I stopped reading when the article said travel agents are irrelevant for anyone but boutique wealthy travelers. A large amount of corporate and government travel is routinely booked through agents, who receive a routine fee.
Hard to believe there is anything good in this article when so much of it in the opening paragraphs is facially inaccurate.
But sales through aggregators have soared (mostly using the Amadeus GDS)
As mentioned in other comments, corporate travel does not buy direct and, along with luxury travel, are the two last holdouts of travel agents - I agree with the article in that agents are becoming more irrelevant for non-corporate bookings, although they're fighting back :) .
See for example:
https://seekingalpha.com/article/3110756-global-distribution...
"market share loss due to disintermediation, which was starting to become a problem for GDS companies, has slowed considerably, according to Amadeus.
Airlines have realized that the reach GDS companies provide -- especially to business travelers -- cannot be matched by the airlines themselves.
Low-cost carriers (LCCs) like RyanAir (NASDAQ:RYAAY) and Southwest Airlines (NYSE:LUV) didn't use GDS to sell their tickets. After their initial growth period, during which they tapped deal-seeking customers, their growth slowed down. They couldn't access the higher-margin business travelers. Hence, most of the LCCs, including Southwest, RyanAir, and jetBlue (NASDAQ:JBLU), had to come back to GDSs to increase their growth rates."
Also, the definition of 'most of the LCCs' conveniently excludes, well, most of the World's LCCs...
...they sell through aggregators, just not to the general public. For business travel they pretty much have to, otherwise they'll miss out on the market (large companies usually requiring their employees to book business travel through a central agency).
Most of their travel traffic is from the leisure segment anyway, so them not getting business traffic isn't the end of the world
Not sure why the author thinks travel agents are useless. You don't (or shouldn't be) paying them so it's not like only the rich benefit. I used an agent recently when I was meeting someone in Orlando and needed our flights to arrive around the same time and have transportation waiting. A lot less stressful than trying to compare between carriers. My agent was able to track our flights and had to move the driver back an hour due to a delay - something I couldn't have done easily from the air.
My employer pays for ours. They've never found a cheaper fare than I've found, and we pay them per person per flight booked. This is the first year that they haven't proposed a flight/hotel stay combo that wasn't anything like what I specified.
As far as I can tell, they're just a way to make sure that higher-level sales folks don't book a $3k 2-hour flight that includes a masseuse.
On the other hand, I'm looking at Southwest because they have a lot of flights, they let me check 2 bags for free, and I can cancel the flight without penalty.
The tradeoff is avoiding the per-booking GDS distribution fees. With their homegrown reservation system, they were able to fill their planes without paying GDS fees.
They did ink a deal with Amadeus to use their GDS, but did not announce that they would make the inventory available to outsiders. I assume that means they were able to negotiate around high fees.
I'm interested to know where Google Flights fits in to this picture. It is not well publicised but suddenly seems to have become quite good. A key feature for me is inclusion of the two big UK low-cost carriers, Ryanair and Easyjet. I'd assume Google are not working on commission but are just trying capture another area of search with their algorithms and data. Does anyone know more about it?
Contrast that to booking on most airline sites where they very clearly and very obviously show you the restrictions because they publish the fare alongside of the less restrictive fares as a way to up sell.
That's the classic benefit of intermediation in an industry, which is the ability to focus more on the market and market needs, and increase the flexibility of offerings by picking and choosing from suppliers. Of course suppliers don't necessarily like this, which leads to the situation described by OP.
The company I work for, roomkey.com, was founded by six of the largest hotel chains to address this problem and bring more direct bookings back to the chains. The OTA duopoly of Expedia and Priceline have many of the hotel chains over a barrel with very aggressive contract terms that do not allow the hotel chain to advertise a lower direct rate than those they supply to the OTAs. And added to this, the OTAs take a pretty eye-watering commission.
However, most of the big chains are able to provide a lower rate to their own loyalty members. Room Key is unique in that we can access and aggregate these lower rates into a one-search solution. But, we are a tiny voice and competing with annual online marketing budgets of over a billion dollars each for the big two OTAs. Our job is a very hard one.
I'm glad articles like this are starting to paint a truer picture for the consumer. It really does make sense to book direct almost every time. It's easier to cancel/modify. You are the customer of the hotel, not a third party. You get loyalty benefits. And more of your money goes to those who take on the overhead of your stay and ensure the quality of your experience.
The OTAs used to be both cheap and convenient. Now they can only really lay claim to convenience through aggregation, and we at roomkey.com are trying to change that too.
I don't understand how this is possible but this is how it seems to me.
I don't use things like flight scanner because booking directly with the airline is always cheaper from experience.
It's interesting to hear about your site though, perhaps I'll try it out next time I'm traveling.
Two topics missing from this article are AirBnB and low-cost airlines that fly to smaller airports. AirBnB does not compete with aggregators and cannot be shut out on the supply side by hotels. Do low-cost airlines (like Norwegian) benefit from customer discovery via aggregators?
Do aggregators change prices based on geographic location of the buyer? The article mentioned an experiment with higher prices for OSX buyers.
Anecdotally, I booked a flight a few weeks ago through expedia.hk for an itinerary that was not even available through expedia.com. I'm not sure if they geotarget, but for Expedia at least, the TLD you go through matters.
I've also found a South American carrier (I forget which) to have significantly different prices depending on whether the website is in Spanish or English (alas, they wouldn't accept my US card through the Spanish site).
That's certainty true of Brazil's main airline TAM (now called LATAM). You often pay about 50% more as a foreigner. Note that Brazil speaks Portuguese, not Spanish, so your experience may have been with another South American airline doing the same thing.
Even if you use LATAM's Brazilian portal where you have to navigate in Portuguese, you won't get the cheaper Brazilian price. That's because they have this great little trick to determine if you're a foreigner. They demand that you enter your CPF number, a Brazilian national identity number, to buy the cheaper ticket from the Brazilian portal. And you can't make one up, or use the CPF number of a Brazilian friend, because they query a government database to verify that the CPF number matches the purchaser's name.
It's discussed in more detail here:
http://brazilsense.com/index.php?title=Booking_a_domestic_fl...
Collecting the CPF number is not dictated by the government. You can buy a ticket in person at a travel agency in Brazil or at the airport without a CPF number. As far as I can tell, this CPF business is LATAM's way to get a higher price out of foreign visitors for online purchases.
Not sure if they do, but airlines do. I wanted to fly from NYC to Singapore for a few days, and then fly to a friends wedding in the Philippines. Searching the websites, the fares were ~600$ but my singaporean friends said it should be cheaper. So I flew to singapore, walked into a local travel agent office and got my tickets for around 150 SGD
They offer different products at the very least. CarTrawler is a car rental aggregator and they've found all sorts of geographic aberrations through AB testing (who's willing to pay for insurance, who prefers to see cheapest cars first etc). I'd be very surprised if they're not using hardware/software info to inform their offerings.
This is why you can call and get a better deal, and why many hotels are aggressively trying to build loyalty programs
There's no reason hotels want to pay 15% to a website for no reason.
On the other hand, these undercut clauses are already in discussion for violating competition regulations. So even if there is such clause in a contract, the OTAs may not fight for it.
Also, I've probably booked 100+ hotels in the past few years, and I still do the majority of them through booking.com. I am aware that I can sometimes get cheaper rates by booking direct, and I do sometimes, if the delta is high enough. (On the other hand, I actually just booked a Hilton that was cheaper on the aggregator than on their own website.) I'm also aware that every hotel employee will tell you that 3rd party customers get the worst rooms in the place and are the first ones to get walked when overbooked. I can't say I've ever noticed any problems there. I'm even aware that booking's rating system is skewed - their 10 point scale actually only runs from 2.5 to 10, and the median rating is something like 8.1, so keep that in mind when you book your "Very Good, 8.1" hotel.
Despite all that, it has one killer feature that making direct reservations doesn't have - a uniform interface for making/changing/canceling bookings. It's a tremendous benefit in countries where I don't speak the language. I can do it fairly reliably on either the app or the website even when my network connection is dodgy, at any time, and without having to speak the language. I do admit that my requirements are fairly specific and most people traveling within their own country with reliable phone/internet service are generally better off doing the search first on an aggregator, and then booking direct (after signing up for loyalty programs) if the price is close.
(I work in the industry, but not for any of the companies mentioned.)
With respect to ratings, very few people actually leave them. So you're looking at the uncommon case of a traveler being negatively impacted, multiplied by the chance they even notice or care (e.g. someone who sleeps like a log getting the noisy room), multiplied by the chance that they actually bother reviewing. Couple that with the fact that pickier customers (frequent business travelers, points bloggers, or just brand loyalists) are vastly more likely to book direct, since you generally can't use/gain loyalty program points when booking through an aggregator, and it's understandable why direct customers might get preferential treatment. Not to mention that they're making more money from the direct customers to begin with.
"$99 for a room!" Great!. Erm, for tonight. Only. It's "$299 for every other night". Not so great.
Eventually it became clear that staying in Connecticut and taking the train in was a huge improvement.
At any chain hotel (Marriot/Hilton/IHG/Choice/Wyndham/Starwood), you'll get the cheapest price by being a rewards member (free, just like airline mile programs) and reserving directly on their website, or www.roomkey.com which is also owned by the hotel chains itself.
Next time, reserve the room from far out, then pay attention to the cancelation policy. Just before the cancelation policy ends, check the prices, they've probably dropped. You can then cancel and get the new price, and it will be cheaper than Hotel Tonight, because the hotel doesn't need to pay commission to Hotel Tonight, and you get the benefits of being a rewards member.
https://www.lolatravel.com/about
"We’re a new kind of travel company that provides on-demand, personal travel service through a smartphone app. The Lola app instantly connects people to our team of travel agents who find and book flights, hotels, and cars for our customers. We also provide support while they’re on their trips."
Aggregators are all fun and games till your plans change. And Lola gives you human curated travel (they really do consider your tastes) at aggregator costs.
* Expedia is not an aggregator/meta-search, it is an OTA itself. Meta-search engines are sites like skyscanner, hipmunk, trivago and kayak to mention some.
Another further confusion is when the author compares TripAdvisor with Hilton's own site. The screenshot even shows that TripAdvisor just redirects to Booking.com (Booking.com is owned by Priceline), who is the OTA.
The other thing the author doesn't discuss, but is an important part of the story, is that large OTAs spend billions advertising through Google, and are experts at it. Booking.com is the largest spender of any company on Google Adwords: https://venturebeat.com/2015/11/05/booking-com-largest-googl...
Disclaimer: I built a flight search tool, https://concorde.io
I just looked at Google flights and most offerings are under £400 return (GOA-JFK). Even in mid-august I struggled to find flights above £600. Either that guy is flying business (management consultant, maybe then) or he seriously got shafted on price.
Just had a look - premium economy is £900, business is almost £2000.
EDIT: Interesting, it gets a lot more expensive the other way around. Though Google does suggest Milan as an alternative route, which drops the price to £400 again. It seems like the hop from Genoa to the international hub makes the difference.
Or you could get a train from Milan, which is only 85 miles.
I've worked with these systems. Airlines are pretty much never worth it through these sites. Margins are so damn razor thing that everyone pretty much scrambles for the last dollar. (Literally like 3-5 dollar margin"
Hotels are MORE worth it, in that they do offer deals through aggregators. Partially due to name and partially through exposure.
Booking.com is pretty good for this as they index alot of smaller hotels that generally are hard to find.
Recently I had to make a last minute change in a hotel reservation via Agoda, but they require you to pay the full amount in order to cancel the reservation, and then re-do the booking.
So instead I called the hotel directly and got my reservation changed without any extra cost.
It makes sense, it's not in the airlines or hotels best interest to give lower prices to external OTAs and by providing better fares on their website they cut the middleman. It's also the reason why hotel chain tend to not reward user with status and points if they book through an aggregator.
Trivago have been blitzing our TV stations with ads, so I thought I'd give them a try. But their searches seemed just to redirect to booking.com so I couldn't see much value-adding.
Forget the 'only 2 left at this price' deception. I door knocked at a couple of places and they were half empty for the night - owners offered cheaper in cash than off a website! Now maybe this doesn't work in high season when everything is full but I found it liberating to stumble out randomly from a bus station to the tourist information centre who would plot for me on a map the best places to stay!
And there may be technological opportunities here, like open APIs to hotel property management systems or even property management systems as a service....
