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Online agencies are losing competitive edge, says PWC report
LONDON – The balance of power in the online travel market is shifting from online agencies to the suppliers, according to PricewaterhouseCoopers.
The consultancy group says over the past 12 months, online travel agents have lost their competitive edge while suppliers have been able to take control of their inventory and make use of high speed broadband internet connections.
Airlines and hotels are in a strong position in a market where price and convenience are still the crucial differentiators, it believes.
Malcolm Preston, partner and travel sector specialist, explained, “Suppliers are now providing the lowest-cost bookings available on the internet.
“Those suppliers that have sufficient scale will continue to see more and more bookings made through their own sites. It’s the smaller operators that will become the key clients of the aggregators.”
He said loyalty schemes for hoteliers and reward points for airlines are proving to be very successful and provide the online supplier with another advantage over aggregators.
“These schemes are very persuasive at ensuring customer loyalty and they are also extremely cost-effective.
“After all, they are giving away something that would not otherwise be taken. The cost to an airline, for example, is minimal but the benefit to the customer is enormous.
“Aggregators struggle to provide anything significant to ensure customer loyalty. Discounts are one option but this comes directly off the bottom line. If they want to give a free flight, they have to first purchase it from the supplier.”
PricewaterhouseCoopers believes all online travel players will need to be more creative in the future, for example expanding into theatre tickets, restaurant bookings and theme park entry.
Its findings are published in a new report, called ‘The Distribution Revolution: the growth of supplier-only sites has been at the expense of the online aggregators’.
by Bev Fearis
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