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.