This is part two in a series looking at the relationship between online travel agencies and traditional travel agents.
With mega OTAs, notably Expedia and Orbitz, paying up to 12% commission through their agency partnership programs, OTAs appear to have crossed the line from competitor to collaborator – at least for some agents.
But at what risk? Does working with the OTAs merely strengthen their grip on distribution? And what impact might such affiliations have on agent-supplier relations?
In Part One of our series on OTAs, Travel Market Report looked at the edge that traditional agents maintain over OTAs, particularly in customer service. (See, Customers Differ, But Chasm Narrows Between Agencies and OTAs, Aug. 30, 2012.)
In Part Two, we look at the OTAs’ travel agent affiliate programs and their impact on the distribution landscape. Travel Market Report spoke with Diego Pedrani, director of travel agent distribution for Expedia Worldwide.
Expedia’s agent program
Expedia has pursued the most aggressive strategy for partnering with traditional agents, followed closely by Orbitz. Other OTAs have not made agent affiliate programs a core pillar of their growth strategy. (See sidebar.)
Launched in the U.S. in 2010, Expedia’s Travel Agent Affiliate Program (TAAP) allows agents to access Expedia’s inventory of travel products and earn competitive commissions on their sales. Expedia launched an agent-only online portal last year to give agents more direct access to its services.
Pedrani, who is based in Spain, responded to Travel Market Report’s questions by email. Following are his edited replies.
How is Expedia’s TAAP program doing? How many agents have signed on?
Pedrani: In the last three years TAAP has become a truly global program, with travel agency affiliates in 25 markets – most recently Norway, Korea and Indonesia.
We currently work with more than 25,000 travel agency affiliates worldwide, and new agent signups continue to accelerate. We signed double the number of agents in the first three months of 2012 compared to the previous year.
How many of those are in the U.S. and Canada?
Pedrani: TAAP has enrolled 6,500 agencies in North America, primarily home-based agents and independent contractors. The enrolling run rate is very healthy in the U.S.
With Expedia and other OTAs paying as much as 12% in commissions to traditional agencies, are the preferred supplier relationships of agents and the agency consortia in danger of being eroded?
Pedrani: Travel distribution remains a diverse and complex landscape. Expedia TAAP operates in an extremely competitive environment. Other intermediaries – tour operators, wholesalers, consortia, host agencies and direct channels – all compete for business. Each of these channels has unique selling points and needs to evolve to remain relevant.
Many consortia are moving to an online distribution model, which presents potential partnership opportunities and areas of healthy competition for Expedia.
Should agents who work with OTAs be concerned about their own supplier partnerships?
Pedrani: Based on our conversations with agents, we haven’t heard any concern over their individual relationships with suppliers.
Expedia TAAP offers competitive hotel commissions and incentive agreements, but it’s also worth noting that commission percentages aren’t the main aspect we compete on. Timely commission payment, dedicated agent support, strength and breadth of inventory are all important.
How are agents using OTAs and how is that changing?
Pedrani: In the past, it was common for agents to use our sites primarily as search tools to compare rates and fares. Since TAAP launched, agents now use Expedia to make reservations as well.
Typically an agent will start booking with TAAP when a room is not available through their traditional suppliers. Many agents tell us once they experience the simplicity of implementing TAAP, the user-friendliness of the Expedia platform, and timely commission payment, they increase their production with us.
Expedia offers an extensive selection of travel products and services all in one place, making the booking process simpler. Our sites offer more than 155,000 hotels in over 200 countries, hundreds of global and regional airlines, rental car companies, cruise lines, and destination experiences.
What’s new and what’s ahead for your agent partner program?
Pedrani: TAAP has enjoyed significant organic growth. In order to maintain and accelerate the level of growth we continue investing in enhancements.
In order to continue providing a high level of service, a dedicated agent portal, Expedia Access, was launched in 2011 and new features continue to be added to enhance our offerings and usability for our travel agency affiliates.
We listen to our agent partners who are always making suggestions as to how we can improve TAAP, including for new products and features. This engagement is critical because it helps us prioritize areas to improve and increase the value we can add to our affiliates.