Link to video:
You could say that the traditional mantra ‘location, location, location’ in the travel industry is shifting to ‘knowledge, knowledge, knowledge’. With this in mind, there are several changes that are happening in the leisure industry. Since a couple of years there has been a steady rise in the number of holidays that have been auctioned. The most common way of selling leisure activities and services was always through a “buy-now price”. However, because auctions come with a lot of benefits such as First-Degree Price Discrimination, companies that offer online auction could become the dominant player, instead of the hotels, travel agencies and airlines. This shift is slowly becoming more apparent as some of the larger auction platforms already have more than 7 million visitors per month. (Vakantieveilingen.nl, 2017)
Online B2C companies introduced elements of fun and excitement into the buying process of leisure services. Auctions often result in higher sale prices than the buy-now price due to this fun aspect and something that is known as the Endowment effect. However, online auctions can also come with some negative aspects as well. A problem that arises due to the online auctions is a phenomenon known as the market for lemons. This problem occurs due to the information gap that is present on the buyer’s side of the auction. Hence, the products of high quality are often sold for prices that are not optimal because of the lack of trust. (Akerlof, 1970)
These insights show that the travel industry has seen huge developments in the last few years, and these developments are going to continue for some time. More sales will shift towards auction platforms where travel products and services are offered, and these platforms will gain more and more power as more information is gathered.
The aim of this video is specifically to analyze the benefits and problems that have come with the rise of online auction platforms in the industry of leisure. Finally, we will also share our prediction about what the future of this industry will look like.
References:
Akerlof, George A. “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.” The Quarterly Journal of Economics, vol. 84, no. 3, 1970, pp. 488–500. JSTOR, JSTOR, www.jstor.org/stable/1879431.
Emesa Nederland BV. “Aanbieders” Vakantieveilingen.nl www.vakantieveilingen.nl/aanbieders.html
