Principal–agent relationship within a cruise supply chain model for China

Abstract

Changes in travelers’ booking habits and the evolution of technology have come to threaten the existence of traditional travel agents (TAs). However, the cruise industry still relies heavily on TAs as its main distribution channel. A qualitative study was conducted to investigate the networks, relationships, and power distribution between cruise companies and TAs using a triangulation method via a tourism supply chain model. Principal–agent (P-A) theory was taken as the framework to describe various parties’ relationships and roles. Several TA business models were identified, including group blocks (i.e., guaranteed and nonguaranteed) and charter cruises (i.e., retail for resale and corporate; meetings, incentives, conferences, and exhibitions). Results show an imbalance of power between parties due to unique business practices and customer preferences in Mainland China. Principals (i.e., cruise companies) were found to rely excessively on agents (i.e., TAs) to create demand, with the growing number of cruise lines leading agents to overpower principals. The alliance among TAs further affected the principal–agent relationship. A refined tourism supply chain model tailored to the cruise industry is thus proposed herein; this cruise supply chain model simplifies the complicated business network relationships between cruise companies and TAs in China.