Travel suppliers take on agencies in online market

The balance of power in the online travel market has shifted from online agencies to travel suppliers, according to PricewaterhouseCoopers.

In its report, The Distribution Revolution, PWC says that now suppliers have the ability to take control of their own inventory they are better able to compete with online travel agents.

According to the report, price and convenience are crucial factors in booking online – putting airlines and hotel owners in a strong position as they control pricing.

PricewaterhouseCoopers partner and travel sector leader Malcolm Preston said: “Suppliers are now providing the lowest-cost bookings available on the internet.

“Those suppliers that have sufficient scale will continue to see more and more bookings made through their own sites. It’s the smaller operators that will become the key clients of the aggregators.”

Loyalty schemes and reward points are also proving to be successful for online companies, the report said.

“Aggregators struggle to provide anything significant to ensure customer loyalty. Discounts are one option but this comes directly off the bottom line. If they want to give a free flight, they have to first purchase it from the supplier,” said Preston.

PricewaterhouseCoopers also suggested that all online travel players will need to be more creative and offer a wider range of services unrelated to travel including theatre tickets and restaurant bookings.

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