Distribution Strategies

From deep discounts to the disappearance of fees, travel businesses are taking bold action to acquire a disproportionally larger share of a diminished pool of travellers.

Published: 22 Apr 2009

From deep discounts to the disappearance of fees, travel businesses are taking bold action to acquire a disproportionally larger share of a diminished pool of travellers.

Such move indicates that the industry is in the process of establishing a new point of equilibrium, according to strategic advisory firm Hudson Crossing.

“Big adjustments are being made by travel businesses," said Michael W. McCormick, managing partner, Hudson Crossing.

“We are seeing everyone from suppliers to travel agencies get much more creative in their approach to generating revenue.”

In its quarterly report, Q2 2009 Travel Industry Insight, the firm listed following expectations for the second quarter:

The decline in business travel will remain in effect for the rest of 2009, and it will not begin to change until the next budget cycle in late Q4 2009.

Suppliers will take bold action with their loyalty programmes and offer aggressively priced packages to lure travellers.

Online booking fees from online travel agencies such as Orbitz.com and Travelocity are likely gone for good — but whether or not it was a wise financial move on the part of the OTAs in the longer term is yet to be determined.

According to the firm, the big story for the first three months of 2009 has been the precipitous drop in traveller demand and the predictable wave of discounts it has triggered amongst suppliers and OTAs alike. While this discounting hasn’t resulted in the generation of much new demand for travel, it may have been successful in shifting available demand between OTA firms.

Related links: OTA, business traveller