The US online travel giant says partnerships are the key to its success, but what does this mean for UK travel firms who compete with the OTA, asks Lee Hayhurst
During the Internet revolution the travel sector viewed the web and the OTAs it spawned as like being in a battle to the death, a zero sum game destined to end with one ultimate winner.
The area where change was felt most acutely was the assault on the traditional package sector.
After all, it is in packaging up individual components to form a complete product that the travel trade shows its true value, as well as the service and assurances about product that comes with it.
The mass market roll out of the package holiday in the 70s and 80s, with its ability to work a decent margin into the resultant holiday, has underpinned the entire industry, defining business models, technologies and regulation.
So the process, led by Expedia over two decades, of breaking apart the package under the auspices of putting power in the hands of the consumer through transparency, by turning the travel agent GDS ‘green screen’ around to face the customer, was understandably highly disruptive.
Expedia’s apparently Damascene conversion to the virtues of the package may now seem a touch ironic to many who have seen large chunks of their business migrate to the big web players.
In truth, Expedia has understood the value of packages for many years and even that great engine of online disintermediation, Google, has recently also come round to their merits.
It’s also true that despite the disintermediation of the internet, the package market has remained strong in European markets, particularly in the biggest two Germany and the UK.
And Expedia isn’t talking about the traditional tour operator style package with hotel and air commitments but more flexible dynamic packages, although these have been a key part of the UK travel sector for over two decades.
Nevertheless, from June next year when the new EU Package Travel Directive comes into law, legally there will be no technical difference from a consumer and regulatory point of view between dynamic and traditional packages.
So the large US online disrupters have had to concede that the prevailing model in the US whereby customers buy separate components in a set order with flights first, then hotel and then car hire and other ancillaries, while seeing some adoption in Europe, has probably hit a natural limit.
The customer on this side of the Atlantic did not ask for the package holiday to be broken apart but they do appear to value greater flexibility and choice. An Expedia that claims to be customer-centric, therefore, has to find a way to meet that demand.
At last week’s partner conference in Las Vegas Expedia shed some light on how it sees its competitive position in this market.
Simon Sinek, British American author of Start With Why and marketing consultant, was chosen as a keynote speaker at the event specifically because his take on what makes great leaders and companies, which he will detail in a new forth coming book, chimes with the vision of Expedia’s senior bosses.
He drew a distinction between finite and infinite battles and said in business firms are involved in the latter and not the former meaning there are no ultimate winners or losers, there is no zero sum game.
In infinite battles players don’t lose, they just withdraw having been out competed by an adversary that is either dominant or is playing by the life or death rules of a finite game.
Sinek used the Vietnam war to illustrate the latter suggesting that by no metrics of success or failure in war did the US lose, and yet it is considered to have lost.
In business, however, Sinek said firms should always consider themselves to be involved in an infinite battle in which many of the brands and the sector itself survives long after the individuals involved are gone and there is no such thing as ultimate victory against your main competitor.
Sinek said infinite game players succeed if they have five key attributes:
- A just cause to dedicate your time and effort to achieving;
- courageous leadership able to make difficult decisions for the long term good;
- a vulnerable team that feels empowered to ask for help and acknowledge failings;
- a worthy adversary that you evaluate yourself against;
- an “open playbook” so that strategy is not fixed but flexible and adaptable.
This is what Sinek said: “How do you live an infinite life? If you choose to live based on the finite game you want to be number one, be the best.
“The problem is at the end you do not win anything, you just die and it’s over. If you choose to live your life and build your business on the infinite game you ask how can I leave this world in a better shape than I found it and we will remember you for longer than you were on this earth.
“There is nothing wrong in playing the finite game as long as you don’t detract from the infinite game. Improve and get better and impact the lives of the people with whom you work and your customers day after day.
“It’s always about you and your own improvement. Do you want to build a company and live a life where you can live forever?”
The question many UK travel firms face is does playing the infinite game mean they no longer see Expedia as a threat but as a fellow traveller in the bid to make the world a better place?
Thomas Cook’s recent deal with the OTA to take hotel supply for a portion of its programme could be seen as an illustration of this, or was it just a pragmatic business decision?
What’s clear is Expedia understands its desire to be the world’s biggest online travel market place isn’t going to happen by putting everyone else out of business, but through developing meaningful partnerships.