Paradise Vacations

In February 2008, the president of Vacances Paradis Inc. (Paradise) was assessing his options for the company’s competitive strategy for the future. Paradise was Quebec’s market leader in the tour operating industry but was facing a significant challenge: FunTours Holidays (FunTours) had stolen a sizeable portion of Ontario’s market share in only two years and was planning on conquering the Quebec market for the 2008/09 winter season. FunTours’ aggressive strategy was to provide large capacity at low prices, thus creating a price war and decreased margins. The president had to consider how to meet FunTours' threat in the face of several challenges: the tour industry was fundamentally changing as a result of shifting from traditional travel agents towards Internet distribution; limited differentiation in product offering forced competing on price; and a growing customer base as more people could afford travel. Price had emerged as the dominant criteria for travelers and a huge consideration for tour operators. The president wondered which strategy would be best for the company’s short- and long-term viability.