An article on Tnooz last Friday peaked our interest, Xotels boss Patrick Landman offering up key variables in what will become the biggest online trade war ever. When Google, all the big corporate OTAs, and key independent online travel entities lock horns for a final round, a few will not be left standing.
Let’s just get down to business where the travel industry online is concerned. Complicated talk of technologies like Google’s ITA software, terms like “rate parity” – a host of over emphasized gibberish will make so little difference later on in 2012. If it’s an acute understanding of “channel management” you are after, I suggest you read Landman’s article over there. But, if you just want to know what to expect when you travel in 2013, maybe you should read on.
Here it is. Travel is a commodity like any other. You can compare it to soap, if you like it really simple. There is Dove, Lava hand soap for men, even the Chanel and even the Yves Saint Laurent variants. Heck, some people even use dish detergent (or drive the family jalopy on vacation – sleep in the camper). It’s all about what you want, who does the best job of providing it, and of course – price. The rub for Expedia and all the other current OTA (online travel agency) companies being – they may not be able to compete price wise – for too much longer.
Just to belay all detractors, it’s about time online entities got back to square one. Not one OTA boss out there will have a clue what I mean here, so let me explain. Free. Just about anyone using the web will readily admit he or she expects one heck of a lot for free. As for monetization? That is for developers to figure out. Hotels and airlines are fed up and almost broke from paying through the nose. Expedia can send 100 trolls here to comment on complex booking instances, dazzle the world with the suggestion their service (GDS or OTA services) are expensive to maintain. But all anyone (Google and/or otherwise) has to do is simplify and moderate the whole booking process.
When all is said and done, travel services are simply going to have to offer flights and rooms for a very low fee. Hospitality management services, marketers, SEO experts, travel agents themselves can argue, but competition is driving costs down – Google will even end up taking pennies on billions just to offer visibility. Our own efforts for Tom Magnuson and the coming Global Hotel Exchange have solidified this idea. GHX will arrive next month in its early iteration offering marketing and visibility free to hoteliers. Let’s make this idea even more clear.
- Magnuson’s GHX signs up 2000 Magnuson and 10,000 independent hotels worldwide
- Marketing efforts present the idea to travelers
- The idea of paying a “tip” of $2.99 for a week long booking in Barbados sinks in
- Hotels reset their losest prices based on 10-20% more revenue without commissions to OTAs
- Price determinant drives more news, WOM, and business
- Expedia and others, not configured to adapt, cannot keep up
- Other GHX models, and new competitions arise
- Current OTA structure a dead duck
- Travelers and service providers win
- Magnuson, Google, and many new players emerge
This is not so complex a projection as many would have us believe. Selling room and flight inventories to OTAs at huge discounts is a bullet in the gun of online travel agencies, chambered alongside the fabled high costs of managing all that inventory. In reality however, the OTAs spend is not so much on innovation, but on extravagance at everyone else’s expense. A room or airplane seat is still a set commodity. Sure, that vacant room is worth less two days before rather than two weeks – but this is just math. The hotel or airline can mediate that.
Tom Magnuson is our client, so are a couple of other travel entities in various niches. We need Google News, we use Google products, this PC is powered by Intel, Microsoft, LG, and HP. The truth of all these travel and technology matters is; “All these businesses need us more than we need any one of them.” Mr & Mrs Hotel owner out there need a break, and so do their guests. This tech writer does not recommend brand loyalty when brands fail to be loyal. Look for a paradigm shift this year.
If you think I am biased or even delusional, read all about ARS from back when. Progress just goes, like it or not. Ivory or just pure lard soap, hotel rooms and airplane seats come in many forms. OTAs peddling bars of soap 20% more expensive than they need to be? Do I have to explain?
Feature image courtesy © photocreo – Fotolia.com
