Analysis of Holiday Tour Operators

Chapter 1: Introduction

Outline

This research focuses on three UK holiday companies Kuoni, Thomas Cook and STA Travel and their marketing strategies. This research is comprised of following chapters:

Rationale

This study highlights many issues related to marketing of tourism companies; more specifically it will be looking at the three companies mentioned above and will be giving a broad analysis to marketing strategy as a marketing tool.

The purpose of this dissertation is to conduct a detailed analysis on three different UK holiday companies which are Kuoni, Thomas Cook and STA Travel, who target different segments of the market. I believe that this investigation will broaden my understanding of the tourism marketing as well as the techniques and strategies that they use as a key factor to their success. (Morgan, 2001)Overall I believe that it is an interesting area to study because I can use and demonstrate while conducting this investigation the skills and knowledge that I had obtained while studying my degree. In addition, I have chosen to carry out my dissertation on the following three companies, because I believe that they differ in their market segmentation, however they have a common goal and they are competitors. I would like to introduce the companies that I will be focusing on and provide some brief introduction for each of them. But first of all let us talk about the role of tour operators. (Wang, 2002)

Tour operators today play a very important role in creating the images of destinations. In this global capacity, they can significantly influence international tourism flows towards a country hit by safety and security risks. Even decisions of individual tourists on where to spend a holiday very often depend on the attitude and practice of tour operators towards a particular destination. But people have their own choices and preferences. In this paper we are going to analyse Kuoni, Thomas Cook and STA Travel tourism and travelling services as this is one of the best tour operator agencies world wide and the first choice of tourists. (Buhalis, 2001)

From 1950 to 1998 the number of international tourist arrivals in the world increased from 25 million to 635 million (WTO 1999b), with an average annual increase of 6.97%. Over the past 15 years, international tourism receipts have grown 1.5 times faster than world GDP, with no signs of slowing down. In 1998 international tourism accounted for an estimated 8% of the world’s total earnings and 37% of exports in the service sector (WTO 1999a). According to data from the International Monetary Fund, in 1998 international tourism receipts and passenger transport amounted to more than $504 billion, putting it ahead of all other categories of international trade (automotive products, chemicals, food, petroleum and other fuels, computer and office equipment, textiles and clothing, mining products, etc.). (Driver, 1999)

This rapid development of international tourism can partly be explained by the xxpackage holidays promoted nationally and internationally. Indeed, tour operators represent one of the most powerful and most influential entities in the tourism industry. They have a strong influence on international flows from main generating markets to various destinations. According to World Tourism Organization estimates, tour operators nowadays have a share of about 25% in the total international tourism market. This means that in 2000 tour operators organized at least 175 million international tourism trips. Therefore, the success of many destinations depends on whether foreign tour operators include them in their programs. (Buhalis, 1998)

Travel Industry

As the travel industry consists of numerous sectors and divisions, companies within the industry vary greatly in their activities and the segments of the market they are involved in. Three of them Kuoni, Thomas Cook and STA Travel leaders in their respective field and I would like to commence with Kuoni in the following segment. (Riege, 2000)

Introduction to Kuoni, Thomas Cook and STA Travel Companies

Kuoni Travel Holding Ltd. oversees one of Europe’s top five travel and tour groups. Based in Zurich, Switzerland, the company is particularly strong in both its domestic and U.K. markets, but is also present throughout Europe, especially in Scandinavia, with a rising presence in the United States and Asian markets. Kuoni Travel operates in three primary areas of business: Leisure Travel, which accounts for more than 85 percent of the company’s sales; Business Travel, through its BTI unit, which handles travel coordination activities for the small and mid-sized and large-scale corporation markets; and Incoming Services, which provides travel destination services, such as touring and sightseeing packages. (Morrison, 1994)The company markets it high-end tours and travel packages under the Kuoni name. Discount travel packages are offered under the Helvetica brand name. Switzerland remains the company’s single largest market, representing slightly less than one-third of its total sales. The U.K. and North American markets together provide less than one-third of sales. The European continent, including Scandinavia, added another roughly 30 percent to Kuoni’s total sales, which topped SFr 4 billion in 1996. (Schonland and Williams, 1996) Kuoni has been stepping up the pace of its acquisitions at the turn of the century. After being disapponited in its attempt to merge with the United Kingdom’s First Choice Holidays Plc, which would have helped the company create a counterweight to Europe’s market-leading Preussag-Thomson alliance announced in early 1999, Kuoni has changed direction, targeting the Scandinavian, Indian, and North American markets for its future growth. (Weber and Roehl, 1999)Listed on the Swiss stock exchange, Kuoni is led by Chairman Daniel Affolter and President and CEO Hans Lerch. (Bonn and Furr, 1999)

A native of Chur, Switzerland, Alfred Kuoni moved to Zurich to open a travel agency in 1906. If the company’s name–Travel Bureau–was not all that original, Kuoni quickly established itself as a pioneer in exotic travel destinations. One of the company’s first organized tour packages took Swiss citizens on a guided tour to far-off Egypt. (Hu, 1996) In 1925, Kuoni reincorporated as a joint-stock company, with shares remaining within the Kuoni family. Through the years leading up to World War II, Kuoni expanded from its original location to include a number of sales offices throughout Switzerland. Despite its success in its home market, the company recognized early on that Switzerland was too small for its growing ambitions. The company also opened its first international office, in Nice, in the south of France. Further international moves were not realised due to the buildup to and outbreak of World War II. (Baker and Hozier, 1994)

Kuoni’s international expansion began almost immediately after the end of the war. In 1948, the company opened its first international subsidiaries, in Italy and France. Kuoni also continued to venture to new and exotic travel destinations, such as the organization of the first charter flights to Africa. (Pizam and Mansfeld, 1999)In 1957, the Kuoni family established the Kuoni and Hugentobler Foundation under which to group their holding; much later, with Kuoni’s public listing, the foundation would became the company’s primary shareholder. (Dev and Olsen, 2000)

Thomas Cook AG is an international leisure group, created in 2000 by C&N Touristic’s purchase of Britain’s Thomas Cook Holdings Ltd., with roots tracing back to 1841. (Bitner and Booms, 1982 )The company is represented in the sales markets of Germany, Great Britain, Ireland, France, Belgium, Luxembourg, the Netherlands, Austria, Hungary, Poland, Slovakia, Slovenia, Egypt, India and Canada, providing products and services in most market segments, including airlines, hotels, tour operators, travel and incoming agencies. Thomas Cook AG is the third largest integrated tourism group in the world, serving some 14 million customers.

Thomas Cook AG, encompasses 32 tour operators and around 3,600 travel agencies, selling the group’s products worldwide, as well as a portfolio of 76,000 controlled hotel beds, a fleet of 87 aircraft and a workforce numbering some 28,000. Its services also include travel shops and charter airlines. (Koh, 1995)

Evidently, the scale of operations of Thomas Cook AG in his respective market, has allowed him to realize economy of scale, affording a strong advantage over competition and in turn benefiting his clients. Because of the large volume of business provided to many resorts by Cook, he currently have excellent buying power, enabling him to negotiate the best possible airfare, hotel rates and transfer rates, which are translated into attractive selling prices, better rooms and overall greater value for his clients. Numerically, Cook has realized triumphs and broken records in his area. In 1993, Thomas Cook AG excels, as it achieved sales of some eight billion Euros and served more that 13 million customers in the 2001-2002 financial year alone. (Ioannides and Debbage, 1997)In appreciation of his expertise and as an acknowledgement of his proficiency in his operations, Thomas Cook AG has both received numerous awards and tributes over the years for a variety of enterprises. For example, the Mexican government awarded the Best Tour Operator Worldwide Award in 1998. Thomas Cook AG is nominated every year in several categories in the World Travel Awards, as well as having its various subsidiaries and companies receive numerous awards worldwide. (Riege and Perry, 2000)

STA Travel, a subsidiary of privately held Diethelm Keller Holding Ltd., markets itself as “the world’s largest student travel organization helping students travel in over 90 countries.” STA Travel specializes in student travel, a market niche accounting for approximately 20% of all travel bookings. In 2005 STA Travel reported revenues of 215 Million CHF (Swiss Francs) on total transactions of 1,542 CHF, down from 241 on 1539 the previous year. That same year, the firms 2,358 employees working from 375 travel agency offices in 17 countries and through franchises in 83 others, provided travel advice and booking services to approximately 6 million travelers. (Fick and Ritchie, 1991)

Founded in 1979, STA Travel had grown and expanded its global reach through a series of mergers and acquisitions. While the brand well known in parts of Europe and Australia, where it had operated for many years, STA Travel’s US brand, born with the acquisition in 2003 of Council Travel, was still less well known. Historically, STA Travel reached its customers through retail travel agencies, many located near or on college campuses. Beginning in the 1990’s, however, the internet brought new online competitors. Among these were Student Universe and Student City as well as less focused on line providers of travel services including Travelocity and Expedia. By 2007 the internet was predicted to account for more bookings than offline alternatives.

Aims and Objectives

Following are the aims and objectives of this study:

• Introduction to Kuoni Holiday Company

• Introduction to Thomas Cook Holiday Company

• Introduction to STA Travel Holiday Company

• Marketing strategy of these companies

Research Questions

The study seeks to answer the following questions:

“An investigation into the marketing strategy of three UK holiday companies who target the different sections of society with reference to their marketing strategy.” (Kuoni, Thomas Cook and STA Travel)

Chapter 2: Literature Review

Role of Tour Operators

The role of tour operators unlike the travel agencies who sell holiday and a range of other travel products tour operators actually assemble the component parts of a holiday, package holidays i.e. the means of travel, accommodation, facilities, transfers, excursion and other services. The famous name which comes into my minds is Thomas Cook for their packages and services. (Field, 1999)

If we consider that the travel agents are the retailer arm of the travel business, then the tour operators can be linked to wholesalers, since they buy in ‘bulk’ from the providers of travel services, such as the hoteliers and airlines, break the ‘bulk’ into manageable packages and offer the finished product the inclusive tour for sale to the travel agencies or direct to the consumer. (Kaynama and Black, 2000)

Peace, safety, and security are the primary conditions for the normal tourism development of a destination, region, or country and thus are the basic determinants of its growth. Without them, destinations cannot successfully compete on the generating markets, even if they present in their marketing campaigns the most attractive and best quality natural and built attractions. Tourism contributes to peace as much as it benefits from it (Savignac 1994). According to Pizam (1999), every minute of every day a crime or a violent act occurs at a destination somewhere in the world. At the same time, it would be difficult to deny that many types of safety risks co-exist in everyone’s daily lives, and within tourism as well. However, an important difference exists: People are rarely in a position to change their place of living, but nothing can force them to spend a holiday in a place that they perceive as insecure. (Kaynama and Black, 2000)The basic requirement of contemporary demand is higher quality supply and services, and that quality has become the most important factor in the existing climate and development of that demand. But usually do not mention factors which are the condition sine qua non—peace, safety, and security, now generally taken for granted. Any threats to the safety of tourists causes a decrease or total absence of activity, not only in a particular destination, but also very often in neighbouring regions or countries as well. Consequently, since tourism is an important contributor to national economies, host countries will find it necessary to take substantial measures to bring the country hit by crisis back onto the market as quickly as possible. Taking the example of three companies discussed below we further try to explore their role and business strategy. (Medlik and Wang, 2002)

Kuoni, Holiday Company

Kuoni began looking farther afield in the 1960s. In 1963, the company made its first entry into the Asian markets with the opening of a branch office in Japan. (Medlik and Wang, 2002 )Two years later, Kuoni entered what was later to become one of its most important single markets when it acquired the United Kingdom’s Challis & Benson Ltd. The importance of the U.K. market to Kuoni was seen at the beginning of the 1970s when the company changed its name–and its U.K. operations’ name–to Kuoni Travel Ltd. (Buhalis, 1998)

The company’s listing on the Swiss stock exchange provided fuel for new growth, while opening up the company’s shares to new partners, including SwissAir, which built up a 30 percent share in Kuoni. The public listing enabled the company to step up its international growth. After opening a subsidiary in Austria at the beginning of the decade, Kuoni now launched subsidiaries in Germany and Spain, both in 1973, and a subsidiary in Greece the following year. The year 1974 also saw Kuoni step up its position in the U.K. market, when it acquired Houlders World Holidays, based in England. (Buhalis, 1998)

While building up its international network, Kuoni also was launching new products. In 1977, the company began marketing its first around-the-world tour. In the 1980s, Kuoni began to acquire properties in many of its most popular destinations, adding a number of hotels, including the Hawksbill Beach Hotel in Antigua in 1981 and the Discovery Bay Beach Hotel in Barbados, bought in 1984. In 1986, Kuoni became the first tour operator to offer around-the-world charter flights on the Concorde supersonic jet. (Morrison, 1996)Although this latter product catered to the company’s strong high-end and high-margin clientele, Kuoni also launched a new brand name, Helvetica, to encompass its discount tour and travel operations.

The worldwide travel industry remained highly fragmented in the 1990s, with numerous small-scale operators competing against a smaller number of quickly growing industry heavyweights. Kuoni, which had already captured the lead in the Swiss market, was determined to maintain a leadership position as the travel industry headed into a drawn-out consolidation drive leading up to the turn of the century. The company acquired Reiseburo NUR Neckermann in 1987, boosting its position in the Austrian market. Three years later, the company regrouped its Austrian activities, launching the NUR Neckermann Reisen AG joint venture with Germany’s Neckermann Touristic. Kuoni’s part of the joint venture remained at 49 percent. (Morrison, 1996)

Back home, the company continued to consolidate its dominance of the Swiss market, acquiring Privat Safaris, the country’s leading operator of tours to eastern Africa, and Reiseburo Popularis, which combined retail offices with direct sales operations marketing discount tour and travel packages. Yet Kuoni’s strong position in the Swiss market and its growing share internationally soon led it to become the target of a takeover attempt. The sale of SwissAir’s 30 percent holding created the opening for Germany’s Krauthof AG department store group to acquire a 50.1 percent majority of Kuoni in 1992. (Middleton, Clarke, 2001)

Kuoni, through the Kuoni and Hugentobler Foundation, nonetheless retained majority control of the company’s voting rights–which provided the leverage to the resolution of the takeover attempt. In 1995, the Kuoni and Hugentobler Foundation bought out Krauthof’s stake in the company. The company then changed its name to Kuoni Travel Holding, a move that also reflected a new diversification drive: in 1995 the company acquired Danzas Reisen AG, a Switzerland-based specialist in business travel services. The Danzas acquisition led Kuoni to create a dedicated business travel unit. The company also acquired retailer Kewi Reisen, while integrating its majority share of Railtour Suiss SA, acquired the year before.

With its independence assured, Kuoni launched its own acquisition drive in the late 1990s. In 1996, Kuoni added France’s Voice SA, and Scanditours, focused on the Nordic region. (Middleton, Clarke, 2001)The company moved into The Netherlands with the acquisition of Special Traffic that same year. Kuoni also looked to the potentially huge market of India for the first time, acquiring SOTC Holiday Tours, which provided the basis for its Kuoni India Ltd. subsidiary. Two other acquisitions completed the company’s busy years, those of Rotunda Tours, expanding Kuoni into South Africa, and CIS Intersport, a Swiss company catering to the growing demand for sports-oriented holiday packages. In 1996, also, the company’s Edelweiss Air launched its charter flight operations. (Walle, 1996)

Kuoni’s expansion campaign continued strongly through the end of the century, including the launch of the P & O Travel Ltd. joint venture with Peninsular and Oriental Steam Navigation Company, based in Hong Kong, with offices in Bangkok and Singapore. The 1997 joint venture strengthened Kuoni’s position in the Asian market, which, despite the austere economic climate in the region at the end of the decade, promised to become one of the world’s stronger holiday markets. Closer to home, Kuoni continued lining up acquisitions, especially Voyages Jules Verne, a U.K. upscale tour operator, and Switzerland’s Manta Reisen, which specialized in scuba and other deep-sea holidays. The company also acquired German business travel specialist Euro Lloyd Reisenburo, which it combined with its other German operations into the new subsidiary BTI Euro Lloyd, one of that market’s top five business travel companies. Also in 1998, Kuoni launched a joint venture with Italy’s Gastaldi Tours.

The next year Kuoni face a major setback. At the beginning of 1999, the company announced its agreement to merge with the United Kingdom’s number three travel operator, First Choice Holidays. The merger, agreed to by both sides, was thwarted by a surprise takeover attempt from rival U.K. operator Airtours Plc, which offered a higher per-share price. When the majority of First Choice’s shareholders chose to back the Airtours offer–which itself was blocked by the European monopolies commission–Kuoni pulled out of the merger talks.

The First Choice merger might have allowed Kuoni to become not only a major player in the U.K. travel market but to boost its position to the top ranks in all of Europe. After the collapse of the merger, however, Kuoni redirected its strategy to other markets. Three markets in particular were to receive its attention: the United States, Scandinavia, and India. In 1999, Kuoni acquired upscale travel company Intrav, based in St. Louis, Missouri; the Intrav acquisition, which cost Kuoni $115 million, gave it a strong opening into the booming U.S. market for luxury vacations. The following year, the company acquired T Pro, an incoming services specialist based in New York and the number three incoming services provider to the U.S. market.

The year 2000 saw Kuoni not only strengthen its hold on the Swiss travel market–taking a 49 percent share in ITV, Switzerland’s third largest tour group and subsidiary of Germany’s Preussag–but also expand its presence in its new target markets of Scandinavia and India. The first was served by the acquisition of 49 percent of Apollo Resor, based in Stockholm, Sweden, and then boosted by the acquisition of Denmark’s Dane Tours. In March 2001, the company announced its decision to restructure most of its Scandinavian holdings into a single subsidiary.

Thomas Cook Holiday Company

Thomascook.com has pledged to bring in a quarter of sales through its website in 2006 and appointed a new digital agency to plan and buy all online media.The move will include an increase in online advertising spend of around 50% and will see an integration between traditional campaigns in print and outdoor with online marketing.

Harvest Digital will take on all online media planning and buying through existing travel portals, plus drive a new strategy with the likes of Metro.co.uk, GM.TV and the Lonely Planet websites.Head of online marketing at Thomas Cook, Manuel Mascarenhas, said: “We selected Harvest Digital because they have delivered on an imaginative plan, using competitions, contextual advertising and sponsorships against tight CPA targets.

They have a core audience of repeat bookers and want to ensure we continue to acquire new customers online. The new marketing strategy will target what has been labelled the lucrative and web-savvy audience of 35 to 45 year olds that several holidays a year, including packages, flights, ski holidays and cruises. Harvest Digital partner Emma Wilson added that Thomas Cook is the oldest name in travel but has a very contemporary approach within its sales channels.

Also Thomas Cook Signature has won the award for Best Long Haul Operator at last year’s British Travel Awards, receiving 31% of the vote, while in 2002 Thomas Cook India Ltd has been awarded the Institute of Directors’ prestigious Golden Peacock National Award for excellence in corporate governance, awarded for transparency, excellence in conducting business at various levels of management, social and environmental responsibility, ethical business practice and consistent creation of value for all the stake holders.

Thomas Cook Group has acquired Elegant Resorts, the Chester-based luxury travel firm with 160 staff and gross assets of £22m. Thomas Cook acquired Hotels4U.com from Centurion Holiday Group for an initial £22m. This company closed 150 travel shops and six offices throughout the country with the loss of up to 2,800 jobs, affecting sites in Rochdale, Manchester, Rawtenstall and Denton; not only this but Thomas Cook based 40 head office jobs in London following its merger with Mytravel, but this is not expected to affect the jobs at its existing headquarters in Peterborough. Apart from this, Thomas Cook of Peterborough merged with MyTravel of Rochdale to form a combined holidays business with more than 32,000 staff, Thomas Cook is to conduct a strategic review of its UK tour operating business, prompting speculation that it will seek buyers for Club 18-30, Style villa holidays, Neilson skiing and Sun World. Accenture has won a £110m 10-year contract from Thomas Cook to set up an IT and finance service centre, which will involve the transfer of about 400 Thomas Cook staff. Thomas Cook has launched a branded digital TV channel, which features its full range of holidays and other travel products; also reduced costs in its European travel business by shedding 2,600 jobs, closing 100 shops and grounding four aircraft.

Today, Thomas Cook is a leading travel company and one of the most widely recognised and respected brands in the world. Employing over 11,000 staff, Thomas Cook operates throughout a network of 616 locations in the UK and overseas. The company is wholly owned by Thomas Cook AG (formerly C&N Touristic AG), which announced its acquisition of Thomas Cook in December 2004 and was granted EC approval in March 2005. (Marvell, 2005) Thomas Cook AG is now the second largest travel group in Europe and the third largest in the world. One reason for the company’s longevity and continued success is its commitment to providing exceptional service. Thomas Cook once described himself as ‘the willing and devoted servant of the travelling public’. Today, 160 years after his pioneering excursion, these words remain a fitting epithet to the company he founded. (Bloch and Segev, 1997)

Thomas Cook, a major UK Tour Operator, has signed an agreement to pilot AXS-One’s new AXSPoint(R) electronic invoice delivery service to travel agents. The new AXSPoint service, which has been approved by the Civil Aviation Authority (CAA), a UK regulatory body for use by tour operators holding an Air Travel Organiser’s Licence (ATOL), will eliminate the need for tour operators to issue hard copy invoices to travel agents, thereby providing tour operators such as Thomas Cook Holidays with potential savings of up to 80 percent on their annual invoice distribution costs.

For travel agents involved in the Pilot program, invoices will now arrive electronically on the same day as dispatch. The AXSPoint service will offer travel agents the ability to automatically match and reconcile invoices to bookings, thereby reducing administration costs and allowing quicker turn-around of invoices to the agent’s customer. (Richer and James, 1998)

“The AXSPoint service will significantly enhance the service we provide to our travel agent customers and the service they provide their customers in turn,” commented Manny Fontenla Novoa, Chief Executive Officer, Thomas Cook (UK). “The speed and efficiency of electronic distribution will reduce our costs considerably while benefiting agents and customers alike.”

Commenting on the development, Mark Donkersley, Managing Director, AXS-One UK, said: “While Thomas Cook is the first tour operator to pilot this system, we are receiving strong interest from other tour operators and travel agents. The issuing of paper invoices has been expensive to tour operators and agents alike in terms of money, time and customer service. Today, this activity costs the regulated tour industry over $25 million per year and we are currently working with the leaders of this sector to bring them on board our system. By providing these services electronically, and securely, we save them a considerable amount of money, while at the same time adding value to each part of the distribution chain and generating recurring revenue streams for AXS-One.” (Richer and James, 1998)

Superficially, the differences between Thomas Cook AG and other agencies are evident, as one is a national tour operator, while the others are global travel conglomerates. Nevertheless, if we examine deeper below the surface and truly analyze other companies, we can appreciate the great difference between Cook and others’ services. All the agencies have become trusted and highly respected in their markets, as well as being among the best-known names in them, but Cook’s services is most appreciated by his customers. This is the reasons his company is the most preferred one. Thus, we can infer that Cook has the same presence and effect in his comparative market, it being tour operation in the U.S. for other companies and the world for Thomas Cook AG. (Trochim, 2001)

STA Travel Company

To be responsive to their globally dispersed and culturally diverse customer base STA Travel sought to “delegate as much autonomy, responsibility and authority as close to the action as possible,” while using a single integrated information system “to provide global support and solutions when that can improve their experience.” They described this philosophy, ‘as local as possible, as global as necessary’. An evolving business strategy called One Company sought to “align business operations with customer needs across the world”. Global teams were charged with developing and delivering “a single supplier strategy, one service standard, one set of operating standards and guidelines for management of our corporate identity”. To support that model the company was providing BLUEe, “a single sales and booking system to every STA Travel point of purchase backed by a single network, infrastructure, finance, and reporting system.” (Trochim, 2001)

To ensure they remained “as local as possible,” each major country maintained its own sales and marketing arms. While most country’s home web page was consistent in look and feel, country marketers were each free to design their marketing campaigns including methods to harness the internet. The US office, for instance had run a successful viral marketing campaign called “body shots,” intended to promote spring break in the U.S. They had also initiated advertising on Facebook and Myspace, two sites popular with the demographics desirable by the firm. The STA Travel U.S. website, itself was a popular destination, registering some 600,000 unique visitors each month. Over 400,000 customers and prospective customers also contact the U.S. Division each month by email.

The STA Travel’s North American division’s had initiated development of STATRAVEL193.COM, a highly interactive web site featuring video reports from STA customers about travel destinations. (Gall & Borg, 2003)They had also been the first division to explore the possibilities of Second Life as a marketing tool. The idea had received a welcome endorsement, and a matching investment, from STA Travels headquarters in the U.K. Craig Hepburn, STA Travels Global Webmaster, was responsible for the content management system that fed the various country websites and that was being rolled out throughout the world. His team had also supported development of personalized travel blogs, that allowed STA Travel customers to document their travel. Hepburn was enthusiastic about SL as a marketing channel, but knew it would be met with resistance by the marketing departments in other countries.

The initial strategy STA Travel had conceived for their web presence had two prongs. The first element was to create several destination islands to attract prospective travelers. For instance, one idea was to create an island featuring the great wall of China. The second element of the plan was to hold a machinima competition among current Second Life residents. Machinima, a style of movie making, uses avatars as members of the cast; the movie is then filmed in the context of a virtual wor