3rd-party sites have revolutionized travel, but their time has passed
For all their usefulness, third-party travel Web sites can be as much a burden as a boon. The conventional wisdom is to check three or four Web sites before purchasing travel services. I say: Hold on a minute. The guy who spoke to me after a speech in San Francisco would agree. He had spent six hours searching Web sites for bargain airfares and found he could save only $25.
"It's not worth it," he said. In the end, he purchased the ticket directly from the airline's Web site. In my opinion, that's what he should have done in the first place.
The online sale of airline tickets dates back to December 1995, when Alaska Airlines sold airline tickets to a family of four over the Internet. That simple transaction changed consumers' travel planning forever.
Before the advent of travel Web sites, it was difficult for travelers to access products, pricing and other travel information There was not a lot of marketplace transparency, i.e., customers couldn't easily compare prices among competing airlines and other travel providers. As a result, customers leaned on travel agents and ticket sellers to guide their travel experiences.
Thanks to Web sites like Expedia, Travelocity and Orbitz, transparency is now the industry standard and consumers are both savvier and better served. Travelers literally have a world of information available through their computers.
Credit for a revolutionary change in travel booking should be given to the early trailblazers.
But I'm afraid their time has come.
According to PhoCusWright, an independent consulting firm, online bookings through a third-party agency will comprise 55 percent of all travel bookings in 2007, a market share that represents $136 billion in business. These are big numbers, and they have gotten the attention of direct service providers, e.g., airlines, hotels and car rental agencies. These suppliers have responded with low-price guarantees, bonus miles and a seamless booking experience for customers who book directly with them, whether online or by phone. PhoCusWright reports that consumer perceptions of direct-supplier Web sites have improved in recent years; in fact, a 2004 study found that 55 percent of consumers believed that direct travel providers offer the best price. I suspect the numbers are much higher today.
It makes sense when you think about it. Whenever you have a middleman, prices are going to be higher. If I sell my used car directly, I avoid paying distribution or commission costs; if I sell it on eBay, I pay to use their services. Sometimes a broker or intermediary can provide added value, but when you're booking a single hotel room, a car rental or a flight from point A to point B, there really isn't much to it.
Today, third-party Web sites cannot compete with direct providers in terms of price and service. Let me give you a few recent examples.
I needed to book a flight from Tel Aviv, Israel, to Amman, Jordan. Using a metasearch engine, I found that Royal Jordanian Air offered a flight (I will explain metasearch engines in a moment). The best fare I could find was about $240. When I called Delta Air Lines to see if they could book this flight for me (I was already flying Delta from the United States to Tel Aviv), the agent offered me a rate of $200. In another case, a third party web site offered me a $638 U.S., round trip fare between Barcelona Spain and Budapest Hungary, while Malev Airline's website offered me the same flight for 195 Euros. Even with the exchange rate, I out fared far better.
Other airlines offer incentives for travelers booking direct. For example, Frontier Airlines is offering free DIRECTVR service for travelers who purchase tickets online before June 30, 2006, and travel before the end of the year.
Better service and cost savings are not limited to the airlines. Back in March, I booked a room at the Grand Hyatt Kauai for a trip in May. Weeks later, I noticed that the room rate offered on the hotel's Web site was $50 a night less. I called Hyatt's reservations line, explained the situation, was placed on hold for 30 second and, presto, I had a new rate and confirmation e-mailed to me. This simple phone call direct to the company netted me a savings of $200 -- enough to pay for the rental car. Would this have happened with a third-party Web site? From the scores of letters I have receives seeking advice about how to deal with similar situations, I doubt it.
In another instance, I booked a room for the San Francisco Hilton. I mistakenly booked the wrong date and did not notice my error for a few weeks. I finally realized what had happened when I saw the room charge on my credit card. When I called the hotel and explained my mistake, the Hilton not only refunded the no-show charge but also honored the lower rate I had booked, even though the room rate had risen by more than $100.
These stories go on and on. The point is that direct providers of services have a greater vested interest in your booking than do third-party providers, so they work harder to assure your customer satisfaction.
Still, there are a few occasions when a third-party Web site can offer good value.
1) Specialized or exotic travel. If you are planning a trip to Africa or other exotic locale, a resourceful site or travel agent can be of great help. Likewise, a site like Road Trips, which offers "The Ultimate in Sports Roadtrips, Travel and Tours," is indeed a source of added value for those seeking a unique sports outing.
2) Metasearch engines. These sites search numerous providers (airlines, car rental companies and hotels) to find the lowest price and then direct you to the provider for booking. This is particularly useful when you're not sure what is available, as was the case when I was searching for a flight from Tel Aviv to Amman. In that case, I used the site kayak.com. Metasearch sites usually do not book travel but rather redirect you to the provider's own Web site; they earn a nominal fee for each referral. Since the price quoted can be higher than you need to pay (as was the case with my Tel Aviv/Amman ticket), I tend to gather information from the metasearch sites, then go directly to my provider of choice for booking. Mobissimo, Qixo, and Sidestep are other popular metasearch sites for travel services.
3) Strong performers.If you're intent on using third-party Web sites, be aware that some appear to do a better job with price then others. For example, according to PhoCusWright, hotel rates available through American Automobile Association (AAA) were generally lower in 20 key metropolitan areas than those on Expedia, Hotels.com, Orbitz and Travelocity.
The choice is yours: Spend endless hours surfing the Web, or go direct to save time and money and get better service.