US online travel agency industry analysis

The online travel industry consists of a diverse set of companies, each providing consumers with the ability to research and book various types of travel via the internet. This assessment reveals that based on industry-specific fundamentals, this is not an attractive industry in which to compete. However, there are several external factors that will allow this industry to achieve economic success if leveraged appropriately. These factors provide significant opportunities for an incumbent company to change the competitive landscape and create a sustainable advantage. Current competitive factors precluding the economic rents required of an attractive industry include high and volatile power of suppliers, intense rivalry among existing firms and extreme price-sensitivity of consumers. A firm’s leverage of patents for key technologies, its strategic use of customer segmentation to drive demand and satisfy unmet needs and the reduction of dependence on suppliers through innovative new business models represent opportunities to achieve economic rents and sustainable competitive advantage.