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Convergence

The travel industry bytes back.

Mike Halpin February 2010
industry

Mondo Travel’s Mike Halpin responds to Carol Soundy’s opinion piece on the health of the travel industry in the online world.

The travel industry used to work on a standard commission paid in much the same way as the media advertising marketing model works. The internet has enabled people to do DIY holidays (often with the misconception that the internet provides wholesale pricing). In fact, nearly every travel purchase must be made on an instant purchase basis, and if you have  ticked the terms and conditions box then the purchase is likely non-refundable and non-amendable, i.e. use it or lose it. 

The traditional distribution system has been honed down as the industry has concentrated on taking out the middleman. As Carol acknowledges, if your travel requirement does not sit on a shelf waiting for you to click it, then where do you go for help online?

Where did the middlemen go?

The other big amendment to the industry has been the personnel shift out of retail. Initially the internet allowed a retail agent to no longer have to deal with domestic and trans-Tasman bookings, which had for years been done almost as a favour to customers and airlines. However once this expanded into long-haul, travel agencies began shutting down - from 750 in 1999 to around 450 today. The internet meant that instead of shopping around locally, you could bombard agencies all over the country with the same request. The result is that the tyre kickers sent many experienced agents into corporate travel, where they now work as order takers.

Agencies started to, and still do, churn through inexperienced workers at an ever increasing rate. It’s the nature of the industry that there is always someone wanting to get into travel. However now everyone works on a commission only basis, and like most things building up a client base takes time, hence the constant dropout.

Many agents who have a client list of regular travellers now make better money working part time from home as travel brokers. Many of these brokers will only deal with a new customer if they are ‘introduced’ by way of referral.

This example of unintended consequences has resulted in a massive decline in experienced agents. I’m the first to admit as a bricks and mortar guy that I don’t yet see social media as something I want to pour resources into. Change is difficult for us in the +45 tick box, and we are sceptical.

In my opinion, the type of specialised travel advice requested by Carol will be difficult to find from a traditional online source that is trustworthy. Carol has correctly identified the somewhat broken model of travel advisory websites, which are constantly being manipulated by suppliers and people with grievances. Is social media any less corruptible?

When making a significant purchase I can understand researching online, but the only tactile thing about a travel purchase is the knowledge and enthusiasm of the person advising you. Sometimes this is achievable within the constraints of email conversations, but it’s still best face to face. Then again, sometimes our customers will visit us once, just to eyeball us, and then we never see them again for years.

This brings me to the main issue in play with any online model - just how is the online business to generate revenue?

Good advice, leading to a transaction as a matter of course, in my experience is the exception not the rule. In a recent example we produced a honeymoon itinerary for a driving tour of Italy in October, when many of the boutique hotels are closed or closing. So detailed was the routing and information, the actual wedding day was booked on the basis of it. Then the groom went and booked the whole thing himself (using our information) via the web at the same rates we would have. Would the bride and groom have paid in advance for this expertise and information? But then again, maybe the web is a ‘hunter collector’ substitute.

If Carol wants to be introduced to a Vietnam expert with no web presence, besides her amazing photographs from Antarctica at www.cbdtravel.com , she can try phoning Geri 09 3664645. PS - I must point out that we are currently engaged in developing a social media plan for Mondo that will help golden oldies utilise these channels.

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