There’s lots of discussions going round, especially in the consulting circus about the future validity of OTAs.
Will they (we) be around in ten or even five years from now, and what will we look like?
Metasearch websites, Google, Bing Travel and other new intermediaries are slowly paralyzing our industry.
New players are hailed by business strategists and consulting firms. But while the OTAs are asking what sort of value they bring, consumers flock to these so-called new players.
An industry insider and veteran says: “People opt for frozen, processed food (meta) when they can find fresh (OTA) one mouse click away.”
The same OTA executive labelled meta channels of being Mercedes compared to the OTAs being a VW.
This very well pictures a common problem in the OTA circles. We don’t know where we are going, why, and even how we got to where we are.
In the 1990s the industry focus and aim was to challenge trade structures for the better of the consumer, now sadly most have crawled back into caves of defence “working” as outsourced contractors for our suppliers - the GDSs, the airlines, the metas and Google.
We challenged the sugar daddies that were sucking up for suppliers, screaming for industry Viagra, kickbacks and incentive.
And now WE are all there standing in line waiting for handouts. It only took a little more than 10 years, and in the process our suppliers got stronger.
It’s all in the volumes. If you don’t have volume your are nobody, or so they say.
BUT, it wasn’t the volume that got us here. It was the Mojo!
Being on the bleeding edge in the evolution of OTAs since it’s inception some 13 years ago, I have seen industry players going from being agile and full of a warrior spirit to become complacent and focusing purely on volume.
The OTA´s have a distinct role and purposes to fill and if we don’t we might as well sell hot dogs. So what is the purpose of the OTAs and what is the calling? Well here’s the five raison d'être for any OTA:
Drive innovation - Before the OTA´s there was literally nothing online to talk about. Companies like PC travel, TISS and others showed how to use technology to present, package and sell flights online. OTA´s have also paved the way for ancillary sales, dynamic packaging etc. What was innovation then are standards today. Innovation today, in online travel, comes from small start ups developing gadgets for parts of the travel process with little and no use without context. With the advent of the smart phone the field is again wide open. The browser was the catalyst to change the booking process. The phone will change the payment, customer services and post booking process. There are many other areas to innovate in; Marketing, social media, supply access you name it. You can shred the OTA business to pieces and find hundreds of areas to innovate in.
Customer advocacy - OTA´s should set standards for customer service levels. The customer advocacy mandate is not about schmoozing, it’s about being the industry pesticide for bad practise and terrible service. The airlines job is to fly passengers as safe as possible from A to B. Unfortunately they get themselves into trench wars with agents allowing their hotlines to break down every time there’s a major delay, strike or God forbid a terror incident. Somewhere around the globe there’s an airline that defaults almost every month and one of the OTA´s jobs is to make sure that airlines with a questionable near future doesn’t get any bookings. The mandate also implies that we make the industry “greener” meaning that we fight for common standards and decency.
Create demand - Google, metachannels, affiliates etc drives a lot of traffic to websites. But it doesn’t create any demand. Through presentation, creative marketing, newsletters, social media and so on the OTA´s can and should drive demand for new and exotic products that perhaps wouldn’t find the market otherwise. Here’s were the long tails works wonder in travel marketing. Specialized operators can niche destinations or special interest groups and fill up hotels and seats on destinations that otherwise would be unsold. We often talk about the need of creating an iPod for the travel industry, meaning creating a product that no one knew that they need or want. Suppliers and consumers will come rushing to an OTA with a creative mind.
Lower fares - A world without OTA would be a dark place with high fares, dodgy rules and bad service. The OTA´s job is to lower fares, democratizing travel and bring order and transparency. Fares and bad business practice are brought down through transparency. Nothing brings competitors to their knees more than the truth. And the truth is the transparent UI. Network carriers, benchmark fares through the OTA´s. It’s amazing what the power of UI holds. In the old world the airline brands were incredibly strong. In 2010 the UI is everything. Today OTA´s have the power to address lack of airlines cooperation by simply cutting them off the UI or price them so high that they will not appear amongst the first search results. The power has truly shifted. And for some markets it’s simply waiting to happen. In many cases, unfortunately, the OTA´s are busboys for the airlines.
Drive distribution - The OTA´s were the first ones to explore the wonderful world of online marketing. Still today OTA´s work harder to find their customers online than any supplier, but suppliers are catching up fast. Our business is judged by how good we are at finding (and keeping) customers. Today most OTA´s depend heavily on three major traffic sources; large affiliates, Google and Meta search engines. Just like many OTA´s lack in innovation I see many fail in finding customers in a clever way, and again fall prey to play the volume game. This is however a dangerous game since the business you “buy” easily can be taken away from one day to the next.
Reason matters more than size, or so it should. Customers are more and more unfaithful and why shouldn’t they.
A partner who doesn’t go the extra mile to impress is not fun to be around after a while. My five raison d'être can reshape the future of any company and put it back in the lead. I for one believe that the race is always on and you can always change the outcome if you are prepared to change the rules a bit.
But the problem is as always in this industry: who do you work for?
There’s lots of discussions going round, especially in the consulting circus about the future validity of OTAs.
Will they (we) be around in ten or even five years from now, and what will we look like?
Metasearch websites, Google, Bing Travel and other new intermediaries are slowly paralyzing our industry.
New players are hailed by business strategists and consulting firms. But while the OTAs are asking what sort of value they bring, consumers flock to these so-called new players.
An industry insider and veteran says: “People opt for frozen, processed food (meta) when they can find fresh (OTA) one mouse click away.”
The same OTA executive labelled meta channels of being Mercedes compared to the OTAs being a VW.
This very well pictures a common problem in the OTA circles. We don’t know where we are going, why, and even how we got to where we are.
In the 1990s the industry focus and aim was to challenge trade structures for the better of the consumer, now sadly most have crawled back into caves of defence “working” as outsourced contractors for our suppliers - the GDSs, the airlines, the metas and Google.
We challenged the sugar daddies that were sucking up for suppliers, screaming for industry Viagra, kickbacks and incentive.
And now WE are all there standing in line waiting for handouts. It only took a little more than ten years, and in the process our suppliers got stronger.
It’s all in the volumes. If you don’t have volume your are nobody, or so they say.
BUT, it wasn’t the volume that got us here. It was the Mojo!
Being on the bleeding edge in the evolution of OTAs since it’s inception some 13 years ago, I have seen industry players going from being agile and full of a warrior spirit to become complacent and focusing purely on volume.
The OTA´s have a distinct role and purposes to fill and if we don’t we might as well sell hot dogs. So what is the purpose of the OTAs and what is the calling? Well here’s the five raison d'être for any OTA:
- Drive innovation - Before the OTA´s there was literally nothing online to talk about. Companies like PC Travel, TISS and others showed how to use technology to present, package and sell flights online. OTAs have also paved the way for ancillary sales, dynamic packaging etc. What was innovation then are standards today. Innovation today, in online travel, comes from small start ups developing gadgets for parts of the travel process with little and no use without context. With the advent of the smart phone the field is again wide open. The browser was the catalyst to change the booking process. The phone will change the payment, customer services and post booking process. There are many other areas to innovate in; Marketing, social media, supply access you name it. You can shred the OTA business to pieces and find hundreds of areas to innovate in.
- Customer advocacy - OTAs should set standards for customer service levels. The customer advocacy mandate is not about schmoozing, it’s about being the industry pesticide for bad practise and terrible service. The airlines job is to fly passengers as safe as possible from A to B. Unfortunately they get themselves into trench wars with agents allowing their hotlines to break down every time there’s a major delay, strike or God forbid a terror incident. Somewhere around the globe there’s an airline that defaults almost every month and one of the OTAs jobs is to make sure that airlines with a questionable near future doesn’t get any bookings. The mandate also implies that we make the industry “greener” meaning that we fight for common standards and decency.
- Create demand - Google, metachannels, affiliates etc drives a lot of traffic to websites. But it doesn’t create any demand. Through presentation, creative marketing, newsletters, social media and so on the OTAs can and should drive demand for new and exotic products that perhaps wouldn’t find the market otherwise. Here’s were the long tails works wonder in travel marketing. Specialized operators can niche destinations or special interest groups and fill up hotels and seats on destinations that otherwise would be unsold. We often talk about the need of creating an iPod for the travel industry, meaning creating a product that no one knew that they need or want. Suppliers and consumers will come rushing to an OTA with a creative mind.
- Lower fares - A world without OTA would be a dark place with high fares, dodgy rules and bad service. The OTAs job is to lower fares, democratizing travel and bring order and transparency. Fares and bad business practice are brought down through transparency. Nothing brings competitors to their knees more than the truth. And the truth is the transparent UI. Network carriers, benchmark fares through the OTAs. It’s amazing what the power of UI holds. In the old world the airline brands were incredibly strong. In 2010 the UI is everything. Today OTAs have the power to address lack of airlines cooperation by simply cutting them off the UI or price them so high that they will not appear amongst the first search results. The power has truly shifted. And for some markets it’s simply waiting to happen. In many cases, unfortunately, the OTAs are busboys for the airlines.
- Drive distribution - The OTAs were the first ones to explore the wonderful world of online marketing. Still today OTAs work harder to find their customers online than any supplier, but suppliers are catching up fast. Our business is judged by how good we are at finding (and keeping) customers. Today most OTAs depend heavily on three major traffic sources - large affiliates, Google and metasearch engines. Just like many OTAs lack in innovation I see many fail in finding customers in a clever way, and again fall prey to play the volume game. This is however a dangerous game since the business you "buy" easily can be taken away from one day to the next.
Reason matters more than size, or so it should. Customers are more and more unfaithful, and why shouldn’t they.
A partner who doesn’t go the extra mile to impress is not fun to be around after a while. My five raison d'être can reshape the future of any company and put it back in the lead. I for one believe that the race is always on and you can always change the outcome if you are prepared to change the rules a bit.
But the problem is as always in this industry: who do you work for?