The fewer companies involved between collecting and understanding the consumers original intent and the travel supplier the better.
But why are many new travel startups adding additional layers and complexity? Can that work? Shouldn't startups be innovating to remove complexity?
Take for example some new entrants in the UK - CruiseCompare [TLabs article), DirectFlights [TLabs article] and KazooTravel - all launched in the last few months.
Effectively the model they are pushing is a four-layer system
- Original advertiser (online/offline)
- CruiseCompare/DirectFlights/Kazoo Travel
- A travel agent
- A supplier (hotel, cruise company, airline)
So it kind of works like this:
Consumer finds a website with advertising on, goes through to a "meta-agent" site, gets sent through to a travel agent and then ultimately the transaction is distributed to a supplier. Four layers - messy.
The web is a game of profit margins. Four layers means thin margins and complex, expensive, automated, human-less, connections.
But some companies do make four layers work. I am mid-way through reading Net Profit by David Soskin, former CEO of Cheapflights.
One insight that startled me is that, at one point, the price comparison site's largest advertiser was Travelocity. Therefore the Cheapflights/Travelocity model fits this four-layer model. (Even today I see Cheapflights take adverts from Expedia and Opodo, continuing this four-level theme)
So, this model has obviously worked up to this point and probably still works, even though it has its weaknesses. But is it really sustainable when under pressure from other models?
The biggest new model causing heat is from Google and its two-layer travel industry:
- Google
- Supplier
Effectively, Google has this already through its keyword advertising model. But now it is going to be a little more clever by having deeper data through its
proposed acquisition of ITA Software. Fine.
So, is that really such a bad thing for consumers and suppliers, or is it just bad for intermediaries?