TravelMole reports on an interesting discussion about why IT lead travel companies are to blame for the current low margin situation within the UK travel industry. 

Read the full article on TravelMole (this link doesn’t require registration)

Some great quotes in the article….. including this one:

A2Btransfers.com chief executive Renaldo Scheepers predicted the survivors would be those with IT expertise, rather than knowledge of the travel industry.

“The IT people are the ones who will be successful; they don’t know anything about holidays but they know how to drive sales online,” he said. 

When a general conversation turns to “surviving” you know that the industry is in “game changing” mode. At some stage OTAs will begin to realise that they are not just changing the game for conventional travel agents - but that meta-search companies are trying to nudge OTAs out of business too….

As I have repeatedly said….. nice either to be Google (who own the consumer), a supplier (who owns the product) or a reservation system provider (the end point for a booking, on behalf of a supplier) - nothing else is safe.

If you want to be notified next time something is published sign up for email alerts or subscribe to the RSS feed. Thank you for reading!

A couple of recent announcements in UK travel technology share a similar thread:

• Comtec - “Powell said the company, as a result of the MBO and investment, plans to treble in size within three years” [See announcement]
• Traveltek - “Traveltek is aiming to quadruple the size of its business this year, from £150million in customers’ transactions in 2007 to more than £600million in 2008.” [See announcement]

Which makes you wonder - where is this growth coming from? Which companies do Comtec or Traveltek consider are going to lose business!?

I am still waiting for the much anticipated UK travel technology provider shake up….  too many companies chasing too few enterprise clients.

In particular three kinds of travel technology companies are at risk:

• travel technology companies heavily reliant on income from high street travel agent systems
• those where operational or fixed costs are covered by developments or projects undertaken by clients (which may be cancelled or postponed if consumer demand or exchange rate fluctuation causes the business case for a development to become unrealistic)
• those selling to companies undergoing mergers because mergers / acquisitions often end up with internal reservation system rationalisation 

Umm….. we are doing all right (Jack)….. although we tend to be getting more and more complex projects as potential clients evaluate us vs more expensive systems - and then find we can do it just as well.

As I mentioned before, I am not that excited by any of the new meta-search travel websites that are out there. The reason for this is that they tend to just have data from the top hotel distribution companies, a few car hire operators and the top airlines. They are also interested in making money from meta-search - which - although a sensible idea for a business (!) - results in a less than perfect meta-search solution.

Just to be clear - I define meta-search differently to price-comparison. Most price-comparison sites are also meta-search sites - but not all meta-search sites have price comparison functionality (Google is an example of the latter)

My objectives for a perfect meta-search

• A distributed technology based on data standards (no single point of failure or control)
• No single commercial entity responsible for its management
• Anyone with travel products should be able to join in - either as a product provider - or as a meta-search consumer

What is my big idea?

The principle would be that all travel websites (providers & suppliers) would have, in a standard location on their website, a data file that describes their products, prices, availability and other commercial data. This data standard could be based on the Open Travel standards - however frankly their standards are just too bulky and complex for a less skilled developer to generate. They are great for highly paid developers found in the leading travel companies - but not those affordable by smaller companies. The standards need to be as clear as the RSS XML standard.

What you could now have is e.g. 10,000 product description & availability files dispersed around the web.

(It is possible to simplify the data standards if they only need to contain sufficient information for marketing purposes - the problem with the Open Travel standards is that they contain sufficient information for a sale to take place - which is why the data burden becomes too heavy)

How would a meta-search work

A meta search company is unlikely to want to work with every travel provider - they could choose a subset of the 10,000. They would import that data and create whatever search they want with it (meta-search, price comparison, inspiration based search etc). Another meta-search company would choose a different subset and so on (A ski meta-search would take ski products etc)

Consumer desktop tools could be created where a consumer could say “I am going to Egypt” - and they would, for a couple of months, pull in the Egyptian data feeds.

Think RSS / web feeds - you have an entire industry of aggregators and software providers. This is what the travel industry needs. It would make best use of the what the web can offer us….

This is the semantic web for travel.

Benefits

• Make the playing field more open for smaller travel companies
• Would deliver technical stability to the online travel industry and ensure that no single large travel company could take full control of the web (which is the status quo larger companies want to maintain)
• Provides a platform for other ideas that no one has even thought of yet

This idea is a chicken and egg problem. Step 1 would be to convince Open Travel that they need to produce data standards that developers like me can actually develop against and that focus on marketing rather than sales…..

Yesterday in London 3 Google executives took to the stage at ABTA HQ and in front of an assembled crowd of travel industry people (and a few online marketing agencies!) they outlined their roles and took questions and answers.

On the Travolution blog I have written about CPC inflation, the UK trademark discussion and a little bit about “Troogle” (or what Google could do in the travel sector). See Travolution blog post

Personally I thought it was a very interesting morning and a big thanks should go to Google for agreeing to it.

What stood out for me was the denial that Google were going to do anything to significantly enhance travel functionality on the Google site. Daniel Robb’s words were:

Nothing I have seen or heard about that is either planned for meta search or selling as an agent

I am not sure this denial helps us for three reasons:

• As reported in the Seattle Post Intelligencer (not my local paper) - Google were bidding against Expedia and Microsoft for Farecast (before Microsoft won) - hence it seems that Google do want to get into enhanced travel content / functionality game - they just don’t want to tell us about it quite yet.
• The UK Google travel team are not, by Google UK’s own admission, always in the loop regarding developments to the core Google travel products. They are more of an advertising sales team than anything else. Hence it is possible that Google are planning something but Daniel Robb doesn’t know about it. Personally I wouldn’t like to work for an organisation where I am not kept in the loop about stuff that impacts me and I am responsible for.
• Google are already in meta-search - just they happen to use keyword search to do it. What Google are not in is price comparison….. but price comparison != meta search.

Who is safe in the brave new world?
One of the points I made yesterday was about how only those companies at either end of the spectrum are safe (or perhaps are the safest). [Referring to B2C or B2B2C travel - not business travel or group travel]

The consumer end of the spectrum
In travel - at one end you have the consumer. Consumer behaviour for online travel generally starts with a visit to Google. A consumer traveller will, via Google, visit 7 travel websites prior to transaction for OTAs while the number is only 3 sites visited prior to transaction for tour operator type travel products. (Source: Google’s own figures announced yesterday from research undertaken by Comscore).

Google’s number one aim has to be to keep this status quo.  

The last thing they want is for what I call the “Amazon.com ification” of the travel industry. For example take book sales - you tend to go to Amazon and then start searching. Even if it is an out of print book you start on Amazon because they have those details too. You may end up buying from somewhere else, but the book reviews drive you to Amazon initially.

Although there are plenty of travel specific sites that are aiming to be the site from where you start searching the opportunity is there for one of the big generic web players (like Microsoft / Yahoo / Google) to take this role in the B2C travel industry. Microsoft have an opportunity (now having purchased Farecast) - but will they be able to take on Google? That will certainly be their aim.

The reservation end of the spectrum
The other “safe” companies are the reservation system providers. Bookings end up in reservation systems regardless of how they got there. Of course, there will be fewer reservation system providers in the future because there could be fewer travel companies…… but that is a different article!

In between….. join the dots
Between the IT systems that own the consumer (Google at the moment) and the reservation system providers is a whole mass of systems all joined with spaghetti. You have

• Big online travel agents (OTAs)
• Meta search / price comparison sites
• Highstreet agents
• Traditional agents
• Traditional tour operators
• Travel inspiration / community / travel guide websites
• etc

These guys are all competing in the middle ground - not really impacting either the Google / Microsoft battle nor the competition between reservation system providers. Us guys on the ends can keep watching while destruction in the middle continues in an “Alien vs Predator” way.

The problem for being in the middle ground is that it is an uncomfortable place to be….. if you start taking too large a slice of the pie…. then the suppliers find a way to work around you…. if you think Expedia is taking too much commission - just go direct…… hence if you are in the middle - even if you have a position of strength - you can’t make use of it that much because the competition is too fierce.

Reinventing the travel industry
What is happening is that both ends of the spectrum are moving towards the middle.

Microsoft is coming towards the middle with their own vertical search engine….. reservation system providers like Comtec are moving towards the middle with Travel.co.uk  [now no longer part of Comtec].

From the consumers end I want to see Google do a good travel vertical search engine. As an industry we need a specialist metasearch that doesn’t just have the top airlines, hotel chains and car hire companies. I want to see small tour operators and activity organisers in the mix as well. Google could deliver this.

From the reservation system suppliers perspective we need to start moving towards the centre ground. Take the humble hotel PMS (property management system). This system knows whether you read the Times or the Telegraph or whether you prefer coffee or tea. This information (and other such data) would help at start of the hotel selection process.

So there you are Google - if you want to help the consumer and disrupt the travel industry…. this shows you how. However, I expect you are now too addicted to travel industry advertising revenues hence will wish to maintain the status quo….. This leaves you wide open to Microsoft (who don’t have travel related advertising revenues to protect)…… which probably spells a long term problem for Google. Of course, this does somewhat rely on Microsoft being able to convert the opportunity they have….. they don’t have it in the bag yet.

It is only when you try to do something that you realise quite how hard it is. The other day I set myself a challenge to come up with some ideas for location / mobile based travel services. My goal was to understand what could coming over the horizon in the next few years.

It is surprisingly hard.

I have been working with the web for a long time (first website in 1994 when you hand wrote HTML in Windows Notepad) - and this maybe the cause of the problem. My mindset is now fully web based - I can come up with web ideas “just like that” - but this whole mobile game is going to be tougher.

Why will it be harder?
Firstly mobile and location based services are going to be pushing up against the inevitable skills shortage in travel technology and the new media sector in general. Like today, the big companies, before spending millions on a project, want a project leader who has at least 5 years experience in the travel domain. These people are just not going to exist in mobile services at the quantity that will be required by the travel industry.

Even finding someone with over 5 years experience in travel websites / travel technology is difficult - and once you find the right person - expensive. Mobile experience will be even more valuable and hard to find.

Is commoditisation of mobile services the answer?
I am sure that companies are going to crop up that will aim to address this issue. This maybe through the production of commoditised software and tools. These tools could be rebranded in a travel companies name - and presented - as their own - to their customers. Call it private labelling if you wish.

I am not convinced that this is going to be a popular route. Regardless of company size all business owners want to differentiate their service. Just look at travel websites - yes many share the same style - and share the same back end technology - but as a result of web design / HTML layer changes - they are able to differentiate significantly from their competitors.

I am not sure that with mobile that this superficial top layer differentiation will be as easy - the underlying technology / functionality will be more exposed to the end customer than with websites - hence if another company has the same service from a technology supplier - there is little differentiation.

So if commoditisation won’t be popular and bespoke will be too expensive - what will happen?
This move to mobile / location based services may be the next tipping point for travel on the web. One aspect that I am looking out for signs of is the “Amazon.comification” of the travel industry - where just one leading website becomes dominant - rather than supplier websites each being their own island.

Imagine if a big travel company really buys into the mobile idea….. and starts innovating wildly. This move to mobile may just be enough to create enough momentum to lock out competitors (in the B2C space) because once consumers adopt a service it may take them a while to look for an alternative.

Think for a second - what would happen if Google was that one company?

I will publish my location based services ideas in a future post…. this one is long enough already!

The Boot blog has suggested a new industry definition (quoting Phillip Wolf, CEO PhoCusWright)

They have defined a “zero percent site” as a site where zero (or near zero) percent of the site’s content is controlled or produced by the owner. Phillip / Tim suggest that 4 of the top 10 online travel sites (by traffic) are zero percent sites.

This therefore would group meta-search and user generated content sites into one group.

Of course, Google is a zero percent site as well….. not sure if they included that!

How the definition fails
I like the definition but I would prefer it if it was more consumer oriented.

For example, say you are signing up for a profile at a travel social network - when you first join there is no content for you to interact with (because you have no friends). These are the true zero percenters - sites where - on first visit - as a consumer you have nothing to play with.

A different way at looking at zero percenters
Perhaps a different way at looking at defining zero percenters is to define as the sites where zero percent of the company equity is owned by the web design team!

A few years ago you would find a number of leading travel websites were entrepreneur backed - hence there would be equity throughout the business - including the web design / development team. Nowadays leading travel portals are corporate backed hence stock isn’t given / earnt by mid-level employees (which the web team normally are)

I remember being offered 0.5% of the stock for a VC backed (non travel) website I was involved with in 1999 (as web design lead). I am still not sure if that was a good deal or not - but the offer was for a reasonable salary and some stock - and so that certainly got my attention at the time. When talking to web teams at large travel companies (who really are the key to the companies short and medium term success) none of them seem to have any stake in the success of the business. No wonder much of the current innovation is coming from start ups.

While talking about stock…… just what is going on over in the States?
Two VC backed sites have got my attention recently - Nile Guide (a weird name for a travel website - but at least doesn’t have the word trip in) and TravelMuse (named after this blog, obviously!)

Both seem headed for the overcrowded travel guide / travel suggestion sector - but what has piqued my interest is their “about us” pages.

TravelMuse has 16 named individuals (and a board of directors). Of the 16 - from the senior team - only the Director of Product Management has a travel industry background. The others are travellers….. yeah I like eating - but doesn’t make me a great person to run a restaurant. One example of where this lack of experience shows is on their inspiration finder - http://www.travelmuse.com/inspire/ (which actually isn’t a bad tool) - if you search for London - you are defaulted from London, Canada - rather than London, UK. This is the kind of thing travel websites sorted out years ago.

NileGuide has 11 named individuals (and a board of directors). These guys seem to have many more travel industry types…..

For what they are doing they both appear over staffed. I am not convinced that paying for 15 staff is going to make it that easy to make a return on just monetised destination content. There is too much competition. Also, if they are in “start up” mode - the stock will be spread thinly between their VC investors and all the initial employees. Content lead websites can be started with 2-5 experienced people and a community…. not 15.

Google have finally let the cat out of the bag….. it is not a matter of IF Google are going to launch further travel functionality - but WHEN - and WHAT will it look like. Read the article on Business Week 

Google moving deeper into travel has always been inevitable (in my mind) - and this was confirmed when I heard that Google (and incidentally Expedia) were bidding for Farecast (then Microsoft got them)…. You don’t bid for a company that large unless you have big plans in the travel vertical sector.

Lets pretend a second that I work for Google and I am pitching ideas to my boss - Rob Torres (MD Travel USA). How would the pitch go? What would I cover? What would I propose?

Strategic considerations

• Has to complement existing keyword based advertising - No desire to risk hurting the relationship with leading travel websites and airlines (who make up some of Google’s largest advertisers)
• Wish to create a “lock out” effect - generating a barrier to entry for new or existing players. Therefore has to either be technologically complex, contractually exclude certain players from taking part with competitors or be consumer driven and grow massive quickly.
• Has to be deliverable within the next 8-12 months - There is a possibility that Microsoft is coming over the horizon…. and besides, now having announced that something is coming soon - we had better launch something that merits this raise in expectations.
• Probably monetised via advertising - as this is where Google is currently strong. Yes we have revenue from services (such as software access) however consumer facing advertising is key
• No desire to sell airline fares or hotel bookings - as this requires too much investment in customer service
• Being an infrastructure play - helping join consumers and travel companies together - which could generate long term lock in and competitive advantage

What about the ideas?

Basically my ideas fall into 4 main areas:

1. Owning the traveller profile
2. Increasing content that can have adverts served against them
3. Meta search
4. A.N. Other

#1 Owning the traveller profile
I suggest that Google create a system where we can “own” the traveller profile. Yes there are sites out there already in this space - Dopplr, WAYN etc - so this demonstrates that consumers have an appetite for this kind of functionality. However, to make this more commercial, these profiles need to join consumer needs with existing Google advertisers - and be more about the individual benefit than about a network of consumers.

Take for example Google Health (which gives you an idea what Google could do in a vertical space). The benefits page says:

Google Health puts you in charge of your health information. It’s safe, secure, and free.

• Organize your health information all in one place
• Gather your medical records from doctors, hospitals, and pharmacies
• Keep your doctors up to date about your health
• Be more informed about important health issues

 Right, lets swap the word health for travel…

Google Travel puts you in charge of your trip information. It’s safe, secure, and free.

• Organize your trip information all in one place
• Gather your travel records from airlines, hotels, and tour operators 
• Keep your agent and suppliers up to date about your latest plans
• Be more informed about important travel information

Sounds good so far. Lets see what else Google Health -> Google Travel has:

Import medical records -> Import travel records
A mechanism where, with partner websites, a traveller can import their itinerary into Google Travel.

“When you link a website to your profile, you may authorize that website to read your Google Health profile or to automatically send and update information in your profile (such as medical records or prescription histories). You decide which permissions to grant when you sign up with each website.” 

Well if we are going to do this medical records and prescription histories - then proposed trips is going to be a doddle.

Pros and cons of managing the traveller record

Pros

• Owning the traveller profile would fit nicely alongside other similar Google tools such as Google Friend Connect and Google Health.
• Infrastructure play - would help join existing advertisers with consumer travellers.
• The information in the profile would help assist with Google searches as we know the kind of travel the consumer is interested in and also details about forthcoming trips. This should help monetise the searches better - and also give more relevant results to the consumer.
• If we don’t own the traveller record - someone else will - and it would be a costly acquisition later - we should build something ourselves before others are all full throttle.

Cons

• Will require working with travel industry partner companies ahead of launch (on the data import system). Will it be possible to keep this out of the press or bloggers like that Musings on Travel ecommerce?
• Will we get further negative PR from having all this information about customers? Will consumers be concerned about the level of information we have about them?

[Side note - Google health maintains a consumer’s immunisation record - which is a whole area that travel websites / travel companies haven’t really got into. This wouldn’t be a big ROI….. but it could be something that would be interesting to demonstrate the benefit of joined up profiles and of interest as a PR exercise]

#2 Increasing content that can have adverts served against them
One of the missed opportunities with the keyword based search system is the “next page”. A user comes to Google, searches for a destination or product, and off they go to a 3rd party website. Maybe they come back - but often the content on that 3rd party website (which could include adverts) is sufficient that they remain there.

While we can’t create specific product pages on Google (because that would complicate our advertiser relationships), we could build specific destination pages.

In order for these destination pages to be fair, we would need to build them as something that looks a bit like:

• Google news (open to all qualified newspapers and magazines - but excludes bloggers)
• Google finance (e.g. GOOG) where we can track information about a specific company to a single page.

They would be a mixture of web pages (links to), adverts, destination information, forthcoming events etc.

Pros and cons of creating more travel focussed pages

Pros

• We will have more tightly focussed content hence will increase the inventory of advertising space that should convert well for our advertisers. This will keep advertisers happy.
• Forms a large container that could make use of Google Maps, Youtube etc integrated into a strong user experience. This would make a nice Google “shop window” to other Google location based services
• Existing major advertisers (airlines and travel companies) won’t feel threatened by the generation of more travel focussed pages.
• Many destination content pages on the web currently are run by SEO groups and contain many affiliate links. This is an opportunity for us to remove these tacky destination pages from the Google index and point users towards our better quality pages.

Cons

• One of the hardest aspects of any travel website is the geography information architecture. How are we going to get this right for all kinds of travel - and at what level of granularity should we go to (country, city, street etc)?
• Is this really “big enough” a concept? Better content - build it they will come - is a strategy that dates from 2000.
• There is a difference in perspective between someone who travels to a destination “as a local” and as a tourist. Designing these pages to handle multiple use cases could become complex.

Probably a good step forwards - and would give us a further 18 months runway to build other services around travel - but not the “end game”. Probably a “just do it” (as long as it doesn’t divert management attention from activities that will have a longer term impact).

#3 - Meta search
Now that Microsoft have Farecast - this is a sector that Google are going to be falling behind on. We (Google) should react.

Rather than recreating Farecast we should enhance the Google Product Search (i.e. turn Froogle into Troogle).

The first step would be to create a simple travel product description standard (!) that would be possible for NON-professional developers to generate. We need to hit the long tail of travel companies.

Pros and cons of meta search

Pros

• By having enhanced product information we can find new and interesting ways to search on it, generating a better consumer (and advertiser) experience
• Having a product feed would help us understand who are product owners and who are product agents - and this would help filter out affiliate sites and potentially some agent sites.

Cons

• In order for this to be successful, we need to get this to be accepted quickly in the marketplace. Acceptance may have to be “forced” through discounted Adwords advertising or other mechanisms.
• A half-hearted meta search would not show Google in a good light. This either has to be a success or not happen at all.

#4 - A.N. Other
I have another idea for Google. However, for various reasons, I will not go into it here. I am keeping it to myself for the moment!

My 4th idea:

• Hits on a weakness that Farecast has
• Sits alongside other Google web services
• Wouldn’t preclude Google from other strategies already outlined in this blog post
• Takes into consideration their desire not to get into airline or hotel product distribution (directly) (because of the customer service issues)
• Doesn’t risk existing airline or hotel advertiser relationships

I hope everyone enjoyed this post…. I am available for consulting (!) (UK)

4 weeks ago I reported (yeah that makes me sound like a journalist!) that Microsoft had acquired Farecast for 115 million USD (see original blog post).

It hasn’t taken long for Farecast to be integrated into the new home at http://farecast.live.com/

However, just a change of URL wouldn’t be enough to get me to write a post. What has got me to write is another Microsoft project that has gone live this week - Live Search Cashback - http://search.live.com/cashback

One advantage that Microsoft has over competitors (such as Google) is plenty for cash…. (or so one can safely assume). They are now using it to buy market share.

What is Live search cashback?
Basically Microsoft is bribing consumers to search via its Live.com search engine by giving discounts on purchases found from products located on live.com search results.

It is a “cost per sale” (CPA) type deal where most of the advertiser revenue gets refunded back to the end consumer (hence Microsoft is subsidising the overall system with its own bank balance - rather than making this a profit generating scheme)

Press and blog coverage has been favourable… and it may be a great success. Previous trial runs (where prizes were on offer from Microsoft) have had a positive impact on Live.com search traffic…. so the chances are that “Cashback” will gain traction.

Read the official pitch on how you can become involved as an advertiser (non travel though)

Yeah but what about travel?
None of the existing products are travel products (no flights, hotels, packages etc)…… however, if you listen to the Gillmor Gang podcast from the 22nd May http://gillmorgang.techcrunch.com/2008/05/22/gillmor-gang-052208/

Right at the end, start at about 55 mins - Mike Arrington (Techcrunch) mentions that he has heard that Farecast is going to run the cashback scheme “soon” for travel products.

In particular he mentions that this means you may be able to get a United Airlines flight on Farecast / Live.com cheaper than you can buy on the United Airlines own website……

Would that be enough to wake Google up and be forced to build a travel portal? If this cashback system becomes successful, it probably would be…..

p.s. I promise not to write about Google for an entire week next week.

Even though I have the now monthly “website review” offer I still get a constant flow of emails asking for help on this or that. I never like not helping….. but sometimes people need to realise what it is like being on the receiving end of all this communication and they should focus their request appropriately (If you are buying something from me, that is a slightly different scenario)

So - now I am going to ask for your help so I can share the load around a bit.

This weeks challenge:

“Requires the student to prepare an individual critical evaluation of Expedia. This will typically be represented in the form of a business plan where the key technological, business and wider aspects are recognised. The report should identify to what extent it has made a success of eCommerce and provide a reasoned discussion about its future success. Word count 2000 words max”

This is for a BSc. in Ecommerce and the Internet at a UK university. Yes the irony that the request says “requires the student to prepare” isn’t lost on me.

So - rather than having to write 2000 words….. the real challenge for you will be to come up with a succinct answer using fewer than 250 words. Please either write below…… or perhaps on your own blog (and add a link to your blog in the post below).

Actually this could be fun.

What can you win? Er…. nothing! (Unless someone from Expedia wants to sponsor this!). However somehow (to be determined) we will choose a winner….. and I am sure the student will be grateful.

PS - Note to professor / lecturer….. obviously we are not actually writing the report….. just coming up with ideas and themes…. isn’t this just how the Internet is meant to be used for research?

UPDATE: I have now added my 230 word critical evaluation below!

Yesterday Yen Lee, from Uptake (the travel search engine formerly known as Kango), stated (as quoted by Travolution)

“What’s surprised me is that when there are so many really strong brands in Europe, we’ve spent 80% of today talking about price. People don’t go to Barcelona because it’s cheap. They go because of what they can do there. Think more about the experience, rather than the cost.” 

[Travolution Summit 2008, London]

Jo Buhler, in a comment on the Travolution blog, replied

“Amen to that, Yen!
It’s the industry that keeps shooting itself into its collective foot with this price focus, which has dominated the discussion since day one of online travel and then being surprised at the resulting mass media coverage that, of course, hammered away at this as well. When does the smart benefit emphasizing marketing finally kick in……?”

Yeah I am not going to get into a big “price vs benefits” discussion - but I thought I would highlight an economic theory that relates to this - and explains why price is so important. The theory is called price disperson.

Price dispersion is variation in prices across sellers of the same item, holding fixed the item’s characteristics. If price dispersion didn’t exist (and everyone sold at the same price) then there would be no reason to comparison shop and consumers would always buy from the same places, and agents profits would stagnate. New online entrants would also find it difficult to break into a market.

i.e. suppliers create price instability on purpose - and actually this benefits both the “agent” and the supplier. So lets stop worrying about it and get on with making great products, websites and systems!

In conclusion, actually these price differences are fairly fundamental so the successful operation of the travel industry.

And before anyone thinks I have suddenly become an academic (!) I am “borrowing” concepts from this article on Slate. Thanks should go to Hal Varian (an economist at U.C Berkeley) for these findings. Should I stick to technology? Umm.