PhoCusWright published an article recently with the premise that travel companies in the long tail are taking traffic away from the big OTAs.
Certainly that feels true, given all the movement in what I call the “emerging travel segments” – emerging referring to their recent adoption of electronic distribution as a viable sales channel – including golf, tours and activities, timeshares and vacation (villa/apartment) rentals.
Let me say at the start that my definition of electronic distribution is any information provided electronically (to trading partners, distributors, brand.com) about the product (the safari, the castle in France), not just the transaction.
Distribution covers everything from a photo of the product to richer media to an availability calendar (real-time or not) to pricing and terms to the actual booking transaction.
Often segments new to distribution assume it’s all about the transaction, but in these specialty segments, that’s just not true.
Emerging segments are interested in distribution, but companies in these segments, especially those that provide travel products with a lot of moving parts (niche or specialty tours, vacation rentals), find the established OTAs, while well-suited for distributing non-experiential travel like business and non-complex leisure travel, are definitely not set up to distribute more complicated products.
These products have generally been distributed in a manual, very high-touch way, which is good for the traveler (lots of personalized service) but not so good for keeping operator costs down (lots of manual processes and human overhead), and has definitely limited research to the times of day when someone would answer the phone.
But times are changing. Costs are high and travelers of all types are now used to researching and buying online, including their business travel and uncomplicated leisure travel, and they’re used to researching whenever it suits them, not just during tour operator office hours.
It was only a matter of time until the buyers of complicated travel started asking for some information about those travel products online – at the very least, rich media like images and videos, and some idea of availability.
However, the large OTAs are built for the transaction not the research. When planning a safari in Africa or a tour of castles in France, the process of researching is a part of the experience, and the large OTA brands don’t support that function and probably don’t want that kind of overhead.
So small tour operator technology providers that enable distribution are stepping into that gap in the States and Europe, like PEAK 15 Systems, Rezgo and TourCMS, and many specialized content aggregators are popping up as well, including well-known names like National Geographic Traveler and Travel + Leisure, but real-time availability is rare and most transactions in these segments take place off-line.
The obstacles to real-time distribution are several and familiar – outdated business processes, technology and money.
One tour operator software provider says his primary competition is Excel, not other technology companies.
In the adventure travel and vacation rental segments, standardization of the descriptors of product (define safari, define tent, define castle, define moat) is a huge business issue that these segments must address before electronic distribution can really be effective.
Other segments have done it (air, rental car, rail, hotel, even cruise) so standardization is a reachable goal with a known payoff in cost reduction, increased sales and brand reach.
The technology and distribution providers stepping into this market are generally start-ups, and the cost of entry is high.
Funding for technology start-ups is still very tight, but interest and demand for these travel products is rising, and they are higher ticket products with higher margins than business travel and uncomplicated leisure travel products.
There could be a role in these segments for the large OTAs.
Orbitz owns away.com, an aggregator of adventure travel content (but there’s no integrated search capability and no booking capability), and the large OTAs have the scalable infrastructure and technical knowledge to support the distribution of any type of inventory unit.
They would have to be willing to be more research oriented and less transaction-oriented, at least in the short term.
Orbitz’ example of away.com is a possible model for the other OTAs, provided it becomes more integrated with orbitz.com.
There’s a real financial prize to be had in these emerging segments but the winners will have to have patience to support lots of online looking without much initial online booking, and will have to drive standardization of product definition, product presentation and product distribution to realize those financial prizes.
PhoCusWright published an article recently with the premise that travel companies in the long tail are taking traffic away from the big online travel agencies.
Certainly that feels true, given all the movement in what I call the “emerging travel segments” – emerging referring to their recent adoption of electronic distribution as a viable sales channel – including golf, tours and activities, timeshares and vacation (villa/apartment) rentals.
Let me say at the start that my definition of electronic distribution is any information provided electronically (to trading partners, distributors, brand.com) about the product (the safari, the castle in France), not just the transaction.
Distribution covers everything from a photo of the product to richer media to an availability calendar (real-time or not) to pricing and terms to the actual booking transaction.
Often segments new to distribution assume it’s all about the transaction, but in these speciality segments, that’s just not true.
Emerging segments are interested in distribution, but companies in these segments, especially those that provide travel products with a lot of moving parts (niche or specialty tours, vacation rentals), find the established OTAs, while well-suited for distributing non-experiential travel like business and non-complex leisure travel, are definitely not set up to distribute more complicated products.
These products have generally been distributed in a manual, very high-touch way, which is good for the traveler (lots of personalized service) but not so good for keeping operator costs down (lots of manual processes and human overhead), and has definitely limited research to the times of day when someone would answer the phone.
But times are changing. Costs are high and travelers of all types are now used to researching and buying online, including their business travel and uncomplicated leisure travel, and they’re used to researching whenever it suits them, not just during tour operator office hours.
It was only a matter of time until the buyers of complicated travel started asking for some information about those travel products online – at the very least, rich media like images and videos, and some idea of availability.
However, the large OTAs are built for the transaction not the research. When planning a safari in Africa or a tour of castles in France, the process of researching is a part of the experience, and the large OTA brands don’t support that function and probably don’t want that kind of overhead.
So small tour operator technology providers that enable distribution are stepping into that gap in the States and Europe, like PEAK 15 Systems, Rezgo and TourCMS, and many specialized content aggregators are popping up as well, including well-known names like National Geographic Traveler and Travel + Leisure, but real-time availability is rare and most transactions in these segments take place off-line.
The obstacles to real-time distribution are several and familiar – outdated business processes, technology and money.
One tour operator software provider says his primary competition is Excel, not other technology companies.
In the adventure travel and vacation rental segments, standardization of the descriptors of product (define safari, define tent, define castle, define moat) is a huge business issue that these segments must address before electronic distribution can really be effective.
Other segments have done it (air, rental car, rail, hotel, even cruise) so standardization is a reachable goal with a known payoff in cost reduction, increased sales and brand reach.
The technology and distribution providers stepping into this market are generally start-ups, and the cost of entry is high.
Funding for technology start-ups is still very tight, but interest and demand for these travel products is rising, and they are higher ticket products with higher margins than business travel and uncomplicated leisure travel products.
There could be a role in these segments for the large OTAs.
Orbitz owns away.com, an aggregator of adventure travel content (but there’s no integrated search capability and no booking capability), and the large OTAs have the scalable infrastructure and technical knowledge to support the distribution of any type of inventory unit.
They would have to be willing to be more research oriented and less transaction-oriented, at least in the short term.
Orbitz’ example of away.com is a possible model for the other OTAs, provided it becomes more integrated with orbitz.com.
There’s a real financial prize to be had in these emerging segments but the winners will have to have patience to support lots of online looking without much initial online booking, and will have to drive standardization of product definition, product presentation and product distribution to realize those financial prizes.