PolyU study finds package tours limit tourist satisfaction

Package tours can result in low tourist satisfaction even though they are economically advantageous, according to a recently published study done by Assistant Professor Markus Schuckert, Professor Haiyan Song and Dean Kaye Chon of the School of Hotel and Tourism Management (SHTM) at The Hong Kong Polytechnic University (PolyU) and a co-researcher. The researchers explain that dissatisfaction with package tours arises from the information asymmetry between tour operators and customers in emerging markets. Focusing on mainland Chinese outbound tours to Hong Kong, the study shows that this asymmetry is reduced once customers become more experienced, at which point they turn to independent travel and other types of tours.

 

Package tours first became popular in the West in the 1970s, note the researchers, because they offered accessible and affordable international travel. As independent travel was expensive at the time, such tours not only offered good value and convenience, but also reduced “tourists’ uncertainties when exposed to distant and unfamiliar destinations”. Although package tours made up a large share of the travel market in Europe and the United States in the 1980s, the share eventually declined. The market model more recently shifted to Asia and the Pacific, but is now suffering the same fate here as tourists increasingly book package holidays online or travel independently.

 

Given that package tours are cost effective for tour operators and, in theory at least, offer tourists greater value than buying services separately, their decrease in popularity is not well understood. Yet, the researchers argue that consumer choice is restricted when products are bundled into a package – the tour operator decides the price for all the included services and the customer has to purchase the whole package. This might represent a good deal for customers who want all of those services, but most customers are in fact only interested in some. Such customers, claim the researchers, may be “more willing to pay for a single product they value” than for the packaged bundle.

 

Initially, there is information asymmetry between the seller and the buyer. Travel services are difficult to evaluate before they are experienced because information about quality is only freely available through purchase and consumption. Customers thus need to initially rely to a great extent on information from the tour operator, and only then from their own experience and information searching. The researchers propose that over time this asymmetry decreases. Fewer package tour customers make repeat purchases because they learn the value of the bundled services, which means they are able to make better decisions about subsequent purchases.