Thank you for emphasizing the importance of XML.Max Starkov and Jason Price ( almost two years ago identified that we were at the end of the merchant model.

Published: 13 Jun 2006

Thank you for emphasizing the importance of XML.

Max Starkov and Jason Price ( almost two years ago identified that we were at the end of the merchant model.

"... the abnormally high margins of the merchant model (18%-30%) constitute a temporary anomaly, not the rule. That is because the merchant model contradicts the very nature of the Internet as an efficient and direct-to-consumer channel. The marketplace cannot tolerate deficiencies and abnormally high profit margins except on a temporary basis in periods of major industry transitions or during the emergence of entirely new distribution and marketing media (i.e. the Internet)."

Further more, as has been pointed out by many this year after the emergence of travel search engines; the internet transparency is changing the model and gives back control to the suppliers.
As Peter O'Connor has pointed out; anything but a consistent pricing strategy because of this, is irrational and could put back the hotels in a situation that was representative of many hotels in the 70's in Spain. During this time many hotels became dependant on Tour Operators and lost complete control over pricing. Not surprisingly then do we see two strong trends; best rate guarantees, and explosive growth in hotel property websites.

So how does this relate to XML?

Well just imagine if hotels would ( Real Simply ... ) Syndicate their hotel property site (information as well as price and availability).
No not in the form of 10's of thousands of hotels to millions of customers, no this syndication will not be to consumers direct but to a new breed of intermediary that that would aggregate this information to allow the consumer to do the same as they do on traditional intermediaries; "search for, and compare hotels". However note that in this new model, the intermediary will not steel the hotel customer by doing the booking on their site, no, this intermediary just redirects the hotel customer to the hotel site. Yes this is efficiency. A model where the consumer deals with the supplier and just uses a service from an intermediary to search and compare.

Doubt that this model can or will emerge? Then think about the number of "channel managers" out in the marketplace that syndicate this information currently to the traditional internet intermediaries like expedia, travelocity etc. ( note these Channel Mangers use XML ) So why would the makers of these Channel Manager embrace this new channel? Because they profit from more direct sales as they also produce booking engines which they sell on a rooms booked commission model. Doubt hoteliers will embrace this model? Then note their number one priorities; the direct channel, and control of their image.

Anyway just some food for thought. We will share more details about our model in the spring of '07. ;-)

Regards Bart LePoole

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