BULLETINS

Providing you excerpts from a very interesting article that I read about online travel market that came in the Mckinsey Quarterly.

Kindly read on….

A decade after the Internet spurred airlines, hotels, and other travel players to sell directly to customers, the sector’s ecosystem is fracturing. Companies are abandoning the systems that are supposed to provide consumers with one-stop shops to book flights, accommodations, and other services. Lawsuits are being filed. And the very people whose interests should be paramount—customers—are being caught in the cross fire. That’s giving newcomers a chance to swoop into a sector that today boasts annual online sales of almost $100 billion, around a third of all global e-commerce activity.

This turbulence isn’t a bad thing: the travel sector has reached the next phase in its evolution, and some creative destruction is necessary. In fact, companies are already investing billions of dollars in the next wave of travel e-commerce, from revamping Web sites to changing the technology infrastructure. Consolidation is also creating opportunities that didn’t exist before. But the critical question is whether the sector’s players can find a sustainable path forward before new rivals blaze the trail for them. To name just two candidates: Google recently paid $700 million for ITA Software, whose algorithms form the backbone of 65 percent of flight sales by carriers, while Apple has filed a series of patents for a mobile-device application called iTravel.

The bottom line is that travel suppliers, aggregators, and service providers each need to define the sector’s next wave quickly. We suggest that industry incumbents move away from a model focused almost exclusively on reducing channel costs and toward one that seeks to maximize returns by best serving customer needs. And the incumbents must understand that the customer experience not only begins before the time of sale—and even before the time of search—but also extends well after purchase and travel. The changes we recommend don’t require reinventing the wheel: many solutions already exist, but the sector’s myopic focus on costs rather than returns prevents their implementation. Balanced business models that give all value-adding players a seat at the table are what’s needed.

You can get access to the full article at mckinseyquarterly