Travel Distribution Intermediaries

By: David J. Wardell

An outside observer of the travel industry might well describe 1997 as the year suppliers attempted to put their agents out of business—and the conclusion would be reasonable. Rarely within memory have so many structurally and financially injurious practices been launched almost simultaneously upon agents who are ill-prepared to deal with them.

In a capitalist economy, put very basely, individuals are free to pursue their own self-interests and do whatever, in a business sense, they can get away with. The perplexing question about travel distribution is why all segments of the industry feel, at least for the present, that they can get away with a great many things that are injurious to long-standing relationships, if not to the fundamental structure of the distribution system.

Many suppliers (not just airlines) appear convinced that they can do without agents—if not today then fairly soon. This behavior is nourished by technology and is part of a larger trend, not confined to travel, that has been called "disintermediation."

Let's be clear: the financial and structural turmoil agents experience clearly evidence that many vendors believe those agents no longer add sufficient value to travel distribution. There can be no rationalization that agents will suddenly cope with these changes by becoming more efficient—there are few tools or readily available processes that would make this happen and little money to pay for them. The only options for many are to shrink or disappear.

Disintermediation means suppliers getting closer to their customers and eliminating all types of intermediaries that impede this process and add needless costs. Technology encourages this thinking because is fosters an illusion of closeness—that somehow wires and electrons bring principals and customers into the same happy camp and that very distant and illusive customers are now just an e-mail message away.

Thus self-booking tools and services continue to proliferate, online comprehensive service offerings expand, and a few large players invest in new reservation centers and tools that are intended to make them efficient, low-cost, and surviving distributors.

Despite its high-tech enchantment, travel disintermediation has serious problems:

There is no cost-effective alternative to the current travel distribution system if establishing local offices is the goal.
The real number of people making direct electronic (agentless) bookings is very small overall and, in some areas (notably vacation), trivial.
Most electronic booking tools sadly lag performance expectations and are, on the whole, a poor alternative to existing distribution.
Beyond motivated self-bookers, customers are usually quite vocal about their desire to retain a human, agent-based presence in the travel process.
As travel distribution is concentrated into large call centers built for cost-efficiency, customer service is almost invariable sacrificed.
Beyond reservation centers and technology-based tools, there is nothing to take the place of agent-based distribution.

The job of blending existing limited technology with what will realistically emerge in the future, and describing how this will produce sustainable, large-scale businesses without intermediaries is very difficult. Despite the obvious benefits of getting closer to the customer, the disintermediation revolution in travel many expect is hampered by real-world technology and process limitations.

Those who are most enthusiastic about displacing agent-based distribution should be cautious about evaluating such a strategy through the prism of their own values and experiences—always a risky proposition where delivering customer satisfaction is key.

Agents would do well to forsake attempts to resurrect the status quo and focus upon why, for many, their value is so ill-perceived. As with any commercial enterprise, there is always uneven value delivered by various individuals and businesses, but for the foreseeable future the true benefits of travel disintermediation remain undefined.