One thing the aggregators do well is offer a consistent and more flexible search than the airlines' own sites which are often pretty terrible. For example, I live within 2 hours of about 5 airports, and when flying within Europe there are often two airports near the destination. Being able to search with multiple departure and arrival locations, with flexibility across several days, in order to find the cheapest combination of airports and dates is still a useful service.
I'm interested to know where Google Flights fits in to this picture. It is not well publicised but suddenly seems to have become quite good. A key feature for me is inclusion of the two big UK low-cost carriers, Ryanair and Easyjet. I'd assume Google are not working on commission but are just trying capture another area of search with their algorithms and data. Does anyone know more about it?
Usually I search with an aggregator find the cheapest carrier, then book directly with that carrier. I've found booking sites to be a bit hit and miss - often they add extra booking fees that make the chosen flight more expensive or you miss out on certain options. In Europe I usually use a combination of Momondo, Skyscanner and Kiwi (formerly Skypicker).
The aggregators are also always showing the cheapest fares, regardless of the restrictions on those fares. More and more airlines have fares like Delta's "Basic Economy" which does not even let you pick a seat. Everyone is familiar with the long standing "non refundable" restriction on most of these fares but the newer restrictions vary from airline to airline and the aggregators don't do a good job of detailing those.
Contrast that to booking on most airline sites where they very clearly and very obviously show you the restrictions because they publish the fare alongside of the less restrictive fares as a way to up sell.
Flights also has an awesome tracking feature that charts the price of selected flights over time. It's very interesting to see how ticket prices fluctuate for different destinations and can help identify the best time to buy.
Google Flight also has this nice bar chart of what departure date is the cheapest for, say, a two-week trip to XYZ (and of course the usual departure date/return date matrix).
> One thing the aggregators do well is offer a consistent and more flexible search than the airlines' own sites which are often pretty terrible.
That's the classic benefit of intermediation in an industry, which is the ability to focus more on the market and market needs, and increase the flexibility of offerings by picking and choosing from suppliers. Of course suppliers don't necessarily like this, which leads to the situation described by OP.
Hard to get through this article. It repeatedly insists that "everyone" uses aggregators, when airlines and hotels sell much of their product directly. In particular, Southwest does not sell through aggregators at all and they are the highest volume US airline. Personally I refuse to book through aggregators because I don't want finger-pointing between aggregator and airline if something goes wrong.
I stopped reading when the article said travel agents are irrelevant for anyone but boutique wealthy travelers. A large amount of corporate and government travel is routinely booked through agents, who receive a routine fee.
Hard to believe there is anything good in this article when so much of it in the opening paragraphs is facially inaccurate.
I work in the industry, and I disagree. If we want to be more exact, most of the airline volume is through Global Distribution Systems (GDSs). I'd say that truly "direct" sales are in a minority.
But sales through aggregators have soared (mostly using the Amadeus GDS)
As mentioned in other comments, corporate travel does not buy direct and, along with luxury travel, are the two last holdouts of travel agents - I agree with the article in that agents are becoming more irrelevant for non-corporate bookings, although they're fighting back :) .
"market share loss due to disintermediation, which was starting to become a problem for GDS companies, has slowed considerably, according to Amadeus.
Airlines have realized that the reach GDS companies provide -- especially to business travelers -- cannot be matched by the airlines themselves.
Low-cost carriers (LCCs) like RyanAir (NASDAQ:RYAAY) and Southwest Airlines (NYSE:LUV) didn't use GDS to sell their tickets. After their initial growth period, during which they tapped deal-seeking customers, their growth slowed down. They couldn't access the higher-margin business travelers. Hence, most of the LCCs, including Southwest, RyanAir, and jetBlue (NASDAQ:JBLU), had to come back to GDSs to increase their growth rates."
GDSs have been so prevalent for so long in the industry that their use surely counts as the new 'direct sales', no? Like if I phone up an airline directly to book, based on an advert I saw which was funded by them directly, the airline would typically still use a GDS to make the booking?
That last quote is somewhat misleading; Southwest adopted the Amadeus GDS for their internal reservations in 2007, replacing a homegrown system. In their 2015 exposed their bookings through Amadeus but only through i:FAO for corporate customers, not the public who still have to buy direct.
Also, the definition of 'most of the LCCs' conveniently excludes, well, most of the World's LCCs...
That's true at a high level, but off on some dates.
Southwest cut a deal with Amadeus in 2007, but is still using the internal homegrown copy of Sabre for all domestic bookings. If you book something that lands outside the US, it goes via Amadeus. They will move all reservations to Amadeus, but over the next year or so.
They exposed bookings to corporate booking tools starting in 2009, but not via a GDS, but rather by a private connection.[1]
Then, in 2015, they exposed bookings via Amadeus, including domestic, to corporate travel tools. But, the booking itself does land in the aforementioned homegrown reservation system.
> In particular, Southwest does not sell through aggregators at all
...they sell through aggregators, just not to the general public. For business travel they pretty much have to, otherwise they'll miss out on the market (large companies usually requiring their employees to book business travel through a central agency).
> Most of their travel traffic is from the leisure segment anyway, so them not getting business traffic isn't the end of the world
This. Southwest (and the other LCCs) can't really compete with the 'kickbacks' provided by traditional carriers. If you're responsible for a lot of corporate travel, or you do a lot of corporate travel yourself, carriers like AA effectively make it so you never have to buy a personal ticket, and get upgraded to a higher level of service on many of your flights.
With you here. I only fly delta and end up just booking on their site. I'd rather be eligible for an upgrade than being in a fare code that doesn't qualify.
Not sure why the author thinks travel agents are useless. You don't (or shouldn't be) paying them so it's not like only the rich benefit. I used an agent recently when I was meeting someone in Orlando and needed our flights to arrive around the same time and have transportation waiting. A lot less stressful than trying to compare between carriers. My agent was able to track our flights and had to move the driver back an hour due to a delay - something I couldn't have done easily from the air.
> Not sure why the author thinks travel agents are useless. You don't (or shouldn't be) paying them so it's not like only the rich benefit.
My employer pays for ours. They've never found a cheaper fare than I've found, and we pay them per person per flight booked. This is the first year that they haven't proposed a flight/hotel stay combo that wasn't anything like what I specified.
As far as I can tell, they're just a way to make sure that higher-level sales folks don't book a $3k 2-hour flight that includes a masseuse.
When I used to work in corporate, the company travel agent sorted out serious crap every time it mattered. Once showed up at the airport, Friday evening, everyone on the way home. Surprise snowfall closed the airport and all flights cancelled. Called the booking people and they sorted out a taxi, hotel and other flight in 5 minutes while everyone else was struggling to find a cab. When I got to the hotel, there was a massive queue at reception which I just sailed past. I love a good travel desk.
I know someone with a golf vacation business and a good chunk of their business is via travel agents from Germany. Not sure if it's just bigger over there or if it's more prevalent for group bookings that they cater to for golf.
Your point about keeping corporate bookings honest makes sense. I've found executive assistants to be very good at research and bookings though. But I suppose they could be more easily influenced than an outsourced agent.
Agreed. I use orbitz expedia etc to find out who flies a route then i buy tickets from the airline. I don't see any savings on the aggregators and i want someone - an airline - to own it if something goes wrong, as it has on my last few trips.
If the airline doesn't pay Kayak, then yes, that counts as a direct sale. As far as I know, Kayak makes their money on hotel bookings. The air bookings are a loss leader.
I'm still astonished that Southwest can pull that off. Or perhaps just more astonished at how long I used flight aggregators without realizing that Southwest flights will never show up. I suppose I always knew Southwest existed, I just must have figured that they didn't have any affordable flights for my routes. Turns out I live near two airports with a ton of Southwest flights, and most places I fly too have plenty of routes. I use them almost exclusively now.
I'm looking at Southwest to fly to John Wayne Airport (SNA) from Portland and I'm surprised that they are very expensive and take twice as long (because of having 1 stop) as their non-stop competitors like Alaska, JetBlue (LGB instead of SNA), etc.
On the other hand, I'm looking at Southwest because they have a lot of flights, they let me check 2 bags for free, and I can cancel the flight without penalty.
>I'm still astonished that Southwest can pull that off
The tradeoff is avoiding the per-booking GDS distribution fees. With their homegrown reservation system, they were able to fill their planes without paying GDS fees.
They did ink a deal with Amadeus to use their GDS, but did not announce that they would make the inventory available to outsiders. I assume that means they were able to negotiate around high fees.
I do all of my business travel through our company's agency. Travel agents might not be worthwhile for most people, but they are invaluable for any company doing a high volume of travel
It's very true that in terms of hotel booking many consumers still see the big OTAs as the "bargain" sites and are often surprised to find that you can usually get an equal or better rate by booking directly with a hotel chain itself.
The company I work for, roomkey.com, was founded by six of the largest hotel chains to address this problem and bring more direct bookings back to the chains. The OTA duopoly of Expedia and Priceline have many of the hotel chains over a barrel with very aggressive contract terms that do not allow the hotel chain to advertise a lower direct rate than those they supply to the OTAs. And added to this, the OTAs take a pretty eye-watering commission.
However, most of the big chains are able to provide a lower rate to their own loyalty members. Room Key is unique in that we can access and aggregate these lower rates into a one-search solution. But, we are a tiny voice and competing with annual online marketing budgets of over a billion dollars each for the big two OTAs. Our job is a very hard one.
I'm glad articles like this are starting to paint a truer picture for the consumer. It really does make sense to book direct almost every time. It's easier to cancel/modify. You are the customer of the hotel, not a third party. You get loyalty benefits. And more of your money goes to those who take on the overhead of your stay and ensure the quality of your experience.
The OTAs used to be both cheap and convenient. Now they can only really lay claim to convenience through aggregation, and we at roomkey.com are trying to change that too.
Agoda often offers discounts to hotels you've viewed if you're browsing around and I always get the hotel cheaper than what's on offer at the hotel directly. For example the hotel I'm currently staying at in Taiwan cost 2500 NT, booking directly with the hotel is actually 4100 NT...
I don't understand how this is possible but this is how it seems to me.
I don't use things like flight scanner because booking directly with the airline is always cheaper from experience.
Actually. Google flights usually has prices that match the airline. I sometimes use that to compare. Then go to the airline site directly to do the booking.
It looks like roomkey.com doesn't seem to have any mobile apps, which makes it hard to say that it's more convenient to use when traveling than an aggregator that does have an app.
It's interesting to hear about your site though, perhaps I'll try it out next time I'm traveling.
Oddly enough, I just tried to book an ihg hotel through priceline, and priceline said it was sold out. ihg was happy to give me the reservation directly though.
I've worked with these systems. Airlines are pretty much never worth it through these sites. Margins are so damn razor thing that everyone pretty much scrambles for the last dollar. (Literally like 3-5 dollar margin"
Hotels are MORE worth it, in that they do offer deals through aggregators. Partially due to name and partially through exposure.
Booking.com is pretty good for this as they index alot of smaller hotels that generally are hard to find.
While I thought this was a pretty good article, the author is confusing what is an OTA vs a meta-search engine, even though he spends a paragraph explaining the difference. From one of the comments on the article:
* Expedia is not an aggregator/meta-search, it is an OTA itself. Meta-search engines are sites like skyscanner, hipmunk, trivago and kayak to mention some.
Another further confusion is when the author compares TripAdvisor with Hilton's own site. The screenshot even shows that TripAdvisor just redirects to Booking.com (Booking.com is owned by Priceline), who is the OTA.
The other thing the author doesn't discuss, but is an important part of the story, is that large OTAs spend billions advertising through Google, and are experts at it. Booking.com is the largest spender of any company on Google Adwords: https://venturebeat.com/2015/11/05/booking-com-largest-googl...
Yes, exactly, the author confuses the term OTA versus a metasearch engine. Expedia and Priceline are the largest OTA's after consolidation in recent years, creating what is now a duopoly. Furthermore, Expedia and Priceline have created an illusion of choice by acquiring the majority of the high traffic metasearch sites and then deciding to maintain their separate brands.
The lifecycle of aggregators may have some parallels with the fall of high-frequency trading. Eventually, the technology barrier to entry falls, incumbents fight back and the ecosystem rebalances.
Two topics missing from this article are AirBnB and low-cost airlines that fly to smaller airports. AirBnB does not compete with aggregators and cannot be shut out on the supply side by hotels. Do low-cost airlines (like Norwegian) benefit from customer discovery via aggregators?
Do aggregators change prices based on geographic location of the buyer? The article mentioned an experiment with higher prices for OSX buyers.
"Do aggregators change prices based on geographic location of the buyer"
Anecdotally, I booked a flight a few weeks ago through expedia.hk for an itinerary that was not even available through expedia.com. I'm not sure if they geotarget, but for Expedia at least, the TLD you go through matters.
I've also found a South American carrier (I forget which) to have significantly different prices depending on whether the website is in Spanish or English (alas, they wouldn't accept my US card through the Spanish site).
> South American carrier (I forget which) to have significantly different prices depending on whether the website is in Spanish or English
That's certainty true of Brazil's main airline TAM (now called LATAM). You often pay about 50% more as a foreigner. Note that Brazil speaks Portuguese, not Spanish, so your experience may have been with another South American airline doing the same thing.
Even if you use LATAM's Brazilian portal where you have to navigate in Portuguese, you won't get the cheaper Brazilian price. That's because they have this great little trick to determine if you're a foreigner. They demand that you enter your CPF number, a Brazilian national identity number, to buy the cheaper ticket from the Brazilian portal. And you can't make one up, or use the CPF number of a Brazilian friend, because they query a government database to verify that the CPF number matches the purchaser's name.
Collecting the CPF number is not dictated by the government. You can buy a ticket in person at a travel agency in Brazil or at the airport without a CPF number. As far as I can tell, this CPF business is LATAM's way to get a higher price out of foreign visitors for online purchases.
LAN is 100% cheaper on the Spanish website. I had no difficulty booking using an AU credit card. Also sells return tickets with a total cost less than the cost one way ticket to the same destination. Weird business model but my wallet was happy that I figured it out. :D
"Do aggregators change prices based on geographic location of the buyer?"
Not sure if they do, but airlines do. I wanted to fly from NYC to Singapore for a few days, and then fly to a friends wedding in the Philippines. Searching the websites, the fares were ~600$ but my singaporean friends said it should be cheaper. So I flew to singapore, walked into a local travel agent office and got my tickets for around 150 SGD
Its hard to tell because they change pricing based on so many other factors relating to browser usage history. Try an aggregator with the same query in both a normal tab and a private tab after doing a bunch of googling for the destination.
> Do aggregators change prices based on geographic location of the buyer? The article mentioned an experiment with higher prices for OSX buyers.
They offer different products at the very least. CarTrawler is a car rental aggregator and they've found all sorts of geographic aberrations through AB testing (who's willing to pay for insurance, who prefers to see cheapest cars first etc). I'd be very surprised if they're not using hardware/software info to inform their offerings.
Who thinks that $2000 for a transatlantic trip is a good deal?
I just looked at Google flights and most offerings are under £400 return (GOA-JFK). Even in mid-august I struggled to find flights above £600. Either that guy is flying business (management consultant, maybe then) or he seriously got shafted on price.
Just had a look - premium economy is £900, business is almost £2000.
EDIT: Interesting, it gets a lot more expensive the other way around. Though Google does suggest Milan as an alternative route, which drops the price to £400 again. It seems like the hop from Genoa to the international hub makes the difference.
Or you could get a train from Milan, which is only 85 miles.
I had a somewhat similar experience as Mr. Giacobbe in the article.
Recently I had to make a last minute change in a hotel reservation via Agoda, but they require you to pay the full amount in order to cancel the reservation, and then re-do the booking.
So instead I called the hotel directly and got my reservation changed without any extra cost.
It's been this way for a long time. It's often cheaper to book directly from the airline than through an aggregator so it always pay to check (and use a tool like http://matrix.itasoftware.com to also look for fare prices)
It makes sense, it's not in the airlines or hotels best interest to give lower prices to external OTAs and by providing better fares on their website they cut the middleman. It's also the reason why hotel chain tend to not reward user with status and points if they book through an aggregator.
This has been my experience, until recently. I started not booking ahead and just using the Hotel Tonight app to get something (literally minutes before i get on my flight). I feel like one day i'm going to get screwed, but so far I've never slept on the street (around 20 months of doing this) and the rates are often no more than $160 CAD for great hotels in midtown [area sucks, but its where the office is]. I also like that it shows currency in my local currency, not the destination currency.
The reason this works for you is not anything to do with Hotel Tonight, it's because NYC hotels price high early and then drop prices heavily because they're market is hurting (lots of new supply, and fewer customers).
At any chain hotel (Marriot/Hilton/IHG/Choice/Wyndham/Starwood), you'll get the cheapest price by being a rewards member (free, just like airline mile programs) and reserving directly on their website, or www.roomkey.com which is also owned by the hotel chains itself.
Next time, reserve the room from far out, then pay attention to the cancelation policy. Just before the cancelation policy ends, check the prices, they've probably dropped. You can then cancel and get the new price, and it will be cheaper than Hotel Tonight, because the hotel doesn't need to pay commission to Hotel Tonight, and you get the benefits of being a rewards member.
Yeah I'd 100% believe this. And to throw another data point in here, i just did it now at got a room at the central park hotel for $180 CAD / night for 2 nights.
The only other good thing about this approach is that I find meetings often get canceled or delayed due to flights not getting in. Canceling hotels is expensive, when you do not book till the last minute canceling becomes very rare.
One time tired me got off an international flight and wanted a hotel. I ended up hooking through hotel tonight and got a corporate apartment (!) accidentally in my tired trance. it was not too expensive but just really strange I missed that. It was a nice apartment, furnished terribly, and enough room to sleep probably 6 people. Weird app. But I love it, great for road trips where you don't know where you want to call it quits for the day.
I travelled to Spain in low season recently. For accommodation it doesn't hurt just to turn up, old school, without a booking.
Trivago have been blitzing our TV stations with ads, so I thought I'd give them a try. But their searches seemed just to redirect to booking.com so I couldn't see much value-adding.
Forget the 'only 2 left at this price' deception. I door knocked at a couple of places and they were half empty for the night - owners offered cheaper in cash than off a website! Now maybe this doesn't work in high season when everything is full but I found it liberating to stumble out randomly from a bus station to the tourist information centre who would plot for me on a map the best places to stay!
Hotels are allowed to undercut the OTAs, you just need to be a hotel rewards member. If you're a Hilton Honors, Marriot Rewards, IHG Rewards, and all the other ones, then reserving directly on the hotel website or www.roomkey.com will get you a lower price than on any OTA. You also get treated like a second class citizen if you buy via OTA, so if you're a Rewards member, which is free, you can get early checkin/late checkout and all that stuff too.
There's no reason hotels want to pay 15% to a website for no reason.
Well, if you are Hilton, you probably have a deal without that "undercut part" in the contracts. OTAs depend on the big chains.
On the other hand, these undercut clauses are already in discussion for violating competition regulations. So even if there is such clause in a contract, the OTAs may not fight for it.
As far as I know too the OTA can legitimately under-price the supplier's products down to their wholesale price right? Which I'm guessing would mean that the largest volume OTAs should have better deals due to lower wholesale prices, but could cause consolidation to continue, meaning higher prices eventually....which happened in car rental and seems to be happening now in travel
Recently left a startup in that business. The article is spot on.
And there may be technological opportunities here, like open APIs to hotel property management systems or even property management systems as a service....
One thing not mentioned yet is that "resort fees" are basically just a way to avoid paying commission to the aggregators. The combination of the ~20% commission and the most favored nation status that aggregators require from hotels without the negotiating power of Hilton limits the options hotels have to raise rates. And as the article mentions, this leads to hotels trying harder these days to establish a relationship with customers as an end run around the MFN clauses.
Also, I've probably booked 100+ hotels in the past few years, and I still do the majority of them through booking.com. I am aware that I can sometimes get cheaper rates by booking direct, and I do sometimes, if the delta is high enough. (On the other hand, I actually just booked a Hilton that was cheaper on the aggregator than on their own website.) I'm also aware that every hotel employee will tell you that 3rd party customers get the worst rooms in the place and are the first ones to get walked when overbooked. I can't say I've ever noticed any problems there. I'm even aware that booking's rating system is skewed - their 10 point scale actually only runs from 2.5 to 10, and the median rating is something like 8.1, so keep that in mind when you book your "Very Good, 8.1" hotel.
Despite all that, it has one killer feature that making direct reservations doesn't have - a uniform interface for making/changing/canceling bookings. It's a tremendous benefit in countries where I don't speak the language. I can do it fairly reliably on either the app or the website even when my network connection is dodgy, at any time, and without having to speak the language. I do admit that my requirements are fairly specific and most people traveling within their own country with reliable phone/internet service are generally better off doing the search first on an aggregator, and then booking direct (after signing up for loyalty programs) if the price is close.
(I work in the industry, but not for any of the companies mentioned.)
It's interesting that you say third party customers get worse treatment. I always assumed the opposite would be the case, because people booking through a portal can leave a rating, while many direct customers will be one-time business, with little to no recourse of things are sub-par. Do you know what the reason might be that this is not the case?
Worse treatment doesn't really mean much unless the hotel is close to 100% capacity. I may have phrased that part badly - what I meant is that 3rd party customers are lower priority than 1st party, so if it comes down to a question of who gets the nicer room, 3rd party will lose.
With respect to ratings, very few people actually leave them. So you're looking at the uncommon case of a traveler being negatively impacted, multiplied by the chance they even notice or care (e.g. someone who sleeps like a log getting the noisy room), multiplied by the chance that they actually bother reviewing. Couple that with the fact that pickier customers (frequent business travelers, points bloggers, or just brand loyalists) are vastly more likely to book direct, since you generally can't use/gain loyalty program points when booking through an aggregator, and it's understandable why direct customers might get preferential treatment. Not to mention that they're making more money from the direct customers to begin with.
I once booked a room with a king size bed through one of the OTAs. The bed size is extremely important to me so I make sure of it. When I found the room, it was barely large enough to contain the bed. I found out from the desk that it had been a "run of the house" booking, which sounds like it should mean, do whatever the customer wants but it apparently means the opposite. Long story short, when we complained we got moved to a penthouse suite, and that was the last time I used an OTA to book anything. BTW this hotel was a landmark in its own right, and the price for the room was very reasonable.
Because the hotel has to pay a commission on you, you are worth the least to the hotel. If they have to refund your room, they have to refund less (they no longer pay the commission)
"We’re a new kind of travel company that provides on-demand, personal travel service through a smartphone app. The Lola app instantly connects people to our team of travel agents who find and book flights, hotels, and cars for our customers. We also provide support while they’re on their trips."
Aggregators are all fun and games till your plans change. And Lola gives you human curated travel (they really do consider your tastes) at aggregator costs.
I've been running citybreakflights.com since Jan this year and one thing I've noticed is that buying tickets directly from the airline tends to be much cheaper than using an OTA. I track prices of flights from the UK to Europe for people wanting to go away for a few days. I don't track hotels but when I go away on a city break I use booking.com. Might start going directly and comparing the difference in price.
Skyscanner is great, but I get the sense that the airlines have cut them off. They used to show almost every carrier, and sent you straight to the airline website to book (I assume they got paid for referrals). Now they seem to search other aggregators, who have spotty data themselves. The great whole month price overview never works any more.
I find the aggregators still offer better deals if you're willing to forego stuff like being able to cancel or selecting the exact hotel you want to stay in.
It makes sense. Companies will use price discrimination to offer higher prices when they are able to segment the market. This would happen regardless of whether the lazy people were on aggregators or going direct. If they're able to separate the groups and one is more price sensitive than the other, that group would tend to be charged higher prices.
I'm interested to know where Google Flights fits in to this picture. It is not well publicised but suddenly seems to have become quite good. A key feature for me is inclusion of the two big UK low-cost carriers, Ryanair and Easyjet. I'd assume Google are not working on commission but are just trying capture another area of search with their algorithms and data. Does anyone know more about it?