Online Travel Distribution Growing Increasingly Murky

Travel companies find themselves in a precarious position when it comes to online distribution: While there's no disputing that consumer travel research and booking is moving steadily toward the Web, merely having a Web site with a strong retail component isn't nearly enough for travel suppliers to take full advantage of that trend.

Executives gathered at EyeForTravel's travel marketing conference in San Francisco this week rolled out metrics that indicated the seismic shift as shoppers move from traditional channels such as call centers and travel agencies toward branded Web sites and third-party online aggregators. But they also pointed out that success in the online channel is anything but simple, with consumers growing increasingly reluctant to depend too heavily on any single resource.

"Consumers are looking for trusted, unbiased sources of information," says Yen Lee, general manager of Yahoo Travel. "They're aware that we often push biased products based on margins. That's one reason they cross-shop. They don't trust any one site to give them all the information they need for the entire planning process."

That's forcing travel suppliers not only to work to develop more affinity for their own sites among their customers, but to explore other online distribution alternatives. Hilton Hotels Corp. has seen the percentage of bookings made through its own proprietary sites grow from 2% in 2000 to 14% today, and it projects that 40% of bookings will be completed on a Hilton site by 2010.

Such dramatic growth has forced Hilton to rethink the way it manages its reservations system, which five years ago was fine-tuned to its call centers and the global distribution systems used by travel agencies and business travel departments. "Today, the brand sites dictate the architecture of our reservations system," Bala Subramanian, senior VP of distribution and brand integration, said during a conference panel discussion.

But Hilton is well aware that its customers' travel-planning efforts don't begin and end at Hilton.com. To that end, it's negotiating terms with its third-party distribution partners that give it the flexibility to offer those channels more inventory when direct sales slow down or to restrict the inventory when direct sales peak. It's also trying to jack up the value of its own Web sites by offering loyalty-card holders perks when they book their stays on a site, and it's using analytics and reporting tools to keep apprised of what customers are doing on its sites so it can keep them from looking elsewhere for competitive deals.

The online distribution picture has gotten blurrier as the growth of phishing has cast doubt on one of the most obvious benefits of bringing customers to a supplier's Web site--namely, the ability to do permission-based E-mail target marketing. Consumers simply can't be certain whether messages that appear to be from companies they do business with are actually coming from that company. Frank Camacho, staff VP of marketing for Hertz Corp., told conference attendees that the impact phishers are having on E-mail as a marketing tool raises serious questions about the future of customer-relationship-management practices in the travel industry. "They haven't gotten around to the rental-car companies, but we're worried they're going to, so we've taken the links out of our messages," Camacho says. "E-mail is going to become less useful."

With online distribution growing increasingly complex, travel suppliers will have to consider creative approaches to tackling the online channel. But so long as they keep at it, the right approach will become apparent, regardless of whether suppliers meet customers at their own sites or elsewhere on the Internet, Subramanian said. "It's important to realize that the customer is teaching us with every interaction we have."