Why Have Package Tour Itineraries Been Homogeneous? Insights from Industry Subgroup Relations

In addressing one of the least-researched areas in tourism—the formation of product strategies—this study focuses on the homogeneous package tour phenomenon. It draws on Industrial Organization theory to explore the impact of relationships between industry subgroups on the development of such products. With a specific focus on Chinese package tours to the UK, tour itineraries were firstly mapped to provide a visualization of relative homogeneity. Then, by examining the resource traits of participating firms, two subgroups in the industry were distinguished: tour operators (including wholesalers and retailers) and travel agencies (including Online Travel Agencies). It was found that the determination of product homogeneity involves a combination of the dependent relationship between tour operators; a more independent relationship between travel agencies; and the nature of the interdependence between the two. Strong bargaining power on the part of suppliers and weaker customer power further strengthened product homogeneity.