Following a long period in the 20th century when travel distribution channels remained fundamentally the same, the development of GDS and viewdata in the final quarter represented the beginnings of radical change.
However, it was the development of the web as a significant travel distribution channel during the final decade that has accelerated these changes. The new online channels have also had a massive implication for the integration of the search process for agents – including access to new types of suppliers, the reinvention of travel packages, changing commercial models and the elimination of traditional distribution boundaries.
Agents used to be inhibited by disintegrated search systems offering inadequate access to travel suppliers. Today, they are potentially inhibited by the challenges presented in integrating an over-abundance of suppliers into a seamless comparative search. This fundamental shift has arisen due to a number of factors.
Firstly, there is a plethora of new travel suppliers. The evolving needs of consumers sees the development of new, specialist, Internet-based suppliers, including low-cost airlines and specialist accommodation bed banks. Suppliers offering a strong online, price-based, consumer proposition and brand recognition have made integration into the travel agency search essential.
Secondly, travel packages have been reinvented. The proliferation of suppliers has created greater choice but also represents a challenge to agents in terms of managing this abundance of online content. The need to aggregate disparate content in the leisure sector has promoted the reinvention of tailor-made holidays in the form of dynamic packaging.
Thirdly, commercial models have changed. The most fundamental change for the leisure travel agency has been the removal of fixed commission. An integrated search needs to recognise and accommodate travel content from both commissionable and non-commissionable suppliers and protect travel agency mark-ups and profits.
This means more than just adding a flat fee or percentage mark-up. An integrated search and booking journey for agents needs to enable the application of rules that determine precisely when specific product should be made available within a search. This may be according to commercial commitments to suppliers, the type of product searched or the profile of the consumer.
Finally, traditional distribution boundaries have been eliminated. The fragmentation of travel distribution channels has also resulted in the breakdown of traditional boundaries within the actual chain of distribution. Suppliers are unbundling traditional packages in order to distribute contracted supply more flexibly. Agents are creating self-branded packages through easier access to components and positioning themselves as virtual tour operators.
Vertically integrated travel organisations are trying to secure supply for their wholly-owned distribution channels while ensuring maximum industry take-up for their contracted supply. Independent agents are seeking alternative sources of availability, through new Internet-based suppliers when vertically integrated travel stock is not available.
With the elimination of traditional distribution boundaries many online travel organisations have also emerged as technology suppliers. A strategic decision for agents has become whether technology suppliers, who are also travel agents/tour operators, can be considered both a partner and a competitor, and if the answer is no today – could this become a yes in the future?
For some travel agents, truly independent technology suppliers may be considered to offer a clearer proposition in a complex and evolving marketplace.
Ed Whiting is product director at Comtec (Europe)