The last few years have seen many changes in travel, almost all driven by the increasing dominance of the internet. More than perhaps any other industry, travel is so perfectly alligned to technology that its future is inevitably going to be determined by the evolving online behaviour of the masses. Reviews, hotel websites, airline schedules, countless travel blogs; the amount of content and the ability to spend money on travel related services appears infinite.
So what do these changes mean for the existing relationships within travel, and the supply chains that take a product from a local office in Bangkok to a potential customer in New York or London?
Currently the office in Bangkok that sets up to run 3 day trips from the city might link up with a local in-bound agency in Bangkok. By partnering with this agency, they are likely to be the chosen suppliers for that agency’s contract with a western tour operator. That tour operator will promote its Thai programme in its brochure, which is then sold via the high street travel agent to the end customer. That, in a nutshell, is a simplified version of the chain.
Typically the supplier will need to offer special rates to the in-bound agency. The agency in turn will be pressured by the western tour operator to provide its services at the lowest price, and will often (but not often enough) ask for guarantees of safety checks, emergency procedures and accreditations. That tour operator will then need to sell their packaged product, which it has traditionally done through the travel agent, by giving them a commision (anything from 5% to 15%, although now heading very much to the lower end).
How has the end customer been enticed to travel on the tour operator’s trip to Thailand? The tour operator has spent part of its revenue on a PR agency (or individual) who has secured a story or two in the national and regional press about the beauty of Thailand, with a visible reference to the operator. A hefty chain, with many people making a good living along the way, all ultimately funded by the end customer and the difference between what they pay and the cost for the local supplier to provide the service.
But we’ve already seen fundamental changes. Customers are doing more and more online – from researching to find where they want to go, all the way to making contact with the little office in Bangkok and even haggling over the best price for the trip. The supplier too now has a website and is actively marketing to the western public, encouraging them to buy direct and give them a better margin than they have traditionally managed. And what of the PR people, who have been employed to write content to promote tour operators as a part of this supply chain? How does their value change when it is the suppliers’ content that is driving the buying decisions of an increasing number of travellers?
We have already seen the demise of many “bricks and mortar” travel agencies, and that trend is set to continue. Tour operators are finding margins squeezed to unsustainable levels, and their survival now depends on the ability to juggle cashflow throughout the year almost as much as being able to sell their product well. Producing content for the travel media is becoming a commodity with rapidly diminishing value. Print media publications, fighting for their survival in many cases, are less inclined to pay travel writers a going rate with so many willing freelancers happy to boost their profile in return for the exposure offered.
I see the future as one with a greatly reduced supply chain. Many more bookings will be made directly with local suppliers as they exploit the new opportunties that technology brings them. Tour operators and travel agents will survive by demonstrating their specialist knowledge in a particular product or market, or not at all. The kids and teenagers of today are going to be very unlikely to use the old ways of buying products and services, and technological advances will make remote purchases ever easier. There will need to be a very good reason for people to speak to another person before making a purchase, and nowhere more so than in travel which lends itself so well to this new pattern of behaviour.
This may be good news for suppliers who can gain greater control of their operations and revenues. It presents some risks for the traveller, and high profile cases will no doubt highlight these risks. Travel agents typically raise the issue of financial protection, but to me this is a risk that most people would take on board and absorb. In my view the question of traveller safety is a far more serious one. Safety practices at the end of a supply chain have typically been driven by a large tour operator, with reputation protection being the major driving force. The cost to the brand of a UK travel company having to deal with a disaster caused by negligence on one of their trips is likely to prove devastating. For the local operator it is less so, with their name unlikely to be picked up in the UK media. The onus for diligence will fall on the customer – and most will go ahead without thinking, or just hope it never happens.
As for travel writers, with a market already moving towards direct sales, real opportunities are likely to come from providing content for suppliers. Not the one-man bands that sell the odd day excursion or car hire, but rather the large regional and national companies that are now realising that with professional written content, aimed at the English speaking market (and written by a native English speaker without the humurous but damaging elements of Chinglish/Spinglish/Kringlish etc) they have an opportunity to promote their services in a way they can control and in a way that brings them closer to their customers, without an army of middlemen eroding their profits.
I’m sure we all have visions of the future, and all will be different in their own way. The only thing that the past teaches us is that the future is often one that none of us expected. It’s going to provide challenges to all of us, but it’s also undeniably going to be full of opportunities. Bring it on!
