American journalist about the decline of online aggregators. Translation of the article author Backchannel Garra Arc.
In August 2016, the 52-year-old consultant for management Andrea Giacobbe checked in at Skyscanner — European service for finding information on air transportation. He was looking for a flight from new York to Genoa. Giacobbe is not the first time he flew to relatives this route and have always booked using Skyscanner, where, as it seemed to him that the tickets were cheaper.
However, the service has found only one Alitalia flight with two stopovers in Milan and Rome for $2050. The price seemed high, and he decided to call directly to Alitalia. The airline will offer tickets for a flight with one stopover in Rome for $1550.
It was cheaper and faster. In addition, the airline has provided a discount on rent a car in Genoa. According to Giacobbe, he was surprised because he didnt call the airline, hoping that Skyscanner offers him the most expensive options.
More and more people find themselves in a situation Giacobbe. Over the last few years users have reinforced my belief that the Internet is cheaper and travel, hotels and car rental services.
In travel industry there has been a shift, in which most people start to use aggregators for booking trips. Nobody wants to spend their time talking to a travel agent.
Now all hope for a metasearch engine like Priceline, Expedia or Travelocity, which usually used data of tens (some two hundred) online travel companies (OTA) and aggregators to search for the best deals. Hotel metasearch engine and aggregator is a interchangeable concepts. They scan other sites and collecting the data “under one roof”.
And booking and all matters connected with the organization of travel, do the OTA, that is a real travel company. We rely on such sites because we believe that they have a secret ingredient — for example, the incredibly powerful search engines configured by the programmers of the higher League, where you have the most sophisticated algorithms that give our services the cheapest deals. Through this search, you feel that you are buying tickets with huge discount.
Over time, however, competition between sites is increased, and as a result began to appear suspiciously cheap offers that users need to filter yourself. For example, for a flight from California to Europe at an unbelievably low price of $99, you were required to purchase return tickets for $400.
And the less be the work of aggregators, the worse appear the transaction. How to make sure that you have found the cheapest offer. The short answer. Does.
During the preparation of the material I talked to several software developers, managers of hotel chains, also researchers and academics who have spent a huge amount of time and effort to explore this question. They came to the conclusion that the industry is changing, and most attractive deals for hotels, flights and services for the rental cars really are not so good.
“Now the hotels do not give aggregators the same good offers as they did before”, said my former developer service hotel, who wished to remain anonymous.
And I wish you good luck in finding bad actors. The number of players for each transaction has increased significantly. Most likely, in the food chain before any deal is several links in aggregators, and each takes a Commission, which raises its final price.
According to a former employee of the hotel, aggregators explain the change in the price fluctuations of supply and demand, which varies significantly in areas of seasonal resorts. In fact, the reason of failure of the system. Exactly the same as 20 years ago, airlines and hotels have started to cut the Commission of travel agents, history repeats itself today.
“Airlines dont want to pay the aggregators”, he said to me. This means that you now have to pay us. In the early 1990s, before the rise of the Internet, you called a travel agent and he took care of all bought tickets, booked hotels, rented a car.
A company like America Airlines, Hyatt, Hertz was paying the agents for those that sold their services. Gradually, however, the landscape has changed. Airlines and hotels have ceased to pay, and tour operators have ceased to offer their services for free.
Then the charges began to include in the cost of tours, and the agents have ceased to be in demand for all parties, in addition to rich tourists who do not care about the price. To make a revolution in this market has helped the technology, partly due to which today we see the price chaos in the market. We began to look for all the tours and tickets online stopped to talk with administrators of hotels, agents car rental agents at the time of booking. And began to brag to friends about how we were able to save on the trip to the Italian lake Como.
All this became possible thanks to the aggregators. They work so. When you write, where you want to go when you want to go or where you want to stay in, the aggregator generates a list of options.
The price of each item is determined not by the aggregator, and the vendor. Aggregators pay for the number of clicks, but if you booking a plane or hotel room, they will receive a higher reward. The contracts of most tourist sites prescribed that they have no right to cut rates of hotels or airlines.
When the online reservation of tickets or numbers only appeared, sites like Kayak or Orbitz could make deals with hotel chains or airlines, requesting discounts for empty places. In this case, [the airlines] Delta [hotel chain] Starwood had nothing left but to agree to the payment of the high Commission site, because any sale is better than nothing.
However, the more aggregators appear, the more unstable became the business model. Around deals suddenly began to appear new intermediaries, each of whom wanted to grab a piece of the. And the more accessible and became powerful search technology, the more tickets and hotel rooms became available on third party sites.
The development of technologies used and advertising vendors to properly study the behavior of Internet users. Cookies enable browsers aggregators may obtain information, to adjust the value of the transaction.
The price of the tour or ticket can affect your location or the type of device from which you logged in. For example, if you at 17:00 looking for a hotel room for the current day from the mobile device, the algorithm of the aggregator, I assume you have a more desperate situation than if you searched the room with the computer and offer a higher value.
“Every time you are looking for a hotel or tickets, aggregators, fix it”, said my former developer of Priceline. In response to the actions of aggregators, the hotel industry began to sell the rooms without payment of a fee. In California I talked to the head of the Corporation that owns several resort complexes. He also asked not to mention in the article his name.
The leader told me that in the last few years, the major networks began to increase the budgets for advertising and promotion, encouraging people to buy directly from their websites with rewards.
I was curious what the difference is between booking rooms in the hotel and with Tripadvisor, which describes itself as a meta-search engine with the lowest prices. Brian Hoyt, head of internal communications, the company insists that the new technology instant book wades through all of the available current offers from the major travel agencies and aggregators. According to him, the company has signed a major agreement with such hotel chains as Hilton, Starwood, Marriott, and many others.
When I asked Hoyt about where higher prices — on Tripadvisor or on the website of the Hilton, he left issue. If you decide to check it out for yourself and try to look on TripAdvisor any of the hundreds or thousands of rooms at the Hilton, you will find that the cheapest room on the website of the hotel chain.
Consolidation, mergers and acquisitions aggregators has led to the fact that prices are even higher. Of Expedia owned services Hotels.com and another dozen of similar sites, including Travelocity, Orbitz and Trivago.
(In 2003, the company Expedia has bought the American media company IAC, which also owns a holding Group Match — Tinder, OkCupid, Match.com, YouTube Vimeo and other companies. Revenue in 2016 is $3,14 billion — approx. Ed.). Expedia does not advertise, but the company sells licenses for access to their database and technology, so now anyone can open your own aggregator.
Rather, it will be another version of Expedia, but under a different name. Anyone can join the game by paying for access to the Central reservation system (CRS), which contains information on vacant hotel rooms, or databases, Sabre or Amadeus, where the accumulated prices for tickets of any airline.
“Every realtor wants their share, so here everyone a small margin”, — says head of research group at northeastern University Christo Wilson. Two years ago he with the help of 300 volunteers, several months investigated the behavior of aggregators.
His group found a dynamic pricing (price fluctuations due to supply and demand, and number of clicks) can lead to discrimination on financial grounds and “shifting” when customers are redirected to other sites where the price is not necessarily the best. A group of Wilson noticed that the service Orbitz was showing the users with the operating system macOS the more expensive hotels, since the algorithms of the expected Apple users can afford more than typical PC users.
Representatives of the service dismissed the charges for Wilson, but stopped this practice. According to them, it was a “short experiment”.
Since online travel agencies became more noticeable, its becoming harder to complain about living administrators. Modern offices to deal with claims carefully hidden. And if the armor turns out to be something not so, they are becoming harder to find.
As the number of aggregators is increased, it is unclear exactly who is responsible for the problems of the tourist. On Yelp and other sites with reviews posted thousands of comments from disgruntled customers who, on arrival at the hotel found that their reservation mysteriously disappeared. According to Wilson, the problem is too many players.
If you look in any app store, you will find dozens of apps for booking hotels. However, the majority of them include intermediaries who never directly work with the hotel. “This is a stratum that resells information from other databases,” says Wilson.
Therefore, when a customer problem occurs, it is difficult to find out who it was he to complain, since it is unclear exactly who sold him a tour or reservation. However, the number of users who use aggregators from a computer or smartphone, begins to decline. Co-founder of a consulting company in the field of tourism Sarah Fiz Hugh reported that most of the users book hotels or flights directly on the websites of the companies, without the help of intermediaries.
This suggests that buyers are now more interested in travel brands (airline or hotel) than a collection of hotels based on preferences. But it tells us something even more important.
Consumers no longer believe that aggregators offer them the lowest price. “Sites for price comparison is a waste of your time. The only valid transactions that can be detected there is the “burning” of unsold inventory in the off-season. But all these discounts you can get for yourself, if you can call the hotel or contact a good agent,” writes the insider of the tourism sector Tom Lewis on service Quora.
Indeed, prices pendulum again swung in the direction of hoteliers. “In the past, aggregators was just to seize the whole business, because the hotels did not pay attention to them. But gradually these services have taken such a large market share and began to demand such a large Commission that hotels were forced to pay attention,” — said the head of a chain of hotels from the West coast. According to him, when hotels were paid aggregators 20-30% Commission on every order.
Over the last two or three years the hotel industry began to struggle with aggregators, offering deals to bypass the original contracts. For example, hotels are obliged to take a room at one rate, below which it has no right to take this room on the Internet.
But networks offer potential customers to become participants of the loyalty program by selling the room for the same price, but with additional services — Parking, Spa and so on. And while they do not violate agreements with aggregators. In February 2016, the Hilton hotel chain decided to compete with the aggregators using the original method — offered the lowest prices when booking rooms on its website as part of the marketing campaign Stop clicking around.
According to Chris Silaka, head of marketing Department of the network, this campaign became the most expensive in the history of the network. Hilton is a great opportunity for testing. If Expedia is the elephant among aggregators, chain of hotels are among the hotel business. The inventory includes Hilton 775 thousand numbers 4.7 thousands of hotels in 550 cities around the world.
Sillok notes that the campaign is successful. One of her goals was to increase the number of members of the loyalty program for Hilton, who have visited hotels first.
Over the past year the number of subscribers has doubled from three million to six million people and their total number exceeds 60 million. The main source of traffic is our own application Hilton.
Company InterContinental Hotels Group, which owns several brands ranging from Holiday Inns and Candlewood Suites have also announced their campaigns, albeit less aggressive. Starting this year, the chain will not award points if the guest reserves a room through aggregators. In October 2016 I was looking for a hotel for the January weekend in Fort Lauderdale. On TripAdvisor, PriceFinder, Hotels.com and Expedia I found rooms at Hilton Embassy Suites at $349 per night.
On the Hilton website for the same room on the same date I was asked for $331. Now you can jump from site to site in search of a cheap hotel, or discounts on tickets. And you can use the old-fashioned way — pick up the phone and call the hotel yourself.