Big Four – Consolidation will not deliver ‘experience’

The giants of the online travel industry have been reasonably quiet in recent months as the so-called bucket-and-spade holiday providers have been busy putting their grand merger programmes into place.


If there was any sense of shock at the events – Thomas Cook joined up with MyTravel and Thomson created TUI Travel with First Choice, although both unions are still dependent on regulatory clearance – it was arguably the timing rather than the fact that the deals took place.


Regardless of the shenanigans that took place in February and March, moving online is the only place where any growth will come and the big four are finally accepting the inevitable, say some, in what can now reasonably be described as the old school online travel agency community.


Ian McCaig, chief executive of Lastminute.com and the first boss of an OTA to speak out since the mergers, knocks back suggestions the agency and others such as Expedia should be concerned.


“They [big four] are not growing into the OTA space – they are merely moving their offline customers online and closing their retail assets as they do it,” McCaig says. “The harsh reality is that the big four have really only been proactive in the online arena for a year or so – Lastminute.com has been operating in the sector for eight years.


But despite the large-scale pooling of resources that will inevitably come with such huge mergers, McCaig says the giants of the offline world will find that radically shifting their offering to an online one will prove difficult.


“Consolidation is not going to deliver that knowledge or experience, however aggressively they choose to develop their online offering,” McCaig says.


McCaig’s strong views perhaps mask concerns over what many believe will be a massively important year for Lastminute.com and the other OTAs in a marketplace that now features a string of rejuvenated operators desperate to lure consumers direct to their websites.


However, the OTAs continue to argue the merits of their trump card: freedom from often costly and cumbersome assets and stock.


“Tour operators also still have massive structural issues such as asset ownership and lack of flexibility inherent in their model that they need to solve,” McCaig says.


Some industry watchers suggest the now-crowded top end of the market looks ripe for further consolidation. However, nobody dares speak publicly about the intentions of the US backers behind the leading OTAs as they look at the now profitable European operators.

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