The internet has helped create the ‘empowered’ consumer – travel companies need to be able to offer more than just the best price – a scenario that could see the balance of power shift yet again. Martin Cowen finds out more.
If ‘knowledge is power’ then one of the many things that the internet has done is give that power to the consumer.
A search for any hotel, destination or airline will bring up a range of responses that will help shape a consumer’s travel purchase.
But even when the world was offline, there were plenty of businesses providing travellers with information, from Rough Guides and Lonely Planet to Time Out. There is still money to be made in providing travel information online. But what of the people who have to make money from selling the actual travel itself?
German philosopher Friedrich Nietzsche was unlikely to be thinking of independent high-street travel agents when he coined the phrase ‘That which does not kill us makes us stronger’. Any high-street travel agent still in business has earned its right to be there. It wasn’t good enough to rise to the challenge of the internet, that challenge had to be overcome. And the really clever agent is using the internet to fight the internet.
Advantage is a consortium of independent high-street agents, with around 700 outlets, turning over more than £2.2 billion a year. Its business development manager David Moon talks to members on a daily basis, and is in a good position to know how they are coping with the empowered consumer.
“The web means that anyone can become a travel expert,” he says, “or at least it makes people think they are an expert. They think they know where to go, what to do, and how much it is going to cost. But it’s not as simple as that, as more people are finding out.”
There is still a Wild West feel to some of what happens on the internet, and travel is no exception. Even the most avid fan of user-generated content must agree that it can allow a clever hotelier to big up his own hotel, to say nothing of the devious ones who could diss a rival. “Some sources of information are better than others,” Moon says, admitting that his sister eschewed his advice to book through her local Advantage agent and opted for what looked like a good deal online.
“The hotel was dreadful,” he says, “and they had to check out and find a new hotel locally. An agent could have saved her the hassle.”
At the time of writing, a number of Zoom passengers are currently struggling to get back to the UK. “We tell our members that they should get the message about consumer protection across to customers. It’s not an easy sell, and there are still grey areas, but agents can explain it more clearly than a website.”
One of the challenges that Moon has picked up from his hotline to the high street is pricing.
“It can be difficult to compete on headline price, so our members are told to think about value. We also make sure that we compare like-with-like pricing. As an organisation, we tend to attract clients who are not looking for mass-market, commoditised product.”
But the reverse side of this is that if what the internet can offer is best prices, it is exposed if customers are looking at more than that. “If the only factor that mattered was price,” Moon said, “we’d all be driving Skodas.”
But it seems that online travel agents are also facing a similar dynamic. Johnny Cudworth, head of product marketing for Expedia.co.uk, says: “Visitors coming to the site are more informed. We do get a lot of traffic from TripAdvisor, but the bulk of our visitors come to the site direct and expect us to provide information other than just the price.”
One potentially game-changing shift as a result of this is that a five-star rating means nothing if the reviews are rubbish. “Star ratings are being used less as a means of searching for hotels. It’s the reviews that count.”
As well as the link to TripAdvisor, Expedia has 700,000 reviews of its own. And hotels that offer virtual tours on the site “tend to perform well”, which suggests that seeing a room in all its 360-degree glory can nail a conversion as effectively as a page of glowing reviews.
“The future for OTAs is that they need to be able to offer more than just the best price,” he says, ironically echoing what Moon said earlier. However, Cudworth was quick to play down any further comparisons.
“Expedia is a marketplace with no bias,” he said. “Control is completely in the customers’ hands.”
Cruise is arguably the weakest consumer sector in online travel, with the consensus that no more than 10% of cruise is bought on the web.
Cruise is still a relatively big ticket item, but a four figure sum is no longer a reason why people don’t book online. More likely is the bewildering array of price points faced by a potential customer, and the lingering concerns about how many tuxedos and/or cocktail dresses to pack.
In the UK, cruise is widely positioned as a sector where there is still room for growth and it is the high-street agent that will drive this growth.
Online isn’t a big part of the distribution, but it is a big part of the training. Royal Caribbean, for example, hasn’t abandoned roadshows and face-to-face product training altogether, but online training sessions are increasingly important. “We do a lot of business through homeworkers,” says training manager Michelle Russell. “And the flexibility that a web-based session offers fits in with their lifestyle.”
Russell’s colleague, David Chidley, also explains how important social networks are becoming as part of its approach to online training. “We think people new to the retail travel agency business will be receptive to how we work within social media,” he says.
It has groups on the usual suspects – Facebook, MySpace and, interestingly, Bebo, which tends to have a younger demographic than the others. It also has a blog within its main online training portal, Cruising For Excellence. This features blogs written by members of the training team, videos and podcasts.
But cruise has always had more of a social network than other travel products. CruiseCritic had been around for 12 years before Expedia bought it in May 2007. It launched a UK site at the start of this year, providing news about the sector, itineraries and orders as well as reviews. It still has some way to go to match the product information available from a clued-up agent, but it’ll be one to watch as Expedia Inc applies lessons learnt from TripAdvisor to its cruise equivalent.
There has been a bloodbath on the high street since the internet found its legs, and it’s safe to assume that any agent still out there is fit for purpose – Darwinians might call it survival of the fittest. Agents cannot hope to compete with the quantity of information available to the consumer, but quality is where they can make the difference. As more research indicates that there are still a lot of travellers who are not just looking for the cheapest price, it might be that the OTAs have to face up to the threat of the high street.
The role of the concierge
The reviews were good, the virtual tour dazzling, the rate acceptable. Check-in was fine, so what shall we do this evening? Let’s ask the concierge…
Concierge desks are still alive and kicking in the hotel sector, despite the fact that, like agents, most of what it can offer is available online. Polina Roze, senior concierge at the New York Marriott Marquis, explains: “Reading about certain shows, restaurants, events or nightlife is not the same as actually going there or knowing the people who work there.
“Over the past five years our guests have become a lot more travel savvy. They print out articles that they read online. They visit numerous sites that help recommend restaurants and nightlife but they still want recommendations from someone they can trust.
“I belong to a concierge organisation called the New York City Association of Hotel Concierges. If we have any doubts, questions or need any assistance to help our visitors, we pick up the phone or e-mail one another. There is no competition,” she said.
Marriott sees its concierge desks as a customer service function rather than revenue generating, “facilitating the return of our guests to the hotel and the city by being the best at what we do”.
This means that there is no such thing as a preferred partner, so Roze has autonomy and flexibility when it comes to looking for activities online. “Marriott does block some more risky sites so I use my own ethical judgment,” she said diplomatically.
On her first night behind the desk 15 years ago, “the information operator, #411, Yellow Pages and an old hand-written Rolodex with index cards were my best friends! Concierge life was more challenging before the internet, yet simpler at the same time. The web serves a wonderful purpose, but it cannot replace a person’s expertise or a helpful welcome in a new place.”
Online Travel Agents vs The High Street
GDSs and travel technology companies are responsible for developing the tools that can help a high-street agent. Andrew Owen Jones, managing director of Amadeus’ leisure business TravelTainment, thinks the high street has an “inherent problem” – agents’ search facilities are system driven, while OTAs’ are user driven.
He explained how search has entered its third wave. “First of all customers searched for date, destination, availability. Next they started to search by facility or amenity; the next big shift is that they will want to search by what other customers are saying. To provide this, agents will need a critical mass of data. It’s no good an agent recommending a hotel if there are 400 reviews saying the pool is too small.”
Travelport UK and Ireland general manager Patrick Lukan offered a different approach, believing that “even with all the cool technology online, an agent who’s been in the business for a while is going to know how to maximise a customer’s buying capabilities.”
He suggested that people coming into a shop have a budget in mind, and a clued-up agent can use the technology as well as old school selling skills to nail the sale.
But both said similar things about the role of the high-street travel agent, saying agents need to be able to do more than just take an order. They need to make sure they can respond to a how a customer wants to buy, rather than how they want to sell. And both agreed there is no standing still – GDSs have to continue to innovate in response to how consumers are shopping.