Surprising Trends In Online, Leisure And Corporate Travel

Recently, I had the pleasure of attending an Amadeus event held in Europe with senior executives in travel across both agencies and suppliers. The general topic discussed was how the changes in travel distribution are impacting both consumers and corporations. A few key points made during the sessions:

• Google is scaring the crap out of the leisure travel industry. They now refer to search charges as the "Google Tax" and it has become a multi-billion dollar expense. This has become a huge barrier to entry for new online resellers. The interesting point is as Google grows and flexes its muscle, the legacy content providers and channels (GDSs and TMCs) suddenly don't look so bad. Nothing like fighting a major war to make old foes more attractive. The OTAs make the point that if you put them out of business, you'll only have Google to deal with. Be careful what you wish for.

• Rating services like TripAdvisor are having a profound impact upon the way travelers purchase travel. A major shift is occurring due to the application of social media. The typical traveler now goes to their favorite source for ratings before shopping. They are heavily dependent upon these rating services to make a buying decision. Someday soon, you'll start to see rating services offered through travel agents and corporate booking solutions.

• Travelers behave differently by device. A consumer using a website is much less loyal than one using a mobile phone or ipad. OTAs only have a 7% attach rate over the web but it's much higher from a smart phone. Suppliers are highly motivated to get their latest app loaded on your phone because users tend to single-source rather than shop around. We've only just begun to see development in this area. 

• No one is really sure as to which distribution channel is growing or shrinking. The battle between OTAs, TMCs and supplier-direct continues but no one really knows who is winning. According to ARC, OTAs have lost share to suppliers. If you read the latest PhoCusWright reports, OTAs have won share from suppliers due to the aggregation of content. My gut tells me that suppliers will get better at creating apps and selling to consumers and, over time, will continue to take share away from both suppliers and TMCs. It's just a matter of time. Consumers will still want to shop through aggregators (meta-search) and travel advisory services but will tend to buy direct.

• Suppliers are not only battling the airlines but the OTAs as well. They appreciate the traditional TMC model and support the channel due to the high cost of service as well as premium pricing from corporations. However, they don't like the dependency upon the GDS or the market segment supported by the OTAs as they believe those consumers should be buying direct. If a major airline in the States ever gets aggressive in selling direct through pricing, amenities and technology (APIs), the industry will change in a big way. Whether it will be better or worse than before depends upon where you sit.

• Europe is ahead of the States for agency point-of-sale solutions. Seems like every major TMC across Europe has already invested in the creation of a fully integrated agent desktop and an online booking tool. Born out of necessity due to content fragmentation, TMCs have heavily invested in these solutions over the past 10+ years and they are paying dividends today in their ability to aggregate both GDS and non-GDS inventory.