Arnie Weissmann
The typical cycle of innovation in travel distribution can be summed up thus:
1) A new approach to selling or booking travel comes along and excites.
2) It becomes widely mimicked by established players.
3) If the innovator is new to travel, he or she begins to understand that one innovation is not enough to sustain the company and pivots the model to avoid being swamped by larger, established competitors who have now co-opted the innovation.
4) The innovator incorporates long-standing travel distribution models and becomes more mainstream in order to scale up.
Rinse, and repeat.
This convergence of new and old is repeated endlessly, with the establishment incorporating new ideas and with recent entrants broadening their vision beyond the original innovation.
The first online travel agencies (OTAs) realized fairly quickly that they needed call centers populated by live agents, and they also installed local representatives at hotel tour desks.
Concurrently, traditional travel agents developed Web strategies.
But perhaps the proof point of convergence is seen in supplier relationships. When Expedia or Priceline sit down to negotiate rates with a hotel company, the conversation topics are not substantially different from when Flight Centre, with a more traditional model, sits down with the same brands.
Expedia might have greater market share and therefore buying power, but the supplier approaches them both as variations on a theme, and that theme is "intermediaries."
Earlier this year, I met with Sam Shank, the CEO of HotelTonight, a popular app whose initial and exclusive focus was selling same-night bookings. Shank wanted to give me the head's up that the app would be lengthening its basic booking window, accepting reservations up to seven days in advance, and further, it would be listing things to see and do in the hotel's destination.
Acknowledging that the concept of same-night booking had been adopted by larger competitors, he positioned the expansion as a pivot in orientation from a niche to a full-service booking tool.
"We're really building an OTA for the new era, an 'MTA' -- mobile travel agency," he said.
The app would still be called HotelTonight, he said, but "'tonight' becomes more metaphorical, the world of possibilities that await you as you check in."
HotelTonight reacted to the marketplace imitating its core concept by pivoting to embrace a broader approach to selling travel; Merit Travel, a Canadian powerhouse "wholetailer," recently repositioned in the opposite direction, pivoting from nine brands that together promised broad service to one focused operation offering deep niche expertise in high-touch travel experiences.
HotelTonight and Merit made complementary pivots in reaction to shifting trends that affected their specific position in the market.
More difficult, however, is to successfully pivot in response to broader, disruptive trends. And the sharing economy has arguably produced the most disruptive models the industry has seen since the Internet became accessible for commerce.
How can an intermediary co-opt a system that ostensibly cuts out intermediaries? Airbnb and HomeAway raised awareness of the vacation rental market, but at the expense of established hotel brands and those who sell them.
But interestingly, these sites were co-opted by a different intermediary: professional property managers. As a group, they pivoted to embrace these sites, significantly diluting the peer-to-peer aspect of vacation rentals.
Last week, I received an email from a technology company that said it was bringing a platform to travel agencies that would enable them to compete with Airbnb. Known as MetaMarketplace, it makes available an inventory of 4,000 properties, ranging from city apartments, townhouses and condos to beach houses, castles and private islands, with prices ranging from about $115 to $71,500 a night. And its booking technology can be integrated into agency websites.
MetaMarketplace's first agency customer? The newly repositioned Merit Travel.
Merit's director of national sales, Jason Merrithew, said adoption of the MetaMarketplace platform was not a direct reaction to Airbnb, and its inventory cannot be booked without the assistance of one of Merit's agents, in keeping with its pivot toward high-touch, expert travel planning. But the platform is a means for the agency to take advantage of the growing awareness of the vacation rental market, courtesy of Airbnb and HomeAway.
Examined from this broad perspective, the entry of Amazon into the travel industry should not be as troubling to existing travel sellers as Amazon has been to sellers of books or other tangible products. For one, Amazon Prime, its program that offers free two-day delivery, offers no advantage in sales of retail travel. And, for the time being, existing OTAs have greater depth of data on individual travel patterns to help guide automated recommendations.
But ultimately, Amazon can, and likely will, leverage other customer knowledge. A search of guide book titles within Amazon could certainly generate relevant travel offers (without having to pay Google for keyword search). In fact, every piece of travel gear or clothing, or even work of fiction, can be used as an entry point to try to determine traveler intentions or even to inspire the urge to travel.
Amazon is a mighty intermediary, but at the end of the day, it is an intermediary. The ways in which it is different from other OTAs and traditional travel agencies will become less noticeable over time as it and they learn from each other, pivot and converge.
Email Arnie Weissmann at aweissmann@travelweekly.com and follow him on Twitter.