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The study aims to work out a way to profit from the tourism industry by identifying and analyzing the components of business models. Based on the analysis and discussion on the components of business models, the study summarizes a business model which can help the travel agencies get sustainable profits.
Oriented to the qualitative research, the study adopts case analysis, literature analysis and in-depth interview. Lion Travel agency is selected as the object among the travel agencies in Taiwan to conduct case study, and it is based on which the related literatures and reports are collected, and the problems related to business model are sorted out. Focusing on the business models of tourism industry, the study concludes 8 components including consumer value, market segmentation, revenue mechanism, industrial status, pricing, value activity, resource capacity and cost analysis. Based on those components, questions are designed and used in the interviews with the staff of Lion Travel. The interview results are studied in a comparing analysis along with the collected literature, in order to work out the business models in tourism industry. The findings are listed as follows.
1. Consumer Value
To establish the industrial status and the foundation of revenue sources, consumer value is both the starting point and the terminal of all components in business models. It is based on the defined consumer value that the all the components can develop related value activities, and to achieve the final goal - meeting the consumer value. Thus it’s crucial for a company to set the goal for consumer value.
2. Market Segmentation
Market Segmentation is a component that based on consumer value (consumer demands) and worked via value activities.
3. Revenue Mechanism
Revenue Mechanism takes the market segmentation (consumer demands) as the foundation and the combination of pricing and cost analysis as the reference, aiming to achieve the revenue goal through value activity operations.
4. Industrial Status
It is a component that establishes the industrial status based on consumer value (consumer satisfaction), meanwhile assisted by value activities and the resource capacity of the company.
5. Pricing
Taking the market segmentation (target market) as the condition, the cost analysis and industrial pricing as the foundation, pricing is a components which creates revenue by combining company resources and value activities.
6. Value Activity
Value Activity is the bridge among the components of business models, which enables the components cooperate and coordinate to produce correlations and finally to form the value chain of the company.
7. Resource Capacity
Resource Capacity of the company is the foundation for the other components to develop value activities, consisting of necessary labor force and materials in activities.
8. Cost Analysis
Cost Analysis is the foundation of pricing. The application of the resource capacity of the company (the statistics and analysis of information system) is one of the factors that reduces the cost. Especially in the meager profit market, the lower the product cost is, the higher the competitiveness is, and so are the profits.
The 8 components mentioned above are related to the company profits, and each of them can influence the profits. Aiming to create consumer value (consumer satisfaction), the company determines the price according to the market segmentation and cost analysis, creates revenue and establishes the industrial status during the process of value activities (sales and services) with the help of resource capacity. Only if the industrial status is established can the consumers be involved constantly. As more consumers are involved, company has to develop more diverse products to meet the market demands. By following this correlation chain, company can create profits sustainably.
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