Lastminute.com boss Ian McCaig has warned of a widening gulf in the UK between the large travel providers and those without the ability to do volume deals with suppliers.
The next two years will see a significant repositioning in the market as the number of large major players decreases and those without buying are forced to switch strategy, said McCaig, who became chief executive of the Sabre-owned online travel agent in April 2006.
The outcome of his predicted overhaul of the industry will see a two different blocks of companies: those supplying to mass-markets, with strategic partnerships and high volumes; and niche operators catering for specialist markets with low volumes but high yields.
McCaig said there is a danger that the current business models across the industry will be under scrutiny in the coming years as there is a danger that many companies will not be able to make money.
Margins are decreasing and “tighter deals” are needed with suppliers, meaning those without purchase volume – typically mid-sized providers – will lose out, McCaig said.
The large group is predicted to include a number of the online travel agencies and the multiples.
McCaig added that the current group of large travel companies would reduce from “12 major players to around six” over the next few years.
He also told Travolution that Lastminute.com is currently going through a wide strategic review of its corporate brand as it looks to appeal to the new breed of travel consumer and its existing base of travellers who have remained loyal for over half a decade.