Today after my radio broadcast, I was listening to a video from the TED conference of Seth Godin, talking about "the Tribes we lead".
So a few minutes into the speech Seth said, "Heretics are the ones that reject the status quo". I quickly learned that he was talking about me.
Chicago-based Travelclick recently posted third quarter results for electronic bookings. The term "electronic bookings" includes bookings made via the GDS and via Pegasus, whether by a traditional travel agent or via the Internet, which primarily includes OTA bookings. It excludes consumer direct bookings made via hoteliers' own internal systems and excludes merchant model bookings, which are generally made via the OTAs' own inventory system against a block of rooms versus live inventory access via a GDS or Pegasus.
The year-to-date results show that bookings via the consumer Internet channel are declining year over year at a rate much greater than their travel agent counterparts. This is not surprising in light of the traffic trends for supplier sites versus OTA sites (as reported by Compete).
Asked where British Airways would most adjust costs during the next year,
BA CEO Willie Walsh named the "limited" areas "we can control." It was indeed a short list: Labor costs, distribution costs and "other."
One of the primary reasons for the demise of commissions was the desire by airlines to reduce their distribution costs. They also felt it would take out an intermediary, bring them closer to their end customers and give themselves a competitive edge. Their strategy was not resisted by corporations who saw it as a way to commoditise this vexing and rather antique type of purchasing, or at least make it far more transparent. After all, experience showed them that stripping a product down to its component parts makes it far easier to negotiate lower prices. There were mixed feelings amongst travel management companies. It varied around the world from despair and anger to others who saw it as an opportunity to survive and thrive whilst their peers faltered under the pressure of having to justify their role in the supply chain.
The end result has proved to be fascinating and I am not sure if any of the key stakeholders got what they wanted out of it.
