understanding the customers’
requirements and providing them with high-added value
services [10]. This innovation in the industry has been
advocated by Morgan & Trivedi [14] who point out that
the travel agents value relies on the customers’ need of
understanding, not in the booking process.
In operational terms, this means that customers trans-
fer to the travel agent the care to find the package that
best fits with his/her expectations. This is a high inform-
ation and fares selection process necessary to design the
best self-tailored package [4].
The relevancy of service quality and expertise sharing
in the service provided by traditional travel agencies has
been proved in an empirical study conducted in Hong
Kong by Lam & Zhang [15]. The two authors have con-
ducted a survey research among 209 travel agents in
Hong Kong in which they evidence a large breach be-
tween customer expectations and perceptions. Moreover,
they outline that corporate image is not a factor that in-
fluences the perceived service quality. So, yet in 1998,
the two authors suggested travel agencies to focus on the
human capital and make investments on it. In practise,
the implementation of a long-term plan of training and
management of employees was supposed to be the right
direction to improve the quality of the service provided
and guarantee the survival of agencies.
The gap between travel agencies and customers’ ex-
pectations has also been studied through game-theoretic
tests. A sample of 198 hotel customers who booked a
hotel room through a travel agent in the six months be-
fore their stay have been tested: results show that the
higher the room rate, the less the value perceived by the
consumer and vice-versa [14].
Expertise and know how (i.e., tacit knowledge) repre-
sent the added value provided by travel agencies. This is
confirmed by an international online survey conducted
upon 132 individuals. The research has pointed out that
travel agents are perceived as more effective than the
Internet in terms of providing a more comprehensive idea
of the destination as well as of the whole journey. Also,
the quality and the choice of the information offered are
better than those provided by Internet [16].
But the role of ICT is also important for travel agen-
cies to survive and being competitive. This is the main
finding of a survey research conducted among random
sample of 84 Canadian and 83 New Zealander travel
agents designed to assess the relevancy of ICT systems
among the travel industry [12]. Again, as put above, the
Internet and other ICT tools need to be seen as an oppor-
tunity, not necessarily a threat [17]. Lewis et al. [2] iden-
tify the upcoming challenges of the traditional travel
agency industry need facing the following list: providing
added-value services, making ICT use successful and
developing customers’ loyalty. The latter needs to be
improved: only few traditional travel agencies have and
use customers’ databases to build effective marketing
and sales strategies [10].
In Switzerland, travel agents are professionals in cha-
rge of informing, counselling, organising travels as well
as providing accommodation, transportation and some-
times tour guide services to the travellers (source: Swiss
Federal Office of Statistics http://www.bfs.admin.ch). In
this country, the major airline “Swiss International Air
Lines Ltd” cut commissions to its agents in 2005 (source:
According to IATA, the International Air Transporta-
tion Association (source: http://www.iata.org), the Swiss
demand for flying is estimated at around CHF 3 billion
per year. This means that, assuming an airline ticket duty
of 7%, which was the most common charge to flying
carriers between 1998 and 2002 [6,7], the whole Swiss
travel agency industry has lost approximately CHF 210
million per year.
In addition to these losses, 2005 data highlight that
only one third of overall travel bookings were made
through traditional travel agencies [13,18]. This trend has
been confirmed in 2006, with “more than one fourth of
Swiss making reservations for their holidays through the
Internet that equals the traditional travel agencies” [19].
We learn from service science theory that it is not easy
to price a service. This happens because of the character-
istics of services that are, by definition, intangible, het-
erogeneous, instantaneous and perishable. Services are
intangible goods: their production results in the creation
of immaterial value. Such goods are invisible for the
customers; the lack of standards to judge them objec-
tively makes the production of services a pure individual
experience. Also, the service experience is encountered
by individuals: it is unique since non-replicable and then
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study
instantaneous. Indeed, most of the time, the production of
a service results from an individual-to-individual transac-
tion. Finally, services are perishable as it is impossible to
stock, re-sale or give them back [20-22]). The pricing of
a service relies upon three pillars: internal organisational
costs, the competitors’ prices and the perceived value by
the customers [20].
However, customers do not always perceive such
value: making individuals aware of the worth of intangi-
bles is not easy, not all individuals acknowledge it and
perceptions may differ a lot. In the case of the travel
agencies, a survey research conducted in the Geneva area
in 2006 has evidenced that clients are aware of the value
of the service provided but they are not ready to pay for
it [23]. Further analysis on Geneva customers has high-
lighted the importance of the travel agents’ expertise: this
knowledge is considered as very useful but, again, indi-
viduals are not willing to pay to benefit of it [13].
In this research, we attempt to explore the perceived
value of a service experienced by a customer between the
travel agency walls. Thus, we aim to discover individu-
als’ Willingness-To-Pay (WTP, see for example [24,25])
for a travel agency service experience. Therefore, would
like to know whether travel agencies provide sufficient
perceived value to their customers to be profitable [24].
To attempt to provide an answer to this concern, we
have designed a theatre-based experimental study to
identify some key patterns associated to this issue: ex-
perimentation is widely used in many environmental,
psychological and service science studies to attempt to
detect WTP for services or non-marketed goods [26-28].
This paper is organised as follows: in the next section,
we present the methodology employed in our experi-
mental study. We also outline the importance of using
human simulation in making visible the value of such
service experience. Then, we present the main results of
our experiment and hypotheses have been validated
through non-parametric statistical tests.
2. Methodology
To attempt understand individuals’ WTP for the travel
agent’s service, we have made a theatre-based experi-
ment. Tests were held at two separate groups of subjects
(mainly adult professionals working in the public or pri-
vate sector) who attended the Geneva Haute École de
Gestion annual Symposium, on November 28th 2007.
To make visible the travel agent service experience,
we have designed a short theatre libretto played before
our subjects. The choice of a theatre experience relies
upon a well-established tradition of these techniques in
business. Theatre for business and organisations has also
been recognised to have didactic qualities: it is consid-
ered as extremely useful for teaching communication,
improving the oral expression, ameliorate employees’
sales techniques, languages teaching and learning. Also,
it is acknowledged to have pedagogic merits such as
making individuals feel part of a group, being a manager
and making communication easier, [29].
Furthermore, a survey on business students and execu-
tives who have followed a theatre-based training agree by
underlying the importance of the theatres’ development
[30]. Finally, theatre-based techniques allow overseeing
individuals in their completeness: this means that indi-
viduals’ intellectual, physical and emotional dimensions
are explored [31].
Thanks to this acknowledged usefulness of theatre in
solving management and organisational issues, we have
designed a theatre-based experiment representative of the
service production and consumption in a Swiss travel
agency. We have used theatre-based techniques in order
to price the perceived added value of a typical travel
agent service in Switzerland.
We call by “theatre-based experiments” tests held in a
theatre-like space, in which there are two parties: actors
and spectators. We plotted two hypothetical Swiss travel
agency services and customer experiences and made
them visible to two independent groups of individuals.
Two professional actors (a man and a woman) on stage
had to play two scripts showing two travel agents’ consu-
lting service experiences and spectators were asked to
price them through the customer’s side. More in detail,
actors played two scripts: a very low quality travel ag-
ent’s service experience followed by a high standard one.
In the very low quality service experience, the custom-
er, Mrs Pittet, an upper-class Geneva woman goes to a
travel agency to organise a tour in Andalusia for a group
of friends and herself. She regularly goes to that agency
and she is always satisfied by the services provided by
Mr Paul, one of the employees working there. However,
that day Mr Paul is absent and another agent (man) is at
her service. Mrs Pittet asks him for a personally designed
tour in that region of Spain. She expects an outstanding
travel, regardless of the total price of the journey. The
agent doesn’t show a customer-oriented behaviour: he
suddenly answers a personal phone-call and then at-
tempts to propose Mrs Pittet a catalogue-based tour. He
is not an expert of Spain, he neither speaks Spanish but
according to him, going to Spain is “an ordinary trip,
everybody knows where to go and what to see”. So, he
insists on the quality/price of the packages on the cata-
logue that he continues to show her. Again, Mrs Pittet
makes clear that the budget is not a priority and she
wishes a personally designed and unforgettable adven-
ture: the travel agent still continues to show his confi-
dence towards the tour operator he has got several cata-
logues on hand and on his table. After a few minutes, the
customer, nervous and unsatisfied by the agent’s attitude,
leaves the agency.
The second play shows a very high-quality travel
agent service. The customer is a direction secretary
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study275
(woman) who is tired, sad and anxious as the directors of
the company she works for have decided to fly from Ge-
neva to New York a few days later. This travel must be
planned in a hurry and the directors always have high
expectations. They will go to the American city for busi-
ness and for shopping for a few days. The travel agent
(man) starts by welcoming his customer and then listens
to her requests. He attempts to reassure the customer,
offers her a glass of water and when his mobile phone is
ringing, he turns it off. He is a very professional man; he
attempts to make his customer at ease and answers to all
of her requests. Finally, he promises the customer to send
her a bid the day after, gives her a business card and,
again reassures her that everything will be fine. The cus-
tomer leaves the agency reassured, relieved and thankful
to the travel agent.
The two scripts were played in front of a group of
spectators: we repeated the test twice, with two inde-
pendent groups of adults who could not communicate
with each other. So, on the public side, a group of spec-
tators (35) assisted to both plays (5-8 minutes each).
They were then asked to freely state their Willing-
ness-To-Pay (WTP) [23-25,32]: each had to price the
service experience as if she/he were experiencing it from
the customer’s side. WTP had to be elicited for both
scenarios. The spectators were provided with a sheet of
paper for both experience and were asked to write down
their WTP in Swiss Francs.
The same experiment was replied with a second group
of subjects (42) that could not interact with the first one.
Each individual of the second group assisted to both
plays and then was asked to elicit her/his WTP. For this
second experiment, the spectators were asked to state
their WTP by choosing among the following possible
answers: CHF 0, CHF 50, CHF 100, CHF 150 and CHF
200. Each individual of this second group was asked to
elicit her/his WTP for both scenarios.
3. Operational Definition
This experiment has been conducted in the occasion of
the Geneva Haute École de Gestion Symposium entitled
“Draw-me a service! Private and public administrations:
new techniques to conceive and appraise your services”
which took place on November 28th 2007 in the buildings
of the school. During all day, participants were intro-
duced to the underlying service science issues together
with a selection of best practises relating to both the pri-
vate and the public sectors. Each participant, mainly
adults active in the locally-based private and public or-
ganisations paid CHF 170 for the whole day: among oth-
ers, this gave us the opportunity to funding our tests
made with the help of professional actors.
Thus, the experiment was held during the afternoon
when participants had already been introduced to the
main basic concepts of service management, that is to
say, the IHIP paradigm (Intangibility, Heterogeneity,
Instantaneity and Perishability, see [20-22]) and its prac-
tical applications.
Several participants (77 subjects in total) chose the
two parallel sessions called “Service Design Workshop”
without being informed in advance about the experiment
Two scripts were written by Mr Gaëtan Derache, a
Lecturer in Communications at HEG, and attempted to
show in a humoristic way two opposite service experi-
ences: a low quality or unpleasant experience and a high
standing one in which it was possible to outline the ex-
pertise and quality of the service provided. This clear-cut
difference among the two service experiences was de-
signed with the aim to make obvious the huge gap occur-
ring between them.
The choice of using professional actors was driven by
two main factors: first of all, their expertise in playing
different roles in front of a wide public was judged as a
condition sine qua non to make the representations
credible towards a group of adult spectators paying to
assist and participate to the experiment. Secondly, pro-
fessional actors are able to replicate the plays several
times in an identical manner. These conditions allowed
us to replicate the experiment twice in front of two sepa-
rate groups of adults.
We can mention a few issues related to the experiment:
first, because the two groups are independent our ex-
periment falls in the category of independent measure
design which is also known as between subjects design.
Second, in terms of factors, the dependent variable cor-
responds to the WTP stated by the respondents and the
independent variable is represented by the individuals’
perception produced by the two scenes played by the
professional actors.
The physical environment in which the professional
actors played the scripts, i.e., the School annual event,
the classroom, the day of the week, the stage of the
plays… that might have influenced the individuals’ per-
ceptions have not been changed along the experiments.
Thus, the environmental variables could be as much as
possible kept under control since, in the same day, time
and place individuals have participated to an identical
The experimenter asked the participants to the experi-
ment to sit in the classroom and to watch the coming
short play to be presented in front of them. After the end
of the demonstration, the experimenter asked the partici-
pants to state their WTP for this service experience by
writing it on a provided document. Participants were not
allowed to communicate with each other during and after
the experience. (see Figure 1)
This document was then collected to all participants;
afterwards, the second play followed. Again, after the
end of the play, the experimenter asked the tested adults
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study
to state their WTP for the service experience they have
just observed by writing it on a provided document. (see
Figure 2)
After collecting this second document, an explanation
of the experiment followed together with participants’
questions and suggestions.
Immediately after that the first group of tested indi-
viduals left the classroom, a second group entered into
the classroom without any contact with the previous one.
The same experience was replicated with the same tech-
nique as described above. The only change that was
made concerns the documents on which the participant
had to state their WTP. For this second round, the fol-
lowing document model (Figure 3) was provided.
This means that individuals were not free to elicit their
WTP at their convenience but had to choose among the
four possible provided answers, i.e., CHF 0, CHF 50,
CHF 100 and CHF 200. The choice of this scale is moti-
vated by what we have learnt by a first attempt on how to
price the service of the travel agent. CHF 0, CHF 50,
CHF 100 and CHF 200 correspond to the fixed fee
scheme that we have observed in Geneva main streets
agencies. We have chosen a maximum choice of CHF
200 as this represents the acknowledged fee enabling the
travel agency to be profitable when packaging a full
journey. Thus, we assume that people selecting CHF 200
might have a higher or equal WTP to this amount. The
How much would you be willing to pay for this service?
CHF .-
Figure 1. Play 1, 1st round
How much would you be willing to pay for this service?
CHF .-
Figure 2. Play 2, 1st round
How much would you be willing to pay for this service?
CHF 0.- CHF 50.- CHF 100.- CHF 200.-
Figure 3. Play 1, 2nd round
consistency of this scale is then verified when comparing
the experiments associated with the overall free scale.
The above document was submitted to assess the WTP
for the first play, i.e., the unpleasant service experience.
Again, the participants to the test could not interact with
each other. Then, the filled forms were collected, and the
second script was played. Spectators were asked to state
their WTP for this second play on the following docu-
ment (Figure 4).
At the end of the plays, this second document col-
lected, an explanation of the experiment followed to-
gether with participants’ questions and suggestions.
4. Results & Hypothesis Testing
We collected all papers and coded data with SPSS 15 for
Windows software. Here follow the main findings issued
by the analysis of the data collected.
For the first service experience, i.e., the low quality
and unpleasant service experience, the stated WTP for
both rounds is CHF 0 as collected in our sample. This
means that in both cases, the elicitation tool (free WTP
elicitation document and the multiple choice one) has no
influence on the results. All adults who participated to
the test agree not to be willing to pay anything for the
service experience they had just observed.
The second service experience, that is to say the high
quality service experience leads us with different WTP.
First of all, participants who assisted to the first round
and were free to elicit their WTP show a mean WTP of
CHF 220.29 with a standard deviation of CHF 276.20.
The median WTP is CHF 100 and the mode is CHF 100,
on a range spanning from CHF 0 to CHF 1000.
For the second round, where individuals were asked to
state their WTP according to a provided scale (CHF 0,
CHF 50, CHF 100 and CHF 200), the mean of the elic-
ited WTP is CHF 117.85. The median WTP is CHF 100,
the mode CHF 100 and the standard deviation CHF
66.09. In this second sample, the stated WTP spans from
a minimum of CHF 0 and a maximum of CHF 200.
Thus, we can affirm that most spectators are willing to
pay for the second service experience. Although the stated
WTP does not assure that individuals would accept to
pay the elicited amount [26,28], we can affirm that indi-
viduals perceive a value in the second service experience
How much would you be willing to pay for this service?
CHF 0.- CHF 50.- CHF 100.- CHF 200.-
Figure 4. Play 2, 2nd round
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study277
and are likely to pay for it. This result is confirmed by
other researches in the tourism sector in which it is evi-
denced a positive relationship between customer satisfac-
tion and stated WTP [25]. Frequencies for both rounds
on the second service experience can be visualised as
follows in Figure 5.
If we compare visually the two rounds WTP distribu-
tion as presented in Figure 5, we can see that Round 1
distribution displays more granularity than Round 2 dis-
tributions. This seems to be logical since participants
could write down their WTP as they wanted. Neverthe-
less, both medians are identical. Moreover, looking at
both samples, we notice that roughly one third of re-
sponses indicate a WTP of greater or equal than CHF
Furthermore, we have tried to replace CHF 200 in
round 2 answers’ by CHF 509. This value has been cal-
culated as the mean of equal or higher WTP than CHF
200 in round 1. In this way, for both samples, we obtain a
mean WTP of CHF 220.
As previously mentioned, the break-even point for a
travel agent’s service can be estimated at roughly CHF
200. This means that below this level, operational costs
would be higher than revenues and several agencies
won’t be able to survive. Thus, we hypothesise that the
value of a service experience perceived by clients must
be far higher than its production cost to ensure the eco-
nomical sustainability of the service. This is a condition
sine qua non when making WTP and Price What You
Want (PWYW) experiments: stated or observed cost
need to be equal or higher than providers’ operational
costs [24].
Consequently, regarding the travel agency context, we
would like to test if a typical travel agency service ex-
perience can provide sufficient intensity in terms of value
perception to make people willing to pay enough to make
this business profitable in the long run.
Official data for 2005 and 2006 announced that only
one third of travels are booked through travel agencies
[18,19]. This means that two thirds of the travels are re-
.0 0
Round 1
Round 2
Figure 5. WTP distribution (1)
served through other means. In our experiment, partici-
pants had the opportunity to see an outstanding service
experience and were asked to price it. Thus, we would
like to see in our experiment whether the proportion of
individuals willing to pay CHF 200 or more the service
experience differs from the current knowledge of one
third buying through traditional travel agencies. For this
reason we have designed the following hypothesis
Ho: There is a proportion of 2/3 of individuals whose
WTP is inferior to the required travel agency service fee.
Ha: There is not a proportion of 2/3 of individuals
whose WTP is inferior to the required travel agency ser-
vice fee.
To test this hypothesis we have used a test called “bi-
nomial test for a dichotomous variable” [33] with a test
proportion value of 0.666 that is to say 2/3 of the sample.
To make the test, we have recoded all values in order to
have a dichotomous variable that relies upon two WTP
classes: stated WTP under CHF 199 (Group 1) and stated
WTP equal or superior to CHF 200 (Group 2). Thus, if
the test shows that 2/3 of the sample is willing to pay a
sum inferior to CHF 200 for the travel agent service, and
then the other 1/3 is. Otherwise, we shall reject the null
hypothesis and retain the one affirming that there is a
different proportion between those willing to pay more
than CHF 200 and those who are not.
We have tested the whole sample answers (round 1
and round 2) to verify our hypothesis. (see Table 1)
The p-value of the test being 0.363, we fail to reject
the null hypothesis. On the basis of the test we have made,
we can affirm that 2/3 of individuals have a WTP which
is inferior to the required travel agency service fee. We
can then conclude that only 1/3 of the sample is willing
to pay for at least the mainly adopted fixed fee by the
Swiss travel agents.
We have also checked whether there are differences
frequencies between the sample two rounds. Again, we
have used the dichotomous variable as in the previous
test. Participants assisted to the same service experience,
but they were not allowed to interact with each other and
they had different elicitation tools (free statement, pro-
vided multiple choice scale). We can visualise the distri-
bution of the answers provided by the two rounds
through cross-tables and diagrams (Table 2).
Table 1. Binomial test
Category N Observed
WTP Group 2WTP < 200 49 0.636 0.666 0.323(a)
Group 1WTP > = 20028 0.364
Total 77 1.000
a. Based on Z Approximation.
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study
Finally, we have made an additional to verify whether
significant statistical differences exist between the two
rounds we have made a test called “Chi-square for two
unrelated samples”. This test has been designed with the
aim to check whether the elicitation tool used to measure
subjects’ WTP for the second plot makes statements sig-
nificantly differ between round 1 and round 2. For this
reason we have designed the following hypothesis scheme:
Ho: There are no significant differences between WTP
stated between the two rounds
Ha: There are significant differences between WTP
stated between the two rounds
Table 2. Cross table: round 1 * round 2
Round 1 Round 2 Total
WTP < 200 21 28 49
WTP WTP >= 200 13 15 28
Total 34 43 77
WTP > = 200 WTP < 200
Round 1
Round 2
Figure 6. WTP distribution (2)
Table 3. Chi-Square tests
Value df Asymp.Sig.
Exact Sig.
Exact Sig.
Pearson Chi-square 0.092(b) 1 0.761
Continuity Correc-
tion(a) 0.004 1 0.948
Likelihood ratio 0.092 1 0.762
Fisher’s Exact Test 0.814 0.473
Association 0.091 1 0.763
N of valid cases 77
a. Computed only for a 2 × 2 table
b. 0 cells (0.0%) have expected count less than 5. The minimum ex-
pected count is 12.36.
The p-value of 0.761 for this test show lets us to
fail-to-reject the hypothesis of differences between the
rounds. We can then affirm that there are no statistical
difference in the dichotomous variable provided by the
spectators of the first and the second round.
5. Conclusions
Traditional (physical) travel agencies are suffering the
current changes in the tourism industry. This is caused
mainly by the cut of airline commissions and the use of
Internet that offers customers direct booking to travel
service providers as well as web travel agencies. Both
factors have severely affected the travel agency industry
that should redesign itself. Thus, travel agents shall be-
come travel “consultants” or travel “experts” instead of
booking employees.
Therefore, we assist to a change in the job of the travel
agent, which becomes more and more a high added-value
service. Customer service associated with technical
knowledge and the agent’s expertise become crucial in
the production of the travel agency service experience.
The value of the service provided must be well ac-
knowledged by customers who should accept to pay the
agencies an adequate sum to make this kind of business
profitable. So, the overall customers’ willingness to pay
(WTP) for travel agency services experience should be
sufficient to cover the agencies’ operational costs and to
make profits.
To deal with this service pricing issue, we have de-
signed a theatre-based experiment that has been run on
77 subjects participating to a Geneva Haute École de
Gestion annual event presenting service management
issues for both private and public organisations. Two
professional actors have played two scripts in which they
showed the spectators two opposite travel agents service
experiences: a low quality and an outstanding one. At the
end of each play, participants were asked to state their
WTP for this service experience. The same service ex-
periences were showed to two different groups of adults
that could not interact with each other but had different
WTP elicitation tools. Participants of the first group were
free to state their WTP for both service experiences on a
provided document while those of the second group
should choose their WTP on the basis of a provided scale
(CHF 0, CHF 50, CHF 100 and CHF 200).
Since the travel agencies operational costs for a travel
package can be estimated at about CHF 200, we have
gathered together the two rounds data and divided them
into two sets: values below CHF 200 and those equal or
above this sum. This has allowed us to have a data set in
which it was possible to identify the individuals willing
to pay a sufficient travel agency fee to make their busi-
ness sustainable and those who are not, and would rather
use alternative tools to organise their travels.
Official data show that in Switzerland, in 2005 and
Copyright © 2010 SciRes. JSSM
Pricing Traditional Travel Agency Services: A Theatre-Based Experimental Study279
2006 only one third of travels were booked through
travel agencies. We have conducted a non-parametric
statistical test to verify whether the same proportions
apply to our small sample that assisted to a human simu-
lation of an outstanding travel agent service experience.
Our test evidenced that the same proportion apply to our
participants: 2/3 are not willing to pay a sufficient sum
for the travel agent service to cover its operational costs
and being profitable. Also, a further test has evidenced
that no significant statistical difference exists between
the stated WTP of participants to the first round and to
the second one.
Finally, we can conclude that only one third of cus-
tomers are willing to pay a sufficient fee for a travel agency
service experience. The perceived value of the service
provided expressed in monetary terms is in a general
manner not sufficient to cover the agencies operational
costs. In fact, people are not ready to properly assess the
value provided by the travel agent. We have observed
this attitude in real context since in the past years agen-
cies services were provided for free. Consequently, their
worth might not have been fully acknowledged.
6. Acknowledgements
An earlier version of this paper was presented at the 4th
International Conference on Services Management “Mana-
ging Services across Continents”, Oxford Brookes Uni-
versity, UK, May 8-9, 2009. Thus, we would like to
thank these participants as well as an anonymous referee
for their valuable feedback.
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