The idea that the dinosaurs were killed off by the planet’s response to a meteor strike is not as firmly held in scientific circles as it once was. Similarly, the idea that the internet would kill off high-street travel agents is also up for discussion.
EMarketer is the latest US research group to attempt a screeching U-turn, talking about ‘frustrations related to the
planning and booking capabilities of OTAs’ and a ‘renewed appreciation for the expertise and personalised services offered by traditional travel agents.’
Maybe. Even the most evangelic of dot-commers admit that there is still some big holes in the process of booking travel online, while the high-street advocates are similarly concerned about their ability to compete on price, among other things. If online is so great, how come we look at loads of sites before deciding which one to book with? And if the high street is so great, why have so many agents closed down?
A lot has been written about how the internet is evolving and the high street is adapting, blah, blah, blah, but what about the customer? They are changing too. Arguments that the young folk wouldn’t consider going into a high-street shop are as anecdotally based as the idea that IT-illiterate old folk will hobble through the sleet in January to collect a brochure.
Customers will make the purchase decisions on their own terms. If they are price-led, and a lot of them are, then the OTAs will triumph. But if a customer wants to be made to feel special, and a lot of them do, because he or she is spending a couple of thousand pounds, then it’s the high street.
It’s easy to forget that buying travel online has only been possible for a decade or so, and during that time a lot as happened. A lot hasn’t happened as well, and one of the things that hasn’t happened is high-street travel agents becoming extinct.
If the dinosaurs were killed off by a meteor, it certainly didn’t happen overnight. But whatever the primary cause, they disappeared completely before evolving back into something fit for purpose. Sound familiar?
Batten down the hatches – winter’s coming
At the time of writing, the UK travel industry is about to enter one of its most difficult periods – winter. Historically, even when the economy is strong, losses are usually racked up between October and March. So winter 2008/09 is going to be interesting.
The most exposed businesses are airlines. For many, winter is a time of just making sure load factors are high enough to bring in enough cash to see it through. Most airlines’ cost base is so tight already there isn’t any slack, and a price war will favour the big players. It could get nasty.
Online marketing campaigns will play a major role in helping to fill aircraft, and airlines will want bookings direct rather than through intermediaries. The drive for ancillary revenues is likely to step up a notch this winter.
Online travel agencies will have the chance to show just how adaptable they are and how broad their content range is. OTAs with access to good bedstock in destinations where the average winter temperature is greater than 20°C will be well placed.
But it’s irrelevant if the seats on scheduled flights are yielded out of budget. Tour operators using their charter capacity for their exclusive product packages could easily steal a march.
But even this assumes that the demand is still there. The economy is unlikely to have picked up by then, leaving people with some hard decisions.
Will people prefer to get further into debt because of Christmas or because of a trip to the Canaries? There could be a lot of people who decide to cancel both.
Martin Cowen is chief writer for Travolution