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Online Travel Agents vs Travel Search – 
The Debate

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by Bhanu Chopra, May 2005

Recently Travel search or meta search has become a hot topic. Both the industry experts and wall street analyst predict this as the next hot topic in vertical search engine technology. So much so there are dedicated events on this topic that are being organized by Phocus Wright –Travdex (Dallas – May 2005) and EyeForTravel – Travel Search(Philadelphia – June 2005).

In this debate whether they will erode market share for Online Travel Agents, there is no question that they would challenge the current profitability margins for Online Travel Agents. Now to discuss this debate, it is fair to understand this debate from the perspective of the consumer and the Travel Suppliers.
 

Travel Search – 
From the Eyes of Consumer
Positives
Negatives
  • Ability to do comparison-shopping and get the best deal.
  • Save time as they no longer have to search multiple sites.
 
  • There is no doubt that the customer would benefit enormously by being able to compare the rates across different Online travel agent websites and supplier brand websites. However there is an assumption that the Travel search is actually presenting the best rates for travel needs of the customer. The very fact that the business model of most of these websites is based on CPC questions the ability of Travel Search to recommend unbiased best rates. 
  • Tends to commoditize Travel product. This creates an inability to differentiate travel product. With Dynamic packaging in place and the ability to add entertainment and city tours on some online intermediary sites such as Expedia, there is no clear way currently that travel search can indicate these differentiations as they compare travel products
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Travel Search – 
From the Eyes of Travel Supplier
Positives
Negatives
  • Lower cost of distribution - Eliminates net rates and now you really only need to pay for CPC (in most cases). 
  • More control on your inventory.
  • Customer acquisition happens at your end
  • Have to pay for referrals in CPC though they might not result in bookings. Not performance oriented.
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Online Travel Agents – 
From the Eyes of Customer
Positives
Negatives
  • Provides a mechanism for a customer to search on hotels based on their preferences/
  • Fulfilled by Travel Agent and thus relieves them from the additional effort involved in visiting Travel supplier site and filling out information every time for each travel supplier.
  • Ability to dynamically package Airline with hotels and car rentals.
  • Contact center/support center – more and more of these online travel agents supplement information on their website with 800 number support.
  • Have to search multiple websites to find best deal. Consumer paranoia that you might not have the best deal
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Online Travel Agents – 
From the Eyes of Travel Suppliers
Positives
Negatives
  • Huge customer base
  • Bigger advertising budget thus your product/properties get more exposure.
  • Minimal technological investment as Online intermediaries provide direct interfaces to CRS and also do dynamic packaging on their end
  • Valuable distribution partner
  • High commissions
  • Lack of control
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Some other comments 

"In today's healthier economic climate where demand for travel is high, Travel Search websites like Kayak certainly appear to have the upper hand when it comes to finding price comparisons between travel suppliers. However, if or when the travel market slumps, travel suppliers will only be too keen to go back to the traditional on-line travel agencies to help stimulate the market. Travel Search may represent a cheaper cost of sale in the short run, but the reality is that suppliers will have to open up distribution channels at some point, and this is when travel agents represent the best value and choice for customers. 

From a  consumer's point of view, although Trave Search is excellent, particularly when searching for a commoditized product like short-haul flights, there is the danger that these sites provide too much choice, particularly in the hotel market. I liken it to dining out: Some restaurants have a menu that is 10 pages long and offer everything from around the world. Suddenly, it becomes very difficult to choose a dish. Other restaurants have a menu 1 page long, but you know instantly what you want to order. Travel agents know what sells, and although providing a broad range is important, having the depth of knowledge about your core products is what really matters. It is this which differentiates travel agents from travel search." ‘– Jamie Crain – Commercial Manager

In summary, there is no doubt that the Online Travel Agents model would have to evolve and embrace value additions such as Dynamic packaging in order to be able to differentiate the product they sell. Travel Search holds a lot of promise and it has to be seen how it affects the current Online Travel Agents model.

Contact:

Bhanu Chopra
RateGain
bchopra@rategain.com

Also See: Going Beyond Search Engine Optimization; Converting Looks into Bookings / Bhanu Chopra / October 2004


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