Rivalry
In 2006, there are 145 travel agencies registered in Macau, a 34% increased since 1999 at moderate growth rate. However, lack of bargaining power information between competitors, they are offering similar products in the eyes of consumers, and due to ease of mobility to Zhuhai and Hong Kong, that they becomes two of Macau’s main competitors; this create a high intensity in the travel agency industry.
Stakeholders
Stakeholders include a wide range, in travel agency industry, the dominate ones are the local and destinations governments, local citizens, academic institutes, unions, Destination Marketing Organization; special interest group, e.g. environmental friendly organizations; other merchandisers e.g. oil provider, media, etc. Comparatively, governments are the most influential one because it has the power to establish law and regulation to affect the whole industry.
Complementors
In order to make travel agency industry runs more competitive and add value on, some sort of suitable cooperation has to be made, e.g., attractive souvenir, badge, etc.
Like some event companies, they are also considered as the complementors because they also purchase the tour service from travel agency for their clients as value added entertainment besides the meeting.
Summary of External Factors
After the analysis of the company background and its external environment, the followings forces are considered as the most important ones to the company and to the industry.
Firstly, in the economic aspect, the liberalization of the gaming industry helps to boom the whole economy of Macau. Thus, people acquire more disposable income and their interest to go traveling also increased a great deal. The increased traveling desire of people is really very important to the profit-making of the company. However, the establishments of those grand casinos which provide attractive remuneration packages grab a pool of talented employees from most companies, especially from the small and medium enterprises. This will definitely cause a loss of labour and thus will be more difficult to retain employees so as to maintain the quality. While for Macau Express, commission, training and the harmonic atmosphere between the employees can help retaining them. Moreover, internships can also solve the labor shortage problem. Also, although the average income of household in Macau has increased, the currency of most South-East Asian countries is experiencing inflation, this causes the value of pataca (MOP) becomes relatively low, so that it will decrease the purchasing power of people when travel in those areas.
Besides, the demographic structure of the society has changed, resulting in aging population. Since most elderly are psychocentrics, they would prefer joining the tour packages as they think this way can ensure them safety and convenience. The low- birth rate also affects the travel pattern, since most people will only give birth to one child and try to let them learn more through traveling when they are still small. They will even spend a lump sum joining the learning tour during summer holiday.
Moreover, the launching of low cost airlines in these few years encourages and enables more people to travel; their traveling pattern has also changed dramatically due to online reservation system. They can book their tour individually and become less dependable on travel agencies. As a result, in order to maintain and attractive more potential customers, it is necessary for travel agencies to provide professional tailor made tour service.
There are also several elements influencing this particular industry, as mentioned above, buyers have higher power and obtain stronger position. In the aspect of service industry, the profit depends wholly on customers --- buyers, thus this factor plays an important role in this industry. Besides, buyers also expose to a number of choice arising to substitutes, including product for product substitution and generic substitution. They can rather plan their own tour and travel by themselves or they can spend their money on other entertainments, like enjoying a musical orchestra, dining in a high class restaurant, etc. Furthermore, the stakeholders are also an essential factor for consideration. As a primary stakeholder, government surely has sufficient bargaining power to affect the outcomes of the company, for example, changing the tourism business policy might inevitably affect the operation of the company. Besides, academic institute, like IFT which offer special programs to train potential talents to engage in the managerial level in the travel industry. Last but not least, the local community might suffer from the outcome of over carrying capacity of the destination, resulting in annoyance and unwelcome in receiving tourists.
The above factors will affect both the present and the future development of business.
Internal Environment: Strength and Weakness
Summary of Internal Factors
After analyzing the internal environment of Macau Express Travel Limited, there are factors of core competences in terms of the strengths of the company. Having the strong support from Xpress group and also direct business relationship with Air Macau are considered as distinctive competencies comparing with other travel agencies in Macau.
Among these two distinctive competencies, the former is considered as the dominate one.
However, there are some factors hindering the growth of Macau Express. Mainly are slow decision making and not popular and well- known relatively in the Macau region. Most importantly, lacking of innovative ideas on package design is considered to be the most important factor to the company and its industries in which it competes at the present time and in the future. This concern might either be an obstacle in building up brand recognition or even loss in the competition in the future trend.
Analysis of Strategic Factor – Situation Analysis
Strategic Alternatives
Macau Express Travel Limited has adopted the differentiation business strategy because they try to differentiate itself from other travel agencies by concentrate in niche segment as a potential market of Macau. This is really a practical strategy, as mentioned by Gee, Boberg, Choy and Makens (1990), “Travel agencies are increasingly being forced to find market niches rather than attempting to serve the entire general public as well as the commercial sector.” Therefore, Macau Express set unique products and services such as tailor-made tours and newly trendy tours that competitors cannot copy from, and maintain a good relationship with customers by providing update promotions and following up on their needs and comments after tour. Then, the customers will become less sensitive to the price because of the brand loyalty and unique product. This strategy can be associated with design, brand image, technology, research, dealer network, and customer service.
Besides, according to Ms.Kou, the Board and management will also continue strategy of focusing on developing links between travel operators in Japan, Singapore, and Korea etc in order to expand more quality outbound tours in foreign countries and capture more market share; thus this is a unique strategy to be outstanding. According to Evans, Campbell and Stonehouse (2003), to develop some form of joint development with other organizations by making some form of collaborative arrangement is also a strategic objective for an organization.
Due to the developing of society and the changing of lifestyle, there are opportunities and threats arise in the business of Macau Express Travel Limited. Therefore, the company has to develop some strategies to deal with these external factors. According to Faulkner, Moscardo and Laws (2001), there are some changing socio-demographic factors that are important to note and much attention has been given to the consequences of an ageing population. Therefore, for the long-term issue of social demographic change due to aging population and low birth-rate, there is an opportunity for Macau Express to launch tailor-made tours for this niche segment. For example, tailor-made a tour that combines of easy and comfortable itinerary, hygienic and healthy food, short-haul flight, medical treatment and a patient tour leader with first aid skill for the elderly market segment; a tour that have both leisure and education activities, family oriented activities and theme parks for the small-size family. As mentioned by Gee, Boberg, Choy and Makens (1990), with the demographic and psychographic data can ensure the agent to custom design a travel package that meets with the client’s lifestyle. Also, the opportunity of households having more disposable income for traveling due to the economic booming, Macau Express can offer niche tours much more focus on woman. According to a study done by Marybeth Bond (), it shows that of those who currently take nature, adventure or cultural trips, 75 percent are women. Also, Macau Express can form alliance with travel operators in Taiwan and other countries as there is a trend for parents in taking tours for the reason of attending the graduation ceremony of their children. Besides, there is a trend of more young people demanding of SIT packages, so Macau Express can develop strategy to cooperate with Air Macau to provide air tickets, hotel room packages and semi-tour. On the other hand, the threat of fluctuated exchange rate of the South East Asian currency caused Macau Express to apply strategy of alliance with travel operators in S.E. Asia countries to stabilize the currency. According to Sheldon (1997), the application of information technology in service industry is critical to growth and success. Besides, information technology has more recently become an important strategic weapon for competitive advantage (Ribbers, 1994). Nowadays, more people are less dependent on travel agencies since information and booking can be obtained and done easily through internet, in order to cope with this threat, Macau Express should launch their own website that contains product and price information, booking platform and online payment system. According to Cash (1992), as shown in the figure below, for travel agent, there is high information technology impact on marketing and also relatively high impact on production.
Figure: Impact of IT on different industries. Adapted from Cash et al. (1992).
Since Macau Express Travel Limited belongs to the Xpress group, there are both strengths and weaknesses in the internal environment as being part of the Xpress group. Also, since Macau is very close to Hong Kong, thus many decisions and research were done and also based from Hong Kong situations. That means all the decisions making are mainly and solely based from the top management from Hong Kong Express. Thus, it is somehow considered that the Hong Kong Express leads and rules over Macau Express. This makes Macau Express lacking its own power in terms of its decision making, research and development of the branch. Therefore, Macau Express can have its own research and development, then alternative configurations are feasible depending upon local market conditions and available resources (Gee, Boberg, Choy and Makens, 1990). However, it has strong financial support from the Xpress group, so it can make use of that potential strength in building up its brand recognition. In the following, there are several major feasible alternative strategies available to Macau Express in order to engage in better development of the company and brand recognition.
In order to maintain the loyalty of internal customers (employees) and external customers, Macau Express Travel Limited can improve the technology and launch a homepage where customers can obtain information and make booking easily, while the Intranet within the website allows the employees to effectively share information and freely express their opinion and comment. As mentioned by Sheldon (1997), the usage of information technology system should involve input from all employees in the firm, besides; they should be invited to provide feedback through the system. Also, employees can also participate in some travelers’ forum and bulletin boards, to discuss and answer travel queries from the customers. This is quite concern with the empowerment of employees, empowerment allows an organization to use its employees more effectively, while benefiting the customers and the organization (Ross, 1999). Moreover, according to Gee, Boberg, Choy and Makens (1990), “Marketing is the performance of all business activities that direct the flow of goods and services to consumers in order to satisfy customers and accomplish company objectives.” Therefore, Macau Express can also build up a database that records all the customers’ information and preference, so that customer can be followed up after previous trip, and promotional information can be sent frequently through email. This is referring as database marketing of using a relational database to capture information on clients for better customized marketing and used to manage frequent traveler programs. (Sheldon, 1997)
Furthermore, Macau Express Travel Limited can efficiently capture the elderly customers through sponsorship in some elderly activities, for example, TaiChi competition. It is because with more exposure of the brand name, enable the elderly to strengthen the memory and image in their mind.
Evaluation of financial situation
Since for the nature of the travel agency, most of the profit gained is based on commission of service, therefore, the cost of sale is relatively very high. For the first half year, in terms of the total sales, it is 96.44%. Later on, the situation improves a little bit in the second half year with the cost of sales of 0.69% decrease. Also, for the gross profit, there is slight increase from 3.56% to 4.25%. Besides, in the operating expenses, we can see there is also an increase from 4.46% to 4.63%. The reason for the increase of the operating expense may be due to the continuous inflation, higher rental expenses, higher miscellaneous and sundries expenses, double paid bonus to employees at the end of the fiscal year, etc. In addition, there are net losses encountered in these two periods, but we can observe that the situation is getting better as the net loss of the later half year compared to the previous half year has decreased to 0.38%. Also, the earning per share amounted to HKD 2.35 cents for the Xpress group in 2007, when comparing to 2006, there is an decrease of HKD 0.92 cents due to the main reason of the decrease of the net profit from HKD 53.1 millions (2006) to HKD 40.1 millions (2007).
Conclusion
In conclusion, there is intense competition in the travel industry in Macau. Although the competition is high, in the other hand, it implies that there is relatively high attractiveness in this industry. As a small metropolitan city, every step of Macau’s development can affect the society a lot. Macau Express Travel Limited should be sensitive in recognition of those changes and use creativity to turn threats into opportunity, adopt appropriate strategies for Macau Express to survive in the increasingly competitive environment and attain success in the future.
In short run, it is necessary for Macau Express Travel Limited to gain the brand awareness by introducing some unique, quality and tailor-made tour and services as they will know the trend of the Macau tourism industry by Research and Development. Afterwards, the brand will become well known among the potential customers and it will become a mature brand. Since more and more people in Macau have to work longer time, most of them would like to travel to release their pressure. What they want is just a vocation and some of them may even want to join a package tour because they do not have enough time to do the planning of their own vocation tour. In long run, by establishing a good brand and reputation, Macau Express Travel Limited can gain more market share and profit will be increased so that it can break even and even gain net profit by steps
(6, 846 words)
Reference
Book Reference
Cash, J.I., McFarlan, F.W., Mckenney, J.L. & Applegate, L.M. (1992). Corporate
Information Systems Management: Text and Cases. Irwin, Boston, Massachusetts
Evans, N., Campbell, D., & Stonehouse, G. (2003). Strategic Management for Travel and
Tourism. United Kingdom: Butterworth-Heinemann
Faulkner, B., Moscardo, G., & Laws, E. (2001). Tourism in the 21st Century: Lessons
from Experience. United Kingdom: Continuum
Gee, C.Y., Boberg, K. B., Choy, D.J.L., & Makens J.C. (1990). Professional Travel
Agency Management. United States of America: Prentice Hall
Hunger, J.D., & Wheelen, T.L. (2007). Essentials of Strategic Management (Third
Edition). United States of America: Prentice Hall
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Heinemann
Moutinho, L. (2000). Strategic Management in Tourism. United Kingdom: CABI
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Poynter, J.M. (1993). Tour Design, Marketing, & Management. United States of America:
Regents/Prentice Hall
Ribbers, P.M. (1994). Strategy and information technology in the tourist industry. In:
Schertler, W., Schmid, B., Tjoa, A.M. and Werthner, H. (eds) Proceedings of
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to Medium-sized Enterprises. United Kingdom: Cassell
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Retrieved May 10, 2008, from Web sites:
Transcript of Interview Questions
Interview I
S----Students
C----Cynthia Cheung, Customer Service Supervisor of Macau Express Travel Limited
Introduction
S: Good Afternoon, Ms Cheung. We are the Year 4 students from the Institute For Tourism Studies; my name is Ida, and my group mates are Emily, Isabel, Mandy, Crystal and Rosina. First of all, we thank you a lot on granting us your precious time and knowledge, in helping us to interpret a better analysis on your travel agency’s strategy management, so as to finish the evaluation part of our academic project. So shall we get start now by asking you questions regarding your company?
C: Yes. Sure.
Part A: Macau Travel Industry
S: Though travel agency industry is not a new industry in Macau, do you think due to no dominate revolution has happened before; Macau is still in a development stage?
C: I believe Macau itself is developing in general. Now that there are many more mega size casinos, hotels and foreign investors which led foreign workforce to Macau increasing both population and causing inflation. The increase of tourists and visit friends and relatives may cause the government to lay down new law and orders that may have never occurred before. Generally, the government is racing with time to adapt to this fast developing city.
S: At the meanwhile, travel agency industry competition is very intense, why Xpress Group still chooses Macau as a location to expand its business?
C: We choose Macau due to its new developments. We foresee that Macau will not only rely on gaming to attract tourists, but putting effort to develop its reputation by entering the World Heritage list and MICE developments.
S: What is Macau branch’s mission, objective and strategies in the eyes of Xpress Group, in order to be outstanding?
C: The branch’s mission is to satisfy our client’s needs for inbound or outbound tourism. To set up, and maintain the group’s reputation in this developing city.
S: Generally in Macau, tourism industry is blooming these few years, in terms of labor market, does that affect you?
C: It does affect us, I believe it affects many other industries.
S: Gaming and hotel industry occupy a very large portion, where the some potential labor may be taken away from you?
C: The general population in Macau is very little compared to neighboring cities, local workforce is only a small portion of the population. Many companies will hire foreign labor from the Mainland. We worry that by employing non locals may affect our service quality due to them being unfamiliar to this city’s infrastructure and customs. To solve this problem we have university undergrads working as trainees, this will also help them on their studies gaining experience in this field.
S: How can you recruit and maintain good quality people and services in the tense labor market?
C: We provide quality working environment, commission for our staff and after probation, they will receive a small share and become a stakeholder of the group’s stock market.
S: How do you think about your staff in Macau branch, are their skill and knowledge good enough to satisfy Xpress? Or, you still demand something more?
C: They are good.
S: How about their skills and knowledge? Do they have relevant experiences and education?
C: Many of our staff are well experienced in traveling industry and worked in travel agencies for a long period of time. There are also sufficient education programs provided by the government’s board of education.
Part B: Goods and Services Provided
S: You are offering various services including group packages, FIT packages, ticketing, hotel reserving, visa, and insurance; which one is your main focus? Why?
C: Our largest profit comes from ticketing, mainly because our staff provides quality service and always do follow up closely to our client’s needs. But recently, FIT packages have been a big hit due to a firm increase of the young generation’s trend.
S: Who are your target segments and how they actually react and consume?
C: Our target consumers are mainly middle class local residents. Mainly because they earn more in recent years and their living standard grew. They would spend more to see and experience more.
S: Moreover, changing lifestyle in Macau affects all industries, how does that affect you? For example, ageing population, higher income group, smaller household size.
C: We provide more luxurious or adventurous packages for the higher income group, more leisure and relaxing tours for the ageing population. Smaller household size will have more disposal money for traveling; therefore it is a change for us.
S: In your experience, what aspects will stimulate your sales on (i) group packages/ (ii) FIT packages/ (iii) ticketing/ (iv)other goods and services?
C: (i) We will promote new packages to new and trendy destinations.
(ii) FIT packages may provide augmented product for example providing free shuttle service between airports to hotel. Or reasonable priced city tours may also stimulate the travelers.
(iii) Maintain a good relationship with our clients. Give them updates on what is on promotion regularly.
- Provide quality service and make them realize that the money is worth paying for.
S: How is your relationship with your suppliers, and how is your bargaining power?
C: We have kept a good relationship with our suppliers because we have ongoing business regularly. Therefore we do have great bargaining power.
Part C: Management
S: Macau Express Travel Limited is under the group of Xpress Group, is it an advantage(s) or disadvantage(s) Macau Express? Why and How?
C: I believe it is an advantage due to a strong foundation and support from the group financial wise.
S: Is there higher pressure in managing, stronger brand recognition, financial support or mutual branches support?
C: I don’t see the pressure in managing, because we follow a practical guidebook of expectations and standard that the group requires.
S: Macau branch is mainly executing plans planned by Hong Kong management team, is one of the top management team in Macau branch an advantage or disadvantage?
C: This is an advantage to Macau’s management team as Hong Kong is usually more sensitive in taste and can easily obtain information of the group. Hong Kong is usually more competitive and sharper when decision making.
S: Is familiarity with Macau’s taste and preference necessary, in enhancing a better decision in designing a better tailor made service?
C: In designing a better tailor make service, the ability of familiar with Macau’s taste and preference is necessary. On top of that, caring and passion about providing a quality service is also important.
S: The top management members have a wide and rich experience in the travel industry aspect, how heir experiences help managing Macau branch?
C: They raise issue on what is missing that as a tourist or frequent traveler would need, prefer and wants. They know what is best in order to keep this branch in operation.
Part D: Financial
S: In 2007, though you had the total sales revenue of HKD3, 600,000 and had a gross profit of HKD144, 000, you made a net loss of HKD150, 000; do you satisfied with the report?
C: As we are still a new to Macau, I believe this is a common reaction. As Macau people are less interested to explore new products. It’s still not a trend to Macau at the moment.
S: Any deviation from your original financial plan? Why?
C: I am sorry. I am not in the ranking to answer this question. Therefore I do not know.
S: Any plans to improve your profit?
C: These plans will be planned by top management level. As my position is to give support after plans have been made.
Part E: Competition
S: How do you position yourself and what is your core competence(s) in Macau branch, is it as a south-east Asia countries expert, or you are still expanding your service?
C: We have a well trained research and development team; we are also expanding in several other countries enlarging our network in East Asia.
S: In what aspect does your company compete with other local and regional travel agencies?
C: Our Company competes with a strong supporting background of the Xpress Group, we have strong business relationships with our suppliers bringing assurance to and confidence to our customers.
S: How do you make yourself stand out and add value by using your core competences in the eyes of consumer and stakeholders?
C: By providing comprehensive information, tailor made packages and follow up on client’s needs and comments before and after they join our packages.
Part F: External Environment
S: Does foreign exchange rate fluctuation affect your company? How?
C: It does affect our cost if other foreign exchange rate has high fluctuation. It may also affect client’s motivation to travel to those countries.
S: Do terrorism and other uncontrollable global concern affect your company? How?
C: Yes, it affects the company because travelers believe it is dangerous to travel to foreign countries, therefore it affects our sales. For example the bomb threats in Bangkok Thailand which is a popular traveling destination. And riots caused by unstable political issues may cause less interest to those destinations. Sudden cancellations from clients due to these unexpected reasons will cause great damage to our profit and expenses.
S: What action do you take to overcome these two elements, or anything more? Why?
C: For exchange rate issue, we sell other countries with lesser exchange rate to increase the traveler’s interest and motivation.
For uncontrollable global concerns, we will avoid going to the high risk destinations and explain to our guests that our package tours are safe because we avoid traveling near the areas.
S: Do low cost airlines lead a cheaper tour rate or carry away your grouped tourist to individual managed tourist?
C: Yes, as low cost airlines mean cheaper tickets, thus we can offer a better value for money price. Low cost airlines attract many FIT travelers as this is a recent trend, but it would not carry away all of the group tourists because there are still destinations that are still unfamiliar to travelers and still there are many people like to join a planned trip instead of having to think of where to go once they arrive. Low cost airlines may require self service in booking flight tickets online, but many people would still rely on travel agencies because they would feel confident and reliable.
S: Do some bad quality travel agents affect customers’ confidence where affecting your company? If yes, how will you help building up confidence in terms of this in the tenser industry?
C: Yes, it affects us.
S: If yes, how will you help building up confidence in terms of this in the tenser industry?
C: All we can do is to provide our best service to gain their confident and let them know that we are reliable.
Part G: Stakeholders
S: Do you think Macau government affects your business?
C: If Macau government changes the regulations and laws that related to travel agencies and tourism industry, it will definitely affect Macau Express’ business.
S: As being a foreign based investor in Macau, how do you think your future in terms of government policy making?
C: Same as the previous answer, it will definitely affect Macau Express’ business.
S: How about heavier tax rate levied on?
C: If Macau Government poses a heavier tax rate on foreign based investor, it will affect the company’s revenues. In this case, we may transfer this cost to the customer by raising the prices. However, this will decrease our competitive in the market.
Part H: Future Trends
S: Have you planned or planning in helping Macau travel industry, or yourself more sustainable?
C: We have to be more innovative in order to grow with the industry, and staffs should keep on updating their skills and knowledge from time to time in order to maintain the competences. Moreover, try to set unique products and services that competitors cannot copy from, and maintain a good relationship with the customers to increase their loyalty to the company, both of these can increase the sustainability of Macau Express.
S: How do you think about Macau’s future trend and how will you cope with your future plan?
C: I believe that Macau’s future will still mainly focus on the tourism industry. There is a trend of international mega resorts establishing in Macau creating more opportunities for us to develop inbound tourism market. Since the mega resorts create many job offerings, Macau residents will have more disposable income, but shorter holidays, there is a trend of domestic tourist.
In addition, I believe that the gaming industry will reach the stagnation stage in the future. So Macau can use Special Interest Tourism to rejuvenate the tourism industry. Moreover, customers are having higher expectations nowadays and are more willing to spend their money, there is a trend of luxurious group tour (e.g. cruise), creating an opportunities for Macau Express to develop the high-end inbound tourism market.
S: Thank you very much for your time and information. This is the end of the interview. We wish you and the company all the best in the future.
END
Interview II
S----Students
C---- Ms. Kou, Customer Service Manager of Macau Express Travel Limited
Introduction
Good afternoon, Ms.Kou. We are the Year 4 students from the Institute For Tourism Studies; my name is Rosina, and my group mates are Ida and Crystal. First of all, we thank you a lot on granting us your precious time and knowledge, in helping us to interpret a better analysis on your travel agency’s strategy management, so as to finish the evaluation part of our academic project. So we get start now by asking you questions regarding your company?
- Macau Travel Industry
S: Though travel agency industry is not a new industry in Macau, do you think due to no dominate revolution has happened before; Macau is still in a development stage?
K: Yes, due to the economic growth in Macau, inbound tourism plays a very important role in Macau travel industry. After several Macau’s attractions have been announced as UNESCO heritage, more and more tourists come to Macau. Also, because of higher income level and increasing willingness to travel, outbound tourism has been dominated. In recent years, more Macau citizens travel abroad and join group tours, especially during holidays. Therefore, each product and service offering in travel agency is considered importantly.
S: At the meanwhile, travel agency industry competition is very intense, why Xpress Group still chooses Macau as a location to expand its business?
K: Well, actually not only us to expand the company here. As we can see that there are really quite a lot of travel agencies have been set up in these few years because of the economic growth in Macau and many of us consider Macau as a potential market in the coming decade. Um…although competition is quite intense in here, I think this is not a disadvantage but is an advantage of increasing competitiveness.
S: What is Macau branch’s mission, objective and strategies in the eyes of Xpress Group, in order to be outstanding?
K: Since Xpress Group’s core focus in travel and hospitality businesses with a vision of becoming a leading travel and hospitality service provider serving global communities, Macau Express Travel Limited is one of the gateways to grasp market share in Macau. Moreover, Macau Express Travel Limited will intend to advocate of tailor-made travel, in order to capture new market segments in this competitive market and satisfy different demands in order to develop its own brand name to achieve international recognition in the coming years. Also, the Board and management will also continue strategy of focusing on developing links between travel operators in Japan, Singapore, and Korea etc in order to expand more outbound tours in foreign countries. I think this is a unique strength to be outstanding.
S: Generally in Macau, tourism industry is blooming these few years, in terms of labor market, does that affect you?
K: Do you mean about the lack of man power in Macau recently?
S: Yes, as we know that Macau’s Gaming and hotel industry continuously opened up in recent years and will you consider about some of your potential labors may be taken away from you? (prompts)
K: Eh…in fact it’s still fine in our travel agency because many of our employees would like to work in a stable working time. However, many jobs that offered by casinos and hotels are necessary to work on shift and there are still have people want to work stably. Moreover, you can learn many skilful things in travel agency, for ticketing department, which needs people know how to use some systems like Abacus or Amadeus, so that they would like to stay in order to keep learning different tasks in travel agency. In addition, the social relationship between colleagues in our company is good and all of the colleagues are loyal to Macau Express Travel limited since they work happily and have passion to work.
S: How can you recruit and maintain good quality people and services in the tense labor market?
K: As my point of view, Xpress Group is always considerate to its staff so that Xpress group will regularly provide some training courses for the staff in order to enhance their skills within their workforce, other knowledge in other functional departments as well. Furthermore, Xpress Group will offer commission for those hard-working staff who contribute much effort to the company.
S: How do you think about your staff in Macau branch, are their skill and knowledge good enough to satisfy Xpress? Or, you still demand something more?
K: All of our staff has experience in travel industry for many years, of course not including the interns. Basically, many of them know English and Mandarin and can fell free to deal with guests. All of them are skilful enough to work for their jobs. However, improvement is still needed no matter in which industry or in which department. For me, communications between functional areas and their service attitudes towards the guests still have room to be improved.
- Goods and Services Provided
S: You are offering various services including group packages, FIT packages, ticketing, hotel reserving, visa, and insurance; which one is your main focus? Why?
K: Recently, we still put more effort on group packages and ticketing. However, we can get higher profit from selling flight tickets than group package according to last year result. Although group packages didn’t has a good result in the past year, we still focus on it because there still have many people, especially some dealers in casinos, would like to join group package because they are lack of traveling and not confident enough to travel by self. Therefore, as my point of view, traveling become more and more important in Macau’s residents’ life because of economic growth and also there are a lot of immigrants from the Mainland China want to travel abroad. The tickets are mainly sold to some high-end travelers who are the frequent fliers, so that we must have certain market for ticket sales. Furthermore, the number of people who tend to be FIT travelers is increasing in these few years, so that we also tend to focus on more FIT packages (including flight ticket and hotels) in order to earn more profit.
(prompts: the largest profit margin, market share)
S: Who are your target segment and how they actually react and consume?
K: Just now I mentioned that flight tickets are mainly consumed by some high-end and frequent fliers. Also, FIT packages are mainly consumed by the youngsters who would like to travel by self. Actually, base on different products or services, we will have different target segment. For the group packages, we try to target on those who not travel a lot and tend to be interested in traveling. Besides, we will also tailor-made some tours to fit the customers’ needs like designing the trip for parents or relatives to visit their children’s graduation in Taiwan.. Also, we will provide some high-end group tours for those people who are less price sensitive in terms of providing five star hotels and high quality in catering etc. But we still bear in mind that most people are price sensitive, so that we still need to consider about those low-end people and offer low price and high quality products for them.
(prompt: they money or quality minded, or something more)
S: Moreover, changing lifestyle in Macau affects all industries, how does that affect you?
K: What do you mean by changing lifestyle?
S: In Macau, birth rate is decreasing and the household’s income becomes higher and higher, do you think these phenomenons will affect your company?
K: Well, they surely have some influences on the entire travel industry. Like birth rate is decreasing right now, that means the household size become smaller and smaller. Hence, the couples don’t have burden on caring their children, due to this reason, they will travel more. Except this, because of the economic blooming in Macau, the household’s income is much higher than before; they are willing to spend more money on traveling as well. All of these can increase the sales of our products or services. Probably, their requirements on traveling will change also and we are necessary to consider the trend and provide the right products to the right persons
S: In your experience, what aspects will stimulate your sales on (i) group packages/ (ii) FIT packages/ (iii) ticketing/ (iv)other goods and services?
K: Value for money is very important aspect for stimulating your sales.
(i) To be more innovative, unique and differentiate from others, try to design tours that fit the customers’ needs. Let them to tailor made their own tours. Moreover, if the price is reasonable that can also attract people to choose your services and products.
(ii) Offering lower price for the packages and including more features in FIT packages
(iii) price is also the reason for this, try to offer special fares to them and give them some promotion discounts in terms of giving free coupon etc.
(iv) if you can commit to providing high quality services for the customers and make them loyal to you, and they will come back and also introduce you to other people as well.
S: How your relationship with your suppliers is, and how is your bargaining power?
K: The relationships between us and our suppliers are good and have been cooperated for a long period of time. If our relation is bad, then we cannot enjoy the discount of the tickets, hotels, etc. Therefore, when we purchase bulk of the tickets, then we can always enjoy economies of scale. Our bargaining power is moderate because we always try to compromise with each other in order to gain competitive advantage. Try to have win- win situation.
- Management
S: Macau Express Travel Limited is under the group of Xpress Group, is it an advantage(s) or disadvantage(s) Macau Express? Why and How?
K: Well, Xpress Group Limited is a limited liability company incorporated and domiciled in Hong Kong. Obviously, Xpress Group should be a very strong financial supporter for its branches like Macau Express Travel Limited. Macau Express to be less concern on the financial factors and then focusing on building the brand recognition in Macau. Besides, the top management of the Xpress group also has rich experience in the tourism and business affairs, so it can act as guidance for the business and strategy development of Macau Express. However, we have lower decision making power in circumstances due to the control by Xpress Group and stick to the policies leading to inflexible response. If there’s problem or need to make decision about strategic planning, we need to inform the top management and wait for their approval. We will be influenced by the top management’s decision.
S: Macau branch is mainly executing plans planned by Hong Kong management team, is one of the top management team in Macau branch an advantage or disadvantage?
K: In fact, it is more convenient for us to communicate with each other and can quick response to the change internally since Hong Kong and Macau is close to each other. Sometimes, they will also hold meeting with us to talk about the operating situation of Macau Express and if we have any problems that we will bring it up. Moreover, the nearest sister branch is Hong Kong Xpress Travel Limited, we will share our database with Hong Kong Xpress, so that it can easily co-operate and co-ordinate with us for obtaining more market shares and executing policies more effective and efficient. This is strength to Macau Express because it can further make use of the customer relationship system in extending the potential customers.
S: Is familiarity with Macau’s taste and preference necessary, in enhancing a better decision in designing a better tailor made services?
K: Well, this is not a serious problem because many of our staff have being worked in this industry for many years, so that we are familiar with Macau’s taste and preference, Besides, we will discuss with the top management together to come up with a better alternative to design a better tailor made services for Macau’s market.
S: The top management members have a wide and rich experience in the travel industry aspect, how their experiences help managing Macau branch?
K: The top management has rich experience in tourism business; it is a really significant strength for enhancing a good decision in making a better products and services. The top management know how to communicate with their subordinates and tends to be more aware of the different needs of the stakeholders They are rich experience to generate strategic alternatives, identify and analyze the company’s issue. All of these beneficial factors that can really provide an advantage for the company to further develop its brand recognition in Macau.
- Financial
S: In 2007, though you had the total sales revenue of HKD3, 600,000 and had a gross profit of HKD144, 000, you made a net loss of HKD150, 000; do you satisfied with the report?
K: Umm…as Macau Express was a newly established travel agency, thus deficit was inevitable due to the depreciation. This is a normal condition for a newly set up company. Also, it has a huge financial supporter so that it is not a great problem for us.
S: Any deviation from your original financial plan? Why?
K: Actually I really don’t know what is the top management and board of directors’ original financial plan for Macau Express since I am not one of the top management before. I am sorry that I cannot provide accurate answer for this question.
S: Any plans to improve your profit?
K: Eh…I think try to enhance our brand awareness first. That means we should focus on marketing campaign. Also, each functional areas should try to work together and do our own best for achieving the same goal.
- Competition
S: How do you position yourself and what is your core competence(s) in Macau branch, is it as a south-east Asia countries expert, or you are still expanding your service?
K: Macau Express is still at developing stage. I hope we can position it as a well-known travel agency not only in Macau but also in other places. Therefore, we want to develop our core competence in diversifying our products. We are still expanding our services around the world. As a result, we can attract more customers and get more market segments.
S: In what aspect does your company compete with other local and regional travel agencies?
K: Generally speaking, they do not affect us too much because all of us have our own markets. In some aspects, we may cooperate with them in order to provide wide range of services and products to our specific market segments. Therefore, greater regional cooperation is being sought in further promoting tourism.
S: How do you make yourself stand out and add value by using your core competences in the eyes of consumer and stakeholders?
K: Just now I’ve already mentioned that Macau Express still needs to improve. However, it may not easily fail because of larger supporter, Xpress Group. It is really a valuable capability for Macau Express. Xpress Group has adequate financial status, so that we can try to differentiate the products from our competitors. Moreover, the rich experience in tourism business that the top management has, which really can be an advantage for them to implement the decision finely and smoothly.
- External Environment
S: Does foreign exchange rate fluctuation affect your company? How?
K: Yes, it really affects us. If the foreign exchange rate is appreciated such as Japanese Yen and Malaysian ringgit, that means the costs of the tours and tickets will increase. Thus, we need to increase the products’ price as well. This impact will cause the sales to be decrease. As a result, the profitability will be decreased.
S: Does terrorism another uncontrollable global concern which affects your company? How?
K: Yes, I remember last year, there was a case of murder in a beach, which is quite near Pattaya in Thailand. It is a famous spot for European travelers, but not for Macau’s and Hong Kong’s travelers. However, many people concerned about this and scared to travel to Thailand during that period of time. As a result, the sales of the tour and tickets to Thailand were both decreased.
S: What action do you take to overcome these two elements or anything more? Why?
K: Firstly, we will try to comfort them not to be so scared and nervous and help them to find other destination to them. Moreover, we also will advice them to buy insurance if they travel abroad in order to guarantee their safety.
We can’t control and easily overcome the fluctuation of foreign exchange. As my point of view, we can only try to apply the economies of scale for the products and sells and try to set a reasonable price for the products and services.
S: Do low cost airlines lead a cheaper tour rate or carry away your grouped tourist to individual managed tourist?
K: Actually those low cost airlines are not beneficial to the group package because the price of the low cost airlines fluctuate most of the time and the schedules for the route always change as well. Therefore, it can’t provide guarantee for us. If it is possible, we would like to choose Air Macau rather than the low cost airlines. Also, we try to avoid from helping the individual tourists to buy the low cost airline tickets through internet and advise to purchase by them, but we may provide them the packages including accommodations and some itineraries. FIT packages help complementing, thus we can get profit from different market segment.
S: Do some bad quality travel agents influence customers’ confidence where affecting your company? If yes, how will you help building up confidence in terms of this in the tenser industry?
K: I think word of mouth is very important marketing tool in this industry since Macau is a tiny city. Most of the customers have traveled a lot may know which travel agency is reliable. This may affect Macau Express since it is a newly established one, people may not have confidence to try a new travel agency. Therefore, we need to provide more than they perceive, serve them friendly and with enthusiasm. Let them know we have passion about serving people and want them to experience a pleasure travel when thinking of us. Doing better at the first time, the travelers will come back again and again.
- Stakeholders
S: Do you think Macau government affects your business?
K: Yes, Macau Government is one of our stakeholders. It sure can affect our business in circumstances. The Freedom of Air is controlled by Macau government and if it can approve more airlines to land in Macau International Airport, then we can have more opportunities to operate our business and provide more routes and tours to our customers. Moreover, the price of the fuel is under the government control as well. If the government increase the price for the plane’s fuel that may cause the overall tickets’ price to be increase as well. Therefore, it may indirectly affect our profitability since cannot set high selling price to maintain the same profit. On the other hand, increasing support will be given to the training of tour guides and other tourism and hospitality industry professionals to satisfy future manpower needs. This aspect can be a value- added to the this industry.
S: As being a foreign based investor in Macau, how do you think your future in terms of government policy making?
K: Umm…I don’t understand what points that you want to know? Do you mean that how the government policy influence us?
S: Something like that. For example, will the government levied tax on Macau Express heavily?
K: Eh…I am not sure about this. But I think the government doesn’t ask us to pay higher tax because it is a foreign based investor.
- Future Trends
S: Have you planned or planning in helping Macau travel industry, or yourself more sustainable?
K: Since the objective of Macau Express Travel Limited is striving to take advantage of new opportunities and develop new strengths and strategies to thrive in a different world, in the future we would like to outsource some researchers to take responsible for investigating about Macau’s trend in order to providing products to fit their needs. Moreover, we will establish the value of buying products at Macau Express by our uncompromising quality and by building a personal relationship with each of customers. Keep designing innovative, unique and differentiate products that cannot easily be imitated or duplicated for enhancing brand awareness. Also, we expect to balance the economic goal of profitability with social needs of society such as advocating environmental protection. For doing all of these, I think Macau Express can tend to be more sustainable in the future.
S: How do you think about Macau’s future trend and how will you cope with your future plan?
K: As my point of view, Macau’s future trend still focus on tertiary industry and more and more mega resorts will be opened in the future. Inbound tourism will be dominated in Macau. Therefore, we will try to put more effort on inbound tourism and employ more professional tour guides. Moreover, we can also start to develop domestic tourism for local people since many of them may not visit all attractions in Macau before and we can give them chances to know more about Macau and visit those mega resorts in COTAI strip. Furthermore, the needs of the people will change according to Macau’s trend. In the future, I believe that they would like to have more about special interest tourism such as cruises tourism that can be tailor-made for fulfilling their needs. Higher disposable income is one of the factors that enhance people to travel abroad and they prefer to have high quality and more luxury tours. Besides, the gaming industry will reach to stagnation stage so that we have to do something to rejuvenate the travel industry for maintaining sustainable.
S: Thank you very much for your valuable information and time consuming in this questionnaire.
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