The geological make-up of the travel industry has shifted dramatically in recent years due to seismic shifts brought about, in the main, by the rise of internet-only retailers.
The response of traditional package-holiday specialists to the threat of the web operators' more flexible offering has been to consolidate, as seen in the merger announcements last month of Thomas Cook and MyTravel and last week of TUI and First Choice.
The proportion of the travel market accounted for by package holidays - the staple of the traditional agent - has declined by about 10% over the past five years, according to industry body ABTA, as a rising number of consumers have abandoned the high street in favour of putting together their holidays on sites such as Expedia, Opodo and lastminute.com or buying flights direct from no-frills carriers.
Changes in the nation's travel habits driven by falling airfares and a shift in working patterns have also hit the traditional two-week summer holiday, with consumers now tending to opt for more frequent, but shorter, breaks.
As package-holiday firms sought to find a way of stripping out costs, consolidation was inevitable. 'We were expecting (it) in a stagnant market,' says Richard Cope, senior travel analyst at Mintel.
Mike Greenacre, chief operating officer at the Co-operative Travel Trading Group, which runs more than 600 high-street agencies in the UK as well as internet and call centre-based operations, agrees that the TUI/First Choice merger was an 'inevitable consequence of market pressure'.
The tie-up could prove extremely valuable to both parties. The combined TUI Travel business is targeting £100m a year in pre-tax cost savings through job cuts and the closure of some of its 1100 travel shops in the UK.
The recent mergers will also see the operators invest heavily in their online offerings, according to Kayte Williams, head of holidays at price-comparison site Travelsupermarket.com.
There has already been activity in this area. Last week MyTravel launched seven web TV channels showcasing resorts in a tacit acknowledgement of the growing importance of online video as a marketing tool for the big tour operators.
Nathan Clapton, director of brand distribution at TripAdvisor, a website that offers reviews of resorts and properties written by holidaymakers, believes it will be those operators that come up with the most consumer-focused tools, based around a holiday's price or quality, who will gain a competitive advantage.
However, according to Williams, price will retain its position as the decisive factor. 'Whoever is the cheapest at the time will get the sale,' she says.
This could benefit the consolidated operators, whose combined buying power could come to the fore when negotiating rates with hotels and airlines. This could lead to keener pricing for holiday packages, although Sean Tipton, press officer at ABTA, insists that a large-scale price war among the big four is unlikely.
Although back-room efficiency can provide a one-off boost to the bottom line, long-term growth will be driven by the way in which the groups manage their brands and develop niches to keep customers coming back. 'Tour operators work on a low-margin/high-volume model,' says Clapton. 'It is hard to maintain brand loyalty in such an environment.'
Neither TUI's main brand, Thomson, nor the First Choice name is likely to disappear; each also owns brands with big customer bases, such as First Choice's Hayes & Jarvis and TUI's Club 18-30. 'A lot of effort is put into marketing to those groups,' adds Clapton.
According to First Choice chief executive Peter Long, who will manage the merged entity, the companies' brands will complement one another, not least in terms of expertise.
'TUI is the market leader in traditional beach package holidays,' he says. 'First Choice, meanwhile, has successfully expanded in the modular travel segment and in certain niche markets and has achieved above-average returns.'
First Choice's profitable specialist arm - one of the few areas in the market experiencing growth - will now gain greater distribution. As such, it will help alleviate TUI's low profit margins and is seen by many as the most desirable partner out of the big players.
Last year, First Choice attempted to divest itself of its package business to concentrate on driving the growth of this specialist division. In light of this, Mintel's Cope believes that the focus of cost-cutting in the merged business is likely to be on the mainstream arm. The company could then be repositioned as a long-haul and specialist operator.
'There's not enough differentiation or character in the retail travel market,' he says. 'The Thomas Cook and MyTravel group looks like a traditional mainstream company. TUI Travel should therefore focus on its specialist brands.'
This seems likely to happen, with TUI chief executive Michael Frenzel insisting that it will make small to mid-sized acquisitions in the specialist sector.
For at least the next year, the attention of TUI Travel's management will be focused on integrating the operations of two big companies. Until this is concluded, it remains to be seen whether the combined travel group, with its 200 brands and 27m customers, will be better equipped to dealing with the realities of today's travel industry.
This article was first published on Marketing