8.2 Role of travel intermediaries and aggregators
3 min readâĸjuly 30, 2024
and aggregators play a crucial role in connecting suppliers with consumers. They act as middlemen, offering services like booking flights and hotels, while also managing supplier relationships and ensuring smooth customer experiences. These platforms have revolutionized how we plan and book travel.
Intermediaries and aggregators add value through personalized recommendations, specialized expertise, and comprehensive travel information. They've disrupted traditional distribution channels, increased competition, and shifted power dynamics in the industry. This has created both challenges and opportunities for suppliers in balancing control and leveraging data for growth.
Roles of Travel Intermediaries and Aggregators
Connecting Suppliers and Consumers
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- Travel intermediaries act as middlemen between travel suppliers (airlines, hotels, car rental companies) and consumers
- Provide services such as booking flights, hotels, car rentals, and vacation packages
- Travel aggregators are online platforms that collect and compare travel information and prices from multiple sources
- Allow consumers to find the best deals and options in one place (Expedia, Kayak)
Managing Supplier Relationships and Customer Experience
- Intermediaries and aggregators manage relationships with suppliers
- Negotiate rates and contracts to secure competitive prices and inventory
- Ensure a seamless booking experience for customers
- Handle customer service, payment processing, and post-booking support
- Assist with itinerary changes and cancellations
- Provide travel information and guidance to help customers make informed decisions
Value-Added Services of Intermediaries and Aggregators
Personalized Recommendations and Specialized Expertise
- Offer personalized travel recommendations and curated itineraries
- Based on customer preferences and past booking history
- Use data analytics to tailor suggestions to individual needs and interests
- Some intermediaries specialize in niche markets and offer tailored services and expertise
- Luxury travel (Virtuoso), adventure tourism (Intrepid Travel), corporate travel (American Express Global Business Travel)
Comprehensive Information and Loyalty Programs
- Provide comprehensive travel information to help customers make informed decisions
- Destination guides, reviews, and ratings
- Travel tips, advisories, and requirements (visas, vaccinations)
- Offer loyalty programs and exclusive discounts to encourage repeat business and
- Reward points, early access to deals, personalized promotions
- Partnerships with airlines, hotels, and credit card companies to offer additional benefits (priority boarding, room upgrades)
Impact on Travel Distribution
Disrupting Traditional Channels and Increasing Competition
- Intermediaries and aggregators have disrupted traditional travel distribution channels
- Provide consumers with more choice, transparency, and convenience
- Enable direct booking and comparison shopping, bypassing traditional
- Increased competition among travel suppliers, putting pressure on prices
- Forces suppliers to differentiate offerings through unique experiences and value-added services
- Encourages innovation and customer-centric strategies
Shifting Power Dynamics and Facilitating New Business Models
- Rise of and has shifted power from suppliers to intermediaries
- Intermediaries control a significant portion of the customer booking journey
- Can influence supplier visibility, pricing, and inventory allocation
- Facilitated the growth of the sharing economy and alternative accommodations
- Provide a platform for small suppliers (vacation rentals, peer-to-peer tours) to reach a global audience
- Enable new business models and revenue streams for suppliers and hosts
Challenges and Opportunities for Suppliers
Balancing Control and Collaboration
- Suppliers face the challenge of maintaining control over brand, pricing, and inventory when working with intermediaries
- Intermediaries may have conflicting priorities and strategies
- Commission fees and revenue sharing agreements can eat into profit margins, particularly for small and independent operators
- Building strong relationships with key intermediaries can provide competitive advantages
- Secure preferential placement, promotions, and partnerships
- Collaborate on marketing campaigns and customer acquisition strategies
Leveraging Data and Insights for Growth
- Intermediaries and aggregators provide suppliers with access to a larger customer base and increased visibility
- Can help drive sales and growth, especially for lesser-known or niche suppliers
- Suppliers can leverage data and insights from intermediaries to better understand customer preferences and behavior
- Develop targeted marketing campaigns and personalized offers
- Identify trends and opportunities for product development and innovation
- Adapt to changing customer expectations and market dynamics shaped by intermediaries and aggregators
- Invest in digital capabilities and direct booking channels
- Focus on differentiation, experiential travel, and sustainable practices
Key Terms to Review (19)
Booking engines: Booking engines are online tools that allow consumers to search, compare, and reserve travel products such as flights, hotels, and rental cars directly through websites or mobile applications. They play a crucial role in the travel industry by connecting consumers with travel providers, streamlining the booking process, and providing essential information about available options. By enabling real-time bookings, these engines enhance user experience while supporting travel intermediaries and marketers in reaching their audiences effectively.
Brokering: Brokering refers to the process of acting as an intermediary between buyers and sellers in the travel industry, facilitating transactions and ensuring that both parties achieve their desired outcomes. This role is essential in connecting travelers with travel suppliers, such as airlines, hotels, and tour operators, allowing for a more streamlined booking experience. Brokers often leverage their industry knowledge and relationships to provide value-added services, making them crucial players in the travel marketplace.
Consulting: Consulting is a professional service where experts provide strategic advice and recommendations to organizations, often to improve their performance or solve specific problems. In the travel and hospitality sectors, consultants can help businesses optimize their operations, enhance customer experiences, and navigate complex market dynamics, playing a crucial role in shaping effective strategies for travel intermediaries and aggregators.
Consumer protection laws: Consumer protection laws are regulations that ensure the rights of consumers are upheld and protected in the marketplace. These laws are designed to prevent businesses from engaging in unfair, deceptive, or fraudulent practices, ensuring that consumers receive accurate information and fair treatment. Such protections are essential in maintaining trust between consumers and businesses, especially in the travel and hospitality industry where intermediaries and marketing practices play a significant role.
Conversion rate: Conversion rate is a key performance metric that measures the percentage of users who take a desired action out of the total number of visitors. This metric is crucial for evaluating the effectiveness of marketing strategies, as it indicates how well a brand can turn potential customers into actual customers.
Customer acquisition cost: Customer acquisition cost (CAC) is the total cost incurred by a business to acquire a new customer, including expenses related to marketing, advertising, and sales. This metric is crucial for businesses to understand their profitability and the effectiveness of their marketing strategies. By managing CAC effectively, companies can ensure sustainable growth while optimizing their resources across various distribution channels and intermediaries.
Customer Loyalty: Customer loyalty refers to the ongoing relationship between a customer and a brand, characterized by repeat purchases and a commitment to the brand over time. This loyalty can be influenced by factors such as satisfaction, perceived value, and emotional connection to the brand. Building strong customer loyalty is essential for businesses, particularly in hospitality and travel, as it drives repeat business and can enhance brand reputation.
Disintermediation: Disintermediation refers to the process of removing intermediaries or middlemen from a supply chain or transaction, allowing consumers to engage directly with producers. This shift has significant implications for the travel industry, as it enables travelers to book services like flights and accommodations straight from providers, bypassing traditional travel agents and aggregators. As technology advances, the prevalence of disintermediation is increasing, reshaping how services are marketed and sold in the travel sector.
Dynamic pricing: Dynamic pricing is a strategy where prices are adjusted in real-time based on various factors such as demand, supply, customer behavior, and market conditions. This approach allows businesses in hospitality and travel to optimize revenue and manage occupancy rates effectively, making it a key part of pricing strategies.
Global distribution systems (GDS): Global Distribution Systems (GDS) are computerized networks that facilitate the transaction of travel-related services, such as airline tickets, hotel bookings, car rentals, and other travel products. They serve as intermediaries between service providers and travel agents or consumers, allowing for real-time access to inventory and pricing information, which enhances the efficiency of travel transactions and distribution.
Inventory management: Inventory management is the process of overseeing and controlling the ordering, storage, and use of goods within a business. It involves tracking inventory levels, orders, sales, and deliveries to ensure that the right amount of stock is available at the right time. Effective inventory management is crucial for optimizing operations, reducing costs, and meeting customer demand, especially in sectors like travel where products and services can fluctuate frequently.
Metasearch engines: Metasearch engines are online tools that aggregate search results from multiple search engines or travel websites, allowing users to compare prices and availability across various platforms in one place. They serve as a bridge between consumers and travel service providers, enhancing the user experience by simplifying the process of finding and booking travel options.
Online travel agencies (OTAs): Online travel agencies (OTAs) are digital platforms that allow consumers to research, compare, and book travel services such as flights, hotels, car rentals, and vacation packages. These agencies act as intermediaries between travelers and service providers, simplifying the booking process and often providing competitive pricing. OTAs play a significant role in direct versus indirect distribution strategies by offering an alternative to traditional methods and influencing how travel products are marketed and promoted.
Purchase decision process: The purchase decision process is a series of steps that consumers go through before making a final purchase decision. This process typically includes stages such as problem recognition, information search, evaluation of alternatives, the purchase itself, and post-purchase evaluation. Understanding this process helps businesses tailor their marketing strategies to influence consumer behavior effectively.
Reintermediation: Reintermediation is the process of introducing new intermediaries into a supply chain or distribution channel, often in response to changes in technology or market dynamics. This term is particularly relevant in the travel and hospitality industries, where traditional intermediaries like travel agents have evolved, and new players such as online travel agencies (OTAs) and aggregators have emerged to connect consumers with services more efficiently. Reintermediation can create opportunities for businesses to better reach their target audiences while providing consumers with enhanced options and convenience.
Tour Operators: Tour operators are companies that design and organize travel packages for individuals or groups, providing a variety of services including transportation, accommodations, and guided tours. They act as intermediaries in the travel industry, playing a crucial role in connecting suppliers with consumers while also managing the logistics of travel arrangements.
Travel agents: Travel agents are professionals who assist individuals and groups in planning, booking, and managing travel arrangements. They serve as intermediaries between travelers and travel suppliers, providing valuable services such as itinerary planning, price comparisons, and expert advice. Travel agents play a significant role in distribution channels, helping to navigate the complex landscape of travel offerings while also addressing potential conflicts and utilizing various distribution strategies.
Travel industry regulations: Travel industry regulations are the rules and laws that govern how travel-related businesses operate, ensuring consumer protection, safety, and fair practices. These regulations often include licensing requirements, consumer rights, and standards for service delivery, influencing how intermediaries and aggregators conduct their operations in the travel sector.
Travel intermediaries: Travel intermediaries are businesses or individuals that act as a bridge between consumers and service providers in the travel industry, facilitating the purchase of travel-related services. They play a vital role in helping travelers find, compare, and book various options such as flights, hotels, car rentals, and vacation packages, often streamlining the process and providing valuable information and support.