Translate

Wednesday, July 06, 2011

The travel industry "booking machine" - Have we all missed the boat?

With all the rhetoric about which technology is best, fastest, state of the art, preferred, suggested, recommended, demanded - I believe we have all been focusing on the wrong thing in our quest to improve sales and profitability for the industry.

Click here to PRE-ORDER (publication planned for August)
As I was updating my book on multi-channel distribution yesterday, I solicited quotes from industry veterans to help put the current arguments about distribution into perspective.

From all corners of the industry, those that have seen this whole story unfold for more than three decades shared their stories of relationships and growth using technology as a tool.  

And while the rest of the world was focusing on the stunning revelation of Casey Anthony's acquittal, I was having a revelation of my own.

The booking "machine" in our industry is not the tool (aka the GDS, or Farelogix, or the OTA or the supplier.com).  It is the professional travel agent and the corporate travel manager.

For those of you who are now sighing, certain that I have indeed gone off the deep end, hang on and bear with me.   The numbers don't lie.

By definition, a machine is an apparatus consisting of interrelated parts with separate functions, used in the performance of some kind of work.  And a machine produces a consistent result, with a higher caliber output than one could do without that machine. 

The statistics have consistently shown that for more than a decade, the professional travel agent has booked a higher yield transaction than their online counterparts for airline tickets (see yesterday's post on ARC stats by channel) and they also produce a significantly higher ADR for hotel bookings (stay tuned for tomorrow's post on Travelclick stats by channel).

Why is this?
  1. They help people make decisions about their travel plans - all day, every day.  And in many cases, are paid for that professional advice and for the service they provide throughout the travel experience.
  2. They do not have a singular focus on price.
  3. They ask the questions WHO are you traveling with, WHAT do you like to do when you are together, WHY are you traveling, WHEN do you need/want to travel, WHERE do you need/want to go and HOW they want to travel and quite often they ask these other questions before they ask HOW MUCH.
  4. Upselling is what they do.  Even though they don't always get compensated for doing so (e.g. domestic airline tickets)
Yes, there are significantly fewer travel agents left in the US today than there were a decade ago.  But the ones that are left are still the best distribution value on the planet.

Technology is important, but it is an enabler.  If the proper mechanics are in place to reward the professional for booking your product, if you educate them, they will sell your product.  And they will produce a higher yield than you can get from driving consumers to your own web site.

Most importantly, it won't cost you a penny unless they sell something.  Variable cost distribution will always beat out fixed cost distribution, particularly with a predictable, higher yield result.

As always, I don't ask you to buy the aggregate industry statistics, but instead look at your own numbers and do your own math.

Stay tuned.  Tomorrow's blog:   Don't be fooled.  Direct Distribution is NOT free.
Post a Comment

Popular Posts

TripPlanz - Intelligent Trip Planning right from your website or blog