Online travel’s middlemen: do intermediaries have a future?

Airlines, operators, hotels and agencies debated the future of distribution at a round-table organised by IBM and SAS. Lee Hayhurst reports

The round-table debate covered the future of intermediaries in an industry in which the supplier and consumer are ever more closely connected through technology.

With Google’s proposed takeover of software firm ITA in the US, intermediaries look set to come under greater pressure. Could loyalty schemes and social media be their salvation?

Round-table attendees

  • Alun Williams, Tui UK e-commerce director, Tui UK
  • Marianne Sammann, general manager UK&I, Lufthansa
  • Drew Robinson, sales and distribution general manager, Virgin Holidays
  • Douglas Acton, sales director,  Von Essen Hotels 
  • Tony Berry, director industry and air fare distribution, HRG Stephen Line, SAS UK  
  • Jim Zalles, senior managing consultant, IBM
  • Maarten Oosten, senior analytical consultant, SAS

Alun Williams: “I fear particularly for the aggregators if the Google ITA deal goes through. If it does, their business models start to look a bit shaky. Google doesn’t spend that kind of money without a fairly solid return behind it.”

Stephen Line: “It’s about how you can build trust in a brand. This is one of the challenges for the intermediaries. How can they add value by building trust with their consumers? That’s quite difficult because of the nature of their business models.”

AW: “The only way to really build trust is to give an excellent online user experience, access to all content, all prices, all availability, providing the consumer with the ability to filter content and be confident that they have found the best price and product for them in the market.”

Jim Zalles: “Trust is about brand. We have been trained to focus on brands, especially in the US. It’s loyalty without a card. Loyalty programmes are great. I was at American [Airlines] when they launched Advantage and it transformed things overnight. Retailers have tried to do loyalty and failed. I don’t know if you can really trade on your loyalty programme other than as a great way to capture consumers’ data.”

SL: “You say that, but the obvious success story is Tesco.”

JZ: “It’s more than just the Clubcard – it’s more about what you do with the data.”

SL: “SAS technology sits behind Dunnhumby. They send coupons to 12 million households a quarter and the conversion rate is between 20% and 50% – it’s just astonishing. They introduced the Clubcard in 1996 when they had a 16% market share, by 2002 they had 32%. A lot of that can be attributed to data collected by Clubcard, so you’re absolutely right, it’s about the data.”

Doug Acton: “There are now companies that exploit that. Utilities Warehouse offsets your gas bill based on Tesco points. I’m not that loyal, but if I can save £50 off my monthly gas bill I’m going to do it.”

JZ: “As a counter example, Boots’ loyalty programme had one of the fastest take-ups ever seen.”

SL: “We need to be careful with social media. If you’re go down this route of having personal conversations with people you’d better be able to sustain it and have a plan that’s scalable, because otherwise people are going to say ‘hang on they loved me yesterday and yet today I’m actually no different to anyone else’. You have to go into it with your eyes open and make sure you have a brand that’s not a gimmick.”

Drew Robinson: “People may have expected Virgin Holidays to enter the social media arena sooner and more aggressively, but we decided to wait and see because we have seen so many people doing fantastic stuff initially and then just burning. We said let’s be cautious and not just race in. We have decided not to use it as a sales channel at this point.”

SL: “Suddenly brands can listen, cost effectively, to what people are saying about their products. They don’t just go out and do a survey with people who do surveys. You’ve now got people you can listen to, which is going to drive product development.”

DR: “That was the big eye-opener for us – people loved the brand and yet had never travelled with us.”

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