GTA, Expedia, AliBaba, Google, NDC… the past, present and future of the travel industry.
It’s hard to imagine big companies and organisations will be anything but on top for ever. Picture a world without Commonwealth Bank, Qantas, Woolworth, and even Expedia.
Change will not only happen but will continue to evolve at a much faster rate than before as travel becomes more about technology.
And one day you’ll see a new guy on top.
GTA – the first big fish we knew
Everyone has a preferred contract with GTA including the duopoly in Australia of helloworld as it is now known and Flight Centre.
They were everywhere.
They were sold to Kuoni just before GFC for a massive price and arguably, the timing was perfect.
A chain of events, in part highlighted by the tsunami of 2004, shifted a balance of power away from their traditional long term contracting model and signaled the starts of dynamics.
In comes Expedia
Post Tsunami hotels went to rebuild, found out their land value was huge, banks said they could build twice as many hotels, global tourism exploded.
The traditional wholesale model saw the handing back of allocations that weren’t sold and Expedia began approaching hotels to buy this leftover/water damaged stock at discount rates and push them direct to public. Managers were paid on occupancy, not profit levels. It was awesome… kinda.
Needless to say they did very, very well.
Dynamic Inventory
Traditional wholesalers such as GTA and Tourico realised they needed to evolve. Hotels had also begun undercutting wholesale rates during GFC and old alliances in the industry were challenged.
Hotel technology caught up and now, through a convoluted technology chain, the hotelier can actually sets the price and commission levels to OTA’s.
Of course there are problems with availability, the technology never links up properly and there are no standards.
Expedia buys Orbit
Orbitz product and systems drive Helloworld.
The implementation of this technology with the new hybrid business model and brand consolidation gave Helloworld the chance to take on the red and white army and the OTA’s.
Including Expedia.
Then when Expedia bought Orbitz, it meant a shift where suddenly a good portion of Australian travel agents are selling their main online competitor as a preferred product. Fantastic news for Expedia. Good for anyone else in the Aussie industry?
Alibaba – the magic to come?
Whether you are freaking out about housing prices or you’ve seen that 90 million people travelled from China last year, that’s where the new money is.
In 2014 Alibaba set a record for a $25 billion float. Depending on what you read, Jack Ma, the owner, is the richest man in the world.
They’ve begun a string of travel acquisitions including a $460 million investment into a hospitality management system in China servicing over 6,000 hotels.
OTA market in china approaching $20 Billion per annum.
They are recruiting all of the right staff. They have systems and business nous in place. They are exceptionally aggressive and will get outstanding state support from the Chinese government to take on the world.
It’s an ominous sign. Expedia are fighting back, but will even they have the size?
Sure, it’s all currently China focused for now, but expect to see their footprint stretching to Australia in 2016.
Gmail – remember that “free” email service – the “free” bit comes from the mining of your data and information. Send a few emails to your friends about Bali and watch how the adverts change when you login.
They own the data from billions and trillions of web searches. They are in everything we do associated with travel. Their hand is not yet fully disclosed but they have the size to challenge an Expedia and with tightening restrictions in China, may struggle to compete there.
NDC – back to the airlines?
There is some great technology driving NDC but it’s about driving standards throughout the airline industry to the benefit of airlines. Imagine your Qantas club information but shared and standardised across all of the different airlines.
Software will be able to plot multiple airline segments across carriers and start challenging the knowledge of the average travel agent.
Expect to see the big changes in 2017 as NDC is rolled out – maybe even the rebirth of Qantas holidays as a major and significant player?