Further moves towards disintermediation could emerge in the travel industry as suppliers look to survive the economic downturn, members of the Travolution Editorial Advisory Board predicted.
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Forge partnerships to thrive in 2012
Travolution held the final meeting of the year of its editorial advisory board this month. Lee Hayhurst reports on the discussion about the current state of the travel sector and prospects for 2012.
Further moves towards disintermediation could emerge in the travel industry as suppliers look to survive the economic downturn, members of the Travolution Editorial Advisory Board predicted.
However, although some models were expected to come under pressure, the ability for travel entrepreneurs to reinvent themselves ought not to be under-estimated.
Matthew Crummack, lastminute.com president, said the situation in the travel sector today is reminiscent of the 1980s in general retail when competition was cut-throat.
He said some business partners could work together better to share data about consumer buying behaviours and present product to meet their requirements.
“If some players in our industry viewed themselves as business partners rather than competitors there would be a far better output of activity,” he said.
Crummack, who has a consumer goods background, said what Tesco did 15 years ago was to open up its analytics to suppliers which allowed them to work with the retailer in a different way.
Dan Robb, Google UK travel industry head, said this was a way of Tesco using its “corporate muscle” to drive better deals and it was how “one notable hotel aggregator” operates today.
The issue for the travel sector is that there is always the fear among intermediaries that suppliers will go direct if the retailer is not able to drive the incremental business they need.
Robb said: “In the high street you tend to see periods of fiscal problems as a time when suppliers, more often than not, look to disintermediate.
“I wonder if suppliers will say as there are fewer consumers out there spending less, I will take this time to squeeze out at least a number of intermediaries.”
Crummack said lastminute.com was trying to be a lot clearer about the added value it offers to its suppliers: “You have to be very clear what your value proposition is to the supplier.
“For a hotel, being able to drive large numbers of last minute booking is pure upside which they cannot do themselves, but you have to be clear on the value proposition; if you are not, that’s where the ambiguity lies.
“What’s different right now is that it’s not just about logic and analytics – there needs to be a bit of inspiration and fun in what you are offering.
“Customers, like all of us, are going through a pretty tough time and there has to be some form of energy around the experience.”
Sarah Hannan, Cheapflights Media head of sales, said: “Certainly the deal-based stuff is working really well for us – our newsletter is 50% up year-on-year.”
Nathan Timmins, Tui Travel head of online marketing, said: “There will be a percentage of our audience tuned on by deals, there will be a percentage with more money to spend looking at destinations.
“It’s trying to make sure you are catering for those different audiences.
For those travel intermediaries who find the market too tough, Traveltainment UK managing director Andrew Nicholson offered this comforting thought.
“This industry has an incredible history of people re-emerging in a different shape, form or function. There will continue to be very bright people that will always find a way to re-entrepreneur the same product.”
