The trouble with travel distribution
It’s among the biggest e-commerce markets, and maybe its most turbulent. To compete, players must define their place in travel’s next wave
- March 2012
- Co-authored by Robert Carey, David Kang, and Michael Zea
A decade after the Internet spurred airlines, hotels, and other travel players to sell directly to customers, the sector’s ecosystem is fracturing. Companies are abandoning the systems that are supposed to provide consumers with one-stop shops to book flights, accommodations, and other services. Lawsuits are being filed. And the very people whose interests should be paramount—customers—are being caught in the cross fire. That’s giving newcomers a chance to swoop into a sector that today boasts annual online sales of almost $100 billion, around a third of all global e-commerce activity.The four imperatives for travel companies: making customers the strategic focus, using data to understand them, serving them better through partnerships, and providing the best end-to-end experience.
This turbulence isn’t a bad thing: the travel sector has reached the next phase in its evolution, and some creative destruction is necessary. In fact, companies are already investing billions of dollars in the next wave of travel e-commerce, from revamping Web sites to changing the technology infrastructure. Consolidation is also creating opportunities that didn’t exist before. But the critical question is whether the sector’s players can find a sustainable path forward before new rivals blaze the trail for them. To name just two candidates: Google recently paid $700 million for ITA Software, whose algorithms form the backbone of 65 percent of flight sales by carriers, while Apple has filed a series of patents for a mobile-device application called iTravel.
Submit a comment
Comments chosen to be published may be edited for length and clarity and will appear along with your name and details, but not your e-mail address. We will use your e-mail address only to send you a confirmation copy of your comments and to notify you if we publish them online. We value your feedback and will consider it carefully. Nonetheless, we receive so many comments that we cannot acknowledge all of them.