Blog homeToday I thought I would try to get out my crystal ball and divine what the future of online travel may be in 5-10 years time. Scary thought….. and I will probably be wrong – but, hey, being wrong has never put me off in the past.
To start I thought that I needed to find some guidance on how to read my crystal ball – or crystallomancy as it is actually called. The best advice I found was:
- The images may not be very clear, especially at first. You may see shapes and silhouettes rather than sharp pictures.
- The most important thing to emphasise for a beginner is not to expect immediate results. It is not a TV.
Further information on how to read crystal balls
5 years ago
- Airline websites sold flights.
- Hotel chain websites sold hotel reservations.
- Tour operators sold holidays.
- Newspapers / magazines reviewed destinations and sometimes products. They had a strong revenue source from travel product advertising.
- Review websites published reviews (although there were only a few around)
Now
- Airline websites sell flights, hotels & car hire.
- Hotel chain websites sell hotels.
- Tour operators sell flights, hotels & car hire.
- Newspapers / magazines sell flights, hotels & car hire and have “reviews”. Much reduced income from travel product advertising due to falling subscriber numbers.
- Review websites sell flights, hotels & car hire
+2 years
Websites will be difficult to differentiate – they will all be the same and have the same product. It will be difficult to tell if a company started as an airline, a tour operator or even a newspaper. At this point the least profitable websites (and hence companies) will close down / merge because they won’t be able to keep up with the web design arms race.
- Airline websites sell flights, hotels & car hire – and have “reviews”
- Hotel chain websites….. er not sure
- Tour operators sell flights, hotels & car hire – and have “reviews”
- Newspapers / magazines will have reduced their travel website investments because they will get squeezed out (or maybe they could win because they have less overheads than traditional travel companies who will struggle to get rid of their excess staff quickly enough to compete effectively)
- Review websites (and destination information sites) will have all been purchased by suppliers or big travel companies (as a step to try to retain competitive advantage)
Tim Hughes suggests we are almost there already….. with the TripAdvisor recent launch looking just like an OTA.
+ 10 years
The industry will be moving away from HTML / page based web design towards rich websites that can be experienced fully from within your own home (rather than within your computer) - such as the successor to flash / flex or whatever turns out to win the technology battle a generation after that. Hence older HTML / page based websites that have been “hanging on” will suddenly require massive investment in order to retain position…… and it will be an investment that few companies will be in a position to make. This change in technology will force the change in the travel industry. Remember travel is about experiences…. so will need to stay at the forefront of this technology shift.
Large online travel agents will be the worst hit….. They will be “Amazonafied” – meaning that just one or two will remain. Who needs to find another book ordering website when you already have an account with Amazon and they deliver an acceptable service?
Second worst hit will be large tour operators that are mainly just reselling other people’s products. They will struggle to find sufficient “valued added” to differentiate themselves. The suppliers they have been working with for years will be moving to direct sell (companies that currently work as ground handlers or incoming tour operators will compete directly)
Airlines will go back to being airlines (however there will be little money in flights – as the money will be made on selling extras – which these airlines won’t be selling when sold via the OTAs). Hard times ahead financially although consumer demand will continue to increase so someone will solve this. (Probably one of the handful of vertically integrated online travel agents will own their own airline – and make that work profitably)
Meta search websites – this will be the next big area. In the world where you have a very small number of large travel websites (OTAs) (2-5) the meta search websites will be powerful (like Google is powerful for search today, without actually selling you the product). These metasearch websites will list hotels (who won’t need to be in chains because they can be found through these metasearch websites without having to be part of a larger group), tours (from tour operators who don’t need distribution now, except to these meta search companies), flights, car hire etc. They will form a single shopping experience which, when coupled with a “single industry payment service” such as that launched by Amadeus recently, may compete with the remaining OTAs. However I expect there will be a number of niche meta search websites….. focused around industry segment, destination, activity etc…. Meta search companies will be what replaces medium sized tour operators with their product specialisations. Don’t rely on the fact that there will be thousands of these companies. The technology will be too expensive…. I expect 20-100 of these companies to exist in the world….
Small tour operators – will continue as usual. Will thrive as through removal of marketing issues they will be able to focus on providing great products and services. Metasearch companies will assist small tour operators. Look out for more entrepreneurs here.
Travel technology – collapsed as an industry. In an industry with less large travel companies – who is going to support the required research & development to remain competitive? If there are only 5 companies that need systems, then will there need to be 50 system providers?
Did I miss out travel agents? Yes. I get grief each time I mention that they are doomed….. and I thought I would save myself the bother this time. If you are an agent – jump onto the meta search bandwagon. This is pretty much what you do already right now – except you need to throw technology at the problem not people. Meta search companies will be just like agents – except legally they won’t be selling product – so they will be more like today’s affiliates than today’s agents.
Lastly
One of the problems with projections like this is that they can become self fulfilling. By that I mean that because we think something is going to happen – we make plans for our own companies taking into account the eventuality that it will take place as expected. Once all these plans are in action in multiple companies the initial proposal occurs naturally. Therefore I would suggest you question my projections very carefully. I am not an industry expert by any means. I just do web design & development!
What about:
- social media network (FaceBook-Travel or MySpace-Travel)
- search engine (Yahoo & Trip Planer and why not Google and futur travel search engine or travel social network with orkut)
- the end of DMO’s
- ……
Thanks for your great post
Hi Claude,
Yikes!
I don’t even know what Facebook may do next week – let alone 10 years time!
Let me think about this for a while and I will post something in the future.
I think that search engines will become meta-search companies – somehow.
The problem with all this forward thinking is not designing a “perfect industry” but creating a path where existing players in the industry will naturally evolve along…. as that is how it will work in practice.
Thanks for commenting.
Alex
Thanks for the intriguing post Alex – lots to take in.
What ever happened to the much vaunted Google travel? Is it still the case that it would be a false economy for them as they already make so much money from advertising?
Also, this whole move towards experiential websites in which we’re all thrashing about for new ways to transcribe the very fabric of experience to tantalise the customer – isn’t it more about companies fighting against one another and trying to ramp up their technology than actual customer needs and wants?
Cheers
Matt
Hi Claude,
Interesting projection..
What will happen to the hotel chain websites? I cant find any mention (except under Meta Search) of them from your +10 years projection?
Cheers
Markus
About hotel chain websites
Well, maybe they will sell rooms + packages + incoming services + special concierge services
and airplanes & car tickets to ! with a integrated tool
I gues for 4 stars and up
what do you think? risky business with their travel agency partners? view from my spirit?
regards from France
Claude
Google don’t have to make a move yet. They have the users…. therefore they can launch whatever they want whenever they want.
Indeed, they already make plenty of money from the travel industry…. and have travel industry specialists working for them internally – to advise etc….
I expect they will become a meta search website one of these days….. but are happy letting the rest of the industry disintegrate for the next few years (!) – then they won’t have to deal with so many companies
Remember – it is not their business that needs to reinvent itself – it is ours.
Regarding the question of whether it is technology companies “ramping this up”…. I wrote a post about this concept …. but used a slightly different example… The implication is wider than the hotel description page on OTA websites!
Hotel description arms race
Regarding hotel chains – I have not done any work for one for a while – so haven’t the luxury of looking into an executive’s mindset. This is why I left it a bit unknown. However those chains that are just “branding vehicles” (I won’t mention them) – where the hotels are unique…. may struggle to retain the need for a central marketing brand link. The chains that are more “a standard design hotel in every city of the world” will continue to benefit from working as a chain. I really don’t know this area too well though…. although I did a couple of years in the online hotel industry.
Gawd – this post is interesting – but I do worry that I am now making up answers with 30 seconds of thought! Yikes! Someone show me this post again in 10 years and see how we all did.
Alex
Just a note here. I think I can give you a more accurate picture of what travel booking will look like in the next couple of years. We added 22,000 RTA’s, we call them travel referral agents, last month.
That’s a total of 22,000 uniqiue users and websites. When it comes to booking travel, who you gonna
choose, Mom’s website at http://www.ytbtravel.com /viginia2007 or Expedia’s site. Mom just tells her
friends and relatives about her site and Expedia has to spend $5 mil a week to get clicks and purchases.
see a online presentation at and then check out my combination travel
booking engines and recruiting site at
Earl Allen Boek
Mr. Travel
Hi Earl,
I have tweaked your link because I know this is an affiliate link. Normally I would remove such a post but I am interested to hear more about how your propose to extend your program in the future.
Having 22,000 agents sign up paying you a USD 500 joining fee and a monthly fee of USD $49 sounds an interesting business proposition that we could all benefit from knowing more about. http://www.ytb.com
Please do send me an email (via bottom left of this website) and I will write up a post for all to read. However this is off topic for this particular thread.
Thanks. Alex
Just another note here. Has anyone been keeping up on the Travel Agent Petition started by MSNBC
tavel columist John Frenaye, Jr. The comments there speak volumes about the needs of the more
conventional travel industry, who by estimates, have lost 80 Million Travel Customers to Click and Order Sites like Orbitz and Expedia. Go To see it at Petitiononline.com. Who do they blame for this, Orbitz?
No. Expedia? No way. Themselves, are you kidding me. No by John’s lead they blame it all on MLM
marketing and YTB travel. Wow!
Alex, interesting post but I agree with Claude Travel involve a very strong social interaction and as you mentioned it is all about a great experience and not just searching for commodities (flights, hotels, cars) Meta search is an extremely important piece of the puzzle but far from being the solution. Regarding RTAs they may be part of the new value chain but they will have to specialize and create unique value to their customers as their experts and not as their booking agents.
Thanks,
Davidr.
There may have been 80 million transactions but I doubt 80 million people. Not sure, just a guess. I see the issue is not with the existence of MLM itself, but in the way that it is not fitting in with travel.
Travel is for most about an experience, the journey–not the experience of clicking some websites. Travel is inherently a complex task (not always but most of the time), and the MLM model does nothing to mitigate that. The help button on the sites tell the customer to call the vendor. If I wanted to do that, I would have booked it directly with them. There is no customer care in this model.
The other issue is the insistence that you are somehow entitled to call yourself (not you personally Al because you say you have not) travel agents. The fact that you are renting a website does NOT make one a travel agent. Similarly, possessing a website that sells faux gold chains does not make me a jeweler. Or because I have the Cafe Press site–does that make me a haberdasher? But YTB seems to think this indeed is what it takes to make a travel agent. They offer credentials and mislead people into thinking they can reap all sorts of rewards and amenities which, if you knew anything about the industry, are dwindling very fast. They encourage their agents to use FAM (Familiarization) trips as vacations. FAM Trips are to familiarize yourself with a hotel, destination and so forth–they are NOT vacations.
Another issue is that your agents do not sell travel. A traditional agent sells from $25K to $125K of travel in a month. Online, offline, it does not matter. In July, of the 106,000 YTB agents, only 17,000 sold anything at all, and it averaged out to $588 in sales. This is a huge difference and the suppliers need to be aware that they are giving away the farm when they support these types of agents. They are hobbyist at best, and it is evident that the only legitimate travel they are booking is their own personal travel and maybe that of a few friends and family.
The final issue is that the system cannot sustain itself. There are a finite number of people that can be recruited in the US. Let’s say 300 million. How many can you recruit? Your stated goal is 500,000. Now, when you reach that level, you have to assume the other 299.5 million consumers are complacent with booking their travel outside of YTB. That is reasonable. Now let’s look at the YTB numbers. Once someone buys into the program, are they buying travel from their friend or relative? Of course not. They are buying it from themselves to maximize their anticipated return. So, because they are no longer your customer–and there are no more to recruit—you lose out. Your income has now dropped. Eventually, this will morph into a situation where the ONLY travel the 500,000 RTAs are selling is their own. Poof, there goes your downline.
But realistically, what will happen is that 83% of those 500,000 will likely tire of paying YTB $50 a month for the site that is earning them ZERO. Again, I refer to the July figures where 83% of the active RTAs did not earn a penny in commission. How long will you pay this bill without a return on the investment? Two, three, six months? And when they realize that it is not working out, they pull out. Poof, there goes your downline. It will work its way up and eventually, whatever income the top guys on the pyramid were making is going to be diminished drastically. Will they too bail out? Or will they realize that travel may not have been the right product and move on to something else?
Care to comment…. there is a blog as well http://notravelmlms.blogspot.com/
OK – no more MLM on this thread please!
We have an entire post about MLM over here……
http://www.tourcms.com/blog/2007/10/22/multi-level-marketing-mlm-for-online-travel-ytb-review/
Thanks. Alex