Suppliers Winning the Battle for Online Travel

2007-09-04

An interesting article on Travel Industry Wire about hotel and airline suppliers who are bypassing intermediaries by selling directly to consumers. For some reason, this seems to a hot topic today even though this has been around for many many years. During the first Internet bubble, when OTAs first started to appear, airlines were cutting commissions all over the place in the arrogant belief that consumers would flock to their online booking sites. The result was disastrous, especially in Canada, where traditional travel agents started unofficially boycotting airlines who were actively cutting commissions. The airlines quickly realized the impact that travel agents have on sales and re-initiated commissions. Since then, however, the airlines have been steadily cutting commissions again. This time however, many of them have dedicated marketing budgets and strong enough online brands to offset the loss of sales through agencies by increasing their margins through direct to consumer sales.

I don’t think that OTAs or traditional agencies are going to be able to force the suppliers to play ball and they are simply going to have to find higher margin travel products to sell. Some of these products might include lesser known brands, packages, destination activities, attractions, tours, and custom travel.