Today another chapter was written in the restructuring of the travel industry with the dual announcements from CWT concerning the acquisition of TQ3 Navigant and the buyout of the Accor share of CWT by One Equity Partners. Was this really unexpected? Accor clearly signaled that they wanted to sell their half of CWT last month. Most pundits believed it would be very difficult for Navigant to re-create the TQ3 international presence. So clearly this should not be a surprise to anyone. The press has for years characterized CWT as a #2 to Amex's #1 position. To maintain this, (and perhaps go after Amex) CWT needed to continue to grow and acquisition was the most logical path. The next shoe to drop will concern Cendant and who ends up with Travelport. The interesting part of many of the deals of recent years is the role private equity has played with major acquisitions (e.g Worldspan, Amadeus, CWT and most likely Cendant). Private equity is looking for immediate returns and all four of these companies are profitable with solid ongoing income. Private equity is also funding the GNEs (e.g. ITA Software, G2, Farelogix). So who's right, the funding on traditional players or the embracing of new distribution platforms? Time will be the final judge. I would venture to speculate that ten years from now there will five players in the distribution game (3 GDS and 2 GNEs) and they will look very much alike. On the TMC front today's announcements means more pressure on 2nd tier TMCs and their associated consortium (e.g. Radius) or partnerships (GET) forcing them to prove that their model works and is able to compete against the new mega - mega TMCs.
Monday, April 24, 2006
Friday, April 21, 2006
A recent study by the Institute for Travel Management, a UK based organization that focuses on corporate travel, highlighted the disconnect between pundit predictions on the adoption of self-booking tools (SBTs) and feedback from members on a recent poll. The conclusions drawn from this survey emphasized the gap between the expectations of buyers and the actual adoption as well as the disconnect with their TMCs. Based on recent research I conducted that will shortly be published by PhoCusWright, I understand the reason for this response, but differ in my opinion on why buyers voiced these concerns. Overall Europe is at a different evolutionary stage of SBT deployment. The UK and Nordic regions are the most advanced in SBT selection and deployment, but overall the market is still below 20% adoption for corporate self-booking tools. The US experienced similar disappointment and lack of TMC integration when SBT became the major trend in 2000. A good portion of the problem with TMC relationships lies in the second tier TMCs who don't fully support self-booking viewing it as competitor to their standard services. The European market is now moving quickly to come up to speed with online corporate technology and thus it is my opinion that these issues will begin to fade as more companies embrace online channels and more 2nd TMCs come to the conclusion that Self-booking is a critical part of the travel management process.
Monday, April 17, 2006
Some media outlets picked up as news speculation in Russell Shaw's Znet blog that Google intends to enter the travel booking market and partner with Orbitz. This story demonstrates a number of interesting trends. First how a blog can generate a "news story". The basis for Mr. Shaw's speculation concerns a job posting for a "Senior Account Executive Travel Vertical". I am amazed that Mr. Shaw would draw broad conclusions from this job posting considering the fact that Google has had similar postings on the Web for the last two years. This job posting is nothing more than an advertisement for a sales representative to target potential travel advertisers based in Chicago. To take this job listing and speculate that Google will now enter the travel reservation business with Orbitz is not only a wild jump in logic, but demonstrates how educated tech writers are not necessarily educated in the nuances of the travel industry. Don't get me wrong, I do suspect that Google is considering some sort of travel vertical initiative, but to use this job posting as evidence shows that the writer lacks an understanding of Google's current travel industry positioning. I would more accurately speculate that when Google does make its move into the travel industry it will leverage its core search capabilities to drill deep into travel Web sites, allowing more effective comparative shopping. A more logical observation from Mr. Shaw should have concerned the Google capability to search multiple travel sites when you enter a city pair (e.g. San Francisco New York) into the search engine. This feature was introduced in 2005, something Mr. Shaw doesn't even mention in his blog.
Friday, April 07, 2006
During the last two weeks Worldspan has announced new five year contracts with three large airlines: American, Continental and Lufthansa. Do these contracts signal the end of the buzz around alternate distribution? In my view, major structural change in distribution will continue (and even accelerate) despite these announcements. Many pundits are quick to point out that it was these three airlines that seemed to be making the most noise about alternate distribution and that their agreements with Worldspan seems to contradict their very public efforts. AA and CO were in the news with letters to travel agents saying that they may not participate in all GDS. As part of the Star Alliance, Lufthansa's technology subsidiary (Lufthansa Systems) announced a new agreement with Farelogix to power an alternate distribution platform for Europe. The bottom line change that is happening in distribution is NOT only about GDS bypass, but overall distribution preferencing. In other words, there are major changes under foot to allow suppliers and distributors to direct where inventory is shopped, priced and fulfilled. This capability goes down to the individual reservation level and can be different at each stage of the booking process. This underlying ability to control distribution is at the heart of the changes happening behind the scenes between suppliers and intermediaries. It is essential that everyone stay tuned to this issue as I believe it will permanently impact both consumer and business travel reservation processing.
Thursday, April 06, 2006
On Monday evening I returned from a week in