Distribution Chain Developments Keep TMCs — And Others — On Their Toes
Today's guest blogger is Michael Strauss, CEO of PASS Consulting.
Industry analysts anticipate formidable growth of 20 percent annually for the United States in the online segment. For 2008 the Internet is expected to be the preferred tool for travel planning. A similar trend can be observed worldwide.
But while direct distribution via suppliers’ own websites already accounts for almost 60 percent of the bookings in the leisure segment and is still growing, in business travel the use of online tools still varies greatly from company to company. The expected run towards direct connections has not yet occurred.
Instead, large TMCs operating worldwide emerged as a result of their customers going global and expecting expense reduction and travel management as well as global service. Thus TMCs appeared to be in control, but conflicts of interest are intensifying; suppliers as well as GDS are trying to sell their corporate online booking tools directly to large national corporations and thus exclude the TMCs from the value creation chain. All of the various entities see themselves under threat from each other. And although the players are in intensive negotiations, in the long run, every flexible entity will try to keep its share in a fragmented distribution chain as long as it pays off.
A few things are certain: Airlines will continue to offer flights, hotels will offer accommodations and business travel will remain a part of corporate life. Everything that takes place in between is a form of distribution and therefore part of the value creation chain — and this is where the added value has to be created. All stakeholders — whether GDS operators, technology providers, aggregators, alternative distributors, online or offline agencies — have to reinvent themselves on a continuous basis.
Find out more about how to cope with developments in the U.S. and European travel markets by reading PASS Consulting’s whitepaper entitled “Trends In The Travel Industry: Why It Is Well Worth Taking A Look At The US.”