Blog homeSo far travel agents have been worst hit by the move to Internet based reservations - but other companies, like tour operators, could struggle soon. It won’t be about getting sales (which was the problem travel agents are getting - lack of sales) but it will be about profit margins. The new middlemen will be meta-search websites, price comparison sites, destination based portals etc - all wanting their share of the pie.
The cause of this problem? Technology and the pace it changes.
Currently, to create a web page, you “just” need some text and a few images. With this you can make a website that is really very good. You don’t need complex technology. Clever marketing folks can promote these “Web 1.0″ websites and deliver good sales volumes. The tour operators with the best product, the best customer service and the best marketing got the most sales. Technology came last in the list.
However, new players are joining the sector and they are technology focussed. See this review from Steve E / 23 Musings about how traditional operators are progressing too slowing with new technology.
If this is right, the competition of the future will be played out with technology playing a more important role than it does currently. Historically, technology was a bit like your accounts department - do it badly and you are in trouble and everyone knows about it - but do it brilliantly and no one really notices. Not so in the future.
Can’t technology providers give us technology to compete? Isn’t that what they are for?
No - reservation system providers are moving towards providing “commodity” software. This means all their customers get exactly the same software - the same code base - and all changes are made by configuration rather than development.
Ed Spiers, Anite Travel Systems, stated that Anite are moving towards configuration rather than development model while speaking at the TTI conference in London last June. Their competitors are mainly all taking the configuration model already. This isn’t news.
Technology companies have turned into product companies not service companies.
How about marketing agencies?
One problem with marketing agencies is that they really struggle to work with more than one company in any one sector or with competing products.
For example in search engine optimisation, an agency can’t get more than one of their clients to the top of a keyword search for “Spain holiday”. If they have a brainwave - which client do they give it to?
Be especially wary of marketing agencies who also have their own websites “on the side”…. as you know you won’t get the best ideas……
How about inhouse staff?
The skills shortage in experienced ecommerce folk will soon start to bite. People with the right skills are short on the ground - and even if you have one or two experienced people who can come up with the good ideas - can in house teams really “execute” the idea effectively? Normally not as the technology is becoming too large and too complex - and can’t be purchased off the shelf.
Maybe Ed Spiers from Anite was right when he suggested that small tour operators are not commercially viable.
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