Travolution is meant to be a magazine for the online travel industry, yet I find myself being constantly dragged back to talk about the traditional mediums such as agents and call centres, and try to put all the recent news over the past few weeks about the proposed or actual mergers of Triton, and some of the Co-op’s, into some context.
I don’t know if any effective organisation, but particularly a merged Triton, can include so many larger than life characters, politicians, or entrepreneurs, but a full merger and the longing to be one ‘travel provider’ was always George Begg’s masterplan, so let us see if he realises his wish, and gets the scale he is seeking.
The Co-op merger seems sensible. Travelcare retail needs an overhaul; its tour operation needs further scale, investment and management to be where it needs and wants to be; the Future homeworking division complements the shops nicely, though I have some doubts about its ability to expand its organic tour operations at sufficient speed to be the vehicle it quickly needs to be, if it is to reduce its reliance upon the two remaining ‘beasties’.
A lesson from someone who has some experience in this area – retailers make lousy operators (and I speak having done both for some time). Another Co-op acquisition with ready-made management and stock would seem a sensible next move.
We are all kidding ourselves if we believe that the Internet on its own will drive sales at a cost-effective price. These large groups understand this, which is why they continue to develop their retail strategies together with telephony, and their online plays.
The reality outside of our own PR spin is that telephony and even real estate do and will continue to play a huge part in distribution now and in the future. You need all three to succeed. The old adage of ‘Click, Walk, Talk’ is still relevant and perhaps even growing given rising pay-per-click costs.
The TUI virtual call centre based on the old Scandinavian model is the future for the vertically integrated chains that can’t or don’t want to remove prime real estate in the UK, yet have under-utilised resources (namely empty shops, with experienced staff often all too quiet).
Holidays are not flights, and no amount of advertising spend will remove the need for voice-to-voice or face-to-face contact, as a necessary prerequisite to close a sale.
My view is that the current PPC model is becoming uneconomic, with the big boys at times spending ridiculous amounts per click, which will result in many players reviewing their online marketing spend, and eventually deciding (only once they have spent too much I might add) that perhaps a gradual move back to a more traditional mixed ‘above the line’ spend might not be a bad thing.
We at Lowcostbeds have been single-minded in not operating a multiple brand strategy, to try to get the greatest single focus and return for our marketing spend on the one brand, while also not pretending to be the agent’s greatest friend on the one hand, and simultaneously undercutting them with other aptly named brands sold only direct, unlike some others.
Yahoo, we are told, is about to launch ‘Panama’– its new search vehicle in the UK – and MSN is still trying to grow in search, but the reality is that Google is now so dominant, that it is almost too late.
Getting the right balance for any company to expand its business successfully between PPC, search engine optimisation, natural, brand and repeat is very hard, and with just one such dominant player in this one so vital sector where costs are rising so fast becomes worrying for the whole industry.
I suspect that those that continue to invest in their brand, and natural recall over multi-channels, will succeed over time.
Paul Evans is chief executive of LowCostBeds