The Changing Face of Travel Distribution

Channel planning: harder than tri-dimensional chess?

Dimensions to consider:

Reach Ease of comparison Cost of sale Brand reinforcement Relationship potential Customer preferences Customer satisfaction Product type Decision context Buying process stage Technology choices Scalability

Information economics affect channel strategy

Reach: Connectivity

Richness:CapacityCustomisationInteractivity

Face to Face Sales

TV Advertising

XML, Web Services,Recommendation

engines etc

Online travel agents’ value

Value to customers+ Price+ Choice+ Control+ Information+ / – Customer service– Advice– Payment options

Value to suppliers

+ Efficient reach

+ Customer access

+ Market demand feedback

+ Sales expertise / innovation

+ Outsourced customer support

+ / – Quality of representation

– Loss of relationship control

– Commissions / fees

Web is widely used source of information

21%

10%

11%

24%

18%

22%

29%

14%

25%

15%

6%

35%

23%

12%

22% 13%

24%

16%

0% 10% 20% 30% 40% 50% 60%

Brochures

The Internet

Agency shop staff

Brochures

The Internet

Agency staff

Brochures

The Internet

Agency shop staff

Finding final choiceOther research

% using ... for any research

NB data relates to package / accommodation purchases

Web’s role in holiday planning

41%

29%

28%

24%

5%

36%

29%

28%

25%

16%

0% 10% 20% 30% 40% 50% 60%

Any research

Initial ideas

Comparing offers

Finding final choice

Booking

Air package

Independentaccommodation

NB data relates to package / accommodation purchases

Web becomes part of the process

30%

15%

13%

12%

7%

4%

10%

9%

10%

10%

5%

4%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Used an online search engine to find travel Websites

Emailed or used a Web site form to request furtherinformation (e.g. availability, prices)

Printed out information from a Web site to help mewhen phoning or visiting a travel agent

Phoned the company whose Web site I had beenlooking at

Registered my details or preferences with a travelWeb site

Responded to an email offer or a newsletter byclicking on a Web site link or emailing back

For last holiday planning

Previously but not lasttime

% of adults

Base: All adults who have taken a holiday since May 2002, July 2003

Browsing and booking trends

23%

5%

20%

35%

10%

49%

0% 10% 20% 30% 40% 50% 60%

Researching theirholiday

BookingPackage/accom

Booking a Flight

2001

2003

Base: Adults who took a holiday in the previous 12 months

% adults who cited PC Internet as method of … for last holiday purchase

Brochures’ role in holiday planning

79%

72%

60%

48%

38%

34%

26%

18%

0% 20% 40% 60% 80% 100%

Any research

Initial ideas

Comparing offers

Finding final choice

Air package

Independentaccommodation

NB data relates to package / accommodation purchases

Agency staff role in holiday planning

56%

37%

39%

35%

9%

5%

5%

3%

0% 10% 20% 30% 40% 50% 60%

Any research

Initial ideas

Comparing offers

Finding final choice

Air package

Independentaccommodation

NB data relates to package / accommodation purchases

TV’s* role in holiday planning

13%

11%

6%

2%

3%

3%

0%

0%

0% 5% 10% 15% 20% 25% 30%

Any research

Initial ideas

Comparingoffers

Finding finalchoice

Air package

Independentaccommodation

* programmes/ads only

NB data relates to package / accommodation purchases

2001 2002 2003 2004 2005 2006 2007 2008

Other bookings

Booked by or for PC Web user but not browsed online

Browsed but not booked online

Booked online

All Holiday and VFR trips taken by UK Nationals (000)

All Leisure Travel

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

2001 2002 2003 2004 2005 2006 2007 2008

Other bookings

Booked by or for PC Web user but not browsed online

Browsed but not booked online

Booked online

Full Flight-based International Independent Trips (000)

Leisure air travel subsegment forecast

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

Leisure travel channels ecosystem - 2003

Independent high street travel agent

Mass market

Niche

Low High

Shopper confidence

Seller focus

Tour operator ownedtravel agent

Lates specialist eg Teletext, Cheapflights, Bargainholidays

Direct supplier sites eg Holiday-inn, easyjet, BA.com

General online travel agent eg Expedia, Opodo, Travelocity, ebookers

Ideas aggregator eg Lastminute.com

Specialist tour operators

Destination portals

TV travel channel

TV travel channel

Channel shifts 2004-2007 Mass market

Niche

Low High

Shopper confidence

Seller focus

Independent high street travel agent

Direct supplier sites eg Holiday-inn, easyjet, BA.com

General online travel agent eg Expedia, Opodo, Travelocity, ebookers

Ideas aggregator eg Lastminute.com

Specialist tour operators

Destination portals

Tour operator ownedtravel agent

Lates specialist eg Teletext, Cheapflights, Bargainholidays

TV travel channel

Leisure travel channels ecosystem - 2008

Independent high street travel agent

Mass market

Niche

Low High

Shopper confidence

Seller focus

Teletext, Cheapflights,Bargainholidays

Direct supplier sites eg Holiday-inn, easyjet, BA.com

Specialist tour operators

Destination portals

Ideas aggregator eg Lastminute.com

General online travel agent eg Expedia, Opodo, Travelocity, ebookers

Tour operator owned

travel agent

Conclusions

Take the customers’ perspectiveSegment the online opportunitiesWork on guided selling, rather than taking

orders Mine the web/search activity data as hard as

you can