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Evolve or Perish

The earliest years of airline deregulation were for travel agents a matter of happy coincidence. The early CRS systems were the keys to the travel kingdom and travel agents largely lucked into a privileged position as the gatekeepers for the world of travel. As the air, tour and cruise industries began to mature, the travel agent distribution channel was a natural vehicle for selling travel to the public. As a result, with comparatively little effort, travel agents had almost exclusive access to valuable product to place with their clients. Travel suppliers leveraged the historical relationship established by travel agents with the public and took advantage of a large sales force whose chief economy was that they were widely dispersed and worked on commission – a supplier only paid them when they made a sale.

With the advent of the internet, new avenues of distribution opened up to travel suppliers. “Online travel agencies” and direct to consumer sales became two of the most viable of the new distribution channels. Like new life forms emerging from slimy seas, permutations like “vacation clubs”, multi-level marketing and card mills arose. In each instance the new distribution channels have experienced varied success and have found a willingness of suppliers to experiment with the possibilities inherent in getting their products to market as efficiently as possible.

A clever twist on the online travel agency model recently caused a small spate of letters to Travel Research Online. Aboutanywhere.com launched their new portal claiming to offer hoteliers a “0% commission model.” Many hotel operators have jumped at the model. Miquel Moya, Director of Costumer Relationship & Ecommerce for Barceló Hotels & Resorts said “The model just makes sense for the industry and is long overdue. The timing with the economy is just perfect as we are definitely looking for ways to reduce distribution costs.” Some of the letters I received from agents called for letter writing campaigns to Barceló. Aboutanywhere.com even issued a press release seeking to “Respond to the Backlash of Travel Agents” – which I am guessing is another piece of clever marketing as the press release was widely picked up and no doubt resulted in a much greater increased awareness of the company and its model.

TRO’s official reaction? We have not studied Aboutanywhere.com completely, and there are aspects of their revenue model we do not fully comprehend at this time. But it seems to us that Barceló and the other hotels that have joined them in the experiment with the new distribution channel are doing exactly what they should be doing – seeking the most efficient, cost effective way to move their inventory to market.

Every business is going to act in a manner that best serves its own interest. It is a part of the natural evolution of any industry to seek out and develop new and better ways to distribute their products. Existing distribution chains, like our own, have one and only one imperative: to evolve and become better at what it does or perish. So our official reaction is not to berate Aboutanywhere.com or Barceló but to tell travel agents to again adapt, change and become better at what you do. Agents will not turn back the tide by reacting emotionally. The days of crying about “agent bypass” are long gone. The only appropriate reaction is to become smarter and stronger – to shore up relationships with clients and suppliers and to prove your worth in the marketplace. That is the new ecology and it is here to stay only until the next one takes its place.

We understand this change in the ecology of the industry has not been easy for a large segment of the ranks of travel professionals. Having held a privileged position for so long, it has been difficult to watch as other distribution channels possibly erode the percentage of total business captured by travel agents. Fortunately, however, the best of the best have not just watched. Good travel agents have become more sophisticated marketers. The appropriate reaction to a new distribution channel is to study it, to learn what you can from it, and to improve and enhance your own business methodologies. Suppliers, acting in their own interests, are naturally going to choose the most efficient means of getting their product to market. Every distribution channel has its risks and rewards for suppliers. Some, like card mills and MLMs turn out to be at odds with suppliers’ long-term goals. The market will settle itself out.

The choice for travel agencies is simple – adapt and become better at what you do. Take the energy from your emotion and passion and use it rationally. Learn to market. Be invaluable to suppliers and to clients. Prove your worth. Your history means very little to anyone. It is your ability to meet the future that will empower you.

  12 thoughts on “Evolve or Perish

  1. Julia Reid says:

    I can only say a loud “AMEN” to this article. I couldn’t have said it better myself. Find your niche and be invaluable to the supplier and the client. Build a reputation for doing the best job in the business. I don’t “want” for customers JR

  2. Richard, thank you for writing this insightful article. We were very surprised at the reaction from the travel agent community. Once a hotel creates a profile in our website, we send the customer directly to the supplier… but that does not mean that the travel agent will not receive a commission from the supplier. This is similar to the way that Kayak or Sidestep works, and I don’t recall any angry outcries against those models. AboutAnywhere.com’s model challenges the lofty margins that the OTAs charge hotels, but has nothing to do with traditional travel agent commissions. The hotel industry recognizes that this is a logical ‘next step’ for the industry. Tonight we will announce our first agreement with a major American hotel chain. We saw an opportunity to provide a solution to a problem that the hotel industry has been struggling with for over a decade, and we jumped on it. We have a great respect for the travel agent community and hope that they too will work with us, and evolve to find better solutions for the industry.

  3. j says:

    Mr. Kalimari–

    Your press releases are intentionally misleading. You are directing your efforts tot he consumer–which is fine. Agents can live with most models for competition.

    But when you state that agents and OTAs CHARGE hotels, it is an outright lie!

    The cost of remunerating agents is built into the rate of the room and a direct booking is just added to the bottom line since they do not pay a commission–after their own expenses of course.

    It seems that your firm and your management team may be new to the travel industry. Do you actually know how agents are paid? Or was this just a guess from a rumor you had heard?

  4. Kasey says:

    Richard,
    Kudos to you! Very well said!

  5. Tim Richmond says:

    Great article, but the one problem I see is too often agents still think that this should be their sole territory and suppliers should only support them. They talk service and value, but fail to understand how to adopt that into new revenue steams for themselves other than by commissions from the supplier. The day is coming when they will have too.

  6. Laura says:

    I don’t know why their CEO was surprised at the reaction from agents.I also looked at the website, and was shocked by how misleading their marketing is. Travel agents don’t “charge” hotels commissions. We EARN it.

    Kayak doesn’t try to take business away from agents by implying that they are somehow not making money from their travel site, as they clearly are. And the hotels have to pay aboutanywhere one way or another, whether they call it a commission or something else.

    The fact that he chose to make an issue of how we and other agencies get paid, rather than posting how it is that he gets paid says a lot.
    YTB has attempted to profit by trashing agents for years.In the short run it served them well. But in the long run making money by attacking someone else never works. If this guy is still in business a year from now I’ll be amazed.

  7. Julie says:

    Richard – most agents have spent the last decade evolving their business model at an increasingly dizzying speed. I know of few other industries that are called upon so routinely to reinvent themselves while striving to serve clients, prove their value to suppliers AND clients and retain a semblance of relevance in the face of constant media insistence that we are extinct.

    Just remember – the time that we spend marketing, adapting, educating customers as to the false claims of the internet (and other illusionary means of distribution) and price-shopping to PROVE our value – is time that we cannot spend serving clients. Time that we spend trying to cut $1 from the cost of a room is time that we don’t have available to help clients discern their real needs and/or add value to their (perhaps) once-in-a-lifetime journey. Which would you rather we do? Which do you think our clients truly derive more value from?

    Our suppliers would derive much greater benefit from working with us and treating us as valued partners than entering into 2-faced pseudo-partnerships. Serving only one’s perceived interests rarely creates lasting wealth or stability. Seeking a common benefit usually does.

  8. Patti says:

    I don’t see why it has to be so cut and dried Richard. It’s not a matter of sink or swim when it comes to surviving in the world of travel booking. I don’t need to slit someone’s throat to survive, I just won’t do it, it goes against my principles. What I don’t get is their going for the jugular, by making “travel agents” the villian yet again by a another self-serving entity, and feigning shock when they get a negative reaction. Treat us with respect, and you’ll receive the same in return.

  9. Richard Earls says:

    I agree that the advertising campaign Aboutanywhere.com is using is anti-agent and misleading to the extent that it confuses the merchant model of the large online agencies with the travel commissions earned by storefront agencies. The company’s advertising also incorrectly implies that hotels would charge less if they did not have to pay commissions, when in fact that is not the case.

    I think it entirely appropriate to write participating hotel companies and point out the fallacies of the marketing approach Aboutanywhere.com is using. But do so rationally and without anger.

    We spend too much time angry and not enough time rationally agressive in our own marketing.

    This is just another long shot permutation of the online agency distribution chain and the appropriate reaction is to market harder and smarter.

  10. Laura says:

    Richard I think you’re right. If a hotel chain wants to do business with a company that is outright misleading the public, and determined to take business away from agents through deception, then I will no longer do business with that hotel chain. Here are some links:

    http://www.barcelo.com/BarceloHotels/en-GB/ContactWithUs/ContacteConNosotros

  11. Ian Rodriguez says:

    Why the big bru ha? Aboutanywhere.Com is little more than an affiliate site. Please note the link through to IAN.Com. They also offer suppliers a link and marketing programs to promote their hotels.

    I don’t see where travel agents are being pushed out. Other than a perception that zero commissions offers consumers a lower price.

    Not true of course as any booking would gain the travel site a commission through IAN.Com. Ian.com, I believe is owned by hotels.com?

    thanks

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