We’ve watched consumers growing closer to vendors like hotel chains and airlines through their loyalty programs. Do you see this trend accelerating?
JF: There’s no doubt suppliers want to have a one-to-one relationship with their traveler customers, and try to build and improve that through special offers and incentives (e.g., free Wi-Fi, room selection, etc.). The difficulty they face, at least in the corporate-travel arena, is first and foremost the business-travel relationship is between the hotel and the company…not the traveler. Hotels need to ensure they don’t irritate the company and drive business to the hotel “just around the corner.”
Another frustrating component of this approach is hoteliers’ unwillingness to see the value of the GDS and OTA distribution channels. These channels bring significant sales volume to hotels, and there’s real value there. Hotels say these channels are too costly, but there’s downstream support and customer engagement costs with direct bookings that must be factored into the equation when comparing channel costs. I do see hotels continuing to try to drive direct bookings, but they’ve tried in the past with limited success. That doesn’t mean they won’t be successful this time, but it will be a slow, incremental shift as opposed to an overnight swing.
Smaller travel agencies don't have all of the sophisticated technology that larger TMCs do. Are they at greater risk to seeing themselves disintermediated from hotel bookings?
JF: Technology is an integral part of the travel ecosystem, and agencies of all sizes should embrace best-in-class solutions to provide value-add services to their clientele. Larger agencies tend to have the resources to implement and integrate technology across the life cycle of the trip to ensure they provide quality services. Smaller agencies, with relatively limited resources, tend to need to prioritize and focus on particular aspects of travel fulfillment.
If they don’t effectively prioritize for changes in their distribution approach, they do risk being disintermediated. That said, there are solutions, such as airfare and hotel price tracking from Yapta, that enable even smaller agencies to provide a valuable service by ensuring their customers travel for the lowest cost. It’s a way to ensure customers don’t look elsewhere or try to book direct to get the lowest price, because solutions like Yalta’s ensure that happens via the agency.
What can smaller travel agencies do to mitigate this activity?
JF: As an example, using automated price-tracking technology can enable even smaller agencies to see shifts in pricing, and provide them with greater context for the rates from suppliers and how those suppliers are performing versus current spot-market pricing. That data insight can prove invaluable to their customers.