Report sets out benefits of avoiding online intermediaries

Suppliers of travel products could collectively save $180 million a year for every extra 1% taken online rather than through intermediaries, a new report has found.

The study by Deloitte and New York University, Hospitality 2010 – A Five Year Wake-up Call, found that for some hoteliers there could be a difference between 98% gross yield for online reservations and 75% gross yield for online merchant bookings.

Airlines are leading the industry, the report said, with a 62% share of the global online travel market, followed by hotels with 14%.

However, Deloitte suggested the hotel sector lagged behind the wider consumer business with its investment in information technology.

The sector is in the “lowest quartile of spend with a gap of some $22 billion”, the report added.

Alex Kyriakidis, global leader of tourism, hospitality and leisure at Deloitte, said: “Most CEOs we interviewed have identified spend on e-commerce and distribution as a high priority over the next five years.

“For many, the mission is to target spend where the business case for payback is clear through cost efficiencies or increased revenues.”

The direct relationship with consumers will be boosted only by investing in IT, especially as new competition has arrived recently in the form of travel search engines.

“Our analysis shows that the internet is now the first touch-point between the customer and the product provider’s brand,” Kyriakidis said.

“Ecommerce strategies will need to engage the guest and deliver, in their own right, a consistent brand message and experience.”

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